SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CALYPTE BIOMEDICAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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and 0-11.
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[CALYPTE BIOMEDICAL LOGO]
1265 HARBOR BAY PARKWAY
ALAMEDA, CALIFORNIA 94502
May 12, 2000
Dear Stockholder:
You are cordially invited to attend Calypte Biomedical Corporation's Annual
Meeting of Stockholders on Tuesday, June 13, 2000. The meeting will begin
promptly at 9:00 a.m. local time, in the Pacific Room (Building 4) at the
Oakland Airport Hilton, located at 1 Hegenberger Road, Oakland, California
94621.
The official Notice of Annual Meeting of Stockholders, Proxy Statement, form
of proxy and 1999 Annual Report to Stockholders are included with this letter.
The matters listed in the Notice of Annual Meeting of Stockholders are described
in detail in the Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual
meeting, I urge you to complete, sign and date the enclosed proxy card and
return it in the accompanying envelope as soon as possible so that your stock
may be represented at the meeting.
Sincerely,
/s/ NANCY E. KATZ
Nancy E. Katz
PRESIDENT, CHIEF OPERATING OFFICER AND
CHIEF FINANCIAL OFFICER
[CALYPTE BIOMEDICAL LOGO]
1265 HARBOR BAY PARKWAY
ALAMEDA, CALIFORNIA 94502
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 2000
------------------------
May , 2000
The 2000 Annual Meeting of Stockholders of Calypte Biomedical Corporation
(the "Company") will be held in the Pacific Room (Building 4) of the Oakland
Airport Hilton, 1 Hegenberger Road, Oakland California 94621, on Tuesday
June 13, 2000, at 9:00 a.m. local time, for the following purposes:
1. To elect ten directors of the Company to hold office until the next
Annual Meeting of Stockholders and until their successors are elected and
qualified;
2. To amend the Company's Restated Certificate of Incorporation to effect
an increase in the number of authorized shares of the Company's Common
Stock from 30,000,000 to 50,000,000;
3. To vote on the proposed adoption of the 2000 Equity Incentive Plan
(Appendix A hereto) and to authorize 4,000,000 shares of Common Stock to
be issued thereunder;
4. To vote on a proposed amendment to the 1995 Director Option Plan to
(i) increase by 500,000 the number of shares of Common Stock reserved for
issuance thereunder; and (ii) to revise certain restrictions on the Board
of Directors of Calypte in order to increase their flexibility in
determining awards to be granted to non-employee directors.
5. To ratify the appointment by the Board of Directors of KPMG LLP as
independent auditors to audit the financial statements of the Company and
its consolidated subsidiaries for the fiscal year ending December 31,
2000; and
6. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record on May 5, 2000 will be eligible to vote at this
meeting. Only stockholders of record at the close of business on such date will
be entitled to notice of and to vote at the meeting. To ensure your
representation at the meeting, you are urged to mark, sign, date and return the
enclosed proxy as promptly as possible in the envelope enclosed for that
purpose. If you attend the meeting, you may vote in person even if you return a
proxy.
By order of the Board of Directors,
/s/ NANCY E. KATZ
Nancy E. Katz
PRESIDENT, CHIEF OPERATING OFFICER AND
CHIEF FINANCIAL OFFICER
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THE
PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
[LOGO]
1265 HARBOR BAY PARKWAY
ALAMEDA, CALIFORNIA 94502
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Calypte Biomedical
Corporation ("Calypte" or the "Company") for the Annual Meeting of Stockholders
(the "Annual Meeting"), and any postponements or adjournments thereof, to be
held at the Pacific Room (Building 4) at the Oakland Airport Hilton, 1
Hegenberger Road, Oakland, California 94621, on Tuesday, June 13, 2000, at
9:00 a.m. local time. The Company's principal executive offices are located at
1265 Harbor Bay Parkway, Alameda, California 94502. The telephone number at that
address is (510) 749-5100. Every stockholder shall have the right to vote
whether in person or by one or more agents authorized by a written proxy signed
by the stockholder and filed with the secretary of the Company. The shares
represented by the proxies received, properly dated and executed, and not
revoked will be voted at the Annual Meeting. A proxy may be revoked at any time
before it is exercised by delivering to the Company a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
INFORMATION CONCERNING SOLICITATION AND VOTING
The close of business on May 5, 2000 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock of the
Company, par value $.001 per share ("Common Stock") entitled to notice of and to
vote at the Annual Meeting. As of the close of business on the Record Date, the
Company had [ ,000,000] shares of Common Stock outstanding and entitled to vote
at the Annual Meeting. The holders of a majority of voting power of the Common
Stock issued and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum at the Annual Meeting except as
otherwise provided by statute. Each holder of Common Stock on the Record Date is
entitled to one vote for each share of Common Stock held by such stockholder,
and stockholders shall not be entitled to cumulate their votes in the election
of directors or with respect to any matter submitted to a vote of the
stockholders.
Shares represented by proxies that reflect abstentions or broker non-votes
will be counted as shares that are present and entitled to vote for the purpose
of determining the presence of a quorum. Directors will be elected by a
favorable vote of a plurality of the shares of voting stock present and entitled
to vote, in person or by proxy, at the Annual Meeting. Accordingly, abstentions
or broker non-votes as to the election of directors will not affect the election
of the candidates receiving the plurality of votes. With the exception of
Proposal 2, the Proposed Amendment to the Restated Certificate of Incorporation,
all other proposals to come before the Annual Meeting require the approval of a
majority of the shares of stock present and having voting power. Abstentions as
to a particular proposal will have the same effect as votes against such
proposal. Broker non-votes, however, will be treated as unvoted for purposes of
determining approval of such proposal and will not be counted as votes for or
against such proposal.
As to Proposal 2, the affirmative vote of a majority of the shares of the
Company's Common Stock issued and outstanding as of the Record Date and entitled
to vote is required for approval. Abstentions will be treated as shares that are
present or represented and entitled to vote for the purpose of determining the
presence of a quorum but will not be treated as votes in favor of approval.
Thus, abstentions have the effect of negative votes on the proposal. If no
specific instructions are given in the proxy, the shares will be voted for
approval of Proposal 2. Shares as to which proxy authority has been withheld
with respect to Proposal 2 will not be considered as present or represented with
respect to the proposal and broker non-votes and any other shares for which
proxy authority has been withheld will not be counted for the purpose of
determining a quorum, but will otherwise have the same effect on the matter
submitted herein as a negative vote on the proposal.
This Proxy Statement and the accompanying form of proxy, which is being
solicited by the Company, will be first sent or given to stockholders on or
about May , 2000.
The shares represented by all valid proxies received will be voted in the
manner specified on the proxies. Where specific choices are not indicated, the
shares represented by all valid proxies received will be voted: (1) for the
nominees for director named in the Proxy Statement; (2) for the authorization of
an amendment to the Company's Restated Certificate of Incorporation to effect an
increase in the number of shares of the Company's Common Stock; (3) for the
adoption of the proposed 2000 Incentive Stock Plan; (4) for the proposed
amendment to the 1995 Directors Option Plan; and (5) for ratification of the
appointment of KPMG LLP, as independent auditors.
Should any matter not described above be acted upon at the meeting, the
persons named in the proxy form will vote in accordance with their judgment.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitations may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or facsimile. The Company may also choose to
engage an independent proxy solicitor. In such event, the Company may pay up to
$8,000.00 for such services, otherwise, no additional compensation will be paid
for such solicitation. The Company will request brokers and nominees who hold
stock in their names to furnish proxy material to beneficial owners of the
shares and will reimburse such brokers and nominees for their reasonable
expenses incurred in forwarding solicitation material to such beneficial owners.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the Annual Meeting, ten directors are to be elected to hold office until
the 2001 Annual Meeting. Each director, including a director elected or
appointed to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified. There
are no family relationships among any of the directors or executive officers of
the Company. The nominees listed below are all now Calypte directors. The Board
knows of no reason why any nominee may be unable or unwilling to serve as a
director. If any nominee is unable or unwilling to serve, the shares represented
by all valid proxies will be voted for the election of such other person as the
Board may recommend. The nominees receiving the highest number of affirmative
votes will be elected to the Board.
Certain information relating to each director nominee is set forth below:
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- -------- -------------------- --------
William A. Boeger......... 50 Chairman of the Board of Directors and Secretary,
Calypte Biomedical Corporation 3/91
David Collins............. 65 Chief Executive Officer and Vice Chairman of the
Board of Directors, Calypte Biomedical Corporation 12/95
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DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- -------- -------------------- --------
Nancy E. Katz............. 41 President, Chief Operating Officer and Chief
Financial Officer, Calypte Biomedical Corporation 10/99
Howard B. Urnovitz, 46 Chief Science Officer, Calypte Biomedical
Ph.D...................... Corporation 11/89
Paul Freiman.............. 65 President and Chief Executive Officer,
Neurobiological Technologies, Inc. 12/97
Julius R. Krevans, M.D.... 76 Chancellor Emeritus, Director of International
Medical Care University of California, San
Francisco 3/95
Mark Novitch, M.D......... 68 Adjunct Professor, George Washington University
Medical Center 9/95
Zafar Randawa, Ph.D....... 52 Director of the New Technology Evaluation Division,
Otsuka America Pharmaceutical 12/96
John J. DiPietro.......... 42 Chief Financial Officer and Vice President of
Finance & Administration, Tripath Technology Inc. 10/99
Claudie E. Williams....... 49 Executive Vice President, Mergers and Acquisitions,
Claneil Enterprises, Inc. 4/00
WILLIAM A. BOEGER has served as the Company's Chairman of the Board since
January 1994 and as a director since 1991. He is currently serving as a
consultant to the Company under the terms of an agreement extending through
October 2000. From January 1994 until September 1995, and from September 1997
until October 1999, Mr. Boeger also served as the Company's President and Chief
Executive Officer. He is a founder and Managing General Partner of Quest
Ventures, a venture capital partnership. Prior to entering the venture capital
field, he worked in research at Harvard Medical School and Peter Bent Brigham
Hospital and served on the faculty of the Amos Tuck Business School at Dartmouth
College. Mr. Boeger also serves as a board member of Pepgen Corporation
("Pepgen"), a company in which Calypte has a minority interest. Along with
Dr. Urnovitz, the Company's Chief Science Officer and a board member,
Mr. Boeger has recently announced the formation of Chronix Biomedical, a
commercial company that will focus on novel ways to detect aberrant genes in
individuals with chronic diseases. He serves as President and Chief Financial
Officer of Chronix Biomedical. Mr. Boeger also serves on the Board of Directors
of IRIDEX Corporation, Cell Pathways, Inc., and several private life-sciences
companies and non-profit corporations. Mr. Boeger received his M.B.A. from
Harvard Business School and his B.S. from Williams College.
DAVID E. COLLINS was elected as the Company's Chief Executive Officer in
October 1999. He has served as the Company's Vice Chairman of the Board of
Directors since December 1997, and has been a member of the Board of Directors
since December 1995. From September 1989 until September 1994 he served as
Executive Vice President with Schering-Plough Corporation, a pharmaceutical
company, and President of the Health Care Products division, responsible for all
OTC and consumer health care products. From February 1988 to August 1989, he was
a founding partner of Galen Partners, a venture capital firm. From July 1962 to
February 1988, he held several positions at Johnson & Johnson, including Vice
Chairman of the Board of Directors for Public Affairs & Planning and Vice
Chairman for the Executive Committee & Chairman of the Consumer Sector.
Mr. Collins is also a member of the Board of Directors of Lander, Inc., Advanced
Corneal Systems, Inc., Beansprout Networks, Inc. and Claneil Enterprises, Inc.,
all private companies. Mr. Collins received his L.L.B. at Harvard Law School and
his B.A. at the University of Notre Dame.
NANCY E. KATZ has served as the Company's President, Chief Operating
Officer, Chief Financial Officer and as a member of the Board of Directors since
October 1999. Prior to joining Calypte, Ms. Katz served as President of Zila
Pharm Inc., a prescription and non-prescription oral health care products
company. From 1995 to 1998, Ms. Katz led sales and marketing efforts for
LifeScan, the diabetes testing division of Johnson & Johnson. Ms. Katz also
served as Vice President of U.S. Marketing, directing LifeScan's marketing and
customer call center departments. During her seven-year career at
Schering-Plough
3
Healthcare Products from 1987 to 1994, she held numerous positions including
senior director, and general manager, marketing director, Footcare New Products,
and product director, OTC New Products. Ms. Katz also held various product
management positions at Whitehall Laboratories, a division of American Home
Products, from 1981 to 1987. Ms. Katz received her B.A. in Business
Administration from the University of South Florida.
HOWARD B. URNOVITZ, PH.D. is the founder of the Company and serves as Chief
Science Officer. Prior to founding the Company in 1988, Dr. Urnovitz was a
Senior Scientist at the Institute of Cancer Research in San Francisco from 1985
to 1987. He was Director of Molecular and Cellular Engineering at Xoma
Corporation, a biotechnology corporation, from 1983 to 1985. Prior to that, he
was Director of the Hybridoma Laboratory at the University of Iowa. Along with
Mr. Boeger, the Company's Chairman of the Board of Directors, Dr. Urnovitz has
recently announced the formation of Chronix Biomedical, a commercial company
that will focus on novel ways to detect aberrant genes in individuals with
chronic diseases. He is the Chairman of the Board and Secretary of Chronix
Biomedical. Dr. Urnovitz also serves as Science Director of both the Chronic
Illness Research Foundation, a non-profit organization that conducts basic
research, and Pepgen Corporation, a company in which Calypte has a minority
interest. Dr. Urnovitz received a B.S. in Microbiology and a Ph.D. in
Microbiology from the University of Michigan, and completed a post-doctoral
study at Washington University.
PAUL FREIMAN has served as a member of the Company's Board of Directors
since December 1997. He has served as the President and Chief Executive Officer
of Neurobiological Technologies, Inc. since May 1997. In 1995, Mr. Freiman
retired from his position as Chairman and Chief Executive Officer of Syntex
Corporation, a pharmaceutical company. From 1962 until 1994, he held several
other positions at Syntex Corporation, including President and Chief Operating
Officer. Mr. Freiman is currently serving on the board of Penwest
Pharmaceuticals Corp., Neurobiological Technologies, Inc. and several other
biotechnology companies. He has been chairman of the Pharmaceutical
Manufacturers Association of America (PhARMA) and has also chaired a number of
key PhARMA committees. Mr. Freiman is also an advisor to Burrill & Co., a San
Francisco merchant bank.
JULIUS R. KREVANS, M.D. has served on the Company's Board of Directors since
March 1995. Dr. Krevans has been Chancellor Emeritus and Director of
International Medical Care at the University of California at San Francisco
since 1993. From 1982 until 1993, Dr. Krevans served as Chancellor at UCSF, and
was Dean of the School of Medicine at UCSF from 1971 until 1982. Prior to this,
Dr. Krevans served as Dean for Academic Affairs at Johns Hopkins University
School of Medicine where he also served on the faculty for 18 years and was
Professor of Medicine from 1968 until 1971. He is also a director of Neoprobe.
Dr. Krevans served as a director of Parnassus Pharmaceuticals Incorporated,
which was liquidated under Chapter 7 of the Federal Bankruptcy Code in 1995.
Dr. Krevans received his M.D. from New York University, College of Medicine and
completed a residency in Medicine at Johns Hopkins University School of
Medicine.
MARK NOVITCH, M.D. has served on the Company's Board of Directors since
September 1995. Dr. Novitch was a Professor of Health Care Sciences at George
Washington University from October 1994 to June 1997. He is presently an Adjunct
Professor at George Washington University Medical Center. Since 1993,
Dr. Novitch has also been a private consultant in the pharmaceutical industry.
From 1985 until 1993, he served in senior executive positions with the Upjohn
Company, a medical products company, including Vice Chairman of the Board of
Directors, Corporate Executive Vice President, Corporate Senior Vice President
for Scientific Administration and Corporate Vice President. Prior to this, for
14 years, Dr. Novitch served with the FDA where from 1983 until 1984 he was
Acting Commissioner. For seven years, Dr. Novitch was on the faculty at Harvard
Medical School. He is also a member of the Board of Directors of Neurogen
Corporation, Guidant Corporation, Kos Pharmaceutical, and Alteon, Inc.
Dr. Novitch received his A.B. from Yale University, and his M.D. from the New
York Medical College.
4
ZAFAR RANDAWA, PH.D. has served on the Company's Board of Directors since
December 1996. Dr. Randawa is currently the Director of the New Technology
Evaluation Division of Otsuka America Pharmaceutical, Inc. and has served in
that capacity since September 1995. From 1989 until September 1995, Dr. Randawa
served as a Chief Scientist at Otsuka America Pharmaceutical, Inc. Dr. Randawa
received his Ph.D. in Biochemistry at Oregon Health Sciences University, his
Master of Science degree in Biochemistry at Karachi University in Karachi,
Pakistan, his B.S. in Biochemistry from Karachi University and his B.S. in
Chemistry from Panjab University in Lahore, Pakistan.
JOHN J. DIPIETRO was elected to the Company's Board of Directors in
October 1999. He also serves as a consultant to the Company under the terms of a
consulting contract extending through September 2000. Mr. DiPietro is currently
the Chief Financial Officer and Vice President--Finance & Administration of
Tripath Technology Inc., a digital technology company, and has served in that
capacity since September 1999. He had served as the Company's Chief Operating
Officer, Vice President of Finance, Chief Financial Officer and Secretary from
December 1997 through September 1999. From October 1995 until December 1997, he
served as the Company's Vice President of Finance, Chief Financial Officer and
Secretary. Prior to joining the Company, Mr. DiPietro was Vice President of
Finance, Chief Financial Officer and Secretary of Meris Laboratories, Inc., a
full service clinical laboratory, from 1991 until 1995. He is a Certified Public
Accountant and received his M.B.A. from the University of Chicago, Graduate
School of Business and a B.S. in Accounting from Lehigh University.
CLAUDIE E. WILLIAMS was elected to the Company's Board of Directors in
April 2000. Ms. Williams is currently Executive Vice President, Mergers and
Acquisitions of Claneil Enterprises, Inc., a private holding company. Prior to
joining Claneil in January 2000, Ms. Williams spent 24 years with Johnson &
Johnson, Inc., where she worked in both the pharmaceutical and consumer products
businesses. From 1975 to 1992, Ms. Williams worked with McNeil Pharmaceutical, a
Johnson & Johnson company, where she held a variety of positions in domestic and
international marketing and sales. She served as Vice President of Product
Management and as a member of the Management Board from 1988 to 1992. From 1992
to 1999, Ms. Williams held various marketing and business development positions
with Johnson & Johnson Worldwide Consumer Franchises. From 1997 to 1998, she
served as Vice President, General Manager of the Rx-to OTC Skincare Business
Unit at Johnson & Johnson Consumer products and was a member of the operating
company's Management Board. Ms. Williams received her B.A. degree from the
University of California at Irvine.
APPROVAL REQUIRED
Directors will be elected by a favorable vote of a plurality of the shares
of Common Stock of the Company represented and voting at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NAMED NOMINEES. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT
CHOICE IN THEIR PROXIES.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board met twelve times during 1999. The Board has standing Audit,
Compensation and Nominating Committees. During 1999, all directors attended at
least 75% of the aggregate number of meetings of the Board and the standing
committees on which they served during the period in which each was a member of
the Board.
AUDIT COMMITTEE
The Audit Committee consists of Messrs. Novitch, Randawa and Boeger.
Mr. Randawa replaced Mr. Collins as a member of the Audit Committee upon
Mr. Collins' resignation from the committee in October 1999 in connection with
Mr. Collins' assumption of the duties of Chief Executive Officer of the Company.
The Audit Committee recommends the engagement of the Company's independent
auditors, approves the services performed by such auditors, reviews and
evaluates the Company's accounting
5
principles and its system of accounting controls, and reviews with the auditors
the Company's annual audited financial statements and the audit thereof. There
were two audit committee meetings in 1999. The audit committee meeting to
discuss the results of the audit of the financial statements of the Company for
the year ended December 31, 1999 was held in April 2000.
COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Krevans, Freiman, and
Novitch. Mr. Freiman replaced Mr. Collins as a member of the Compensation
Committee upon Mr. Collins' resignation from the committee in October 1999 in
connection with Mr. Collins' assumption of the duties of Chief Executive Officer
of the Company. Dr. Novitch was also added to the Compensation Committee in
October 1999. The Compensation Committee reviews and approves the compensation
of the Company's executive officers and administers the Company's stock plans.
The Compensation Committee met five times in 1999.
NOMINATING COMMITTEE
The Nominating Committee consists of Dr. Krevans and Mr. Freiman. The
Nominating Committee recommends future additions, deletions and slates of board
members to the full Board. The Nominating Committee met once in 1999.
The Nominating Committee will consider stockholder suggestions for nominees
for director other than self-nominating suggestions. In order to be considered,
stockholder suggestions for board nominees to be elected at the 2001 annual
meeting of the Company must be received by the Secretary of the Company at the
Company's administrative offices prior to December 31, 2000.
DIRECTOR COMPENSATION
The Company's directors are reimbursed for their out-of-pocket travel
expenses associated with their attendance at Board meetings. The non-employee
directors of the Company are eligible to receive grants of options to purchase
Common Stock in amounts determined by the Board of Directors under the Company's
1995 Director Option Plan. In addition to the option grants, all outside
directors receive $5,000 per year in consideration of their membership on the
Board of Directors.
DIRECTOR OPTION PLAN
The Company's Board of Directors adopted the Director Option Plan in
December 1995. The stockholders approved it in 1996 and amended it at the
Company's November 1999 Annual Stockholder's Meeting. Under the Director Option
Plan, as revised, the Company has reserved 350,000 shares of common stock for
issuance to the directors of the Company pursuant to non-statutory stock
options. The Board of Directors determines the number of shares of the Company's
stock that will be granted each year to newly-elected and re-elected
non-employee directors. Each option granted under the Director Option Plan shall
be exercisable at 100% of the fair market value of the Company's common stock on
the date such option was granted. Each grant under the plan will vest monthly
over the twelve month period commencing with the director's date of election or
re-election, provided that the option will become vested and fully exercisable
on the date of the next annual meeting of stockholders if such meeting occurs
less than one year after the date of the grant. The plan shall be in effect for
a term of ten years unless sooner terminated under the Director Option Plan.
There were 140,000 Common Stock options granted in 1999 under the Director
Option Plan.
6
INFORMATION ON EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the years ended December 31, 1999, 1998 and 1997 to its Chief
Executive Officer and each of the other executive officers of the Company
(collectively, the "Named Executive Officers"). The compensation table excludes
other compensation in the form of perquisites and other personal benefits that
constitute the lesser of $50,000 or 10% of the total salary and bonus earned by
each of the named Executive Officers in each fiscal year.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS GRANTED(1) COMPENSATION ($)
- --------------------------- -------- ---------- --------- ---------------------- -----------------
David E. Collins(2).......... 1999 26,500(3) -- 170,000(4) 7,083(5)
Chief Executive Officer and 1998 -- -- 3,000(6) 5,000(7)
Vice-Chairman of the 1997 -- -- 53,000(8) 5,000(7)
Board of Directors
Nancy E. Katz(9)............. 1999 42,308 -- 450,000 --
President, Chief Operating
Officer, Chief Financial
Officer and Member of the
Board of Directors
Howard B. Urnovitz........... 1999 152,000 500 -- --
Chief Science Officer and 1998 157,846(10) 432 250,000(11) --
Member of the Board of 1997 87,692 -- 150,000(12) --
Directors
William A. Boeger(13)........ 1999 222,354(14) -- 20,000(6) 135,979(15)
Chairman of the Board of 1998 210,000(16) 74,686(17) 600,000(11) 25,881(18)
Directors and former 1997 50,000(19) 5,385(20) 195,000(12) 15,470(21)
President and Chief
Executive Officer
John J. DiPietro(22)......... 1999 148,116 40,000 20,000(6) 77,517(23)
Member of the Board of 1998 144,911 432 300,000(11) 25,496(24)
Directors and former 1997 131,250 -- 80,000(12) 36,073(24)
Chief Operating Officer,
Chief Financial Officer,
Vice President of Finance
and Secretary
- ------------------------
(1) All figures in this column represent options to purchase the Company's
common stock.
(2) Mr. Collins was elected Chief Executive Officer in October 1999. He has
served as Vice Chairman of the Board of Directors since December 1997 and as
a member of the Board of Directors since December 1995.
(3) Represents $26,500 paid pursuant to the consulting agreement between
Mr. Collins and the Company.
(4) Reflects option grant for 150,000 shares under the terms of the
October 1999 Consulting Agreement between Mr. Collins and the Company and an
option grant for 20,000 shares pursuant to service as a Director of the
Company.
7
(5) Represents $7,083 in Director's fees for services rendered in 1998 and 1999.
(6) Option grant made pursuant to service as a Director of the Company.
(7) Represents Directors' fees.
(8) Represents option grant for 3,000 shares pursuant to service as a Director
of the Company and option grant for 50,000 shares pursuant to Consulting
Agreement between Mr. Collins and the Company. The latter 50,000 share grant
was cancelled as of October 1999.
(9) Ms. Katz joined the Company in October 1999 as President, Chief Operating
Officer, and Chief Financial Officer.
(10) $5,846 was paid to Dr. Urnovitz in 1998 for services rendered in 1997.
(11) Option grant was made upon cancellation of certain options previously
granted.
(12) These options were cancelled in October of 1998.
(13) Mr. Boeger served as the Company's Chairman of the Board of Directors from
September 1995 to December 1997. From December 1997 to October 1999, he
served as Chairman of the Board of Directors, Chief Executive Officer and
President. Since October 1999, Mr. Boeger has served as Chairman of the
Board of Directors.
(14) Represents $186,346 in salary and $36,008 paid pursuant to the terms of the
October 1999 Consulting Agreement between Mr. Boeger and the Company, of
which $5,000 represents payment for services to be rendered by Mr. Boeger in
2000.
(15) Represents $112,500 in severance payments; $19,429 in living expenses and
$4,050 in car allowance.
(16) $15,000 was paid to Mr. Boeger in 1998 for services rendered by Mr. Boeger
in 1997.
(17) Represents $74,290 for non-cash bonus related to forgiveness of a portion
of a $70,000 note receivable including interest from Mr. Boeger and a $396
cash bonus.
(18) Represents $20,406 in living expenses and $5,475 in car allowance, $75 of
which relates to a 1997 car allowance.
(19) Represents amounts paid to an affiliate of Quest Ventures, a venture
capital partnership of which Mr. Boeger is Managing General Partner.
(20) Represents non-cash bonus related to forgiveness of a portion of a $70,000
note receivable including interest from Mr. Boeger.
(21) Represents $10,595 for living expenses and $4,875 for car allowance.
(22) Mr. DiPietro joined the Company in October 1995 as Chief Financial Officer
and Vice President of Finance. From December 1997 to September 1999,
Mr. DiPietro was Chief Operating Officer, Chief Financial Officer and Vice
President of Finance. Since October 1999, Mr. DiPietro has served as a
member of the Board of Directors.
(23) Represents $55,000 in severance payment; $17,898 in living expenses and
$4,619 car allowance.
(24) Represents living expenses.
8
The following table sets forth information concerning stock options granted
to the Named Executive Officers during the fiscal year ended December 31, 1999:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR(1) ($/SH)(2) DATE 5% ($) 10% ($)
- ---- ---------- --------------- --------- ---------- --------- ---------
David E. Collins................. 150,000(4) 13.16% 0.7812 10/18/09 73,694 186,755
20,000(5) 1.75% 1.5625 11/18/09 19,653 49,804
Nancy E. Katz.................... 450,000(6) 39.47% 0.7812 10/18/09 221,082 560,264
Howard B. Urnovitz............... -- N/A N/A N/A N/A N/A
William A. Boeger................ 20,000(5) 1.75% 1.5625 11/18/09 19,653 49,804
John J. DiPietro................. 20,000(5) 1.75% 1.5625 11/18/09 19,653 49,804
- ------------------------
(1) Based on the aggregate of 1,080,000 options granted under the Company's
Incentive Stock Plan to employees and consultants to the Company and 60,000
options granted to Consultant Directors under the Company's 1995 Director
Option Plan during the year ended December 31, 1999, including the Named
Executive Officers.
(2) The exercise price was based on the closing price of the stock on the date
of grant on the NASDAQ SmallCap Market.
(3) The assumed 5% and 10% compound rates of annual stock appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future common stock
prices. Assuming a ten-year option term, annual compounding results in total
appreciation of 62.9% (at 5% per year) and 159.4% (at 10% per year).
(4) Represents option grant for 150,000 shares pursuant to a consulting
agreement between Mr. Collins and the Company. Options for 50,000 shares
were immediately exercisable upon the grant date, October 18, 1999. Options
for an additional 50,000 shares become exercisable on April 18, 2000, and
options for the remaining 50,000 shares become exercisable on October 18,
2000. The options expire ten years from the date of grant.
(5) Options granted under the Director Option Plan become exercisable at the
rate of 1,667 shares per month beginning December 18, 1999, continuing at
that rate on each monthly anniversary thereafter through June 13, 2000, the
date of the 2000 stockholders' meeting, at which time all unvested options
will vest. The options expire ten years from the date of grant. The grant
was made pursuant to service as a Director of the Company.
(6) Options for 150,000 shares were immediately exercisable on the grant date,
October 18, 1999. Options for an additional 150,000 shares become
exercisable on the first anniversary of the grant date and options on the
remaining 150,000 shares become exercisable on the second anniversary of the
grant date. The options expire ten years from the date of grant, or earlier
upon termination of employment. The grant was made pursuant to the
Employment Agreement between Ms. Katz and the Company.
The following table sets forth information concerning option exercises for
the year ended December 31, 1999, with respect to each of the Named Executive
Officers.
9
AGGREGATED OPTION EXERCISES IN 1999
AND DECEMBER 31, 1999 OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISABLE VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE YEAR END (#) AT FISCAL YEAR END ($)
NAME EXERCISE (#) REALIZED ($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)(2)
- ---- ------------- ------------- --------------------------- ---------------------------------
David E. Collins...... -- -- 58,000/100,000 33,375/62,500
Nancy E. Katz......... -- -- 150,000/300,000 93,750/187,500
Howard B. Urnovitz.... -- -- 261,834/104,166 164,357/42,312
William A. Boeger..... -- -- 500,000/290,000 298,000/117,798
John J. DiPietro...... -- -- 184,500/150,500 74,944/61,133
- ------------------------
(1) Reflects in-the-money options granted under both the 1991 Incentive Stock
Plan and the 1995 Director Option Plan.
(2) Value realized and value of unexercised in-the-money options is based on a
value of $1.4062 per share of the Company's Common Stock, the closing price
on December 31, 1999 as quoted on the NASDAQ SmallCap Market. Amounts
reflect such fair market value minus the exercise price multiplied by the
number of shares to be acquired on exercise and do not indicate that the
optionee actually sold such stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to rules adopted by the Securities and Exchange Commission, the
Compensation Committee of the Board has furnished the following report on
executive compensation.
ROLE OF COMPENSATION COMMITTEE
The Compensation Committee is responsible for determining the most effective
total executive compensation strategy, based upon the business needs of the
Company and consistent with stockholders' interest. The Committee's role is to
review and approve the compensation of the Company's executive officers and to
administer the Company's stock plans. The Compensation Committee consists of
Messrs. Krevans, Freiman and Novitch. In October 1999, Mr. Freiman replaced
Mr. Collins as a member of the Compensation Committee upon Mr. Collins'
resignation from the committee in connection with Mr. Collins' assumption of the
duties of Chief Executive Officer of the Company. Dr. Novitch was elected to the
Compensation Committee in October 1999.
COMPENSATION PHILOSOPHY
The major goals of the compensation program are to align compensation with
the attainment of key business objectives and to enable the Company to attract,
retain and reward capable executives and senior management who can contribute to
the continued success of the Company.
BASE SALARY
Base salary represents the fixed component of the executive compensation
program. Base salaries of the Chief Executive Officer and senior management are
determined by reviewing comparable market base salary compensation, individual
performance, relevant experience and demonstrated capabilities in meeting the
requirements of the position. The base salary of the Chief Executive Officer,
the Chief Operating Officer, and other members of Senior Management is
determined by the Committee's evaluation of
10
attainment of stated overall goals and targets for the Company and the
individual's contribution and performance.
LONG-TERM INCENTIVE AWARDS
Stock option grants serve to align the Company's stockholders' and
employees' goals. The objectives of the stock option and purchase plans of the
Company are to: (1) provide a long-term incentive to help reduce employee
turnover, (2) provide a competitive package for recruiting new employees,
(3) provide a long-term reward for loyalty, dedication and service, and
(4) allow all employees to share in the rewards of "building stockholder value."
BONUS
The Company does not have a formal annual bonus plan. Nevertheless,
employees are eligible to earn annual cash bonuses for achievement of both
Company-wide and individual or departmental goals. This practice is designed to:
(1) enhance the ability of the Company to attract and retain outstanding
employees at all levels of the Company, (2) create a link between compensation
and performance, (3) strengthen team building to foster a culture of fairness
and equity, (4) motivate employees, and (5) create commonality by aligning the
interests of the stockholders with those of the employees. Recommendations for
cash bonus awards are made by management and approved by the Compensation
Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION
In 1999, Mr. Boeger received cash payments of $186,346 for salary, and
$36,008 ($5,000 of which related to services to be rendered by Mr. Boeger in
2000) under the terms of the October 1999 Consulting Agreement between
Mr. Boeger and the Company. Additionally, Mr. Boeger received $112,500 in
severance payments relating to the voluntary termination of his employment with
the Company during 1999. He also received other compensation of $19,429 for
living expenses and $4,050 for car allowance during the period of his employment
in 1999. The Committee considered this level of payment appropriate in view of
Mr. Boeger's leadership and accomplishments.
In 1999, Mr. Collins received cash payments of $26,500 pursuant to the terms
of the October 1999 Consulting Agreement between Mr. Collins and the Company
under which he serves as the Company's Chief Executive Officer. Under the terms
of the agreement, Mr. Collins receives compensation of $1,000 for each day
devoted to the Company's business. In turn, Mr. Collins commits to spend not
less than 5 days per month on Company business. The Committee considers this
level of compensation appropriate in view of Mr. Collins' background, leadership
and accomplishments. Mr. Collins also received cash payments in 1999 totaling
$7,083 for service in 1998 and 1999 on the Company's Board of Directors.
COMPENSATION COMMITTEE
Julius Krevans, M.D.
Paul Freiman
Mark Novitch, M.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company and administers various incentive compensation and
benefit plans. The Compensation Committee consists of Mr. Freiman, Dr. Krevans
and Dr. Novitch. Mr. Collins was a member of the Compensation Committee until
his election as Chief Executive Officer in October 1999.
In October 1999, the Company entered into a consulting agreement with David
E. Collins, Vice Chairman of the Board of Directors, to serve as Chief Executive
Officer effective from October 1999
11
through October 2000. Under the terms of the agreement, Mr. Collins receives
compensation of $1,000 for each day devoted to the Company's business and was
granted options to purchase 150,000 shares of the Company's stock. In turn,
Mr. Collins commits to spending at least five days per month on Company
business.
Mr. Collins also serves on the Board of Directors of Claneil
Enterprises, Inc. and is a member of Claneil's Compensation Committee. On
April 7, 2000, Trilobite Lakes Corporation, a wholly-owned subsidiary of Claniel
Enterprises, Inc., completed the purchase of 1,951,000 shares of Common Stock of
the Company. Trilobite Lakes Corp. was also issued a warrant for the purchase of
an additional 100,000 shares pursuant to the transaction. Claudie Williams, a
member of the Company's Board of Directors, is Executive Vice President, Mergers
and Acquisitions for Claneil Enterprises, Inc.
EMPLOYMENT AGREEMENTS
In October 1999, the Company entered into an employment agreement with Nancy
E. Katz as the President, Chief Operating Officer, and Chief Financial Officer
of the Company, which provides for an annual salary of $220,000. In addition,
Ms. Katz was granted 450,000 stock options, 150,000 of which vested immediately
and the balance of which vest over 24 months. Ms. Katz is also entitled to a
bonus upon the achievement of milestones mutually agreed to by Ms. Katz and the
Board of Directors. In the event the employment of Ms. Katz is terminated by the
Company other than for cause, she will receive her base salary for twelve
months. In the event of a change in control, any unvested stock options will
become fully vested.
In January 1995, the Company entered into an employment agreement with
Dr. Howard B. Urnovitz, as the Founder, Director and Chief Science Officer of
the Company for the year ended December 31, 1995, which provided for an annual
salary of $140,000 plus an annual bonus not to exceed $35,000 per year. The
agreement was amended in November 1999 to provide payment of Dr. Urnovitz' base
salary through April 2000, had he been terminated other than for cause prior to
such date.
In October 1998, the Company entered into an employment agreement with
William A. Boeger for a term effective immediately through December 31, 1999,
which provides for an annual salary of $225,000. In addition, Mr. Boeger was
granted 600,000 stock options, which vest over 24 months. Mr. Boeger was
entitled to a car allowance of $450 per month, 25% bonus upon the achievement of
milestones mutually agreed to by Mr. Boeger and the Board of Directors,
temporary housing, and travel between his home and the Company. In the event
Mr. Boeger's employment would have been terminated by the Company other than for
cause, he would have received his base salary for twelve months and all stock
options that would have vested during the 12 month period following termination
would have become vested. Additionally, if Mr. Boeger voluntarily terminated his
employment after July 1, 1999, he would have been entitled to receive severance
pay equal to six months of his base salary.
Concurrent with his October 1999 resignation as President and Chief
Executive Officer, the Company entered into a consulting agreement with
Mr. Boeger effective from October 1999 through October 2000. Under the terms of
the agreement, Mr. Boeger received $26,008, as compensation for services in
October and November 1999, and is entitled to compensation of $5,000 per month
for the period December 1999 through October 2000. Additionally, Mr. Boeger's
stock options granted pursuant to his 1998 employment agreement continue to vest
at a rate of 5,000 shares per month from October 1999 through October 2000.
In October 1998, the Company entered into an employment agreement with John
DiPietro for a term effective immediately through December 31, 1999, which
provided for an annual salary of $170,000. In addition, Mr. DiPietro was granted
300,000 stock options, which vest over 24 months. Mr. DiPietro was also entitled
to a car allowance of $350 per month, 25% bonus under the Company's bonus plan,
reimbursement for the cost of a corporate apartment, which expenses were
increased sufficiently to reimburse for taxes owed on such expenses, and certain
change in control provisions. In the event Mr. DiPietro's employment was
terminated by the Company other than for cause, he would have received
12
his base salary for twelve months and all stock options that would have vested
during the term of this agreement would have become fully vested. Additionally,
if Mr. DiPietro voluntarily terminated his employment after July 1, 1999, he
would be entitled to receive severance pay equal to six months of his base
salary.
Concurrent with his September 1999 resignation as Chief Operating Officer
and Chief Financial Officer of the Company, the Company entered into a
consulting agreement with Mr. DiPietro effective from September 1999 through
September 2000. Under the terms of the agreement, Mr. DiPietro receives no cash
compensation, however, his stock options granted pursuant to his 1998 employment
agreement continue to vest at the rate of 4,000 shares per month from
September 1999 through September 2000. Under the terms of the consulting
agreement, severance payments payable to Mr. DiPietro pursuant to the 1998
employment contract were fixed at $55,000.
In October 1999, the Company entered into a consulting agreement with David
Collins to serve as Chief Executive Officer. Please see the discussion in
"Compensation Committee Interlocks and Insider Participation" on pages 11 and 12
of this proxy statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, in recognition of a Technology Rights Agreement entered into
between the Company and Dr. Urnovitz, the Company partially funded the expenses
of the Chronic Illness Research Foundation, a research foundation started by
Dr. Urnovitz with which Mr. Boeger is also affiliated. The Company has entered
into a loan agreements with Dr. Urnovitz and certain of his affiliates pursuant
to which there was outstanding principal in the amount of $575,929.78 and
outstanding accrued interest in the amount of $78,231.06 as of December 31,
1999. The loans are evidenced by promissory notes. The interest on the
outstanding principal balance of the loan is a variable rate of the prime rate
plus 1%. The Company's Board of Directors has set the due date of the notes to
be no later than June 12, 2000. The Technology Rights Agreement gives the
Company the first right of refusal for ten years of an exclusive, worldwide
license to practice, make or have made, use, sell, distribute and license to
others any invention or discovery related to urine-based diagnostics made by
Dr. Urnovitz in exchange for a one-time cash payment and the payment of
royalties.
The notes from Dr. Urnovitz and his affiliates are full recourse
obligations. It is secured by Dr. Urnovitz's stock and vested employee options
in the Company, and the Company has also taken a security interest in additional
collateral. Dr. Urnovitz and his affiliates did not meet certain covenants in
the loan agreements during 1998 and 1999. However, at all times, the Company had
the ability to reach Dr. Urnovitz's personal assets which it believes were and
continue to be adequate to provide for payment of the loan.
In 1997, the Company paid Pepgen, a minority-owned affiliate of the Company,
$72,000 for an exclusive license to all technology that relates to urine-based
diagnostics developed by Pepgen. Mr. Boeger is a board member of Pepgen.
Dr. Urnovitz is the Science Officer of Pepgen.
In January 1998, Calypte loaned Pepgen $250,000 at an interest rate of 10%.
The loan was secured by all intellectual property of Pepgen and was due on
March 31, 1998. The due date was initially extended to May 15, 1998. During
June 1998, the loan was increased to $300,000 under the same terms of the
initial loan agreement and subsequent to June 1998, the due date was extended to
December 31, 1998. In August 1998, the loan was increased to $383,000 under the
same terms of the initial loan agreement. During the third quarter of 1998, the
Company loaned Pepgen Corporation an additional $468,000 under the same terms of
the initial note and extension, increasing the total amount due from Pepgen to
$768,000. The loan was further collateralized by a personal guaranty by the
Founder and Chairman of Pepgen and a standby guaranty from Pepgen's President in
the event that the guaranty by the Founder and Chairman proves insufficient.
During the third quarter of 1998, the due date was extended to July 1, 1999.
13
In May 1999, Pepgen received a financing offer from a third party that was
contingent upon Calypte converting its note receivable due from Pepgen into an
additional equity interest in Pepgen. At a meeting of the Calypte Board of
Directors, the Board agreed to the conversion. Consequently, effective
March 31, 1999, the Company wrote off its total investment in the note
receivable from Pepgen, including accrued interest, as research and development
costs. Additional amounts totaling $63,000 were spent on research and
development related to Pepgen during the second quarter of 1999. On October 6,
1999, Pepgen secured $3.8 million in a new round of financing. Following the
closing of the financing, Calypte now owns 38% of Pepgen.
STOCK PERFORMANCE CHART
The graph below compares the cumulative total stockholder return on the
Common Stock since the Company's initial public offering in 1996. The
Corporation's return is shown with the cumulative total return of the NASDAQ
Stock Market-U.S. Index and the Hambrecht & Quist Biotechnology Index. The graph
assumes a $100 investment made at the beginning of the respective period and
reinvestment of all dividends.
COMPARISON OF 41 MONTH CUMULATIVE TOTAL RETURN*
AMONG CALYPTE BIOMEDICAL CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST BIOTECHNOLOGY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALYPTE BIOMEDICAL CORPORATION NASDAQ STOCK MARKET (U.S.) HAMBRECHT & QUIST BIOTECHNOLOGY
7/26/96 100 100 100
12/96 138 119 109
12/97 65 146 111
12/98 48 206 168
12/99 23 372 360
* $100 INVESTED ON 7/26/96 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as set forth in the footnotes to this table, the following table sets
forth information known to the Company with respect to the beneficial ownership
of its Common Stock as of March 15, 2000 for (i) all persons known by the
Company to own beneficially more than 5% of its outstanding Common Stock,
(ii) each of the Company's directors, (iii) each Named Executive Officer and
(iv) all directors and executive officers of the Company as a group.
SHARES
BENEFICIALLY %
5% STOCKHOLDERS, DIRECTORS AND OFFICERS(1) OWNED OF TOTAL(2)
- ------------------------------------------ ------------ -----------
Trilobite Lakes Corp.(3).................................... 2,051,220(4) 9.99%
Silverside Carr Executive Center, Suite 14
501 Silverside Road
Wilmington, DE 19809
H&Q Healthcare Investors(5)................................. 1,433,993 6.98%
50 Rowes Wharf-4th Floor
Boston, MA 02110
Otsuka Pharmaceutical Co., Ltd.(6).......................... 1,310,480 6.38%
463-10 Kagsuno
Kawauchi-cho
Tokoshima Japan
Zafar Randawa, Ph.D.(7)..................................... 1,310,480 6.38%
William A. Boeger(8)........................................ 1,061,655 5.03%
David E. Collins(9)......................................... 2,167,804(9) 10.53%
Nancy E. Katz(10)........................................... 150,000 *
Howard B. Urnovitz, Ph.D.(11)............................... 443,701 2.13%
John DiPietro(12)........................................... 216,181 1.04%
Mark Novitch, M.D.(13)...................................... 44,833 *
Paul Freiman(14)............................................ 17,333 *
Julius Krevans, M.D.(15).................................... 29,833 *
Claudie E. Williams(16)..................................... 2,051,220(16) 9.99%
All directors and executive officers as a group (10
persons).................................................. 3,386,600 15.68%
- ------------------------
* Represents beneficial ownership of less than 1%.
(1) To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in this table has sole voting and investment power with respect to the
shares set forth opposite such person's name. Except as otherwise indicated,
the address of each of the persons in this table is as follows: c/o Calypte
Biomedical Corporation, 1265 Harbor Bay Parkway, Alameda, California 94502.
(2) Based on 20,536,915 shares of the Company's Common Stock outstanding on
March 15, 2000.
(3) This information was obtained from the Form 13D filing of Claneil
Enterprises, Inc., an affiliate of Trilobite, dated March 14, 2000. David E.
Collins, the Chief Executive Officer and Vice Chairman of the Board of
Calypte serves on the Board of Directors of Claneil Enterprises, Inc. and is
a member of Claneil's Compensation Committee.
(4) 100,000 shares are issuable pursuant to a warrant for the purchase of Common
Stock.
(5) This information was obtained from the Form 13G/A filing of the entity dated
February 22, 2000.
(6) Includes 17,333 shares subject to options exercisable within 60 days.
15
(7) Includes 17,333 shares subject to options exercisable within 60 days.
Dr. Randawa is a director of the Company and an affiliate of Otsuka
Pharmaceutical Co., Ltd. All shares listed are held by Otsuka. Dr. Randawa
disclaims beneficial ownership of the shares except to the extent of his
affiliation with Otsuka.
(8) Includes 67,303 shares subject to options exercisable within 60 days owned
by entities affiliated with Quest Ventures LP of which Mr. Boeger is a
partner. Mr. Boeger disclaims beneficial ownership of all shares held by
Quest Ventures except to the extent of his actual pecuniary ownership. Also
includes 528,334 shares subject to options exercisable within 60 days owned
by Mr. Boeger.
(9) Includes 72,584 shares subject to options exercisable within 60 days.
Includes 2,051,220 shares held by Trilobite Lakes Corp. Claneil Enterprises,
Inc. is an affiliate of Trilobite Lakes Corp. and Mr. Collins is a member of
the Board of Directors of Claneil Enterprises, Inc. Mr. Collins disclaims
beneficial ownership of these shares because he has abstained and will
continue to abstain from participating when matters involving these shares
are addressed by the Board of Directors of Claneil Enterprises, Inc.
(10) Includes 150,000 shares subject to options exercisable within 60 days.
(11) Includes 303,501 shares subject to options exercisable within 60 days.
(12) Includes 208,833 shares subject to options exercisable within 60 days.
(13) Includes 40,833 shares subject to options exercisable within 60 days.
(14) Includes 17,333 shares subject to options exercisable within 60 days.
(15) Includes 18,333 shares subject to options exercisable within 60 days.
(16) Includes 2,051,220 shares held by Trilobite Lakes Corp. Ms. Williams is the
designated nominee of Trilobite Lakes Corp. a wholly-owned subsidiary of
Claneil Enterprises, Inc. Ms. Williams is Executive Vice President, Mergers
and Acquisitions, of Claneil Enterprises, Inc. Ms. Williams disclaims
beneficial ownership of these shares.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), requires the Company's executive officers, directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission and the National
Association of Securities Dealers. Such officers, directors and ten percent
stockholders are also required by the Securities and Exchange Commission rules
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of such reports received or written
representations from reporting persons, the Company believes that during fiscal
year 1999 all the Reporting Persons complied with applicable filing requirements
subject to the following exceptions: Mr. Collins had one late filing of a report
on Form 5 with respect to a stock option grant.
PROPOSED AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OR
COMMON STOCK TO 50,000,000
(PROPOSAL 2)
The Board unanimously adopted, subject to stockholder approval, an amendment
to the Company's Restated Certificate of Incorporation (the "Amendment")
increasing the number of authorized shares of Common Stock from 30,000,000 to
50,000,000. The Board is recommending stockholder approval of the Amendment.
16
DESCRIPTION OF THE PROPOSAL
The Company's Restated Certificate of Incorporation currently authorizes the
issuance of 35,000,000 shares, of which 30,000,000 are authorized for issuance
as Common Stock and 5,000,000 are authorized for issuance as Preferred Stock. As
of the Record Date, the Company had shares of Common Stock outstanding
and no shares of Preferred Stock outstanding. In addition, as of that date, the
Company had approximately (i) shares of Common Stock reserved for
issuance under its stock option and purchase plans, and (ii) shares of
Common Stock issuable upon exercise of outstanding warrants. If this Amendment
is approved, the Board intends to cause a certificate of amendment to the
Restated Certificate of Incorporation to be filed as soon as practicable after
the date of the Annual Meeting. Upon effectiveness of this Amendment and the
adoption of the 2000 Equity Incentive Plan (see Proposal 3), the Company will
have approximately shares of Common Stock authorized but unreserved.
The increase in the number of outstanding shares of Common Stock shall be
accomplished by amending the first paragraph of Article IV of the Restated
Certificate of Incorporation to read as follows:
The Corporation is authorized to issue two classes of shares of
stock to be designated, respectively, Common Stock, $0.001 par value,
and Preferred Stock, $0.001 par value. The total number of shares that
the Corporation is authorized to issue is 55,000,000 shares. The number
of shares of Common Stock authorized is 50,000,000 and the number of
shares of Preferred Stock is 5,000,000.
The Board considers it advisable to have additional authorized but unissued
shares of Common Stock available to (i) allow issuances under the Company's
employee benefit plans; (ii) allow the Company to act promptly with respect to
possible future acquisitions or financing; (iii) sell additional shares, as
necessary, to finance operations and growth of the Company; and (iv) further
corporate purposes approved by the Board. Having additional authorized shares of
Common Stock available for issuance would give the Company greater flexibility
and allow shares of Common Stock to be issued without the expense or delay of a
stockholders' meeting, except as may be required by applicable laws or
regulations. The Company has no specific plans for issuance of additional shares
of Common Stock, other than shares currently reserved under option and purchase
plans and for exercise of outstanding warrants.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. The Board will have the authority to
issue authorized Common Stock without requiring future stockholder approval of
such issuances, except as may be required by applicable law or exchange
regulations.
To the extent that additional authorized shares are issued in the future,
they will decrease the existing stockholders' percentage equity ownership and,
depending upon the price at which they are issued as compared to the price paid
by existing stockholders for their shares, could be dilutive to the existing
stockholders. No Company stockholders have rights to participate in offerings of
additional shares by the Company.
The increase in the number of authorized shares of Common Stock could have
an anti-takeover effect. If the Company's Board of Directors desired to issue
additional shares in the future, such issuance could dilute the voting power of
a person seeking control of the Company, thereby deterring or rendering more
difficult a merger, tender offer, proxy contest or an extraordinary corporate
transaction opposed by the Company. However, the matter submitted herein is not
being recommended in response to any specific effort of which the Company is
aware to obtain control of or to acquire the Company.
APPROVAL REQUIRED
Approval of Proposal 2 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company.
17
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
TO 50,000,000. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
ADOPTION OF 2000 EQUITY INCENTIVE PLAN
(PROPOSAL 3)
Stockholders are being asked to approve the adoption of the 2000 Equity
Incentive Plan (the "Incentive Plan") attached as Appendix A to this proxy
statement, and to approve the reservation for issuance thereunder of up to
4,000,000 shares of Common Stock.
The Board recommends the adoption of the Incentive Plan in order to replace
the Company's previous plan, the 1991 Stock Option Plan (the "1991 Plan"), is
expiring in 2001 and there remains a continuing need to provide stock options
and other incentives to attract and retain quality employees and remain
competitive in the industry. The Board is of the opinion that the Incentive Plan
is necessary to enable the Company to compete for, motivate and retain talented
executives and other key employees and to align their interests with those of
stockholders. Therefore, the Board believes that it is in the best interests of
the Company to adopt the Incentive Plan as proposed. The Board believes that the
adoption of the Incentive Plan, under which incentive stock options,
non-qualified stock options, restricted stock or stock bonuses may be granted,
will provide the Company with adequate flexibility to meet goals and facilitate
the expansion of its employee base. Consistent with the Company's compensation
objectives, rewards under the Incentive Plan are dependent on those factors
which directly benefit the Company's stockholders and appreciation in the market
value of the Common Stock. Further, the adoption of the Incentive Plan will
permit the continuation of incentive grants through 2010 thereby providing
long-term incentives to the executive officers and other key salaried employees
of the Company who have the potential to direct and manage the business of the
Company successfully in the future.
The number of newly authorized shares on which options could be granted
under the Incentive Plan will represent approximately 16% of the currently
outstanding shares of Common Stock.
The Board voted to recommend approval of the Incentive Plan to the
stockholders on April 19, 2000. The Incentive Plan will become effective upon
its approval by the stockholders. Below is a summary of the principal provisions
of the Incentive Plan. The summary is not necessarily complete, and reference is
made to the full text of the Incentive Plan which is attached to this Proxy
Statement as Appendix A.
THE 2000 EQUITY INCENTIVE PLAN
PURPOSE. The purpose of the Incentive Plan is to offer eligible persons an
opportunity to participate in the Company's future performance through awards of
stock options, restricted stock and stock bonuses.
SHARES SUBJECT TO THE INCENTIVE PLAN. The stock subject to issuance under
the Incentive Plan consists of shares of the Company's authorized but unissued
Common Stock. Initially, 4,000,000 shares of Common Stock (the "Shares") are
reserved by the Board for issuance under the Incentive Plan. Any Shares that:
(a) are subject to an option granted pursuant to the Incentive Plan that expires
or terminates for any reason without being exercised; or (b) are subject to an
award granted pursuant to the Incentive Plan that are forfeited; or (c) are
subject to an award granted pursuant to the Incentive Plan that otherwise
terminates without shares being issued, will again become available for grant
and issuance pursuant to awards under the Incentive Plan. In addition, the
following shares of Common Stock reserved for issuance under the 1991 Plan will
be added to the reserved shares: (i) any shares remaining unissued under the
1991 Plan on the effective date of the Incentive Plan; (ii) any shares that are
issuable upon exercise of options granted pursuant to the 1991 Plan that expire
or become unexercisable for any reason without having been exercised in full;
(iii) any shares that are subject to an award granted pursuant to the 1991 Plan
but such award has been exchanged by the holder thereof for awards granted under
the Incentive Plan; and (iv) any shares that are subject to an award granted
pursuant to the 1991 Plan that otherwise terminates without
18
the shares being issued. Such shares will no longer be available for issuance
under the 1991 Plan. This number of shares is subject to proportional adjustment
to reflect stock splits, stock dividends and other similar events.
ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisors of the Company (and of any parent company or
subsidiary) are eligible to receive awards under the Incentive Plan (the
"Participants"). No Participant is eligible to receive more than 900,000 shares
of Common Stock in any calendar year under the Incentive Plan. The closing price
of the Company's Common Stock on the Nasdaq SmallCap Market was $ per share
as of May 4, 2000, the last trading day before the Record Date.
ADMINISTRATION. The Incentive Plan is administered by the Compensation
Committee (the "Committee"), the members of which are appointed by the Board.
The Committee currently consists of Julius Krevans, M.D., Mark Novitch, M.D. and
Paul Freiman, all of whom are "non-employee directors," as defined in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and "outside directors", as defined pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the Incentive Plan, the Committee determines the
persons who are to receive awards, the number of shares subject to each such
award, and the terms and conditions of such awards. The Committee also has the
authority to construe and interpret any of the provisions of the Incentive Plan
or any awards granted thereunder.
STOCK OPTIONS. The Incentive Plan permits the granting of options that are
either Incentive Stock Options ("ISOs") or Nonqualified Stock Options ("NQSOs").
ISOs may be granted only to employees (including officers and directors who are
also employees) of the Company or any parent or subsidiary of the Company. The
option exercise price for each ISO share must be no less than 100% of the "fair
market value" (as defined in the Incentive Plan) of a share of Common Stock at
the time the ISO is granted. In the case of an ISO granted to a person who holds
10% or more of the outstanding capital stock of the Company, (a "10%
stockholder"), the exercise price for each such ISO share must be no less than
110% of the fair market value of a share of Common Stock at the time the ISO is
granted. The option exercise price for each NSO share must be no less than 85%
of the fair market value of a share of Common Stock at the time of grant.
The exercise price of options granted under the Incentive Plan may be paid
as approved by the Committee at the time of grant: (1) in cash (by check);
(2) by cancellation of indebtedness of the Company to the Participant; (3) by
surrender of shares of the Company's Common Stock owned by the Participant for
at least six months, or acquired by the Participant in the public market, and
having a fair market value on the date of surrender equal to the aggregate
exercise price of the option; (4) by tender of a full recourse promissory note;
(5) by waiver of compensation due to or accrued by the Participant for services
rendered; (6) by a "same-day sale" commitment from the Participant and a
National Association of Securities Dealers, Inc. ("NASD") broker; (7) by a
"margin" commitment from the Participant and an NASD broker; or (8) by any
combination of the foregoing, provided, however, that any Participant exercising
rights and obtaining shares pursuant to awards granted under the Incentive Plan
must pay lawful consideration equal to the aggregate par value of such Shares to
the extent required by the Delaware General Corporation Laws in such form as the
Committee shall approve.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted
stock awards to purchase stock either in addition to, or in tandem with, other
awards under the Incentive Plan, under such terms, conditions and restrictions
as the Committee may determine. The purchase price for such awards must be no
less than 85% of the fair market value of the Company's Common Stock on the date
of the award (and in the case of an award granted to a 10% stockholder, the
purchase price shall be 100% of fair market
19
value) and can be paid for in any of the forms of consideration listed in
items (1) through (5) in "STOCK OPTIONS" above, as are approved by the Committee
at the time of grant.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards
for services rendered to the Company either in addition to, or in tandem with,
other awards under the Incentive Plan, under such terms, conditions and
restrictions as the Committee may determine.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all of the assets of the Company or any other similar corporate
transaction, the successor corporation, if any, may assume, convert, replace or
substitute equivalent awards in exchange for those granted under the Incentive
Plan or provide substantially similar consideration, shares or other property as
was provided to stockholders of the Company (after taking into account
provisions of the awards). In the event that the successor corporation does not
assume or substitute options, such options will accelerate at the time and upon
the conditions as the Board determines. With certain exceptions, if a
Participant's employment is terminated without cause within twelve months after
a change of corporate control has occurred, then all options held by the
Participant shall become fully vested upon the date of termination.
AMENDMENT OF THE INCENTIVE PLAN. The Board may at any time terminate or
amend the Incentive Plan, including amending any form of award agreement or
instrument to be executed pursuant to the Incentive Plan. However, the Board may
not amend, without stockholder approval, the Incentive Plan in any manner that
requires stockholder approval pursuant to the Code or the regulations
promulgated thereunder, or the Exchange Act or the regulations promulgated
thereunder and the rules of the applicable stock exchange upon which the
Company's Common Stock trades.
TERM OF THE INCENTIVE PLAN. Unless terminated earlier as provided in the
Incentive Plan, the Incentive Plan will expire ten years from the date it was
approved by the stockholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of federal income tax consequences is based upon
existing statutes, regulations and interpretations thereof. The applicable rules
are complex, and income tax consequences may vary depending upon the particular
circumstances of each plan participant. This proxy statement describes federal
income tax consequences of general applicability, but does not purport to
describe either particular consequences to each individual plan participant or
foreign, state or local income tax consequences, which may differ from the
United States federal income tax consequences.
INCENTIVE STOCK OPTIONS ("ISOS")
AWARD; EXERCISE. ISOs are intended to constitute "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986 (the
"Code"). ISOs may be granted only to employees of the Company (including
directors who are also employees). An optionee does not recognize taxable income
upon either the grant or exercise of an ISO. However, the excess of the fair
market value of the shares purchased upon exercise over the option exercise
price (the "option spread") is includible in the optionee's "alternative minimum
taxable income" ("AMTI") for purposes of the alternative minimum tax ("AMT").
The option spread is generally measured on the date of exercise and is
includible in AMTI in the year of exercise. Special rules regarding the time of
AMTI inclusion may apply for shares subject to a repurchase right or other
"substantial risk of forfeiture" (including, in the case of each person subject
to the reporting requirements of Section 16 of the Exchange Act, any limitations
on resale of shares imposed under Section 16(b) of the Exchange Act).
SALE OF OPTION SHARES. If an optionee holds the shares purchased under an
ISO for at least two years from the date the ISO was granted and for at least
one year from the date the ISO was exercised, any gain from a sale of the shares
other than to the Company is taxable as long-term capital gain. Under these
20
circumstances, the Company would not be entitled to a tax deduction at the time
the ISO was exercised or at the time the stock was sold. If an optionee were to
dispose of stock acquired pursuant to an ISO before the end of the required
holding periods (a "Disqualifying Disposition"), the amount by which the market
value of the stock at the time the ISO was exercised exceeded the exercise price
(or, if less, the amount of gain realized on the sale) would be taxable as
ordinary income, and the Company would be entitled to a corresponding tax
deduction. Such income is subject to information reporting requirements. Gain
from a Disqualifying Disposition in excess of the amount required to be
recognized as ordinary income is capital gain, and is "long-term" gain if the
shares have been held more than one year as of the date of sale. Optionees are
required to notify the Company immediately prior to making a Disqualifying
Disposition. If stock is sold to the Company rather than to a third party, the
sale may not produce capital gain or loss. A sale of shares to the Company will
constitute a redemption of such shares, which could be taxable as a dividend
unless the redemption is "not necessarily equivalent to a dividend" within the
meaning of the Code.
EXERCISE WITH STOCK. If an optionee pays for ISO shares with shares of the
Company acquired under an ISO or a qualified employee stock purchase plan
("statutory option stock"), the tender of shares is a Disqualifying Disposition
of the statutory option stock if the above described (or other applicable)
holding periods respecting those shares have not been satisfied. If the holding
periods with respect to the statutory option stock are satisfied, or the shares
were not acquired under a statutory stock option of the Company, then any
appreciation in the value of the surrendered shares is not taxable upon
surrender. Special basis and holding period rules apply where previously owned
stock is used to exercise an ISO.
The present position of the Internal Revenue Service ("IRS") appears to be
that income and employment withholding taxes are not imposed upon the exercise
of an ISO or the sale of ISO shares. The IRS is studying this position and may
change it at any time, possibly with retroactive effect.
NON-QUALIFIED STOCK OPTIONS (NQSOS)
AWARD; EXERCISE. An optionee is not taxed upon the award of an NQSO.
Federal income tax consequences upon exercise of an NQSO will depend upon
whether the shares thereby acquired are subject to a "substantial risk of
forfeiture." If the shares are not subject to a substantial risk of forfeiture,
or if they are so restricted and the optionee files an election under
Section 83(b) of the Code (a "Section 83(b) Election") with respect to the
shares, the optionee will have ordinary income at the time of exercise measured
by the option spread on the exercise date. The optionee's tax basis in the
shares will be their fair market value on the date of exercise, and the holding
period for purposes of determining whether capital gain or loss upon sale is
long-term or short-term also will begin on that date. If the shares are subject
to a substantial risk of forfeiture and no Section 83(b) Election is filed, the
optionee will not be taxed upon exercise, but instead will have ordinary income,
on the date the restrictions lapse, in an amount equal to the difference between
the amount paid for the shares under the option and their fair market value as
of the date of lapse. In addition, the optionee's holding period will begin on
the date of lapse.
Whether or not the shares are subject to a substantial risk of forfeiture,
the amount of ordinary income taxable to an optionee who was an employee at the
time of grant constitutes "supplemental wages" subject to withholding of income
and employment taxes by the Company, and the Company receives a corresponding
income tax deduction.
SALE OF OPTION SHARES. Upon sale, other than to the Company, of shares
acquired under an NQSO, an optionee generally will recognize capital gain or
loss to the extent of the difference between the sale price and the optionee's
tax basis in the shares, which will be long-term gain or loss if the employee's
holding period in the shares is more than one year. Certain lower rates apply if
the shares have been held for longer periods. If stock is sold to the Company
rather than to a third party, the sale may not produce capital gain or loss. A
sale of shares to the Company will constitute a redemption of such shares, which
21
could be taxable as a dividend unless the redemption is "not necessarily
equivalent to a dividend" within the meaning of the Code.
EXERCISE WITH STOCK. If an optionee tenders Common Stock (other than
statutory option stock -- see above) to pay all or part of the exercise price of
an NQSO, the optionee will not have a taxable gain or deductible loss on the
surrendered shares. Instead, shares acquired upon exercise that are equal in
value to the fair market value of the shares surrendered in payment are treated
as if they had been substituted for the surrendered shares, taking as their
basis and holding period the basis and holding period that the optionee had in
the surrendered shares. The additional shares are treated as newly acquired, are
taxable to the optionee, and have a basis equal to their fair market value on
the exercise date.
If the surrendered shares are statutory option stock as described above
under "INCENTIVE STOCK OPTIONS", with respect to which the applicable holding
period requirements for favorable income tax treatment have not expired, then
the newly acquired shares substituted for the statutory option shares should
remain subject to the federal income tax rules governing the surrendered shares,
but the surrender should not constitute a Disqualifying Disposition of the
surrendered stock.
OTHER TAX CONSEQUENCES
TAX TREATMENT OF THE COMPANY. The Company generally will be entitled to a
deduction in connection with the exercise of an NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent that
the Participant recognizes ordinary income and the Company withholds tax. The
Company will be entitled to a deduction in connection with the disposition of
ISO Shares only to the extent that the Participant recognizes ordinary income on
a disqualifying disposition of the ISO Shares.
ERISA. The Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") and is not qualified
under Section 401(a) of the Code.
NEW PLAN BENEFITS. The amounts of future option grants under the Incentive
Plan are not determinable because, under the terms of the Incentive Plan, such
grants are made in the discretion of the Committee. Future option exercise
prices are not determinable because they are based upon fair market value of the
Company's Common Stock on the date of grant. Similarly, the amounts of future
stock purchases under the Stock Purchase Plan are not determinable because,
under the terms of the Stock Purchase Plan, purchases are based upon elections
made by Participating Employees. Future purchase prices are not determinable
because they are based upon fair market value of the Company's Common Stock.
SPECIAL FEDERAL INCOME TAX CONSIDERATION DUE TO SHORT SWING PROFIT RULE
The potential liability of a person subject to Section 16 of the Exchange
Act of 1934 to repay short-swing profits from the resale of shares acquired
under a Company plan constitutes a "substantial risk of forfeiture" within the
meaning of the above-described rules, which is generally treated as lapsing at
such time as the potential liability under Section 16 lapses. Persons subject to
Section 16 who would be required by Section 16 to repay profits from the
immediate resale of stock acquired under a Company plan should consider whether
to file a Section 83(b) Election at the time they acquire stock under a Company
plan in order to avoid deferral of the date they are deemed to acquire shares
for federal income tax purposes.
22
PLAN BENEFITS
The following table shows the number of shares of Common Stock issuable upon
exercise of options granted to the named groups under the 1991 Plan during the
fiscal year ended December 31, 1999.
NUMBER OF
NAME AND POSITION OPTIONS(1)
- ----------------- ----------
Nancy E. Katz, President, .................................. 450,000
Chief Operating Officer, Chief Financial Officer
David E. Collins, .......................................... 150,000
Chief Executive Officer and the Chairman of the Board of
Directors
William A. Boeger, ......................................... --
Chairman of the Board of Directors
Howard B. Urnovitz, ........................................ --
Chief Science Officer
John J. DiPietro, .......................................... --
Former Chief Operating Officer and Chief Financial Officer
Executive Group............................................. 600,000
Non-Executive Director Group................................ --
Non-Executive Employee Group................................ 480,000
- ------------------------
(1) All options granted at fair market value as of the date of grant.
APPROVAL REQUIRED
Approval of Proposal 2 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2000 EQUITY INCENTIVE
PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
PROPOSED AMENDMENT TO THE 1995 DIRECTOR OPTION PLAN
(PROPOSAL 4)
Subject to the approval of the stockholders, the Board has amended the 1995
Director Option Plan (the "Director Option Plan") as described below.
DESCRIPTION OF THE PROPOSAL
1. Currently, the total number of shares of Common Stock reserved and
available for issuance pursuant to options under the Director Option Plan is
143,000 shares. The proposed amendment to the Director Option Plan increases the
number of shares of Common Stock reserved for issuance thereunder by 500,000 to
.
2. Currently, the Director Option Plan allows the Board to determine the
number of shares of Common Stock to be granted to non-employee directors on the
date on which each person first becomes a director, provided that in any given
year the number of options granted to each newly-elected director shall be
equal. The Board also determines the number of options to be granted to each
re-elected director, provided that the number of options granted in any given
year will be the same for each such re-elected director.
The proposed amendment to the Director Option Plan would remove the
requirement that the number of options granted to each newly-elected director be
equal and that the number of options granted to each re-elected director be
equal.
23
3. Currently, the Director Option Plan provides that any outstanding option
granted under the Director Option Plan shall be assumed or an equivalent option
be substituted therefor in the event of a merger with another corporation or the
sale of all or substantially all of the Company's assets. In the event that the
successor corporation does not agree to assume the option or substitute an
equivalent option, each outstanding option shall become fully vested and
exercisable unless the Board determines otherwise.
The proposed amendment to the Director Option Plan would provide that if a
non-employee director whose outstanding options have been assumed or substituted
pursuant to a merger or asset sale is removed from the Board without cause
within six months of such merger or asset sale, such director's outstanding
options shall become fully vested and exercisable.
4. Currently, the Director Option Plan permits options to be granted only
to non-employee directors.
The proposed amendment to the Director Option Plan would provide that if a
non-employee director is the nominee of a corporate stockholder, options granted
under the Director Option Plan may be granted to such corporate stockholder
provided that in each case, the potential nominee is subject to the approval of
the Board prior to being nominated and any such nomination is made pursuant to
an agreement between the Company and the corporate stockholder.
DESCRIPTION OF THE DIRECTOR OPTION PLAN
Only non-employee directors of the Company are eligible to participate in
the Director Option Plan. The Director Option Plan is currently designed to
allow the Board, or a committee chosen by the Board, to grant options on a
discretionary basis but the awards are limited as follows:
(i) No person shall have any discretion to select which non-employee
directors shall be granted options or to determine the number of shares
to be covered by options granted to non-employee directors.
(ii) The Board shall have discretionary authority to determine the number of
shares of Common Stock to be granted to non-employee directors on the
date on which each person first becomes a director, provided that
during any given term of office the number of options granted to each
newly-elected director shall be equal.
(iii) The Board shall have discretionary authority to determine the number of
options to be granted to each re-elected director, provided a) that in
any given term of office the number of options granted will be the same
for each such re-elected director, and b) that if such re-elected
director has not served on the Board for at least six (6) months prior
to the date of the Company's annual meeting of stockholders the Board
may adjust the number of options granted to such director.
In other words, the Board determines the number of shares that will be
granted to newly-elected and to re-elected non-employee directors, provided that
the number of options for each newly-elected non-employee director in any given
year will be the same for each such director and the number of options for each
re-elected non-employee director in any given year will be same for each such
director. Each grant under the plan currently vests monthly over the twelve
month period commencing with the date of election or re-election of any
non-employee director, provided that such option will become vested and fully
exercisable on the date of the next annual meeting of stockholders if such
meeting occurs less than one year after the date of grant.
If the Director Option Plan is amended as proposed the Board will be able to
grant individual awards based upon contributions to the Company's profitability
and other criteria related to corporate objectives and its ability to award
incentive grants will no longer be restricted by the uniformity of awards
currently required.
24
In addition, if the Director Option Plan is amended as proposed, the number
of shares of Common Stock reserved under the Director Option Plan will increase
by 500,000 shares. The consideration to be paid for the shares to be issued upon
exercise of an option, including the method of payment, shall consist of any
form of lawful consideration approved by the Board including, but not limited
to, the following: (i) cash, (ii) check, (iii) delivery of a properly executed
exercise notice together with such other documentation as the Company and the
broker, if applicable, shall require to effect an exercise of the option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (iv) any combination of the foregoing methods of payment.
Funds received by the Company upon exercise of an option are used for general
corporate purposes.
If the Director Option Plan is amended as proposed, the limitation that
awards may be granted only to non-employee directors shall be removed so that
the Board may grant awards to a corporate stockholder pursuant to an agreement
between such stockholder and the Company. The agreement must permit the
stockholder to put forth candidates for nomination to the Board, such nomination
must be approved by the Board and the nominee must be a non-employee. a
non-employee director who is the nominee of a corporate stockholder shall be
permitted to transfer options granted under the Director Option Plan to the
corporate stockholder provided that potential nominees are subject to the
approval of the Board prior to being nominated.
Options granted under the Director Option Plan have a term of ten years.
Each option granted will continue to be exercisable over a period of ten years
commencing with the date of such option grant to the extent the option has
become vested, regardless of whether the non-employee director has terminated
service as a board member provided, however, that if an non-employee director is
removed from the Board, the option will terminate if it is not exercised within
90 days of the date of such removal. Options will continue to be transferable by
gift to a family member or a partnership or trust for a family member during the
lifetime of the non-employee directors.
Under the Director Option Plan, in the event of a merger of the Company with
or into another corporation or the sale of substantially all of the assets of
the Company, each outstanding option issued pursuant to the Director Option Plan
shall be assumed or an equivalent option shall be substituted by the successor
corporation (or a Parent or Subsidiary thereof). In the event that the successor
corporation does not agree to assume the option or to substitute an equivalent
option, each outstanding option shall become fully vested and exercisable,
including shares which would not otherwise be exercisable, unless the Board, in
its discretion, determines otherwise.
If the Director Option Plan is amended as proposed, if (a) any non-employee
director whose options, pursuant to a merger or asset sale, are (i) assumed,
converted or replaced by the successor corporation (if any), or
(ii) substituted by the successor corporation with equivalent awards or
substantially similar consideration; and (b) such non-employee director is
removed from the Board without cause within six months of such merger or asset
sale, then (c) any options held by the non-employee director will immediately
become fully vested and exercisable by the Participant.
To the extent necessary and desirable to comply with Rule 16b-3 of the
Exchange Act, as amended, and the rules of the NASDAQ Small Cap Market (or any
other applicable law or regulation), the Company will obtain stockholder
approval of any amendment to the Director Option Plan in such a manner and to
such a degree as required. Any such amendment or termination of the Director
Option Plan shall not affect options already granted and such options shall
remain in full force and effect as if the Director Option Plan had not been
amended or terminated. The Director Option Plan will terminate in 2005 unless
earlier terminated as described above.
Options granted under the Director Option Plan are non-statutory options. A
non-employee director awarded options will not recognize any taxable income at
the time he or she is granted a non-statutory option. However, upon exercise of
an option, such non-employee director will generally recognize ordinary income
measured for tax purposes by the excess of the then fair market value of the
shares over the
25
exercise price. If a sale of shares acquired upon exercise of an option could
subject the director to suit under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the date of recognition of such ordinary
income may be deferred for up to six months unless the director timely files an
election with the Internal Revenue Service under Section 83(b) of the Code. The
non-employee director holding period for long-term capital gain purposes
commences as of the date he or she recognizes ordinary income with respect to an
option exercise. Upon resale of such shares by the non-employee director any
difference between the sales price and the exercise price, to the extent not
recognized as ordinary income as provided above, will be treated as capital gain
or loss and will qualify for long-term capital gain or loss treatment if the
shares have been held for more than one year. The Company will be entitled to a
tax deduction in the amount and at the time that the director recognizes
ordinary income with respect to shares acquired upon exercise of a non-statutory
option.
Subject to any required action by the stockholders of the Company, the
number of shares covered by each outstanding option, and the number of shares
which have been authorized for issuance under the Director Option Plan but as to
which no options have yet been granted or which have been returned to the
Director Option Plan upon cancellation or expiration of an option, as well as
the price per share covered by each such outstanding option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the aggregate number of issued shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided in the Director Option Plan, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to the number or price of shares subject to an option. In
the event of the proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately before the consummation of such
proposed action.
PLAN BENEFITS
The following table shows the number of shares of Common Stock issuable upon
exercise of options granted to the named Optionees under the Director Option
Plan during the fiscal year ended December 31, 1999.
NUMBER OF
NAME AND POSITION OPTIONS(1)
- ----------------- ----------
William A. Boeger, Director(2).............................. 20,000
David E. Collins, Director.................................. 20,000
Paul E. Freiman, Director................................... 20,000
John J. DiPietro, Director(2)............................... 20,000
Julius Krevans M.D., Director............................... 20,000
Mark Novitch M.D., Director................................. 20,000
Otsuka Pharmaceutical Co., Ltd. (Zafar Randawa, Director)... 20,000
- ------------------------
(1) All options granted at fair market value as of the date of grant.
(2) Optionee received grant following his resignation as an employee of the
Company.
The Company believes that in order to attract and retain highly qualified
candidates to serve as directors, it is important that directors have meaningful
equity ownership in the Company. Initially, the reason for creating a
non-discretionary option plan for outside directors and for making such options
non-transferable was to comply with rules of the Securities and Exchange
Commission (the "Commission"), while still allowing equity participation by the
outside directors. Subsequent rule changes by the
26
Commission have eliminated such "disinterested" administration requirements and
the Company believes that the Board should have the discretion to make
reasonable use of all available means to attract and retain such highly
qualified director candidates.
APPROVAL REQUIRED
Approval of Proposal 3 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1995 DIRECTOR OPTION
PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
27
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 5)
The Board recommends that the stockholders ratify the Board's appointment of
the accounting firm of KPMG LLP as independent auditors to audit the financial
statements of the Company. The firm has conducted the audits for the Company for
many years and is considered by management of the Corporation to be well
qualified.
Representatives from KPMG LLP are expected to be at the Annual Meeting and
to be available to respond to appropriate questions. Such representatives will
have the opportunity to make a statement if they desire to do so and to respond
to appropriate questions raised during the meeting.
APPROVAL REQUIRED
Approval of Proposal 5 requires the affirmative vote of a majority of the
outstanding shares of Common Stock of the Company represented and voting at the
Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE APPOINTMENT OF KPMG LLP
AS INDEPENDENT AUDITORS TO AUDIT THE FINANCIAL STATEMENTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000. PROXIES SOLICITED BY THE BOARD WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE IN THEIR PROXIES.
OTHER MATTERS
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR INCLUSION IN THE COMPANY'S
PROXY STATEMENT FOR THE 2001 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, stockholder
proposals submitted for next year's Proxy Statement must be received by the
Company no later than the close of business on January 14, 2001, to be
considered. Proposals should be addressed to William A. Boeger, Secretary,
Calypte Biomedical Corporation, 1265 Harbor Bay Parkway, Alameda, California
94502.
Any stockholder who wishes to bring a proposal before the Calypte Biomedical
Corporation 2001 Annual Meeting of Stockholders, but does not wish to include it
in the Company's proxy materials, must provide written notice of the proposal to
Calypte's Secretary, at the above address, by February 14, 2001.
OTHER INFORMATION
The Company does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of Stockholders that may properly come
before the meeting or other matters incident to the conduct of the meeting. As
to any other matter or proposal that may properly come before the meeting,
including voting for the election of any person as a director in place of a
nominee named herein who becomes unable to serve or for good cause will not
serve and voting on a proposal omitted from this Proxy Statement pursuant to the
rules of the Securities and Exchange Commission, it is intended that proxies
received will be voted in accordance with the discretion of the proxy holders.
By order of the Board of Directors,
/s/ NANCY E. KATZ
Nancy E. Katz
PRESIDENT, CHIEF OPERATING OFFICER AND
CHIEF FINANCIAL OFFICER
Alameda, California
May 12, 2000
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APPENDIX A
CALYPTE BIOMEDICAL CORPORATION
2000 EQUITY INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent and Subsidiaries, if
any, by offering them an opportunity to participate in the Company's future
performance through awards of Options, Restricted Stock and Stock Bonuses.
Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1. NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 4,000,000 Shares. Shares that: (a) are subject to issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option; or (b) are subject to an Award that
otherwise terminates without Shares being issued, will again be available for
grant and issuance in connection with future Awards under this Plan. Any
authorized shares not issued or subject to outstanding grants under the Prior
Plan on the Effective Date and any shares that: (a) are issuable upon exercise
of options granted pursuant to the Prior Plan that expire or become
unexercisable for any reason without having been exercised in full; (b) are
subject to an award granted pursuant to the Prior Plan but such Award has been
exchanged by the holder thereof for awards granted under this Plan; or (c) are
subject to an award granted pursuant to the Prior Plan that otherwise terminates
without shares being issued, will no longer be available for grant and issuance
under the Prior Plan, but will be available for grant and issuance under this
Plan. At all times the Company shall reserve and keep available a sufficient
number of Shares as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2. ADJUSTMENT OF SHARES. In the event that the number of outstanding
Shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs may be granted only to employees (including officers
and directors who are also employees) of the Company or of a Parent or
Subsidiary. All other Awards may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any Parent
or Subsidiary; provided such consultants, contractors and advisors render bona
fide services. No person will be eligible to receive more than 900,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder.
4. ADMINISTRATION.
4.1. COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the
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direction of the Board, the Committee will have full power to implement and
carry out this Plan. Without limitation, the Committee will have the authority
to:
(a) construe and interpret this Plan, any Award Agreement and any other
agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this
Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination with,
in tandem with, in replacement of, or as alternatives to, other
Awards under this Plan or any other incentive or compensation plan of
the Company or any Parent or Subsidiary;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2. COMMITTEE DISCRETION. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
4.3. EXCHANGE ACT REQUIREMENTS. If two or more members of the Board
are Outside Directors, the Committee will be comprised of at least two
(2) members of the Board, all of whom are Outside Directors. During all times
that the Company is subject to Section 16 of the Exchange Act, the Company will
take appropriate steps to comply with the disinterested administration
requirements of Section 16(b) of the Exchange Act.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be ISOs or NQSOs, the number of Shares
subject to the Option, the Exercise Price of the Option, the period during which
the Option may be exercised, and all other terms and conditions of the Option,
subject to the following:
5.1. FORM OF OPTION GRANT. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO and will be in such form and contain such provisions (which need
not be the same for each Participant) as the Committee may from time to time
approve, and which will comply with and be subject to the terms and conditions
of this Plan.
5.2. DATE OF GRANT. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
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5.3. EXERCISE PERIOD. Options may be exercisable immediately (subject
to repurchase pursuant to Section 12 of this Plan) or may be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; provided, however, that no Option
will be exercisable after the expiration of ten (10) years from the date the
Option is granted; and provided further that no ISO granted to a Ten Percent
Stockholder will be exercisable after the expiration of five (5) years from the
date the ISO is granted. The Committee also may provide for the exercise of
Options to become exercisable at one time or from time to time, periodically or
otherwise, in such number of Shares or percentage of Shares as the Committee
determines.
5.4. EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and shall not be less
than 85% of the Fair Market Value of the Shares on the date of grant; provided
that: (i) the Exercise Price of an ISO will be not less than 100% of the Fair
Market Value of the Shares on the date of grant; and (ii) the Exercise Price of
any ISO granted to a Ten Percent Stockholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5. METHOD OF EXERCISE. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding the Participant's
investment intent and access to information and other matters, if any, as may be
required or desirable by the Company to comply with applicable securities laws,
together with payment in full of the Exercise Price for the number of Shares
being purchased.
5.6. TERMINATION. Notwithstanding the exercise periods set forth in an
Award Agreement, exercise of an Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such Participant's
Options no later than three (3) months after the Termination Date (or
such shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond three
(3) months after the Termination Date deemed to be an NQSO), but in
any event, no later than the expiration date of the Options.
(b) If the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after a
Termination other than because of Participant's death or disability),
then Participant's Options may be exercised and must be exercised by
Participant (or Participant's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years
as may be determined by the Committee, with any such exercise beyond
(a) three (3) months after the Termination Date when the Termination
is for any reason other than the Participant's death or Disability,
or (b) twelve (12) months after the Termination Date when the
Termination is for Participant's death or Disability, deemed to be an
NQSO), but in any event no later than the expiration date of the
Options.
(c) If a Participant is determined by the Board to have committed on act
of theft, embezzlement, fraud, dishonesty, a breach of fiduciary duty
to the Company or Subsidiary, or deliberate disregard of the rules of
the Company or Subsidiary, or if a Participant makes any unauthorized
disclosure of any of the trade secrets or confidential information of
the Company or Subsidiary, engages in any conduct which constitutes
unfair competition with the Company or Subsidiary, induces any
customer of the Company or Subsidiary to break any contract with the
Company or Subsidiary, or induces any principal for whom the Company
or Subsidiary acts as agent to terminate such agency relationship,
(each of
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which acts by the Participant shall constitute "Misconduct" for
purposes of this Plan) neither the Participant, the Participant's
estate nor such other person who may then hold the Options shall be
entitled to exercise any Option with respect to any Shares
whatsoever, after termination of service, whether or not after
termination of service the Participant may receive payment from the
Company or Subsidiary for vacation pay, for services rendered prior
to termination, for services rendered for the day on which
termination occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall give the
Participant an opportunity to present to the Board evidence on his
behalf. For the purpose of this paragraph, termination of service
shall be deemed to occur on the date the Company dispatches notice or
advice to the Participant that his service is terminated.
(d) If a Participant is terminated pursuant to a Change of Control,
subsequent treatment of awards granted pursuant to this Plan is
subject to Section 18.1 hereof.
5.7. LIMITATIONS ON EXERCISE. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.8. LIMITATIONS ON ISOS. If the Fair Market Value of Shares on the
date of grant with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, then the Options for the
first $100,000 worth of Shares to become exercisable in such calendar year
(under this Plan or under any other incentive stock option plan of the Company
or any Parent or Subsidiary) will be ISOs and the Options for the amount in
excess of $100,000 that become exercisable in that calendar year will be NQSOs.
In the event that the Code or the regulations promulgated thereunder are amended
after the Effective Date of this Plan to provide for a different limit on the
Fair Market Value of Shares permitted to be subject to ISOs, such different
limit will be automatically incorporated herein and will apply to any Options
granted after the effective date of such amendment.
5.9. MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Options previously granted.
5.10. NO DISQUALIFICATION. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1. FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such
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person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2. PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at least
85% of the Fair Market Value of the Shares on the date the Restricted Stock
Award is granted, except in the case of a sale to a Ten Percent Stockholder, in
which case the Purchase Price will be 100% of the Fair Market Value. Payment of
the Purchase Price may be made in accordance with Section 8 of this Plan.
6.3. RESTRICTIONS. Restricted Stock Awards will be subject to such
restrictions (if any) as the Committee may impose. The Committee may provide for
the lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or part, based on length of service, performance or such
other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1. AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary. A Stock Bonus may be awarded for past services already
rendered to the Company, or any Parent or Subsidiary pursuant to an Award
Agreement (the "STOCK BONUS AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. A Stock Bonus may be awarded upon satisfaction of such performance goals
as are set out in advance in the Participant's individual Award Agreement (the
"PERFORMANCE STOCK BONUS AGREEMENT") that will be in such form (which need not
be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. Stock Bonuses may vary from Participant to Participant and between groups
of Participants, and may be based upon the achievement of the Company, Parent
and/or Subsidiary individual performance factors or upon such other criteria as
the Committee may determine.
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7.2. TERMS OF STOCK BONUSES. The Committee will determine the number
of Shares to be awarded to the Participant and whether such Shares will be
Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the "PERFORMANCE PERIOD") for each
Stock Bonus; (b) the performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee deems
necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3. FORM OF PAYMENT. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash,
whole Shares, including Restricted Stock, or a combination thereof, either in a
lump sum payment or in installments, all as the Committee will determine.
7.4. TERMINATION DURING PERFORMANCE PERIOD. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee will
determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1. PAYMENT. Payment for Shares purchased pursuant to this Plan may
be made by a form of lawful consideration approved by the Committee including,
wihtout limitation, the following:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has
been fully paid with respect to such shares); or (2) were obtained by
Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as may
be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274
of the Code; provided, however, that Participants who are not
employees or directors of the Company will not be entitled to
purchase Shares with a promissory note unless the note is adequately
secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to the Participant for
services rendered;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price, and
whereby
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the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a NASD
Dealer whereby the Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer
in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
8.2. LOAN GUARANTEES. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
8.3. Notwithstanding Sections 8.1(c) and 8.2, any Participant
executing rights and obtaining Shares pursuant to awards granted under this Plan
must pay cash or other valid consideration approved by the Committee equal to
the aggregate par value of such Shares to the extent required by the Delaware
General Corporation Law.
9. WITHHOLDING TAXES.
9.1. WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2. STOCK WITHHOLDING. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined (the "TAX DATE"). All elections by a Participant to
have Shares withheld for this purpose will be made in writing in a form
acceptable to the Committee and will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, then except as provided below, the election will be
irrevocable as to the particular Shares as to which the election is
made;
(c) all elections will be subject to the consent or disapproval of the
Committee;
(d) if the Participant is an Insider and if the Company is subject to
Section 16(b) of the Exchange Act: (1) the election may not be made
within six (6) months of the date of grant of the Award, except as
otherwise permitted by SEC Rule 16b-3(e) under the Exchange Act, and
(2) either (A) the election to use stock withholding must be
irrevocably made at least six (6) months prior to the Tax Date
(although such election may be revoked at any time at least six
(6) months prior to the Tax Date) or (B) the exercise of the Option
or election to use stock withholding must be made in the ten
(10) day period beginning on the third day following the release of
the Company's quarterly or annual summary statement of sales or
earnings; and
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(e) in the event that the Tax Date is deferred until six (6) months after
the delivery of Shares under Section 83(b) of the Code, the
Participant will receive the full number of Shares with respect to
which the exercise occurs, but such Participant will be
unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1. VOTING AND DIVIDENDS. No Participant will have any of the rights
of a stockholder with respect to any Shares until the transfer of the Shares to
the Participant which transfer shall become effective upon payment for the
Shares and the delivery of a completed Exercise Agreement pursuant to
Section 5.5. After the transfer of the Shares to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's original Purchase
Price pursuant to Section 12.
10.2. FINANCIAL STATEMENTS. The Company will make available financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information. This
obligation is deemed to be satisfied for so long as the Company is a reporting
company pursuant to Section of the Exchange Act.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Award Agreement a right to
repurchase a portion of or all Shares held by a Participant following such
Participant's Termination at any time within ninety (90) days after the later of
Participant's Termination Date and the date Participant purchases Shares under
this Plan, for cash and/or cancellation of purchase money indebtedness, at:
(A) with respect to Shares that are "Vested" (as defined in the Award
Agreement), the higher of: (l) Participant's original Purchase Price, or
(2) the Fair Market Value of such Shares on Participant's Termination Date,
provided, that such right of repurchase (i) must be exercised as to all such
"Vested" Shares unless a Participant consents to the Company's repurchase of
only a portion of such "Vested" Shares and (ii) terminates when the Company's
securities become publicly traded; or (B) with respect to Shares that are not
"Vested" (as defined in the Award Agreement), at the Participant's original
Purchase Price, provided, that the right to repurchase at the original Purchase
Price lapses at the rate of at least 20% per year over five (5) years from the
date the Shares were purchased (or from the date of grant of options in the case
of Shares obtained pursuant to an Award Agreement and Stock Option Exercise
Agreement), and if the right to repurchase is assignable, the assignee must pay
the Company, upon assignment of the right to repurchase, cash equal to the
excess of the Fair Market Value of the Shares over the original Purchase Price.
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13. CERTIFICATES. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange
or automated quotation system upon which the Shares may be listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant's
Shares, the Committee may require the Participant to deposit all certificates
representing Shares, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant
who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under this Plan will be required to pledge and
deposit with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; provided, however, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such obligation
and, in any event, the Company will have full recourse against the Participant
under the promissory note notwithstanding any pledge of the Participant's Shares
or other collateral. In connection with any pledge of the Shares, Participant
will be required to execute and deliver a written pledge agreement in such form
as the Committee will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary or limit in any way the right of the Company
or any Parent or Subsidiary to terminate Participant's employment or other
relationship at any time, with or without cause.
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18. CORPORATE TRANSACTIONS.
18.1. ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which stockholders owning more than 50% of the voting stock of the
Company (other than any stockholder which merges, or which owns or controls
another corporation which merges, with the Company in such merger) cease to own
their shares or other equity interests in the Company, or (d) the sale of all or
substantially all of the assets of the Company, any or all outstanding Awards
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to Participants as was provided
to stockholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions no less favorable to the
Participant. Notwithstanding the foregoing, if (a) any Participant whose options
are (i) assumed, converted or replaced by the successor corporation (if any), or
(ii) substituted by the successor corporation with equivalent Awards or
substantially similar consideration; and (b) such Participant is terminated by
the Company or a successor corporation (if any) without cause within twelve
months of a Change of Control (with such termination to include a Constructive
Termination); then (c) any Options held by the Participant will immediately
become fully vested and exercisable by the Participant. For purposes of this
Section 18.1, the term "Change of Control" shall have the meaning assigned by
this Plan, unless a different meaning is defined in an individual Participant's
Option. In the event such successor corporation (if any) refuses to assume or
substitute Options, as provided above, pursuant to a transaction described in
this Subsection 18.1, then notwithstanding any other provision in this Plan to
the contrary, such Options will accelerate at such time and on such conditions
as the Board determines.
18.2. OTHER TREATMENT OF AWARDS. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 18, in the event
of the occurrence of any transaction described in Section 18.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3. ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either: (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. EFFECTIVE DATE. This Plan will become effective on the date it is
approved by the stockholders of the Company (the "EFFECTIVE DATE").
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20. TERM OF PLAN/GOVERNING LAW. This Plan will terminate ten (10) years
from the date it is approved by the stockholders. This Plan and all agreements
thereunder shall be governed by and construed in accordance with the laws of the
State of Delaware.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"AWARD" means any award under this Plan, including any Option, Restricted
Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CHANGE OF CONTROL" means any of the following events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) who is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such person any
securities acquired directly from the Company or any of its Affiliates)
representing more than 20% of either the then outstanding shares of the Common
Stock of the Company or the combined voting power of the Company's then
outstanding voting securities; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board and any
new director (other than a director designated by a person who has entered into
an agreement or arrangement with the Company to effect a transaction described
in clause (i) or (ii) of this sentence) whose appointment, election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) there is consummated a merger or
consolidation of the Company or subsidiary thereof with or into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding securities which represent immediately after such merger or
consolidation more than 50% of the combined voting power of the voting
securities of either the Company or the other entity which survives such merger
or consolidation or the parent of the entity which survives such merger or
consolidation; or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, more than 50% of the combined voting power of
the voting securities of which are owned by persons in substantially the same
proportions as their
A-11
ownership of the Company immediately prior to such sale. Notwithstanding the
foregoing (i) no "Change of Control" shall be deemed to have occurred if there
is consummated any transaction or series of integrated transactions immediately
following which the record holders of the Common Stock of the Company
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately prior to such
transaction or series of transactions and (ii) "Change of Control" shall exclude
the acquisition of securities representing more than 20% of either the then
outstanding shares of the Common Stock of the Company or the combined voting
power of the Company's then outstanding voting securities by the Company or any
of its wholly owned subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan now or hereafter
established by the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer this
Plan, or if no such committee is appointed, the Board.
"COMPANY" means Calypte Biomedical Corporation or any successor corporation.
"CONSTRUCTIVE TERMINATION" means a resignation by a Participant who has been
elected by the Board as a corporate officer of the Company due to diminution or
adverse change in the circumstances of such Participant's employment with the
Company, as determined in good faith by the Participant; including, without
limitation, reporting relationships, job description, duties, responsibilities,
compensation, perquisites, office or location of employment. Constructive
Termination shall be communicated by written notice to the Company, and such
termination shall be deemed to occur on the date such notice is delivered to the
Company.
"DISABILITY" means a disability, whether temporary or permanent, partial or
total, within the meaning of Section 22(e)(3) of the Code, as determined by the
Committee.
"EFFECTIVE DATE" shall have the meaning given to it in Section 19.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE AGREEMENT" shall have the meaning given to it in Section 5.5.
"EXERCISE PRICE" means the price at which a holder of an Option may purchase
the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National or SmallCap
Markets, its closing price on the Nasdaq National Market on the last
trading day prior to the date of determination as reported in The Wall
Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a national
securities exchange, its closing price on the last trading day prior to
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;
(c) if such Common Stock is publicly traded but is not quoted on the Nasdaq
National or SmallCap Markets nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked
prices on the last trading day prior to the date of determination as
reported in The Wall Street Journal; or
(d) if none of the foregoing is applicable, by the Committee in good faith.
A-12
"INSIDER" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section 16 of
the Exchange Act.
"ISO" means incentive stock option within the meaning of the Code.
"NQSO" means non-qualified stock option.
"OUTSIDE DIRECTOR" means any director who is not: (a) a current employee of
the Company or any Parent or Subsidiary; (b) a current or former officer of the
Company or any Parent or Subsidiary; or (c) currently receiving compensation for
personal services in any capacity, other than as a director, from the Company or
any Parent or Subsidiary; provided, however, that at such time as the term
"Outside Director", as used in Section 162(m) of the Code is defined in
regulations promulgated under Section 162(m) of the Code, "Outside Director"
will have the meaning set forth in such regulations, as amended from time to
time and as interpreted by the Internal Revenue Service.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 5.
"PARENT" means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, if at the time of the granting of an
Award under this Plan, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PLAN" means this Calypte Biomedical Corporation 2000 Equity Incentive Plan,
as amended from time to time.
"PRIOR PLAN" means the Calypte Biomedical Corporation 1991 Stock Option
Plan.
"PURCHASE PRICE" shall have the meaning given to it in Section 6.1.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section 6.
"RESTRICTED STOCK PURCHASE AGREEMENT" shall have the meaning given to it in
Section 6.1.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for issuance
under this Plan, as adjusted pursuant to Sections 2 and 18, and any successor
security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares, pursuant
to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"TEN PERCENT STOCKHOLDER" means any person who directly or by attribution
owns more than 10% of the total combined voting power of all classes of stock of
the Company or of any Parent or Subsidiary.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan with respect
to a Participant, that the Participant has for any reason ceased to provide
services as an employee, director, consultant or advisor to the Company or a
Parent or Subsidiary. An employee will not be deemed to have ceased to provide
services in the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Committee, provided, that such leave is for a
period of not more than 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute or
A-13
unless provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing. In the case of
any employee on an approved leave of absence, the Committee may make such
provisions respecting suspension of vesting of the Option while on leave from
the employ of the Company or a Subsidiary as it may deem appropriate, except
that in no event may an Option be exercised after the expiration of the term set
forth in the Option agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
A-14
CALYPTE BIOMEDICAL CORPORATION
1265 HARBOR BAY PARKWAY
ALAMEDA, CALIFORNIA 94502
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DAVID E. COLLINS and NANCY E. KATZ, and each
of them, with full power of substitution, as the proxy or proxies of the
undersigned to vote all shares of Common Stock of Calypte Biomedical
Corporation which the undersigned is entitled to vote at the annual meeting
of stockholders of Calypte Biomedical Corporation to be held at 1265 Harbor
Bay Parkway, Alameda, California 94502 on June 13, 2000, at 9:00 a.m. local
time, and at any adjournments or postponements thereof, with all powers that
the undersigned would have if personally present thereat:
(CONTINUED ON OTHER SIDE)
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Proposals 1, 2, 3, 4 and 5.
/ x / Please mark
your votes
as this
1. Election of Directors
David E. Collins; Nancy E. Katz; Howard B. Urnovitz, Ph.D.; William A.
Boeger; Paul Freiman; Julius R. Krevans, M.D.; Mark Novitch, M.D.; Zafar
Randawa, Ph.D.; John J. DiPietro, Claudie Williams.
(The Board of Directors recommends a vote FOR.)
FOR all nominees WITHHOLD AUTHORITY
(except as marked to vote for all
to the contrary below) nominees listed below
/ / / /
This proxy will be voted in the election of directors in the manner
described in the proxy statement for the 2000 annual meeting of
stockholders. (INSTRUCTION: To withhold authority to vote for one or
more individual nominees, write such name or names in the space provided
to the right.)
2. Proposal to amend the Company's Restated Certificate of Incorporation to
effect an increase in the number of shares of the Company's Common Stock
authorized for issuance from 30,000,000 to 50,000,000 shares. (The Board
of Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve the 2000 Employee Incentive Plan. (The Board of
Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
/ / / / / /
4. Proposal to amend the 1995 Directors Option Plan. (The Board of Directors
recommends a vote FOR.)
FOR AGAINST ABSTAIN
/ / / / / /
5. Proposal to ratify the selection of KPMG Peat Marwick LLP as the
Company's independent accountants for the 2000 fiscal year. (The Board of
Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and at any adjournment or
postponement thereof.
Dated: _________________________, 2000
______________________________________
Signature of Stockholder
______________________________________
Signature if held jointly
Please sign exactly as name appears above. 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 person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.