SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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IGENE Biotechnology, Inc.
________________________________________________
(Name of Registrant as Specified in Its Charter)
N/A
____________________________________________________________
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IGENE BIOTECHNOLOGY, INC.
9110 Red Branch Road
Columbia, Maryland 21045
Notice of Annual Meeting Of Stockholders
To Be Held November 3, 2008
NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of
Stockholders of IGENE Biotechnology, Inc. (the "Company", "we" or
"us") will be held at the offices of Kimelman & Baird, LLC, 100
Park Avenue, 21st floor, New York, New York 10017 at 10:00 a.m.
local time on November 3, 2008 for the following purposes:
1. To elect five (5) directors to serve for a term of one
(1) year and until their successors are elected and
qualified.
2. To authorize and approve an amendment to the Articles
of Incorporation to increase the number of authorized
shares of common stock from 750,000,000 to
3,000,000,000 shares.
3. To approve the amendment to the Company's 2001 Stock
Incentive Plan to increase the number of shares
available from 55,000,000 to 300,000,000.
4. To transact such other business as may properly come
before the meeting, or any adjournment thereof.
Stockholders of record at the close of business on October
3, 2008 shall be entitled to notice of, and to vote at, the
meeting.
All stockholders are cordially invited to attend the
meeting.
By order of the Board of Directors,
/S/ STEPHEN F. HIU
___________________________________
STEPHEN F. HIU
President
Dated: Columbia, Maryland
October 3, 2008
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE
THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.
-1-
IGENE BIOTECHNOLOGY, INC.
9110 RED BRANCH ROAD
COLUMBIA, MARYLAND 21045
PROXY STATEMENT
The accompanying proxy is solicited by the Board of
Directors (or the "Board") of IGENE Biotechnology, Inc., a
Maryland corporation (the "Company", "we" or "us"), for use at
our 2008 Annual Meeting of Stockholders, which we refer to as the
"meeting," to be held on November 3, 2008, or any adjournment
thereof. Holders of record of our common stock, par value $.01,
and our Series A, 8% Cumulative Preferred Stock (the "Series A
preferred stock"), at the close of business on October 3, 2008
(the "record date"), shall be entitled to vote at the meeting.
Proposals of stockholders intended to be presented at our 2009
Annual Meeting of Stockholders must be received by us no later
than 5:00 P.M. local time on March 1, 2009, to be eligible for
inclusion in our proxy statement and form of proxy to be used in
connection with such meeting.
The cost of solicitation of proxies will be borne by us. We
may use the services of our directors, officers, employees and
others to solicit proxies, personally or by telephone.
Arrangements may also be made with brokerage houses and other
custodians, nominees, fiduciaries and stockholders of record to
forward solicitation material to the beneficial owners of stock
held of record by such persons. We may reimburse such solicitors
for reasonable out-of-pocket expenses incurred by them in
soliciting, but no compensation will be paid for their services.
Each proxy executed and returned by a stockholder may be
revoked at any time before it is voted by timely submission of
written notice of revocation or by submission of a duly executed
proxy bearing a later date (in either case directed to our
Corporate Secretary at the above address) or, if a stockholder is
present at the meeting, the stockholder may elect to revoke his
or her proxy by voting his or her shares in person at the
meeting.
There is being mailed herewith to each stockholder of record
our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007 and our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008. The notice, proxy statement,
enclosed form of proxy, Form 10-KSB and Form 10-Q will be mailed
to stockholders of record beginning October 3, 2008. The
Company's website address is www.igene.com.
On the record date, there were 110,337,072 shares of common
stock outstanding and entitled to vote with respect to all
matters to be acted upon at the meeting. Each holder of common
stock is entitled to one vote for each share of common stock held
by such holder.
On the record date, we also had 11,134 shares of our Series
A preferred stock outstanding and entitled to vote with respect
to all matters to be acted upon at the meeting. Each holder of
our Series A preferred stock is entitled to two votes for each
share of Series A preferred stock held by such holder. Holders of
record of our outstanding shares of common stock and Series A
preferred stock will be entitled to vote together as a single
class on all matters to be voted on at the meeting.
Pursuant to the terms of our Series A preferred stock, as a
consequence of the non-payment of dividends on such stock for
more than the past four consecutive dividend payment dates, the
holders of Series A preferred stock, voting together as a single
class, are entitled to elect two directors, in accordance with
the procedures set forth in our Articles of Incorporation, as
amended (the "Articles of Incorporation") and bylaws. To date,
the holders of the Series A preferred stock have not exercised
such right.
Voting Procedures
The presence of holders representing a majority of all the
votes entitled to be cast at the meeting will constitute a quorum
at the meeting. In accordance with Maryland law, abstentions,
but not broker non-votes, are counted for purposes of determining
the presence or absence of a quorum for the transaction of
business.
-2-
The plurality of votes cast at the meeting is required to
elect each of our director nominees under Proposal No. 1. The
affirmative vote of holders of at least two-thirds of the
outstanding voting power of the Company entitled to be cast at
the meeting is required to approve Proposal No. 2, the amendment
to the Articles of Incorporation increasing the number of
authorized shares of common stock to 3,000,000,000. The
affirmative vote of holders of at least a majority of the votes
cast on Proposal No. 3 is required to approve the amendment to
the 2001 Plan to increase the number of shares available under
the 2001 Plan to 300,000,000. The votes will be tabulated by the
Company's Corporate Secretary. Abstentions and broker non-votes
are not counted in determining the votes cast with respect to any
of the matters submitted to a vote of stockholders.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Pursuant to our bylaws and as permitted by our Articles of
Incorporation, as amended, the Board has fixed the number of
directors at eight. It is proposed to elect five directors at
this meeting to hold office for a one-year term, until the 2009
annual meeting of stockholders, and until their respective
successors are duly elected and qualified. The Company has
recommended fewer nominees for directorships than have been fixed
by the Board under our bylaws, as the Board has determined the
current nominees are appropriate at this time. The Board has not
yet determined whether to fill such vacancies and may reduce the
size of the Board to eliminate one or more of the vacancies.
Proxies cannot be voted for more than five directors at the
meeting. Each of the persons listed below has been nominated for
election to our Board at the meeting. All of the nominees listed
below presently serve on our Board. If some unexpected
occurrence should make necessary, in the Board's judgment, the
substitution of some other person or persons for any of the
nominees, shares for which proxies have been granted will be
voted for such other person or persons as the Board may select.
The Board is not aware that any current director, or nominee, may
be unable or unwilling to serve as a director. The following
table contains certain information with respect to the nominees:
NOMINEES FOR ELECTION
Name Age Position with Igene
____ ___ ___________________
Michael G. Kimelman 69 Chairman of the Board of
Directors<F1>
Thomas L. Kempner 80 Vice Chairman of
the Board of Directors <F2>
Stephen F. Hiu 51 Director, President, Chief
Technical Officer,
and Director of Research and
Development
Patrick F. Monahan 57 Director, Vice-President,
Secretary, and Director
of Manufacturing
Sidney R. Knafel 77 Director <F2>
<FN>
<F1> Member of the audit committee of the Board of Directors.
<F2> Member of the compensation committee of the Board of
Directors.
</FN>
Each of our directors was elected for a one-year term at the
Company's most recent annual meeting, held in July of 2006, and
because no annual stockholder meeting was held in 2007, is
currently holding-over from his prior term.
MICHAEL G. KIMELMAN has served as a director of the Company and
as Chairman of the Board of Directors since 1991. At the time of
his election as director and through the present, Mr. Kimelman
has been a founder and member of Kimelman & Baird, LLC, an
investment advisory firm. Mr. Kimelman also serves on the board
and the executive committee of the Hambletonian Society.
-3-
THOMAS L. KEMPNER is Vice Chairman of the Board of Directors and
has been a director of the Company since its inception in 1981.
He also has been Chairman and Chief Executive Officer of Loeb
Partners Corporation, investment bankers, New York, and its
predecessors since 1978. Mr. Kempner is currently a director of
CCC Information Services Group, Inc., Dyax Corporation, Fuel Cell
Energy, Inc., Insight Communications Co., Inc., Intermagnetics
General Corp. and Intersections, Inc. He is also a director
emeritus of Northwest Airlines, Inc.
STEPHEN F. HIU has served as Chief Technical Officer since 2002,
and has served as President and Treasurer of the Company since
1999. Mr. Hiu has served as a director since 1990 and has been
the Company's Director of Research and Development since 1989
and, prior thereto, was Senior Scientist since he joined the
Company in 1985. Mr. Hiu was a post-doctoral Research Associate
at the Virginia Polytechnic Institute and State University,
Blacksburg, Virginia, from January 1984 until December 1985. Dr.
Hiu holds a Ph.D. degree in microbiology from Oregon State
University and a B.S. degree in biological sciences from the
University of California, Irvine.
PATRICK F. MONAHAN has served as Vice-President of the Company
since 2002, and as Director of Manufacturing and as a director of
the Company since 1991. Mr. Monahan has also served as Secretary
of the Company since September 1998 and has managed the Company's
fermentation pilot plant since 1982. He received an Associate of
Arts degree in biology from Allegheny Community College and a
B.S. degree in biology with a minor in Chemistry from Frostburg
State College, Frostburg, Maryland.
SIDNEY R. KNAFEL has served as a director of the Company since
1982. He has also been Managing Partner of SRK Management
Company, a private investment company located in New York City,
since 1981 and has served as Chairman of Insight Communications,
Inc. since 1985. Mr. Knafel is also currently a director of
General American Investors Company, Inc., as well as a number of
private companies.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE DIRECTOR NOMINEES.
Committees of the Board of Directors
We have two standing committees of the board of directors,
our audit committee and our compensation committee. We do not
have a standing nominating committee. Since the Board of
Directors consists of five persons, each director participates in
the consideration of director nominees. Given the size of the
Company and its resources, the Board believes that this is
appropriate. The Company has not adopted a formal process
relating to director nominations, nor does it have a formal
policy regarding the consideration of any director candidates
recommended by stockholders or specific minimum qualifications
for director nominees. The Board believes this is appropriate
since any such recommendations may be informally submitted to and
considered by the Company's directors. Stockholders wishing to
communicate with the Board should send their communications
addressed to the Board at the principal executive offices of the
Company. The Board periodically reviews the performance of each
Board member and concludes whether or not the member should
continue in their current capacity. Since the Company only has a
limited number of employees, it has not adopted a code of ethics.
Set forth below is a description of the functions of each of
our standing committees and the members of the board of directors
who serve on such committees.
Audit Committee
The responsibilities of the audit committee include
recommending to the board of directors the independent certified
public accountants to conduct the annual audit of our books and
accounts, reviewing the proposed scope of the audit and approving
the audit fees to be paid. The audit committee is charged with
reviewing, with the independent certified public accountants and
with our management, the adequacy and effectiveness of our
internal auditing, accounting and financial controls. Mr.
Kimelman served as the sole member of the audit committee
throughout 2007. Mr. Kimelman is not independent as defined in
Rule 4200(a)(15) of the Nasdaq Marketplace Rules, based on his
ownership percentage of the Company's securities. Please see the
section of this proxy statement titled "Security Ownership of
Certain Beneficial Owners and Management" for more information
-4-
about Mr. Kimelman's holdings. The audit committee charter is
attached as Appendix II. The audit committee held four meetings
in 2007 to review the Company's 2006 audited financial statements
and three quarterly unaudited financial statements.
Audit Committee Report
The audit committee has reviewed and discussed the fiscal
year 2007 and 2006 audited financial statements with management,
and has discussed with the independent auditors the matters
required to be discussed by the statement on Auditing Standards
No. 61, as amended, "Communication With Audit Committees" issued
by the Auditing Standards Board of the American Institute of
Certified Public Accountants ("AICPA"), as modified or
supplemented, and has received the written disclosures and the
letter from the independent auditors required by AICPA
Independence Standards Board Standard No. 1 "Independence
Discussions with Audit Committees," as modified or supplemented,
and has discussed with the independent auditor the auditors'
independence.
Based on the review and discussions referred to in the
previous paragraph, the audit committee recommended to the board
of directors that the audited financial statements be included in
our annual report on Form 10-KSB for the year ended December 31,
2007.
Michael G. Kimelman, the sole member of the audit committee.
Compensation Committee
Our compensation committee is responsible for approving the
salaries of all of our officers and certain other employees. It
also supervises the administration of all benefit plans and other
matters affecting executive compensation, subject to further
approval of our board of directors. The members of the
compensation committee during 2007 were Messrs. Thomas L. Kempner
and Sidney R. Knafel. The compensation committee held one
meeting during 2007 for the purposes of considering employee
share grants. The compensation committee does not have a written
charter. Compensation of executives and directors is at the
discretion of the compensation committee.
Director and Committee Independence
Since the Company is not a listed company, it has determined
to apply Rule 4200(a)(15) of the Nasdaq Marketplace Rules to
determine independence of its directors. Based on such rule, the
Company has determined that none of its directors are
independent. Accordingly, the members of the Company's audit and
compensation committees are not independent.
Board of Directors Meetings and Compensation
The board of directors held one meeting in 2007. None of
our directors attended fewer than 75% of the total number of
meetings held by the board and by all committees of the board on
which he served during 2007. Board members are encouraged, but
not required, to attend our annual meeting of stockholders. Four
directors attended our last annual meeting held in 2006.
-5-
Executive Officers
Our executive officers are listed blow, in addition to
Messrs. Hui and Monahan, who are listed above as director
nominees. Our officers serve at the discretion of the Board of
Directors and until their respective successors are elected and
qualified.
Name Age Position with Igene
____ ___ ___________________
Edward J. Weisberger 44 Chief Financial Officer
EDWARD J. WEISBERGER has served as Chief Financial Officer of the
Company since 2001. He is a CPA with multiple years of financial
experience in the public and private sectors with both smaller
and Fortune 100 companies.
Executive Compensation
The following tables show the compensation paid or accrued
by the Company to each of the three executive officers (the
"named executive officers"). Other than the 2001 Stock Incentive
Plan and the 401k Retirement Plan, the Company has no profit
sharing or incentive compensation plans.
Summary Compensation Table
All Other
Name and Stock Awards Compensation
Principal Position Year Salary($)<F1> ($) ($)<F2> Total ($)
______________________________ ____ _____________ ____________ ____________ _________
Stephen Hiu 2007 $ 153,886 $ 0 $ 6,396 $ 160,282
President
2006 142,580 0 6,575 149,155
Patrick Monahan 2007 137,914 10,000 <F3> 5,968 153,882
Vice-President, Secretary
and Director of Manufacturing 2006 129,965 0 5,838 135,803
Manufacturing
Edward Weisberger 2007 132,793 0 5,712 138,505
Chief Financial Officer
2006 125,817 0 5,750 131,567
<FN>
<F1> Gross Salary of the named executive officers listed.
<F2> Includes annual taxable compensation for health insurance
premium and employer match of 401(k).
<F3> Includes issuance of 1,000,000 shares of the Company's
common stock at $.01 per share value based on current stock
price in addition to restriction and blockage discounts.
</FN>
There are no employment agreements or arrangements, written or
unwritten, for any of the executive officers.
-6-
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning the
outstanding equity awards of each of the named executive officers
as of December 31, 2007. All options reflected on the table are
fully vested.
Name Number of Securities
Underlying Unexercised Option Exercise Option Expiration
Options(#) Exercisable Price ($/Share) Date
___________ ______________________ _______________ _________________
Stephen Hiu 2,000,000 $ .10 04/16/2008
2,000,000 .05 01/19/2010
45,000 .065 01/02/2011
4,800,000 .025 08/13/2012
5,000,000 .10 06/25/2014
Patrick Monahan 1,050,000 .10 04/16/2008
1,317,500 .05 01/19/2010
2,900,000 .025 08/13/2012
2,000,000 .10 06/25/2014
Edward Weisberger 2,500,000 .05 12/01/2011
500,000 .10 06/25/2014
1,500,000 .027 12/09/2015
Retirement Benefits
There are no retirement benefits or any contracts, plans or
arrangements, written or unwritten, that provide payment to named
executive officers in connection with their resignation,
retirement or other termination.
Director Compensation
During 2007, no directors were compensated for their Board
or committee activities.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of September
9, 2008 with respect to beneficial ownership of shares of the
Company's outstanding common stock by (i) each person known to
the Company to own or beneficially own more than five percent of
its common stock or preferred stock, (ii) each director of the
Company, and (iii) each named executive officer, and (iv) all
directors and executive officers as a group. On September 9,
2008 there were 110,337,072 shares of common stock issued and
outstanding. Shares of common stock subject to options or
warrants currently exercisable or exercisable within 60 days of
September 9, 2008 are deemed outstanding for computing the share
ownership and percentage of the person holding such options and
warrants, but are not deemed outstanding for computing the
percentage of any other person. Unless otherwise noted below,
each beneficial owner listed on the table below has sole voting
and investment power with respect to their shares beneficially
owned. No shares of preferred stock are beneficially owned by
the persons listed below.
-7-
Common Stock
________________________________________
Number of
Name and Address Shares Percent(%)
______________________ _______________ _______________
Directors and officers
______________________
Stephen F. Hiu 14,993,633<F1> 12.07
9110 Red Branch Road
Columbia, MD 21045
Thomas L. Kempner 147,804,528<F2> 61.53
61 Broadway
New York, NY 10006
Michael G. Kimelman 50,197,723<F3> 31.52
100 Park Avenue
New York, NY 10017
Sidney R. Knafel 145,777,554<F4> 61.27
810 Seventh Avenue
New York, NY 10019
Patrick F. Monahan 9,315,033<F5> 7.92
9110 Red Branch Road
Columbia, MD 21045
Edward J. Weisberger 4,570,000<F6> 3.98
9110 Red Branch Road
Columbia, MD 21045
All Directors and Officers 372,658,471<F7> 84.25
as a Group (6 persons)
Others
______
Joseph C. Abeles 17,954,407<F8> 14.23
220 E. 42nd Street
New York, NY 10017
Fraydun Manocherian 7,905,135<F9> 7.13
3 New York Plaza
New York, NY 10004
Fermic 20,000,000<F10> 18.13
Col. San Nicolas Tolentino
Iztapalapa 09850 Mexico, D.F.
<FN>
<F1> Includes 1,148,633 shares held directly or indirectly by Dr.
Hiu and 13,845,000 shares issuable upon exercise of options held
by Dr. Hiu that are currently exercisable.
-8-
<F2> Includes 17,933,110 shares held directly or indirectly by
Mr. Kempner and 536,920 shares issuable upon exercise of warrants
held by Mr. Kempner that are currently exercisable. Also
includes 43,800,135 shares issuable upon conversion of notes
issued by the Company and held by Mr. Kempner. Also includes (i)
41,582,728 shares issuable upon exercise of warrants held by a
trust under which Mr. Kempner is one of two trustees and the sole
beneficiary, which are currently exercisable, (ii) 41,561,125
shares issuable upon exercise of warrants held by a trust under
which Mr. Kempner is one of two trustees and one of his brothers
is the sole beneficiary, which are currently exercisable, (iii)
2,079,411 shares issuable upon exercise of warrants held by
trusts under which Mr. Kempner is one of two trustees and is a
one-third beneficiary, that are currently exercisable, and (iv)
311,099 shares issuable upon exercise of warrants held by trusts
under which Mr. Kempner is executor and is a one-third
beneficiary, that are currently exercisable. Mr. Kempner shares
voting and investment power with respect to the shares listed in
(i)-(iv) above.
<F3> Includes 1,264,360 shares held directly or indirectly by Mr.
Kimelman, and 14,000,000 shares issuable upon exercise of options
that are currently exercisable. Also includes 17,680,341 shares
issuable upon the conversion of notes issued by the Company, and
17,253,022 shares issuable upon exercise of warrants, all of
which are held by Mr. Kimelman and are currently exercisable or
convertible.
<F4> Includes 18,190,551 shares held directly or indirectly by
Mr. Knafel, 42,619,509 shares issuable upon the conversion of
notes issued by the Company and held by Mr. Knafel and 84,967,494
shares issuable upon the exercise of warrants directly or
beneficially owned by Mr. Knafel that are currently exercisable.
<F5> Includes 2,047,533 shares held directly or indirectly by Mr.
Monahan and 7,267,500 shares issuable upon the exercise of
options held by Mr. Monahan that are currently exercisable.
<F6> Includes 70,000 shares held directly by Mr. Weisberger and
4,500,000 shares issuable upon exercise of options that are
currently exercisable.
<F7> Includes 42,863,601 shares of common stock, 39,612,500
shares issuable upon exercise of options that are currently
exercisable, 110,823,687 shares issuable upon the conversion of
notes issued by the Company and 197,313,091 shares issuable upon
the exercise of warrants that are currently exercisable.
<F8> Includes 2,128,294 shares held directly or indirectly by Mr.
Abeles, 6,723,701 shares issuable upon the conversion of $311,663
of long-term notes issued by the Company, and 9,102,412 shares
issuable upon exercise of warrants held by Mr. Abeles that are
currently exercisable.
<F9> Includes 7,375,935 shares of common stock owned directly or
indirectly by Mr. Manocherian and 529,200 shares issuable upon
the exercise of warrants owned directly or indirectly by Mr.
Manocherian that are currently exercisable.
<F10> Includes 20,000,000 shares of common stock held directly by
Fermic.
</FN>
Compensation Committee Interlocks and Insider Participation
Thomas L. Kempner and Sidney R. Knafel are members of our
compensation committee. Neither Mr. Kempner nor Mr. Knafel is, or
has previously served as, one of our officers or employees. None
of our executive officers serve, or has served as member of the
board of directors or compensation committee of any other entity
that has had one or more executive officers serving on our Board
or compensation committee.
-9-
Certain Relationships and Transactions
In order to provide the Company with sufficient funds to
settle the litigation with the holders of the convertible notes
issued by the Company in 2001, on February 15, 2007, the Company
issued and sold an aggregate principal amount of $762,000 in 5%
convertible debentures, $381,000 to each of Thomas Kempner and
Sidney Knafel, directors of the Company. These debentures are
convertible into shares of the Company's common stock at $.02 per
share based on the offer made to the original debenture holders
as the market price of the Company's common shares as of February
2007. As of September 1, 2008 these debentures have accrued
$58,240 of interest, and no payments have been made.
In order to provide the Company with working capital as the
inventory received from the termination of the joint venture with
Tate & Lyle PLC is sold and the receivables are collected, on
December 12, 2007, the Company issued and sold an aggregate
principal amount of $300,000 in 8.5% secured notes, $150,000 to
each of Thomas Kempner and Sidney Knafel. These notes are
secured by the accounts receivable of the Company. As of
September 1, 2008 these notes have accrued $10,850of interest,
and no payments have been made.
On October 15, 2007, Mr. Monahan, the Company's Vice-
President, Secretary and Director of Manufacturing, was issued
1,000,000 shares of the Company's common stock, valued at
$21,000, in connection with his employment with, and services to,
the Company. The shares of common stock were issued pursuant to
the exemption from registration provided under Section 4(2) of
the Securities Act of 1933, as amended.
As discussed in the section of this proxy statement titled
"Proposal No. 2: Amendment to Articles of Incorporation
Increasing Authorized Shares of Common Stock," the Company
intends to commence an exchange offering to, among other things,
reduce its current debt, if Proposal No. 2 is approved by the
stockholders at the meeting. Michael Kimelman, Chairman of the
Board, and Thomas Kempner and Sidney Knafel, directors of the
Company, own in the aggregate $3,815,337 principal amount of
outstanding non-convertible notes issued by the Company. The
Company expects that Messrs. Kimelman, Kempner and Knafel will
exchange all of their outstanding non-convertible notes for
shares of common stock if the Company commences the exchange
offers. In addition, Messrs. Kimelman, Kempner and Knafel own an
aggregate of $4,897,474 of outstanding notes convertible into an
additional 734,369,671 shares of our common stock. The Company
expects that these convertible notes will be exchanged on the
same terms as the proposed exchange offers. Directors of the
Company own warrants and options to purchase 390,612,879 and
35,112,500 shares, respectively, of the Company's common stock.
Officers of the Company own options to purchase 25,612,500 shares
of the Company's common stock. The Company expects that the
options and warrants held by the directors and officers will be
exchanged for shares of common stock in the proposed exchange
offers.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of the Section 16(a) reports filed
with the Securities and Exchange Commission (the "SEC") and
written representations provided to the Company by its officers
and directors, and holders of more than ten percent of any class
of the Company's registered securities, the Company believes that
during fiscal year 2007, all filing requirements applicable to
its reporting officers, directors and greater than ten percent
beneficial owners were timely satisfied except one delinquent
Form 4 filing by Thomas L. Kempner resulting in four transactions
being untimely reported, and one delinquent Form 4 filing by
Michael Kimelman resulting in four transactions being untimely
reported.
-10-
Audit Fees and Services
The accounting firm of McElravy, Kinchen & Associates, P.C.
("McElravy") has been engaged to audit the financial statements
of the Company for the fiscal year 2008. McElravy served as the
Company's registered public accountants to audit the financial
statements for 2007. J.H. Cohn LLP ("Cohn") originally served as
the auditor in 2007 and served as the Company's registered public
accountants to audit the restated financial statements in 2006.
Berenson LLP originally served as the auditor in 2006; however,
in May 2007, J.H. Cohn LLP acquired Berenson LLP in a transaction
that was structured as an asset sale. Each of J.H. Cohn LLP and
McElravy has advised the Company that neither the accounting firm
nor any of its members or associates has any direct financial
interest in or any connection with the Company other than as
independent public auditors.
As of January 11, 2008, the Company dismissed Cohn as its
independent registered public accounting firm as approved by the
audit committee of the Board of Directors. The audit report
issued by Cohn on the consolidated financial statements of the
Company as of and for the years ended December 31, 2006 and 2005,
included in the Company's amended Annual Report on Form 10-KSB/A
filed on December 21, 2007, did not contain an adverse opinion or
a disclaimer of opinion, and was not qualified or modified, as to
uncertainty, audit scope or accounting principles, except as
follows:
Cohn's report contains an explanatory paragraph. The
paragraph states that the Company has suffered recurring
losses from operations since inception and has a working
capital deficiency that raises substantial doubt about its
ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
During the years ended December 31, 2006 and 2005 and the
interim period through January 11, 2008, the date of their
dismissal, there have been no disagreements between the Company
and Cohn on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Cohn,
would have caused Cohn to make reference to the subject matter
thereof in its report on the Company's consolidated financial
statements for such periods other than as described below.
There was a disagreement related to the Company's initial
accounting for warrants issued in connection with certain debt
that arose in connection with Cohn's review of the Company's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 2007. The accounting treatment was discussed with the
audit committee of the Board of Directors and resolved to the
satisfaction of Cohn. As a result, the Company restated the
financial statements included in its Annual Report on Form 10-KSB
for the year ended December 31, 2006, and the Form 10-QSB for the
three months ended March 31, 2007. The Company has authorized
Cohn to respond fully to the inquiries of McElravy, if any,
concerning the matter.
During the years ended December 31, 2006 and 2005 and the
interim period through January 11, 2008, Cohn did not advise
the Company of any reportable event under Item 304(a)(1)(v) of
Regulation S-K other than in connection with their audit of the
Company's consolidated financial statements for the years ended
December 31, 2006 and 2005, Cohn advised the Company's management
and the audit committee of the Board of Directors that the
Company did not have the internal controls necessary for the non-
routine recording of warrants issued in connection with certain
of the Company's debt obligations.
-11-
The Company appointed McElravy as its new independent
registered public accounting firm effective as of January 15,
2008. The selection of McElravy was approved by the audit
committee of the Board of Directors of the Company on January 15,
2008.
The following table shows the aggregate fees paid or accrued
by the Company for the audit and other services provided by
McElravy and J.H. Cohn LLP for fiscal year 2007, and by J. H.
Cohn LLP for fiscal year 2006:
FY 2007 FY 2006
________ ________
Audit Fees $ 33,000 $100,844
Audit-Related Fees 0 0
Tax Fees 0 5,000
All Other Fees 0 0
________ ________
TOTAL $ 33,000 $105,844
Audit services provided by McElravy and Cohn for fiscal year
2007, and by Cohn for fiscal year 2006 consisted of the audit of
the consolidated financial statements and quarterly reviews of
financial statements. "Tax Fees" include charges primarily
related to tax return preparation and tax consulting services.
In 2003, the SEC adopted a rule pursuant to the Sarbanes-Oxley
Act of 2002 that, except with respect to certain de minimis
services discussed below, requires audit committee pre-approval
of audit and non-audit services provided by the Company's
independent auditors. The audit committee reviews and pre-
approves audit and non-audit services of the independent auditors
in conformity with the requirements of Sarbanes-Oxley. All of
the 2007 and 2006 services described above were pre-approved by
the audit committee pursuant to this SEC rule. A representative
of McElravy is expected to be available by phone at the meeting
with the opportunity to make a statement if such representative
so desires and to respond to appropriate questions.
PROPOSAL NO. 2:
AMENDMENT TO ARTICLES OF INCORPORATION INCREASING AUTHORIZED
SHARES OF COMMON STOCK.
The Company is proposing to amend Article Fifth of its
Articles of Incorporation to increase the number of authorized
shares of common stock, par value $.01 per share, from
750,000,000 shares to 3,000,000,000 shares. Pursuant to Article
Fifth of its Articles of Incorporation, the Company is presently
authorized to issue 750,000,000 shares of common stock, of which
on the record date 110,337,072 shares were issued and
outstanding. Approximately 488,414,337 of the Company's unissued
shares are reserved for issuance upon exercise of presently
outstanding stock options, exercisable warrants and conversion of
convertible securities. The Company is also presently authorized
to issue 1,500,000 shares of Series A preferred stock, par value
$.01 per share, of which on the record date, 11,134 shares were
issued and outstanding. The authorized number of shares of
Series A preferred stock will not change as the result of the
proposed amendment.
The Company is proposing (the "Proposal") to amend Article
Fifth of its Articles of Incorporation in order to increase the
authorized number of shares of common stock of the Company from
750,000,000 shares to 3,000,000,000 shares, par value $.01 per
share, as follows:
-12-
ARTICLE FIFTH
The total number of shares of stock of all classes which the
Corporation has authority to issue is Three Billion, One Million
Five Hundred Thousand (3,001,500,000) shares divided into Three
Billion (3,000,000,000) shares par value of One Cent ($.01) per
share of Common Stock, having an aggregate par value of Three
Hundred Million Dollars ($300,000,000.00) and One Million Five
Hundred Thousand (1,500,000) shares of the par value of One Cent
($.01) per share of Preferred Stock having an aggregate par value
of Fifteen Thousand Dollars ($15,000.00). The aggregate par value
of all shares of stock is Three Hundred Million Fifteen Thousand
Dollars ($300,015,000.00).
In order to reduce our stockholders' deficit, reduce our
debt, improve our balance sheet ratios and simplify our capital
structure, we are proposing to commence an exchange offer
pursuant to which we will offer to exchange shares of our common
stock for our outstanding notes due March 31, 2009, we are also
proposing to exchange common stock for and our other outstanding
convertible notes and warrants presently held by directors of our
Company. Our directors own an aggregate of $3,815,337 principal
amount of non-convertible notes, $4,897,474 principal amount of
convertible notes. Directors of the Company own warrants and
options to purchase 390,612,879 and 35,112,500 shares,
respectively, of the Company's common stock. Officers of the
Company own options to purchase 25,612,500 shares of the
Company's common stock. The Company expects that these directors
and officers will exchange all of their outstanding non-
convertible notes, convertible notes, options and warrants for
shares of common stock in the exchange offers. See the sections
of this proxy statement titled "Security Ownership of Certain
Beneficial Owners and Management" and "Certain Relationships and
Transactions" for more information about the directors' security
holdings and their interests in the proposed exchange offers.
We presently anticipate commencing the exchange offer after
the date of this proxy statement, but before the scheduled date
for the meeting; however, any such exchange offer will not be
consummated until after the date of the meeting and will be
contingent upon stockholder approval of the amendment of the
Articles of Incorporation increasing the number of authorized
shares. If stockholder approval is not obtained then we will not
effectuate the exchange. Any exchange offer will only be made
pursuant to documents or arrangements made with the holders of
the securities to be exchanged.
This proxy statement shall not constitute an offer to sell
or the solicitation of any offer to buy nor shall there be any
sales of securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any state.
This proposal also will enable the Company to have
sufficient shares of common stock to be issued or reserved for
issuance to provide flexibility with respect to future
transactions, including financing requirements or other business
transactions where the Company would have the option to use its
common stock (or securities convertible into or exercisable for
common stock) as consideration (instead of, or in addition to,
cash) in connection with future growth, financing and other
corporate purposes.
The Board of Directors of the Company has approved the
adoption of the Proposal. The Board of Directors believes that
it is in the best interests of the Company to amend Article Fifth
of the Articles of Incorporation to give effect to the Proposal.
In order to adopt the Proposal, the affirmative vote of holders
of at least two-thirds of the outstanding voting power of the
Company entitled to be cast at this meeting is required.
Stockholders of the Company will not have any preemptive
rights with respect to the additional shares of common stock
being authorized. No further approval by stockholders would be
necessary prior to the issuance of any additional shares of
common stock, except as may be required by law. The Board of
Directors has sole discretion to issue additional shares of
common stock for such consideration as may be determined by the
Board of Directors. The issuance of any additional shares of
common stock may have the effect of diluting the percentage of
stock ownership of the present stockholders of the Company or
could, under certain circumstances, be construed as an anti-
takeover effect.
-13-
Directors of the Company who hold approximately 65% of the
outstanding voting power of the Company have indicated that they
intend to vote all their shares in favor of the proposal to amend
the Articles of Incorporation of the Company.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE ARTICLES OF INCORPORATION.
PROPOSAL NO. 3:
AMENDMENT TO THE COMPANY'S 2001 STOCK INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FROM 55,000,000 TO 300,000,000.
The Company is proposing to amend and restate its 2001 Stock
Incentive Plan (the "2001 Plan") to increase the number of shares
available under the 2001 Plan from 55,000,000 to 300,000,000
shares of common stock and to make certain other changes designed
to reflect changes in regulatory requirements affecting the Plan
and is seeking stockholder approval of such amendment. This
amendment would also increase in the same proportion, from
5,500,000 to 30,000,000, the number of shares of common stock
that may be allocated to the stock options or stock appreciation
rights that are granted to any individual participant under the
2001 Plan who is an employee during any single taxable year. The
affirmative vote of a majority of the votes cast on the proposal
to amend the 2001 Plan is required for approval of the amendment.
We have attached as Appendix I to this proxy statement the form
of 2001 Plan as it would be amended and restated to reflect the
new shares authorized for issuance assuming we receive the
stockholder approval we are requesting.
The purpose of the 2001 Plan is to further the long term
stability and financial success of the Company by attracting and
retaining employees through the use of stock-based incentives,
and to provide employees of the Company with additional incentive
to promote the success of the Company. The following
description of the material terms of the 2001 Plan is intended as
a summary only and is qualified in its entirety by reference to
the text of the 2001 Plan (reflecting the proposed amendment)
attached as Appendix I.
Eligibility
All present and future employees of the Company1 that the
Board determines have contributed or who can be expected to
contribute significantly to the Company will be eligible to
receive incentive awards under the 2001 Plan. The approximate
number of persons eligible to participate in the 2001 Plan is 13
as of August 27, 2008.
The Board has the power and complete discretion to select
eligible employees to receive awards, and to determine the type,
terms and conditions of the awards. The Board may delegate to
the compensation committee, if any, the power to select which
employees will receive awards, the type of awards, the time when
awards are granted, the number of shares of common stock
allocated to awards and the terms of awards, except to the extent
that such a delegation would prevent compliance with applicable
federal securities or tax laws, or other applicable laws or
regulations. The Board may also delegate to the Executive
Committee of the Company's officers, or, if the Executive
Committee ceases to exist, to the President of the Company, the
authority to select eligible employees to receive stock options,
to determine the time or times at which stock options will be
awarded to eligible employees and to determine the terms and
conditions of such stock options, subject to compliance with
applicable law. Action taken by the Executive Committee or the
President pursuant to such a delegation must be ratified by the
Board.
Amount of Stock Available for Awards
The number of shares of the Company's common stock available
for incentive awards under the Company's 1997 Stock Option Plan
and 2001 Plan was 75,000,000, 10% of the total number of the
Company's common shares authorized, of which 55,000,000 are
currently authorized under the 2001 Plan. The remaining
20,000,000 shares were authorized under the Company's 1997 Stock
Option Plan, which has now expired. The number of shares
available under the 2001 Plan, the option exercise prices, the
terms of incentive awards and the number of shares subject to
outstanding options are proportionately adjusted by the Board for
stock dividends, stock splits, re-capitalization, mergers,
-14-
combinations of shares and other changes affecting the Company's
common stock. As of September 9, 2008, there were 40,525,000
shares of our common stock subject to outstanding options and
restricted stock awards under the 2001 Plan. The Company proposes
to increase the number of shares available under the 2001 Plan to
300,000,000 to maintain the 10% ratio to the total number of
shares of common stock authorized to be issued by the Company.
The Company's common stock is quoted on the OTC Bulletin Board.
The last quoted price of the Company's common stock on September
5, 2008 was $.013.
The actual amount of awards that will be granted under the
2001 Plan after its amendment and restatement will depend upon a
number of factors, including the market value of the Company's
common stock on future dates, the achievement of one or more
performance goals by the employees and actual performance of the
Company. Since these factors are not known at this time, the
amount of awards paid under the 2001 Plan after its amendment and
restatement, and the market value of such awards, are not yet
determinable. In addition, because of these unknown variables, it
is not possible to determine the benefits that might be received
by recipients under the 2001 Plan after its amendment and
restatement. The Summary Compensation Table on page 6 above
shows the awards that were made in 2007 under the 2001 Plan
(prior to its amendment and restatement proposed herein). No
awards were made under the 2001 Plan in 2007 to non-executive
directors.
Stock Options and Stock Appreciation Rights
The Board may grant stock options to eligible employees, and
establish the terms and conditions for exercising each stock
option. Stock options may be either incentive stock options
(which are subject to favorable tax treatment under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code")) or
non-qualified stock options (which are not entitled to such
treatment). Stock appreciation rights may be granted with
respect to all or any part of a stock option, and also are
subject to terms and conditions set by the Board. Stock
appreciation rights may be granted in connection with a stock
option or in a separate incentive award.
The exercise price of a stock option granted to an employee
must be at least 100% of (i) the closing price of the Company's
common stock on the date of determination if the stock is traded
on a national securities exchange or quoted on the Nasdaq
National Market, (ii) the average of the closing bid and asked
prices per share for the Company's common stock on the date of
determination if the stock is not listed on a national exchange
or quoted on the Nasdaq National Market, or (iii) the value
determined by the Board using the reasonable application of a
reasonable valuation method if none of the above are applicable
(the "Fair Market Value"). The exercise price of an incentive
stock option must be at least 110% of Fair Market Value in the
case of a grant to an employee who is a 10% stockholder of the
Company. The Fair Market Value of incentive stock options that
become exercisable by an employee for the first time in any
calendar year is limited to $100,000.
In order to exercise a stock option, an employee must
provide the Company with written notice and pay the exercise
price of the stock option in full in cash, unless the terms of
the stock option agreement permit the employee to deliver mature
shares (shares of common stock to which the employee has good
title, free and clear of all liens, which the employee has either
held for at least six months or purchased on the open market),
valued at their Fair Market Value, in satisfaction of all or any
part of the exercise price. Alternatively, an employee's stock
option agreement may permit the employee to conduct a "broker-
assisted" exercise. A broker-assisted exercise occurs when the
employee delivers the exercise notice, together with irrevocable
instructions to a broker to deliver to the Company, from the sale
or loan proceeds with respect to the sale of common stock that is
the subject of the stock option or from a loan secured by common
stock that is the subject of the stock option, the amount
necessary to pay the exercise price and, if required by the terms
of the stock option, any applicable withholding taxes.
Stock options may be exercised in whole or in part at such
times as may be specified in the employee's stock option
agreement, subject to certain limitations with respect to
incentive stock options. No incentive stock option may be
exercised after the first to occur of (x) ten years from the Date
of Grant (or five years if the employee is a 10% shareholder),
(y) three months following the date of the employee's retirement
or termination of employment with the Company for reasons other
than disability or death, or (z) one year following the date of
the employee's termination of employment on account of disability
or death (or, if the employee dies after terminating employment
while the option is still exercisable, one year following the
date of the employee's death).
-15-
The Board may grant a stock appreciation right in connection
with all or any part of a stock option or as a separate award. A
stock appreciation right entitles the employee to receive an
amount equal to the excess of (i) the Fair Market Value of the
common stock covered by the stock appreciation right over (ii)
the Fair Market Value of the common stock on the date of the
stock appreciation right was granted. The stock appreciation
right can be paid in stock or cash, or both.
Restricted Stock
The Board may also grant shares of common stock that are
subject to certain terms and conditions. Employees who receive
restricted stock may not sell or transfer the restricted stock
until the restrictions have been met, and if the restrictions are
not met, the restricted stock will be forfeited. Unless otherwise
provided in the restricted stock agreement, a stockholder's
agreement or any other agreement, a holder of restricted stock
will have all the rights of a Company stockholder holding the
same class or series of common stock, including the right to vote
the shares and the right to receive dividends and distributions.
Federal Income Tax Consequences
The following is a brief and general summary of the federal
income tax consequences of transactions under the 2001 Plan based
on federal income tax laws in effect on January 1, 2008. The
summary does not purport to be complete, and does not address the
tax consequences of a participant's death or the state, local and
foreign tax laws that may also be applicable to awards and
transactions involving awards.
A participant generally will not incur federal income tax
when he or she is granted a nonqualified stock option, an
incentive stock option or a stock appreciation right. Upon
exercise of a nonqualified stock option or a stock appreciation
right, the participant will be treated in most circumstances as
having received ordinary income equal to the difference between
the fair market value of the common stock on the date of the
exercise and the exercise price.
This income is subject to income tax withholding by the
Company. When a participant exercises an incentive stock option,
he or she generally will not recognize taxable income, unless the
participant is subject to the alternative minimum tax, subject to
satisfying applicable holding period requirements.
A participant will generally not incur federal income tax
when he or she is granted restricted stock. When the restrictions
imposed on the restricted stock lapse, the participant will be
treated as having received ordinary income equal to the fair
market value of the restricted stock on the date the restrictions
lapsed. A participant may make a special election under the Code
to be taxed on the fair market value of the restricted stock at
the time the restricted stock is granted. If such an election is
made, the participant generally will not be taxed when the
restrictions on the restricted stock later lapse. Income
recognized by a participant in connection with restricted stock
is subject to income tax withholding by the Company.
The Company usually will be entitled to a business expense
deduction at the time and in the amount that the recipient of an
award recognizes ordinary income. As stated above, this usually
occurs upon exercise of nonqualified stock options and stock
appreciation rights, and upon the lapse of restrictions on
restricted stock. No deduction is allowed in connection with an
incentive stock option unless the employee disposes of the common
stock received upon exercise in violation of certain holding
period requirements. There may be circumstances when a deduction
is not allowed for certain transfers of common stock or payments
to participants upon the exercise of an award that has been
accelerated as a result of a change of control. Also, Section
162(m) of the Code imposes a $1,000,000 limit on the amount of
the annual compensation deduction allowable to a publicly-held
company with respect to its PEO and each of its other three most
highly compensated officers (other than the PFO), and the Company
will not be able to deduct the payment of compensation to any of
these persons in excess of the $1,000,000 annual limit unless it
qualifies for an applicable exclusion
-16-
The discussion above is subject to the general federal tax
doctrines of constructive receipt and economic benefit and to the
applicable provisions of Code Section 409A. If at any time the
2001 Plan, any incentive award under the 2001 Plan, or any
arrangement required to be aggregated with the 2001 Plan or any
incentive award under the 2001 Plan fails to comply with the
applicable requirements of Code Section 409A, all amounts
(including earnings) deferred under the 2001 Plan or the award
for the taxable year and all preceding taxable years by any
participant with respect to whom the failure relates are
includible in that participant's gross income for the taxable
year, to the extent the amounts are not subject to a substantial
risk of forfeiture and have not previously been included in the
participant's gross income. These amounts are also subject to an
additional income tax equal to twenty percent of the amount
required to be included in gross income and to interest equal to
the underpayment rate specified by the Internal Revenue Service
plus one percentage point, imposed on the underpayments that
would have occurred had the compensation been included in income
for the taxable year when first deferred, or if later, when no
longer subject to a substantial risk of forfeiture.
Administration
The Board of Directors administers the 2001 Plan. The Board
may, however, delegate the responsibility for administering the
2001 Plan to the compensation committee of the Board, provided
the compensation committee consists solely of non-employee,
outside directors, as defined in Section 162(m) of the Code and
Rule 16b-3 of the Exchange Act of 1934, as amended (the "Exchange
Act"). The 2001 Plan may be terminated, modified or amended by
the stockholders of the Company. The Board of Directors may also
terminate the 2001 Plan or modify or amend it in certain respects
as set forth in the 2001 Plan.
Plan Amendment and Termination
The Board may amend or terminate the 2001 Plan in such
respects as it shall deem advisable; however, if the Code so
requires, no change may be made that increases the total number
of shares of common stock reserved for issuance pursuant to
incentive awards granted under the 2001 Plan (except in
connection with a business combination, re-capitalization, stock
dividend or combination and the like), materially modifies the
requirements as to eligibility for participation in the 2001
Plan, or materially increases the benefits accruing to
participants under the 2001 Plan, unless the change is authorized
by the stockholders of the Company. The Board may, however,
amend the 2001 Plan and unilaterally amend incentive awards under
the 2001 Plan as it deems appropriate to ensure compliance with
applicable federal or state securities laws or regulations, or
any applicable NASDAQ or securities exchange listing requirement,
or to cause incentive stock options issued under the 2001 Plan to
meet the requirements of the Code and applicable regulations.
Except as indicated in this paragraph, a termination or amendment
of the 2001 Plan will not, without the consent of the
participant, detrimentally affect the participant's rights under
an incentive award previously granted to the participant. The
2001 Plan will terminate automatically on April 30, 2011.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 2001 STOCK INCENTIVE PLAN.
Stockholder Proposals
Any stockholder desiring to present a proposal to the
stockholders at the 2009 Annual Meeting of Stockholders and who
desires that the proposal be included the Company's proxy
statement and proxy card relating to that meeting, must transmit
the proposal to the Secretary of the Company so that it is
received at the Company's principal executive offices no later
than 5:00 p.m. local time on March 1, 2009. All proposals must
comply with applicable SEC regulations. With respect to
stockholder proposals that are not included in the proxy
statement for the 2008 Annual Meeting of Stockholders, the
persons named in the proxy solicited by the Company's board of
directors for the 2008 Annual Meeting of Stockholders will be
entitled to exercise discretionary voting power conferred by the
proxy under circumstances specified in Exchange Act Rule 14a-
4(c), including with respect to proposals received by the Company
after August 10, 2008. It is suggested that the proposal be
submitted by certified mail, return receipt requested, to our
principal executive office at the following address: IGENE
Biotechnology, Inc., 9110 Red Branch Road, Columbia, Maryland
21045, Attn: Corporate Secretary.
-17-
Deliver to Stockholders Sharing Address
We are providing a copy of our Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2007 and our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2008
simultaneously with delivery of this Proxy Statement. You may
obtain additional copies of the proxy statement, Form 10-KSB
and/or Form 10-Q filed with the SEC by writing to IGENE
Biotechnology, Inc., 9110 Red Branch Road, Columbia, Maryland
21045, Attn: Corporate Secretary or by calling (410) 997-2599.
We are delivering only one proxy statement, Form 10-KSB and
Form 10-Q to multiple stockholders sharing an address unless we
have received contrary instructions from one or more of the
stockholders. We will promptly deliver upon written or oral
request a separate copy of this proxy statement, the Form 10-KSB
or the Form 10-Q to a stockholder at a shared address to which a
single copy was sent. If you are a stockholder residing at a
shared address and would like to request an additional copy of
the proxy statement, Form 10-KSB or Form 10-Q now or with respect
to future mailings, or to request to receive only one copy of the
proxy statement, Form 10-KSB or Form 10-Q if you are currently
receiving multiple copies, please send your request to IGENE
Biotechnology, Inc., 9110 Red Branch Road, Columbia, Maryland
21045, Attn: Corporate Secretary or call (410) 997-2599.
Other Business
At the date of this proxy statement, the only business that
the board of directors intends to present or knows that others
will present at the meeting is that hereinabove set forth. If
any other matter or matters are properly brought before the
meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxy
on such matters in accordance with their judgment.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information
into this proxy statement. This means that we can disclose
important information about us and our financial condition to you
by referring you to another document filed separately with the
SEC. The information incorporated by reference is considered to
be part of this proxy statement. This proxy statement
incorporates by reference the information listed below that we
have previously filed with the SEC. We incorporate by reference
Items 6, 7 and 8 from Part II of the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007, and
Items 1 and 2 from Part I of the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2008 and any
other items in that Quarterly Report expressly updating the above
referenced items from our Annual Report on Form 10-KSB. You can
read and obtain copies of the information incorporated into this
proxy statement at the following SEC location:
Public Reference Room
100 F Street, N.E.
Washington, D.C. 20549
You may obtain information on the operation of the Public
Reference Room by calling the SEC at (800) SEC-0330. The SEC also
maintains a web site that contains reports, proxy statements,
information statements and other information about issuers, like
IGENE Biotechnology, Inc., who file electronically with the SEC.
The address of that web site is www.sec.gov.
/S/ STEPHEN F. HIU
_________________________________________
STEPHEN F. HIU
President and Chief Technical Officer
<PAGE<
APPENDIX I
IGENE BIOTECHNOLOGY, INC.
AMENDED AND RESTATED 2001 STOCK INCENTIVE PLAN
1. PURPOSE.
_______
The purpose of the Amended and Restated 2001 Stock
Incentive Plan (the "Plan") is to further the long term
stability and financial success of IGENE Biotechnology, Inc. and
its subsidiaries (collectively the "Company") by attracting and
retaining employees through the use of stock-based incentives,
and to provide employees with an additional incentive to promote
the success of the Company. It is believed that ownership of
Company Common Stock will stimulate the efforts of those
employees upon whose judgment and interests the Company is and
will be largely dependent for the successful conduct of its
business. It is also believed that Incentive Awards granted to
employees under this Plan will strengthen their desire to remain
employed with the Company and will further the identification of
employees' interests with those of the Company. The Plan is
intended to operate in compliance with the provisions of
Securities and Exchange Commission Rule 16b-3.
2. DEFINITIONS.
___________
As used in the Plan, the following terms have the
meanings indicated:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "APPLICABLE WITHHOLDING TAXES" means the aggregate amount of
federal, state and local income and payroll taxes that the
Company is required by applicable law to withhold in
connection with any lapse of restrictions on Restricted
Stock or any exercise of a Nonstatutory Stock Option or
Stock Appreciation Right.
(c) "BOARD" means the Board of Directors of IGENE Biotechnology,
Inc.
(d) "CHANGE OF CONTROL" means the occurrence of any of the
following events:
(i) The acquisition by a Group of Beneficial Ownership
of 50% or more of the Common Stock or the Voting Power of
the Company, but excluding for this purpose: (A) any
acquisition by the Company (or a Subsidiary of the Company),
or an employee benefit plan of the Company; (B) any
acquisition of Common Stock of the Company by management
employees of the Company; (C) any acquisition by a member or
members of the Board who own Common Stock as of the
effective date specified in Section 11 (the "Existing
Shareholders"); or (D) any trusts, partnerships or
corporations controlled by the Existing Shareholders.
(ii) Individuals who constitute the Board on the date
immediately after the effective date set forth in Section 11
(the "Incumbent Board") cease to constitute at least a
majority of the Board, provided that any director whose
nomination was approved by a majority of the Incumbent Board
shall be considered a member of the Incumbent Board unless
such individual's initial assumption of office is in
connection with an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Act).
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, in
which the owners of more than 50% of the Common Stock or
Voting Power of the Company do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of the Common Stock or
Voting Power of the corporation resulting from such
reorganization, merger or consolidation.
(iv) A complete liquidation or dissolution of the
Company or a sale or other disposition of all or
substantially all of the Company's assets.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means the Compensation Committee of the Board,
provided that each member of the Compensation Committee
qualifies as an outside director for purposes of Code
section 162(m), a non-employee director for purposes of Rule
16b-3 and an independent director for purposes of the
listing standards of the NASDAQ or securities exchange on
which the Common Stock may be listed.
(g) "COMMON STOCK" means common stock of IGENE Biotechnology,
Inc., par value $.01 per share. In the event of a change in
the capital structure of IGENE Biotechnology, Inc. (as
provided in Section 13), the shares resulting from such a
change shall be deemed to be Common Stock within the meaning
of the Plan.
(h) "COMPANY" means IGENE Biotechnology, Inc. and, as the
context requires, its Subsidiaries.
(i) "DATE OF GRANT" means (i) with respect to a Nonstatutory
Stock Option, the date on which the Committee completes the
corporate action necessary to create a legally binding right
constituting the Nonstatutory Option; or (ii) with respect
to an Incentive Stock Option, the date on which the
Committee completes the corporate action constituting an
offer of stock for sale to an employee under the terms and
conditions of the Incentive Stock Option; and (iii) with
respect to Restricted Stock, the date on which the Board
grants the Incentive Award. With respect to an Incentive
Award, the Committee may specify a future date on which the
grant is to be granted or become effective.
(j) "DISABILITY" or "DISABLED" means, as to an Incentive Stock
Option, a disability within the meaning of Code section
22(e)(3). As to all other Incentive Awards, the Board shall
determine whether a Disability exists and such determination
shall be conclusive.
(k) "FAIR MARKET VALUE" means, as of any date, the value of a
share of Common Stock, determined as follows:
(i) if such Common Stock is then quoted on the NASDAQ
National Market, its closing price on the NASDAQ National
Market on the date of determination, as reported in The Wall
Street Journal;
(ii) if such Common Stock is then listed on a national
securities exchange, its closing price on the date of
determination on the principal national securities exchange
on which the Common Stock is listed or admitted to trading,
as reported in The Wall Street Journal;
(iii) if such Common Stock is not quoted on the NASDAQ
National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid
and asked prices on the date of determination, as reported
in The Wall Street Journal or by such other source as the
Board may determine to be reliable;
(iv) if none of the foregoing is applicable, by the
Board using the reasonable application of a reasonable
valuation method.
(l) "INCENTIVE AWARD" means, collectively, an award of
Restricted Stock, an Option, or a Stock Appreciation Right
granted under the Plan.
(m) "INCENTIVE STOCK OPTION" means an Option intended to meet
the requirements of, and qualify for favorable federal
income tax treatment under, Code section 422.
(n) "MATURE SHARES" means shares of Common Stock for which the
holder thereof has good title, free and clear of all liens
and encumbrances and which such holder either (i) has held
for at least six months, or (ii) has purchased on the open
market.
(o) "NONSTATUTORY STOCK OPTION" means an Option that does not
meet the requirements of Code section 422, or, even if
meeting the requirements of Code section 422, is not
intended to be an Incentive Stock Option and is so
designated.
(p) "OPTION" means a right to purchase Common Stock granted
under the Plan, at a price determined in accordance with the
Plan.
(q) "PARTICIPANT" means any employee of the Company who receives
an Incentive Award under the Plan.
(r) "RESTRICTED STOCK" means Common Stock awarded upon the terms
and subject to the restrictions set forth in Section 10.
(s) "RULE 16B-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the
Plan to Rule 16b-3 shall include a reference to any
corresponding rule (or number redesignation) of any
amendments to Rule 16b-3 enacted after the effective date of
the Plan's adoption.
(t) "STOCK APPRECIATION RIGHT" means a right to receive amounts
from the Company granted under Section 7.
(u) "SUBSIDIARY" means (i) for purposes of determining
eligibility to receive a Nonstatutory Stock Option, any
corporation or other entity in a chain of corporations or
other entities in which each corporation or other entity has
a controlling interest (within the meaning of Treasury
Regulations section 1.409A-1(b)(5)(E)(1)) in another
corporation or other entity in the chain, beginning with the
corporation or other entity in which the Company has a
controlling interest; and (ii) for all other purposes, any
corporation of which the Company owns at least 50 percent of
the combined voting power of all classes of stock or which
is in a chain of corporations with the Company in which
stock possessing at least 50% of the combined voting power
of all classes of stock is owned by one or more corporations
in the chain.
(v) "TAXABLE YEAR" means the fiscal period used by the Company
for reporting taxes on income under the Code.
3. GENERAL.
The following types of Incentive Awards may be granted under
the Plan: Options (Incentive Stock Options or Nonstatutory Stock
Options), Stock Appreciation Rights or Restricted Stock.
4. STOCK.
Subject to Section 13 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of Three Hundred Million
(300,000,000) shares of Common Stock, which shall be authorized,
but unissued, shares. Shares allocable to Incentive Awards or
portions thereof granted under the Plan that expire, are
forfeited, or otherwise terminate unexercised may again be
subjected to an Incentive Award under the Plan. The Board is
expressly authorized to grant an Incentive Award to a Participant
conditioned upon the surrender for cancellation of Incentive
Awards previously granted to such Participant. No more than
Thirty Million (30,000,000) shares of Common Stock may be
allocated to the Options or Stock Appreciation Rights that are
granted to any individual Participant who is an employee during
any single Taxable Year. For purposes of determining the number
of shares that are available for Incentive Awards under the Plan,
such number shall include the number of shares under an Incentive
Award surrendered by a Participant or retained by the Company in
payment of Applicable Withholding Taxes. All the shares of
Common Stock that may be issued under the Plan may be issued as
Incentive Stock Options.
5. ELIGIBILITY.
(a) All present and future employees of the Company whom the
Board determines to have contributed or who can be expected
to contribute significantly to the Company shall be eligible
to receive Incentive Awards under the Plan. The Board shall
have the power and complete discretion, as provided in
Section 14, to select eligible employees to receive
Incentive Awards, and to determine for each employee the
terms and conditions, the nature of the award, and the
number of shares to be allocated to each employee as part of
each Incentive Award.
(b) The grant of an Incentive Award shall not obligate the Board
to pay an employee any particular amount of remuneration, to
continue the employment of the employee after the grant or
to make further grants to the employee at any time
thereafter.
6. OPTIONS.
(a) The Board may make grants of Options to eligible employees
hereunder. Whenever the Board deems it appropriate to grant
Options, written notice shall be given to the Participant
stating the number of shares for which Options are granted,
the Option price per share, whether the Options are
Incentive Stock Options or Nonstatutory Stock Options, the
extent to which Stock Appreciation Rights are granted (as
provided in Section 7), and the conditions to which the
grant and exercise of the Options are subject. This notice,
when duly accepted in writing by the Participant, shall
become a stock option agreement. The Board may delegate to
the Executive Committee of the Company's officers the
authority to select eligible employees to receive Options,
to determine the time or times at which Options will be
awarded to eligible employees and to determine the terms and
conditions of such Options, except to the extent that such a
delegation would prevent compliance with Rule 16b-3, Code
section 162(m) or any other section of the Code, or other
applicable law or regulation. Actions taken by the Executive
Committee of the Company's officers pursuant to such a
delegation of authority shall be subject to ratification by
the Board. In the event that the Executive Committee ceases
to exist, the delegation described above may be made to the
President of the Company.
(b) The exercise price of shares of Common Stock covered by an
Option shall be not less than 100% of the Fair Market Value
of such Common Stock on the Date of Grant (or 110% of Fair
Market Value in the case of a grant of an Incentive Stock
Option to a 10% shareholder (as that term is defined in Code
section 422)).
(c) Options may be exercised in whole or in part at such times
as may be specified by the Board in the Participant's stock
option agreement; provided that, the exercise provisions for
Incentive Stock Options shall in all events not be more
liberal than the following provisions:
(i) No Incentive Stock Option may be exercised after
the first to occur of (x) ten years from the Date of Grant
(or five years from the Date of Grant in the case of a grant
of an Incentive Stock Option to a 10% shareholder (as that
term is defined in Code section 422), (y) three months
following the date of the Participant's retirement or
termination of employment with the Company and all its
Subsidiaries for reasons other than Disability or death, or
(z) one year following the date of the Participant's
termination of employment on account of Disability or death
(or, if the Participant dies following termination of
employment during the time when the Incentive Stock Option
is otherwise exercisable, one year from the date of death).
(ii) An Incentive Stock Option by its terms, shall be
exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined at the Date of
Grant) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time during the
calendar year does not exceed $100,000 (the "Limitation
Amount"). Incentive Stock Options granted under the Plan and
all other plans of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has
been exceeded. The Board may impose such conditions as it
deems appropriate on an Incentive Stock Option to ensure
that the foregoing requirement is met. If Incentive Stock
Options that first become exercisable in a calendar year
exceed the Limitation Amount, the excess Options will be
treated as Nonstatutory Stock Options to the extent
permitted by law.
(d) The Board may impose such vesting conditions and other
requirements as the Board deems appropriate, and the Board
may include such provisions regarding Change of Control as
the Board deems appropriate.
7. STOCK APPRECIATION RIGHTS.
(a) Whenever the Board deems it appropriate, Stock Appreciation
Rights may be granted to an eligible employee. Stock
Appreciation Rights may be granted in connection with all or
any part of an Option or in a separate Incentive Award.
(b) The following provisions apply to all Stock Appreciation
Rights that are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the
Participant, upon exercise of all or any part of the Stock
Appreciation Rights, to surrender to the Company unexercised
that portion of the underlying Option relating to the same
number of shares of Common Stock as is covered by the Stock
Appreciation Rights (or the portion of the Stock
Appreciation Rights so exercised) and to receive in exchange
from the Company an amount equal to the excess of (x) the
Fair Market Value on the date of exercise of the Common
Stock covered by the surrendered portion of the underlying
Option, over (y) the exercise price of the Common Stock
covered by the surrendered portion of the underlying Option.
The Board may limit the amount that the Participant will be
entitled to receive upon exercise of Stock Appreciation
Rights.
(ii) Upon the exercise of a Stock Appreciation Right
and surrender of the related portion of the underlying
Option, the Option, to the extent surrendered, shall not
thereafter be exercisable.
(iii) Subject to any further conditions upon exercise
imposed by the Board, a Stock Appreciation Right shall be
exercisable only to the extent that the related Option is
exercisable and a Stock Appreciation Right shall expire no
later than the date on which the related Option expires.
(iv) A Stock Appreciation Right may only be exercised
at a time when the Fair Market Value of the Common Stock
covered by the Stock Appreciation Right exceeds the exercise
price of the Common Stock covered by the underlying Option.
(c) The following provisions apply to all Stock Appreciation
Rights that are not granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the
Participant, upon exercise of all or any part of the Stock
Appreciation Rights, to receive in exchange from the Company
an amount equal to the excess of (x) the Fair Market Value
on the date of exercise of the Common Stock covered by the
surrendered Stock Appreciation Right, over (y) the Fair
Market Value of the Common Stock on the Date of Grant of the
Stock Appreciation Right. The Board may limit the amount
that the Participant will be entitled to receive upon
exercise of Stock Appreciation Rights.
(ii) A Stock Appreciation Right may only be exercised
at a time when the Fair Market Value of the Common Stock
covered by the Stock Appreciation Right exceeds the Fair
Market Value of the Common Stock on the Date of Grant of the
Stock Appreciation Right.
(d) The manner in which the Company's obligation arising upon
the exercise of a Stock Appreciation Right shall be paid
shall be determined by the Board and shall be set forth in
the Incentive Award. The Incentive Award may provide for
payment in Common Stock or cash, or a fixed combination of
Common Stock or cash, or the Board may reserve the right to
determine the manner of payment at the time the Stock
Appreciation Right is exercised. Shares of Common Stock
issued upon the exercise of a Stock Appreciation Right shall
be valued at their Fair Market Value on the date of
exercise.
(e) Stock Appreciation Rights shall be evidenced by a written
agreement in such form as the Board shall from time to time
approve and as shall be consistent with the terms of the
Plan.
8. METHOD OF EXERCISE OF OPTIONS AND STOCK APPRECIATION
RIGHTS.
(a) Options and Stock Appreciation Rights may be exercised by
the Participant giving written notice of the exercise to the
Company, stating the number of shares the Participant has
elected to purchase under the Option or the number of Stock
Appreciation Rights the Participant has elected to exercise.
In the case of the purchase of shares under an Option, such
notice shall be effective only if accompanied by the
exercise price in full in cash; provided, however, that if
the terms of an Option so permit, the Participant may (i)
deliver Mature Shares (valued at their Fair Market Value) in
satisfaction of all or any part of the exercise price, or
(ii) deliver a properly executed exercise notice together
with irrevocable instructions to a broker to deliver
promptly to the Company, from the sale or loan proceeds with
respect to the sale of Common Stock or a loan secured by
Common Stock, the amount necessary to pay the exercise price
and, if required by the terms of the Option, Applicable
Withholding Taxes.
(b) The Company may place on any certificate representing Common
Stock issued upon the exercise of an Option or a Stock
Appreciation Right any legend deemed desirable by the
Company's counsel to comply with federal or state securities
laws, and the Company may require a customary written
indication of the Participant's investment intent. Until the
Participant has made any required payment, including any
Applicable Withholding Taxes, and has had issued a
certificate for the shares of Common Stock acquired, he or
she shall possess no shareholder rights with respect to the
shares.
(c) Each Participant shall agree as a condition of the exercise
of an Option or a Stock Appreciation Right to pay to the
Company, or make arrangements satisfactory to the Company
regarding the payment to the Company of, Applicable
Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Company have been made, no
stock certificate shall be issued upon the exercise of an
Option or cash paid upon the exercise of a Stock
Appreciation Right.
(d) As an alternative to making a cash payment to the Company to
satisfy Applicable Withholding Taxes, if the Participant's
Option agreement so provides, the Participant may elect to
(i) deliver Mature Shares (valued at their Fair Market
Value) or (ii) to have the Company retain that number of
shares of Common Stock (valued at their Fair Market Value)
that would satisfy all or a specified portion of the
Applicable Withholding Taxes.
9. TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS.
Nonstatutory Stock Options and Stock Appreciation Rights may be
transferable by a Participant and exercisable by a person other
than the Participant, but only to the extent specifically
provided in the Incentive Award agreement. Incentive Stock
Options, by their terms, shall not be transferable except by will
or by the laws of descent and distribution and shall be
exercisable, during the Participant's lifetime, only by the
Participant.
10. RESTRICTED STOCK AWARDS.
(a) The Board may make grants of Restricted Stock to eligible
employees. Whenever the Board deems it appropriate to grant
Restricted Stock, written notice shall be given to the
Participant stating the number of shares of Restricted Stock
granted and the terms and conditions to which the Restricted
Stock is subject. This notice, when accepted in writing by
the Participant shall become a grant agreement between the
Company and the Participant. Restricted Stock may be awarded
by the Board in its discretion without cash consideration.
(b) No shares of Restricted Stock may be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered
or disposed of until the restrictions on such shares as set
forth in the Participant's grant agreement have lapsed or
been removed pursuant to paragraph (d) or (e) below.
(c) Upon the acceptance by a Participant of an award of
Restricted Stock, such Participant shall, subject to the
restrictions set forth in paragraph (b) above, have all the
rights of a shareholder with respect to such shares of
Restricted Stock, including, but not limited to, the right
to vote such shares of Restricted Stock and the right to
receive all dividends and other distributions paid thereon.
Certificates representing Restricted Stock shall be issued
to the Participant but shall bear a legend referring to the
restrictions set forth in the Plan and the Participant's
award agreement.
(d) The Board shall establish as to each award of Restricted
Stock the terms and conditions upon which the restrictions
set forth in paragraph (b) above shall lapse. The terms and
conditions may include, without limitation, the lapsing of
such restrictions as a result of the Disability, death or
retirement of the Participant or the occurrence of a Change
of Control.
(e) Notwithstanding the provisions of paragraph (b) above, the
Board may at any time, in its sole discretion, accelerate
the time at which any or all restrictions will lapse or
remove any and all such restrictions.
(f) Each Participant shall agree at the time the Restricted
Stock is granted, and as a condition thereof, to pay to the
Company, or make arrangements satisfactory to the Company
regarding the payment to the Company of, Applicable
Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made,
no stock certificate free of a legend reflecting the
restrictions set forth in paragraph (b) above shall be
issued to such Participant. As an alternative to making
a cash payment to the Company to satisfy Applicable
Withholding Taxes, if the grant so provides, the Participant
may elect to (i) to deliver Mature Shares (valued at their
Fair Market Value) or (ii) to have the Company retain that
number of shares of Common Stock (valued at their Fair
Market Value) that would satisfy all or a specified portion
of the Applicable Withholding Taxes.
11. EFFECTIVE DATE OF THE PLAN.
The original effective date of the Plan was April 30, 2001.
The effective date of the Plan (as amended and restated herein)
is September 12, 2008 (the "Amended and Restated Effective
Date"). The Plan (as amended and restated herein) shall be
submitted to the shareholders of the Company for approval. Until
(i) the Plan (as amended and restated herein) has been approved
by Company's shareholders, and (ii) the requirements of any
applicable Federal or State securities laws have been met, no
Option or Stock Appreciation Right granted under the Plan on or
after the Amended and Restated Effective Date shall be
exercisable.
12. TERMINATION, MODIFICATION, CHANGE
(a) If not sooner terminated by the Board, this Plan shall
terminate at the close of business on April 30, 2011. No
Options or Restricted Stock shall be granted under the Plan
after its termination. The Board may amend or terminate the
Plan in such respects as it shall deem advisable; provided
that, if and to the extent required by the Code, no change
shall be made that increases the total number of shares of
Common Stock reserved for issuance pursuant to Incentive
Awards granted under the Plan (except pursuant to Section
13), materially modifies the requirements as to eligibility
for participation in the Plan, or materially increases the
benefits accruing to Participants under the Plan, unless
such change is authorized by the shareholders of the
Company. Notwithstanding the foregoing, the Board may amend
the Plan and unilaterally amend Incentive Awards as it deems
appropriate to ensure compliance with applicable federal
or state securities laws or regulations thereunder, or any
applicable NASDAQ or securities exchange listing
requirement, and to cause Incentive Stock Options to meet
the requirements of the Code and regulations thereunder.
Except as provided in the preceding sentence, a termination
or amendment of the Plan shall not, without the consent of
the Participant, detrimentally affect a Participant's rights
under an Incentive Award previously granted to the
Participant.
(b) Notwithstanding the provisions of subsection (a) above, this
subsection (b) will apply if the Company is involved in any
merger or similar transaction that the Company intends to
treat as a "pooling of interest" for financial reporting
purposes. In such a case, the Board may amend the terms of
any Incentive Award or of the Plan to the extent that the
Company's independent accountants determine that such terms
would preclude the use of "pooling of interest" accounting.
The authority of the Board to amend the terms of any
Incentive Award or of the Plan includes, without limitation,
the right (i) to rescind or suspend any terms that are
contingent on a Change in Control, such as the acceleration
of vesting or provisions for special payments to an optionee
or participant; (ii) to modify Incentive Awards to comply
with prior practices of the Company as to terms of Incentive
Awards; (iii) to provide for payment to the Participant of
Common Stock or stock of the other party to the transaction
equal to the fair value of the Incentive Award; and (iv) to
suspend any provisions for payment of an Incentive Award in
cash. The authority of the Board under this section may be
exercised in the Board's sole and complete discretion.
(c) No modification (within the meaning of Section 424(h)(3) of
the Code) shall be made with respect to any Incentive Stock
Option without the Participant's consent. No modification
(within the meaning of Section 1.409A-1(b)(5)(v)(B) of the
Treasury Regulations) shall be made with respect to any
Nonstatutory Option or Stock Appreciation Right if such
modification would result in the Option constituting a
deferral of compensation, and no extension (within the
meaning of Section 1.409A-1(b)(5)(v)(C) of the Treasury
Regulations) shall be made with respect to any Nonstatutory
Stock Option if such extension would result in the Option
having an additional deferral feature from the Date of
Grant, in each case without the Participant's consent.
13. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or combination
of shares, recapitalization or merger in which the Company
is the surviving corporation or other change in the
Company's capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights,
options or warrants for the purchase of common stock or
preferred stock of the Company), the number and kind of
shares of stock or securities of the Company to be subject
to the Plan and to Incentive Awards then outstanding or to
be granted thereunder, the maximum number of shares or
securities which may be delivered under the Plan, the
maximum number of shares or securities that can be granted
to an individual Participant under Section 4, the exercise
price, the terms of Incentive Awards and other relevant
provisions shall be proportionately adjusted by the Board,
whose determination shall be binding on all persons. If
the adjustment would produce fractional shares or fractional
cents with respect to any unexercised Option or its exercise
price, the Board shall decrease the number of shares covered
by the Option so as to eliminate the fractional shares and
shall increase the fractional cent so as to eliminate the
fractional cent.
(b) If the Company is a party to a consolidation or a merger in
which the Company is not the surviving corporation, a
transaction that results in the acquisition of substantially
all of the Company's outstanding stock by a single person or
entity, or a sale or transfer of substantially all of the
Company's assets, the Board may take such actions with
respect to outstanding Incentive Awards as the Board deems
appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the
Board may take the foregoing actions without the consent of
any Participant, and the Board's determination shall be
conclusive and binding on all persons for all purposes.
14. ADMINISTRATION OF THE PLAN.
(a) Subject to the provisions of Section 16(b) of the Act and
Rule 16b-3, the Plan shall be administered by the Board. The
Board shall have general authority to impose any limitation
or condition upon an Incentive Award that the Board deems
appropriate to achieve the objectives of the Incentive Award
and the Plan and, without limitation and in addition to
powers set forth elsewhere in the Plan, shall have the power
and complete discretion to determine: (i) which eligible
employees shall receive Incentive Awards and the nature of
each Incentive Award, (ii) whether all or any part of an
Incentive Award shall be accelerated upon a Change of
Control, (iii) the number of shares of Common Stock to be
covered by each Incentive Award, (iv) whether Options shall
be Incentive Stock Options or Nonstatutory Stock Options,
(v) when, whether and to what extent Stock Appreciation
Rights shall be granted, (vi) the time or times when an
Incentive Award shall be granted, (vii) whether an Incentive
Award shall become vested over a period of time and when it
shall be fully vested, (viii) when Options and Stock
Appreciation Rights may be exercised, (ix) whether a
Disability exists and whether a Participant that cannot be
located shall be treated as having died, (x) the manner in
which payment will be made upon the exercise of Options or
Stock Appreciation Rights, (xi) conditions relating to the
length of time before disposition of Common Stock received
upon the exercise of Options or Stock Appreciation Rights is
permitted, (xii) whether to authorize a Participant (A) to
deliver Mature Shares to satisfy Applicable Withholding
Taxes or (B) to have the Company withhold from the shares to
be issued upon the exercise of a Nonstatutory Stock Option
or Stock Appreciation Right the number of shares necessary
to satisfy Applicable Withholding Taxes, (xiii) the terms
and conditions applicable to Restricted Stock awards, (xiv)
the terms and conditions on which restrictions upon
Restricted Stock shall lapse, (xv) whether to accelerate the
time at which any or all restrictions with respect to
Restricted Stock will lapse or be removed, (xvi) notice
provisions relating to the sale of Common Stock acquired
under the Plan, (xvii) the extent to which information shall
be provided to Participants about available tax elections,
(xviii) when Incentive Awards may be forfeited or expire,
and (xix) any additional requirements relating to Incentive
Awards that the Board deems appropriate. Notwithstanding the
foregoing, no "tandem stock options" (where two stock
options are issued together and the exercise of one option
affects the right to exercise the other option) may be
issued in connection with Incentive Stock Options. The Board
shall have the power to amend the terms of previously
granted Incentive Awards that were granted by the Board so
long as the terms as amended are consistent with the terms
of the Plan and provided that the consent of the Participant
is obtained with respect to any amendment that would be
detrimental to him or her, except that such consent will not
be required if such amendment is for the purpose of
complying with Rule 16b-3 or any requirement of the Code
applicable to the Incentive Award.
(b) The Board may adopt rules and regulations for carrying out
the Plan with respect to Participants. The interpretation
and construction of any provision of the Plan by the Board
shall be final and conclusive as to any Participant. The
Board may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Board shall constitute a
quorum, and all actions of the Board shall be taken by a
majority of the members present. Any action may be taken by
a written instrument signed by all of the members, and any
action so taken shall be fully effective as if it had been
taken at a meeting.
(d) Subject to the provisions of Section 16(b) of the Act and
Rule 16b-3 and the Maryland General Corporation Law, the
Board may delegate its rights, duties and other
responsibilities hereunder to the Committee, in which case a
majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action by the Committee
may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully effective as
if it had been taken at a meeting. The Board from time to
time may appoint members previously appointed and may fill
vacancies, however caused, in the Committee. The Committee
shall have, in connection with the administration of the
Plan, the powers possessed by the Board, including the power
to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise, subject,
however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time
by the Board.
15. NOTICE.
All notices and other communications required or permitted
to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed
first class, postage prepaid, as follows (a) if to the Company -
at the principal business address of the Company to the attention
of the President of the Company; and (b) if to any Participant -
at the last address of the Participant known to the sender at the
time the notice or other communication is sent.
16. SHAREHOLDER RIGHTS.
No Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares
of Common Stock subject to an Option unless and until such
Participant has exercised the Option and satisfied all
requirements under the terms of the Option. A Participant
holding shares of Restricted Stock shall be a shareholder of the
Company with respect to such shares for all purposes, including
dividend and voting rights, subject to the terms of the
Restricted Stock award.
17. NO EMPLOYMENT OR OTHER SERVICE RIGHTS
Nothing in the Plan or any instrument executed or Incentive
Award granted under the Plan shall confer upon any Participant
any right to continue to serve the Company in the capacity in
effect at the time the Incentive Award was granted or shall
affect the right of the Company to terminate the employment of an
employee with or without notice and with or without cause.
18. INTERPRETATION.
The terms of this Plan shall be governed by the laws of the
State of Maryland, without regard to the conflict of law
provisions of any jurisdiction. The terms of this Plan are
subject to all present and future regulations and rulings of the
Secretary of the Treasury or his delegate relating to the
qualification of Incentive Stock Options under the Code. If any
provision of the Plan conflicts with any such regulation or
ruling, then that provision of the Plan shall be void and of no
effect.
19. SECURITIES LAW COMPLIANCE. If at any time counsel to
the Company shall be of the opinion that any sale or delivery of
Common Stock pursuant to an Incentive Award is or may be in the
circumstances unlawful or result in the imposition of excise
taxes on the Company or any Subsidiary under the statutes, rules
or regulations of any applicable jurisdiction, the Company shall
have no obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or
registration under the Federal securities laws or otherwise with
respect to Common Stock, and the right to exercise any Option
shall be suspended until, in the opinion of such counsel, such
sale or delivery shall be lawful or will not result in the
imposition of excise taxes on the Company or any Subsidiary.
Upon termination of any period of suspension under this Section
19, any Option affected by such suspension which shall not then
have expired or terminated shall be reinstated as to all shares
available before such suspension and as to the shares which would
otherwise have become available during the period of such
suspension, but no suspension shall extend the term of any
Option.
APPENDIX II
IGENE BIOTECHNOLOGY, INC.
AUDIT COMMITTEE CHARTER
1. PURPOSE. The primary function of the Audit Committee (the
"Committee") of Igene Biotechnology, Inc. (the "Company") is
to monitor management's and the independent auditor's
participation in the financial reporting process and to
otherwise review and evaluate the audit efforts and
independence of the independent accountants.
2. COMPOSITION.
A. The Committee shall be comprised of three or more
independent directors as determined by the Company's
Board of Directors (the "Board").
B. Each member of the Committee shall be, in the opinion
of the Board, financially literate, and at least one
member must have accounting or related financial
management expertise. No member of the Committee shall
have any relationship to the Company that might
interfere with such member's independence from the
Company and its management. In addition, the following
restrictions shall apply to every member of the
Committee:
(i) No individual who is either an employee or
executive officer of the Company or any of its
affiliates (or an immediate family member of an
employee or executive officer of the Company) may
serve on the Committee until at least three (3)
years following the termination of such person's
employment; and
(ii) No individual who either is a partner, controlling
shareholder, or executive officer of an
organization that has a business relationship with
the Company or who has a direct business
relationship with the Company may serve on the
Committee unless the Board determines that the
relationship does not interfere with the exercise
of such member's independent judgment; provided,
however, that the Board need not make such
determination if at least three (3) years have
elapsed since the termination of such
disqualifying relationship; and
(iii) No individual may serve on the Committee if
such person is employed as an executive of another
corporation whose compensation committee includes
any of the executive officers of the Company.
C. The members of the Committee shall be subject to such
further or different restrictions and requirements for
qualification as may be required from time to time by
the Securities and Exchange Commission and any stock
exchange which lists the Company's securities.
D. The members of the Committee shall be elected by the
Board at the annual meeting of the Board or until their
successors shall be duly elected and qualified. Term
of membership of the Committee is at the discretion of
the Board, but maintenance of continuity while bringing
a fresh perspective is to be considered. Unless a
Chair is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the
full membership.
3. MEETINGS. The Committee shall meet at least twice annually,
or more frequently as circumstances dictate.
4. RESPONSIBILITIES AND DUTIES. To fulfill its
responsibilities and duties the Committee shall:
A. Documents/Report Review
(i) Review and update this Charter periodically, at
least annually, as conditions dictate.
(ii) Cause the Company's independent accountants to
review, prior to filing, any interim financial
statements of the Company to be included in its
quarterly reports on Form 10-Q.
(iii) Discuss with management any significant issues
raised by the independent accountants with
respect to the quality of the Company's accounting
principles and financial reporting processes.
(iv) Prepare and submit an audit committee report
to be set forth in the Company's proxy statement
which sets forth whether:
(a) the Committee has reviewed and discussed the
Company's audited financial statements with
management;
(b) the Committee has discussed with its
independent accountants the matters required
to be discussed by SAS 61; and
(c) the Committee has received written
disclosures and a letter from its independent
accountants required by ISB Standard No. 1
and has discussed with its accountants the
accountants' independence; and
(d) the Committee's recommendation to the
Company's Board that the audited financial
statements be included in the Company's
annual report on Form 10-K.
(v) Cause the Company to disclose in its proxy
statement whether the Committee members are
independent, the standard used in making such
determination, and disclosure of information
regarding any member of the Committee who is not
independent.
B. Independent Accountants.
(i) Have the authority and responsibility with the
Board for the selection and evaluation of the
Company's independent accountants and the
selection and appointment of their successors. The
Company's independent accountants ultimately shall
be accountable to the Committee and the Board.
(ii) Recommend to the Board the selection of the
independent accountants. The Committee shall
require the Company's independent accountants to
prepare and submit to the Committee on a periodic
basis a formal written statement delineating all
relationships or services between said independent
accountants and the Company. The Committee shall
review and discus all relationships disclosed by
the Company's independent accountants which may
impact upon their objectivity and independence and
shall be responsible for recommending to the
Company's Board any appropriate action to ensure
the independence of such accountants.
(iii) Review the performance of the independent
accountants and approve any proposed discharge of
the independent accountants when circumstances
warrant.
C. Ethical and Legal Compliance.
(i) Perform any other activities consistent with this
Charter, the Company's Bylaws and governing law as
the Committee or the Board deem necessary or
appropriate.
(ii) Cause the Company to provide each exchange on
which any of the Company's securities are listed,
if any, on at least an annual basis and with
respect to any changes to the composition of the
Committee, with written confirmation regarding:
(a) any determination made the Company's Board
concerning the independence of its auditors;
(b) the financial literacy of the Committee
members;
(c) the determination that at least one
member of the Committee has accounting or
related financial management expertise; and
(d) the annual review and reassessment of the
adequacy of this Charter;
(iii) Cause the Company to disclose in its
proxy statements whether the Committee has
adopted and the Board has approved a written
charter for the Committee and, if applicable,
include a copy of such charter a an appendix to
the company's proxy statement at least once every
three years.
The foregoing Charter of the Audit Committee of the
Board of Directors of Igene Biotechnology, Inc., a Maryland
corporation, was adopted by the Audit Committee on the 1st day of
February, 2001, and approved by the Board of Directors of said
corporation on the 1st day of February, 2001.
Igene Biotechnology, Inc.
By: /S/ MICHAEL G. KIMELMAN
-------------------------------
MICHAEL G. KIMELMAN
Secretary
APPENDIX III
FORM OF PROXY
IGENE BIOTECHNOLOGY, INC.
2008 Annual Meeting of Stockholders - November 3, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of IGENE BIOTECHNOLOGY, INC., a
Maryland corporation, hereby appoints Stephen F. Hiu, Michael G.
Kimelman and Thomas L. Kempner, and each of them the proxies of
the undersigned with full power of substitution to vote at the
2008 Annual Meeting of Stockholders of the Company to be held at
10:00 a.m. on November 3, 2008, and at any adjournment or
adjournments thereof (the "Meeting"), with all the power which
the undersigned would have if personally present, hereby revoking
any proxy heretofore given. The undersigned hereby acknowledges
receipt of the proxy statement for the Meeting and instructs the
proxies to vote as directed on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL
PROPOSALS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE--SEE REVERSE
SIDE. THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL PROPOSALS, AND IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE MEETING.
(To Be Signed on Reverse Side)
X Please mark your votes as in this example.
1. Election of Directors
FOR WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees listed below
_______________ _______________
Nominees: Stephen F. Hiu, Thomas L. Kempner, Michael G.
Kimelman, Sidney R. Knafel, Patrick F. Monahan
(Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name below)
_______________________________________
2. To authorize and approve an amendment to the Articles of
Incorporation of the Company to increase the number of
authorized shares of common stock from 750,000,000 to
3,000,000,000 shares.
FOR AGAINST ABSTAIN
__________ __________ __________
3. To authorize and amend the Company's 2001 Stock Incentive
Plan to increase the number of shares available under the
Plan from 55,000,000 to 300,000,000.
FOR WITHHOLD ABSTAIN
__________ __________ __________
4. To transact such other business as may properly come before
the meeting, or any adjournment thereof.
PLEASE RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature: ________________________ Date: _____________
Signature: ________________________ Date: _____________
(SIGNATURE IF HELD JOINTLY)
Note: Please sign exactly as name appears on stock certificate.
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. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partner, please sign in partnership
name by authorized person.