SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ X ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Unigene Laboratories, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, New Jersey 07004
(201) 882-0860
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 30, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Unigene
Laboratories, Inc., a Delaware corporation (the "Company"), will be held at the
offices of the Company, 83 Fulton Street, Boonton, New Jersey 07005 on June 30,
1997, at 11:00 A.M., Eastern Daylight Time, for the following purposes:
1. To elect directors of the Company;
2. To approve an amendment to the Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock, par value
$.01 per share, from 48,000,000 shares to 60,000,000 shares.
3. To approve an amendment to the Company's 1994 Employee Stock Option Plan
to increase the total number of shares that may be sold by 750,000 shares.
4. To ratify the appointment of KPMG Peat Marwick LLP as auditors of the
Company; and
5. To transact such other business as may properly come before the meeting
and any and all adjournments thereof.
The Board of Directors has fixed the close of business on May 1, 1997, as
the record date for the determination of stockholders who are entitled to notice
of and to vote at the meeting.
A copy of the Company's Annual Report for the year ended December 31, 1996,
is sent to you herewith.
To assure your representation at the meeting, please sign, date and return
your proxy in the enclosed envelope, which requires no postage if mailed in the
United States.
By Order of the Board of Directors
RONALD S. LEVY
Secretary
May 12, 1997
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, New Jersey 07004-2193
(201) 882-0860
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unigene Laboratories, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders of the
Company to be held at the offices of the Company, 83 Fulton Street, Boonton, New
Jersey 07005, on June 30, 1997, at 11:00 A.M., Eastern Daylight Time.
You are requested to complete, date and sign the accompanying form of proxy
and return it to the Company in the enclosed envelope. The proxy may be revoked
at any time before it is exercised by written notice to the Company bearing a
later date than the date on the proxy, provided such notice is received by the
Company prior to the start of the meeting. Any stockholder attending the meeting
may vote in person whether or not he has previously submitted a proxy. Where
instructions are indicated, a duly executed proxy will be voted in accordance
with such instructions. Where no instructions are indicated, a duly executed
proxy will be voted for each of the director nominees named herein and in favor
of each of the proposals set forth in the attached Notice.
The Board of Directors has fixed the close of business on May 1, 1997, as
the record date (the "Record Date") for the determination of stockholders who
are entitled to notice of and to vote at the meeting. As of the Record Date, the
outstanding shares of the Company entitled to vote were 37,000,412 shares of
common stock, par value $.01 per share ("Common Stock"), the holders of which
are entitled to one vote per share.
A majority of the outstanding shares of Common Stock, present in person or
represented by proxy, will constitute a quorum for the conduct of business at
the Annual Meeting. Directors will be elected by a plurality of the votes cast.
The affirmative vote of a majority of the outstanding shares is required for the
approval of the increase in the authorized shares of Common Stock and for the
approval of the increase in the total number of shares that may be sold under
the 1994 Employee Stock Option Plan. The affirmative vote of a majority of the
votes present and entitled to vote is required for the ratification of the
appointment of KPMG Peat Marwick LLP as auditors of the Company. For matters
that require for adoption the affirmative vote of a majority of the shares of
Common Stock outstanding, broker non-votes and abstentions will constitute a
vote against the matter. For matters that require for adoption the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote,
abstentions are considered as shares present and entitled to vote and,
therefore, have the effect of a no vote, whereas broker non-votes are considered
shares not present and entitled to vote and, therefore, have no impact on the
outcome of the vote.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and form of proxy are being mailed to the stockholders on or about
May 12, 1997. A copy of the Company's Annual Report for the year ended December
31, 1996, is also enclosed.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of May 1, 1997, concerning
the persons who are known by the Company to own beneficially more than 5 percent
of the outstanding shares of Common Stock, other than persons who are identified
under the heading "Security Ownership of Management".
Name and Address of Amount of Beneficial Percentage of
Beneficial Owner Ownership Outstanding Shares
---------------- --------- ------------------
Loews Corporation (1) 3,000,000 7.9.%
CNA Plaza
Chicago, IL 60685
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(1) Based on information furnished by Loews Corporation in a Schedule 13G, dated
March 4, 1997, filed with the Securities and Exchange Commission in which it
reports that the securities, which consist of 2,000,000 shares of Common Stock
and warrants to purchase 1,000,000 shares of Common Stock, are owned by
Continental Casualty Company, which is owned by CNA Financial Corp., a company
in which Loews Corporation has an 84% equity interest.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of May 1, 1997, concerning
the beneficial ownership of Common Stock by each director of the Company, each
executive officer of the Company listed in the Summary Compensation Table, and
all directors and executive officers of the Company as a group.
Common Stock of the Company
---------------------------
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(1) Class
---------------- ----------------------- -----
Warren P. Levy 1,911,700 (2) 5.2%
Ronald S. Levy 1,926,700 (2) 5.2%
Jay Levy 439,950 1.2%
Robert F. Hendrickson 15,000 --
Robert G. Ruark 30,000 (3) 0.1%
George M. Weimer 30,000 (4) 0.1%
Directors and Executive Officers
as a Group (6 persons) 4,153,350 (2)(5) 11.2%
- ----------------------
(1) Unless otherwise noted, each listed person and each member of the group has
reported that he has sole voting and sole dispositive power with respect to
securities shown as beneficially owned by him.
(2) Includes 200,000 shares of Common Stock held in a family trust over on
which Warren P. Levy and Ronald S. Levy in their capacity as trustees share
voting and dispositive power.
(3) Consists solely of shares of Common Stock that Mr. Ruark has the right to
acquire pursuant to stock options that are exercisable immediately.
(4) Consists solely of shares of Common Stock that Mr. Weimer has the right to
acquire pursuant to stock options that are exercisable immediately.
(5) Includes an aggregate of 60,000 shares of Common Stock that such persons
have the right to acquire pursuant to stock options that are exercisable
immediately.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors of the Company are to be elected at the meeting. The
directors will serve until the Annual Meeting of Stockholders to be held in
1998, and until their respective successors shall have been elected and
qualified.
Each of the persons named below is currently a director of the Company and,
except for Robert F. Hendrickson, each was elected as a director at the
Company's Annual Meeting of Stockholders in 1996. Mr. Hendrickson was elected a
director by the Board of Directors in January 1997. The Board of Directors of
the Company has no reason to believe that any of the nominees will be
unavailable for election as a director. However, should any of them become
unwilling or unable to accept nomination for election, the individuals named in
the enclosed proxy will vote for the election of a substitute nominee selected
by the Board of Directors or, if no such person is nominated, the Board of
Directors will reduce the number of directors to be elected.
The following table sets forth certain information with respect to the six
nominees.
Served
Continuously
Name Age as Director Since
---- --- -----------------
Warren P. Levy (1) 45 1980
Ronald S. Levy (1) 48 1980
Jay Levy (1) 73 1980
Robert F. Hendrickson 64 1997
Robert G. Ruark 55 1993
George M. Weimer 78 1984
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(1) Dr. Warren P. Levy and Dr. Ronald S. Levy are brothers and are the sons of
Mr. Jay Levy.
Dr. Warren P. Levy, a founder of the Company, has served as President,
Chief Executive Officer and director of the Company since its formation in
November 1980. Dr. Levy holds a Ph.D. in biochemistry and molecular biology from
Northwestern University and a bachelor's degree in chemistry from the
Massachusetts Institute of Technology.
Dr. Ronald S. Levy, a founder of the Company, has served as Vice President
and director of the Company since its formation in November 1980 and as
Secretary since May 1986. Dr. Levy holds a Ph.D. in bioinorganic chemistry from
Pennsylvania State University and a bachelor's degree in chemistry from Rutgers
University.
Mr. Jay Levy, a founder of the Company, has served as Chairman of the Board
of Directors and Treasurer of the Company since its formation in November 1980.
Mr. Levy is a part-time employee of the Company and devotes approximately 15% of
his time to the Company. From 1985 through February 1991, he served as the
principal financial advisor to the Estate of Nathan Cummings and its principal
beneficiary, The Nathan Cummings Foundation, Inc., a large charitable
foundation. For the seventeen years prior thereto, he performed similar services
for the late Nathan Cummings, a noted industrialist and philanthropist.
Mr. Robert F. Hendrickson has been a director since January 1997. Mr.
Hendrickson was Senior Vice President, Manufacturing and Technology, for Merck &
Co., Inc., an international pharmaceutical company, from 1985 to 1990. Since
1990, Mr. Hendrickson has been a management consultant with a number of
biotechnology and pharmaceutical companies among his clients. He is currently
Chairman of the Board of Envirogen, Inc. an environmental biotechnology company,
and a director of Cytogen, Inc. and The Liposome Co., Inc., both of which are
biotechnology companies.
Mr. Robert G. Ruark has been an independent consultant since June 1993.
Prior thereto, he had been employed by Merck and Co., Inc., an international
pharmaceutical company, for 25 years in various legal and administrative
capacities. Mr. Ruark, an attorney, has extensive experience in international
licensing and business development. When he retired in 1993, Mr. Ruark was Vice
President of the Merck Human Health Division.
Mr. George M. Weimer has been an independent general partner and director
of Westford Technology Ventures L.P., a venture capital investment company,
since May 1988. For more than 40 years prior thereto, Mr. Weimer worked in
various administrative capacities for divisions and subsidiaries of Merck & Co.,
Inc. and E.R. Squibb & Sons, both of which are major international
pharmaceutical companies. When he retired in 1984, Mr. Weimer was Senior Vice
President-Administration for Merck Sharp & Dohme International Pharmaceuticals,
Inc., a position he had held since 1981. Since 1984, he has served as a
pharmaceutical consultant for the Company and, from time to time, for other
corporations.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company does not have standing nominating or
compensation committees. The members of the Audit Committee are Jay Levy, Robert
G. Ruark and George M. Weimer. The Audit Committee consults with the independent
certified public accountants and reviews the reports submitted by such auditors.
During 1996, there were four meetings of the Board of Directors and one
meeting of the Audit Committee.
Directors who are neither employees nor consultants on retainer receive a
fee of $1,000 for each Board meeting attended. Mr. Robert G. Ruark and Mr.
Robert F. Hendrickson are the only directors who qualified for such fees.
Although not on retainer, Mr. Ruark is entitled to consulting fees of either
$500 or $1,000 per day, depending on the type of project. No such fees were paid
to Mr. Ruark in 1996. Mr. George M. Weimer receives a $1,000 per month retainer
for consulting services. Mr. Weimer is also entitled to receive commissions
ranging from 1% to 3% on revenues procured by him for the Company. No such
commissions have been earned to date. The Company believes that the fee and
commission arrangements with Mr. Ruark and Mr. Weimer are no more favorable than
would be paid to unaffiliated third parties. Audit Committee members do not earn
additional compensation.
In 1994, the Company's stockholders approved the adoption of the 1994
Outside Directors Stock Option Plan (the "Plan"). Under the Plan, each person
who was an outside director at the time of the adoption of the Plan was granted,
and each person who subsequently is elected as an outside director is granted, a
ten-year option to purchase 30,000 shares of Common Stock at an exercise price
equal to the market price of the Common Stock on the date of the grant. The
options vest in equal annual increments over the three-year period following the
grant. If the recipient's service as a director terminates, the option will
expire three (3) months after the date of such termination. Messrs. Hendrickson,
Ruark and Weimer each have received under the Plan grants of options to purchase
30,000 shares.
REPORT OF THE BOARD OF DIRECTORS ON 1996 EXECUTIVE COMPENSATION
The entire Board of Directors was responsible for determining the 1996
compensation of the three executive officers of the Company. This Report
describes the policies and other considerations used by the Board in
establishing such compensation.
The members of the Board are familiar with various forms and types of
remuneration from reports of other public corporations and their own business
experience.
The Board has determined that, because the Company was still in a research
and preproduction phase in 1996, compensation for 1996 for executive officers
could not be related primarily to the performance of the Company's stock or to
the annual profit performance of the Company. A primary consideration for the
compensation of an executive officer of the Company is his leadership effort in
the development of proprietary products and processes, and in planning for
future growth and profitability. Other significant factors considered by the
Board of Directors in determining executive officers' compensation were salaries
paid by other public companies in the health-care related biotechnology field to
comparable officers, the duties and responsibilities of the executive officers
in the past and as projected, their past performance and commitment to the
Company, and incentives for future performance, although no specific weighting
was allocated to any of these considerations. The executive officers were also
consulted with respect to their compensation and their plans for compensation
for other personnel in order to coordinate all compensation policies of the
Company.
The Board of Directors determined that no bonuses or salary increases
should be paid to executive officers in 1996, primarily on the basis of the
Company's losses and the projected expenses and cash flow required for the
further development and clinical trials for the Company's calcitonin pill as
well as the regulatory expenses and clinical trials for the Company's injectable
form of calcitonin.
The Board also determined that no stock options be awarded to executive
officers for 1996, at the request of such executive officers.
The compensation for the Chief Executive Officer for 1996 was based on the
same policies and considerations set forth above for executive officers
generally.
Warren P. Levy
Ronald S. Levy
Jay Levy
Robert G. Ruark
George M. Weimer
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Executive compensation for 1996 was determined by the Board of Directors of
the Company consisting of Messrs. Warren P. Levy, Ronald S. Levy, Jay Levy,
Robert G. Ruark, and George M. Weimer.
Three of the members of the Board of Directors, Warren P. Levy, Ronald S.
Levy and Jay Levy, are executive officers of the Company. Jay Levy is the father
of Warren and Ronald Levy.
During 1995, Warren P. Levy, Ronald S. Levy, Jay Levy and another family
member loaned a total of $1,905,000 to the Company of which $1,850,000 was
secured by secondary liens on the Fairfield plant and equipment and the Boonton
manufacturing equipment. The notes bear interest at the Merrill Lynch Margin
Loan Rate plus .25% (8.875% at April 15, 1997). Under the terms of the Company's
9.5% Senior Secured Convertible Debentures, for so long as the Debentures are
outstanding, repayment of the loans is contingent upon the achievement of
certain corporate benchmarks and is subject to a maximum limitation of
$1,250,000. A total of $440,000 in principal payments was made during 1996,
leaving an outstanding balance of $1,465,000 at December 31, 1996. No interest
has been paid to date.
EXECUTIVE COMPENSATION
The following table sets forth for the years 1996, 1995 and 1994
compensation paid to the Chief Executive Officer of the Company and to each
other executive officer whose compensation in 1996 exceeded $100,000 for
services rendered by such executive officers in all capacities in which they
served:
SUMMARY COMPENSATION TABLE
All Other
Annual Compensation Long Term Compensation Compensation(1)
------------------- ----------------------- ---------------
Awards Payouts
------ -------
Other Restricted
Name and Annual Stock Options/ LTIP
Principal Position Year Salary Bonus Compensation Award SARs Payouts
- ------------------ ---- ------ ----- ------------ ----- ---- -------
Warren P. Levy, 1996 $145,454 $ -0- $ -0- $ -0- $ -0- $ -0- $ 13,806
President, Chief 1995 145,394 -0- -0- -0- -0- -0- 13,811
Executive Officer 1994 145,344 -0- -0- -0- -0- -0- 12,942
and Director
Dr. Ronald S. Levy, 1996 140,889 -0- -0- -0- -0- -0- 16,746
Vice President and 1995 140,829 -0- -0- -0- -0- -0- 16,616
Director 1994 140,716 -0- -0- -0- -0- -0- 13,914
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(1) Represents premium paid by the Company on executive split-dollar life
insurance.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the NASDAQ Market Index and of a peer group index
determined by Standard Industrial Classification (SIC) code.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG UNIGENE LABORATORIES, INC.
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
FISCAL YEAR ENDING
--------------------------------------------------
COMPANY 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
UNIGENE LABS INC 100 101.52 60.61 57.58 31.82 49.24
INDUSTRY INDEX 100 82.68 68.63 46.07 89.42 79.54
BROAD MARKET 100 100.98 121.13 127.17 164.96 204.98
The industry index chosen was:
SIC Code 8731 - Commercial Physical & Biological Research
The current composition of the industry index is as follows:
Abiomed Inc.
AC Nielsen Corp.
Affymetrix Inc.
Amerigon Inc. CL A
Aura Systems Inc.
Avigen Inc.
Cadus Pharmaceutical CP
Catalytica Inc.
Celgene Corp.
Cocensys Inc.
Collaborative Clin Res
Conductus Inc.
Core Laboratories N.V.
Covance Inc.
Cree Research Inc.
CV Therapeutics Inc.
Cyclo 3 PSS Corp.
Ecogen Inc.
Ecoscience Corp.
Electronic Designs Inc.
Electrosource Inc.
Energy Biosystems Corp.
Energy Conversn Devices
Excel Technology Inc.
Fiberchem Inc.
Genset ADR
Illinois Superconductor
Incyte Pharmaceuticals
Innerdyne Inc.
Integrated Process Equip.
Irvine Sensors Corp.
KFX Inc.
Kopin Corp.
Krug Internat Corp
Life Medical Science Inc.
Lifecell Corporation
Liposome Co. Inc.
Myriad Genetics Inc.
Neopharm Inc.
Neose Technologies Inc.
Neotherapeutics Inc.
Neurocrine Biosciences
Organogenesis Inc.
Pacific Biometrics Inc.
Parexel Internat CP
Pharmaceutical Prod Dev
Pharmacopeia Inc.
Polymer Research of Amer
Primark Corp.
Protein Polymer Tech
Quintiles Transational
Research Frontiers Inc.
Satcon Technology Corp.
SI Diamond Technol
Spire Corp.
Summit Technology Inc.
Superconductor Tech.
Synaptic Pharmaceutical
Valence Technology Inc.
Xenova GR PLC ADS
XXSYS Technologies Inc.
PROPOSAL 2
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED
COMMON STOCK FROM 48,000,000 TO 60,000,000 SHARES
The Board of Directors unanimously has adopted resolutions approving and
recommending that the stockholders adopt an amendment to Paragraph FOURTH of the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock, par value $.01 per share, from 48,000,000 shares to
60,000,000 shares. Shares of the Common Stock do not have preemptive or similar
rights.
As of April 15, 1997, the Company had a total of 37,007,702 shares of
Common Stock issued and outstanding and a total of 7,987,918 shares of Common
Stock reserved for issuance as follows:
No. of Shares Reserved
----------------------
1984 Employee Stock Option Plan 198,650
1994 Employee Stock Option Plan 1,500,000
1994 Outside Director Stock Option Plan 180,000
Convertible Debentures 774,362
Warrants 5,319,906
Other Options 15,000
---------
Total Shares Reserved 7,987,918
The Board of Directors of the Company believes that the increase in the
number of authorized shares of Common Stock is in the best interests of the
Company and its stockholders. The Board of Directors believes that the
authorized Common Stock should be increased to provide sufficient shares for
such corporate purposes as may be determined by the Board of Directors to be
necessary or desirable. The Board of Directors considers the increase of the
authorized number of shares of Common Stock essential to ensure prompt
availability of shares for issuance should transactions requiring the issuance
of additional shares, warrants or options be consummated. Also, the outstanding
warrants and options have, and any warrants or options issued in the future may
contain, anti-dilution provisions requiring adjustments which would increase the
number of shares subject to such warrants and options under certain
circumstances.
Under the Delaware General Corporation Law, the Board of Directors
generally may issue authorized but unissued shares of Common Stock without
further stockholder approval. The Board of Directors does not currently intend
to seek stockholder approval prior to any future issuance of the additional
authorized shares of Common Stock, unless stockholder action is required in a
specific case by applicable law, the rules of any exchange or market on which
the Company's securities may then be listed, or the Certificate of Incorporation
or By-Laws of the Company then in effect. Frequently, opportunities arise that
require prompt action, and the Company believes that the delay necessitated for
stockholder approval of a specific issuance could be to the detriment of the
Company and its stockholders.
The additional shares of Common Stock authorized for issuance pursuant to
this proposal will have all of the rights and privileges that the currently
outstanding shares of Common Stock possess under the Company's Certificate of
Incorporation. The increase in authorized shares would not affect the terms or
rights of holders of existing shares of Common Stock. All outstanding shares of
Common Stock would continue to have one vote per share on all matters to be
voted on by the stockholders, including the election of directors.
The issuance of any additional shares of Common Stock by the Company may,
depending on the circumstances under which those shares are issued, reduce
stockholders' equity per share and would reduce the percentage ownership of
Common Stock of existing stockholders.
The authorized but unissued shares of Common Stock could be used to make
more difficult a change in control of the Company. For example, such shares
could be sold to purchasers who might side with the Board of Directors in
opposing a takeover bid that the Board determines not to be in the best
interests of the Company and its stockholders. Such a sale could have the effect
of discouraging an attempt by another person or entity, through the acquisition
of a substantial number of shares of the Company's Common Stock, to acquire
control of the Company, since the issuance of new shares could be used to dilute
the stock ownership of the acquirer. Neither the Certificate of Incorporation
nor By-Laws of the Company now contains any provisions that are generally
considered to have an anti-takeover effect. The Company is not aware of any
pending or threatened efforts to obtain control of the Company.
To accomplish the increase of the authorized shares of Common Stock, the
following resolution authorizing the amendment of the Certificate of
Incorporation will be submitted to a vote of the stockholders at the meeting:
"RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Fourth Article thereof so that, as amended said
Article shall be and read as follows:
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is sixty million (60,000,000), having a par value
of $.01 per share. All such shares are of one class and are common stock."
Approval of the resolution authorizing the amendment to increase the number
of authorized shares of Common Stock requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 48,000,000 TO 60,000,000 SHARES.
PROPOSAL 3
AMENDMENT TO THE COMPANY'S 1994 EMPLOYEE STOCK OPTION PLAN
On June 17, 1994, the stockholders approved the adoption of the 1994
Employee Stock Option Plan ("1994 Plan"). The 1994 Plan provides for the
issuance of a maximum of 1,500,000 shares of Common Stock. Through April 15,
1997, options for an aggregate of 1,442,250 shares of Common Stock have been
granted. After taking into account the cancellation of options for 85,200
shares, 142,950 shares remain available for option grants under the 1994 Plan.
Of the total options granted, 538,750 were granted pursuant to an employee
"swap" agreement to replace an equal number of shares previously granted under
the Company's 1984 Employee Stock Option Plan. The 1994 Plan terminates on June
16, 2004. The text of the 1994 Plan, as currently in effect, is set forth in the
Appendix to this Proxy Statement and is hereby incorporated by reference.
On April 8, 1997, the Board of Directors adopted, subject to and effective
upon stockholder approval, an amendment to the 1994 Plan to increase the maximum
number of shares authorized for issuance by 750,000 shares to 2,250,000 shares.
The purpose of the amendment is to enable the Company to continue to provide
employees of the Company with opportunities to purchase stock in the Company,
thereby increasing their motivation for and interest in the Company's long-term
success.
Federal Income Tax Information
The following brief description of the tax consequences of awards under the
1994 Plan is based on Federal tax laws currently in effect and does not purport
to be a complete description of such Federal tax consequences.
There are no Federal tax consequences either to the optionee or to the
Company upon the grant of an Incentive Stock Option ("ISO") or a Non-qualified
Stock Option ("NQSO"). On the exercise of an ISO, the optionee will not
recognize any income and the Company will not be entitled to a deduction,
although such exercise may give rise to alternative minimum tax liability for
the optionee. Generally, if the optionee disposes of shares acquired upon
exercise of an ISO within two years of the date of grant or one year of the date
of exercise, the optionee will recognize ordinary income, and the Company will
be entitled to a deduction, equal to the excess of the Fair Market Value of the
shares on the date of exercise over the option price (limited generally to the
gain on the sale). The balance of any gain, and any loss, will be treated as a
capital gain or loss to the optionee. If the shares are disposed of after the
foregoing holding requirements are met, the Company will not be entitled to any
deduction, and the entire gain or loss for the optionee will be treated as a
capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise Fair Market
Value of the shares acquired over the option price will generally be taxable to
the optionee as ordinary income and deductible by the Company. The disposition
of shares acquired upon exercise of a NQSO will generally result in a capital
gain or loss for the optionee, but will have no tax consequences for the
Company.
Under the terms of the 1994 Plan, approval of the resolution authorizing
the amendment to increase the total number of shares of Common Stock that may be
sold under the Company's 1994 Employee Stock Option Plan requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1994 EMPLOYEE STOCK OPTION PLAN.
PROPOSAL 4
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
public accountants, to serve as the Company's independent auditors for the
fiscal year commencing January 1, 1997. Although not required by the Company's
Certificate of Incorporation or By-Laws, the Board of Directors is submitting to
a vote of the stockholders a proposal to ratify the appointment of KPMG Peat
Marwick LLP. KPMG Peat Marwick LLP served as the independent auditors for the
Company for the year ended December 31, 1996. A representative of the firm will
be present at the meeting to respond to appropriate questions and will have the
opportunity to make a statement, if such representative desires to do so.
Ratification of the appointment of KPMG Peat Marwick LLP requires the
affirmative vote of a majority of the shares of Common Stock present and
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG PEAT
MARWICK LLP.
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
that are likely to be brought before the meeting. However, in the event that any
other matters properly come before the meeting, the persons named in the
enclosed form of proxy will vote all proxies received in accordance with their
judgment on such matters.
PROPOSALS BY STOCKHOLDERS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders of the Company to be held in 1998, must be received by January 12,
1998, if they are to be included in the Company's Proxy Statement and form of
proxy relating to such meeting.
SOLICITATION OF PROXIES
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Meeting and the enclosed form of proxy will be borne by the Company.
In addition to the solicitation of proxies by use of the mails, the Company may
utilize the services of some of its officers and regular employees (who will
receive no compensation therefor in addition to their regular salaries) to
solicit proxies personally and by telephone and telefax. The Company has
retained Regan & Associates, Inc. to aid in the solicitation of proxies, for
which such firm will be paid a fee of $5,000 plus reimbursable expenses.
By Order of the Board of Directors
RONALD S. LEVY
Secretary
Fairfield, New Jersey
May 12, 1997
Appendix
UNIGENE LABORATORIES, INC.
1994 EMPLOYEE STOCK OPTION PLAN
1. Purpose. This Employee Stock Option Plan (the "Plan") is intended to
provide incentives to selected employees of Unigene Laboratories, Inc. (the
"Company") by providing them with opportunities to purchase stock in the
Company, thereby increasing their motivation for and interest in the Company's
long term success. The term Company shall include controlled subsidiaries where
the context requires.
2. Administration. The Plan shall be administered either by the Board of
Directors of the Company (the "Board") or by a Committee (the "Committee") of
not less than two directors of the Company. Each member of such Board or
Committee shall be a person who, at the time of his appointment to, and at all
times during his service as a member thereof satisfies the requirements of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor statute or regulation regarding the same
subject matter.
The Board or the Committee shall have authority, subject to the terms of
the Plan, to determine the employees eligible for grant of options under the
Plan, the employees to whom options shall be granted, whether the option is an
Incentive Stock Option or a Non-qualified Stock Option, the number of shares to
be covered by each option, the time or times at which options shall be granted,
the option price, the term of the option, the date or dates upon which the
option may be exercised, and the installments, if any, in which options may
become exercisable, and the terms and provisions of the instruments by which
options shall be evidenced; to interpret the Plan; and to make all
determinations necessary or advisable for the administration of the Plan. The
Board or the Committee shall also have the authority to grant to any holder of a
stock option under this Plan a new stock option in substitution for such
holder's existing option under this Plan which, upon his acceptance of the new
option, would be cancelled, and may also grant an additional option or options
to any holder of an option under this Plan or any other plan.
No member of the Board or the Committee shall be liable for any action
taken or omitted or for any determination made in good faith with respect to the
Plan or any option granted under the Plan.
3. Eligibility. Options may be granted only to persons who are employees
(including officers and directors who are employees) of the Company, and, in the
discretion of and as conclusively determined by the Board or the Committee, may
include employees on authorized leave of absence.
4. Stock. The stock as to which options may be granted is the Company's
common stock ("Common Stock"). When options are exercised, the Company may
either issue unissued shares of Common Stock or transfer issued shares of Common
Stock held in its treasury. The total amount of Common Stock which may be sold
under the Plan shall not exceed one million five hundred thousand (1,500,000)
shares (subject to adjustment as provided in Section 7 herein). In the event
that any outstanding option under the Plan, for any reason, expires, is
surrendered or terminated or is canceled after a substitution pursuant to
Section 2 hereof prior to the exercise thereof with respect to any shares of
Common Stock covered thereby, such shares shall be available for re-offering
under the Plan.
5. Granting of Options. Options may be granted under the Plan at any time
prior to the tenth (10th) anniversary of the effective date of the Plan as set
forth in Section 11 hereof. The date of grant of an option under the Plan shall
be the date on which the option is awarded by the Committee or the Board.
6. Terms and Conditions of Options. Options may be in the form of
"incentive stock options" as that term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended ("Code"), herein called "Incentive Stock
Options", or in the form of options which are not described in Section 422 or
Section 423 of the Code, herein called "Non-qualified Stock Options". Options
granted under this Plan shall be evidenced by instruments in such form as the
Committee or the Board may from time to time approve. Such options and the
instruments issued to evidence such options shall conform to the following terms
and conditions:
(a) Number of Shares. The option shall be granted for a specific number of
shares of Common Stock.
(b) Option Price. The purchase price at which an option may be granted
shall be not less than the Fair Market Value of the Common Stock at the
time the option is granted or the par value thereof, if any, whichever
is greater. Fair Market Value of a share of Common Stock on any date
means the average of the closing sales price of a share of Common Stock
as reflected in the report of trading by the principal quotation
service, market or stock exchange on which the Common Stock is traded
or listed on such date (or, if no such shares were publicly traded on
that date, the next preceding date that such shares were so traded) as
published in The Wall Street Journal or in any other publication
selected by the Board or the Committee; provided, however, that if
shares of Common Stock shall not have been publicly traded for more
than ten (10) days immediately preceding such date, then the Fair
Market Value of a share of Common Stock shall be determined by the
Board or the Committee in such manner as it may deem appropriate and
its decision shall be final and binding.
(c) Payment. The option price shall be payable upon the exercise, in whole
or in part, of the option, in cash, or to the extent authorized by the
Board or the Committee prior to the time the option is exercised, in
shares of Common Stock or in a combination of cash and such shares. The
value of a share of Common Stock delivered in payment of the purchase
price shall be its Fair Market Value on the date the option is
exercised. No shares shall be issued or transferred to an optionee
until full payment therefor has been made.
(d) Term of Options. Each option granted shall expire no later than ten
(10) years after the date of its grant.
(e) Exercise of Option. Each option shall become exercisable in one or more
installments at the time or times as specified in the grant of the
option. Once an installment becomes exercisable, it shall remain
exercisable in whole or in part until expiration or termination of the
option, except as hereinafter set forth in Section 7. No fractional
shares shall be issued or cash adjustment for fractional shares made
upon exercise of an option.
(f) Death and Other Termination of Employment. Any option which has not
theretofore expired, shall terminate upon termination of the optionee's
employment with the Company whether by death or otherwise, and no
shares of Common Stock may thereafter be purchased pursuant to such
option, except that:
(i) Upon termination of employment (other than by death or for Cause),
an optionee may, within three (3) months after the date of
termination of employment, purchase all or any part of the shares
of Common Stock which such optionee was entitled to purchase under
such option on the date of termination of employment.
(ii) Upon the death of any optionee while employed with the Company or
within the three-month period referred to in Section 6(f)(i)
above, the optionee's estate or the person to whom such optionee's
rights under the option are transferred by Will or the laws of
descent and distribution may, within one hundred eighty (180) days
after the date of such optionee's death, purchase all or any part
of the shares of Common Stock which such optionee was entitled to
purchase under such option on the date of death. Nothing in this
Section 6(f) shall authorize the exercise of an option after the
expiration of the exercise period therein provided, nor later than
ten (10) years after the date of grant.
(iii)If employment of an optionee by the Company terminates by reason
of discharge for Cause, the option shall terminate upon the giving
of notice of termination to the optionee or on the termination
date stated in the option, whichever is earlier. The term Cause
shall mean discharge from employment because of fraud, disclosure
of trade secrets, activities in competition with the business of
the Company, misappropriation of assets of the Company,
intentional acts materially harmful to the Company or its
business, or conviction of a crime involving moral turpitude.
(g) Assignability. No option granted under the Plan shall be assignable or
transferable by the optionee except by Will or by the laws of descent
and distribution, and during the lifetime of the optionee, each option
shall be exercisable only by the optionee or a duly appointed committee
for an incompetent optionee.
(h) Taxes and Withholding. The Company's obligation to deliver shares
and/or property upon the exercise of any option or to accept shares on
account of the purchase price shall be subject to applicable federal,
state and local taxes and withholding requirements.
(i) Limitations on Incentive Stock Options. Notwithstanding anything to the
contrary herein set forth:
(x) The option price under an Incentive Stock Option granted to an
individual who, at the time the option is granted, owns stock
possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the Company shall be 110%
of the Fair Market Value of the stock at the time of grant and the
term shall be for no more than five (5) years.
(y) The aggregate Fair Market Value of shares with respect to which
Incentive Stock Options are exercisable (under this Plan and all
other plans of the Company and its parent and subsidiary
companies) for the first time by an optionee during any calendar
year shall not exceed $100,000, applied to such options in the
order granted. The aggregate Fair Market Value of shares of stock
shall be determined as of the time the option with respect to such
shares is granted.
(z) All options granted as Incentive Stock Options shall comply with
subsection (b) of Section 422 of the Code.
(j) Rights as a Stockholder. An optionee shall have no rights as a
Stockholder with respect to any shares covered by his option until the
issuance of a stock certificate to him for such shares. No adjustment
shall be made for dividends or other rights for which the record date
is prior to the issuance of such stock certificate, except as set forth
in Section 7 herein.
(k) Securities Act and Other Provisions. The instruments evidencing options
may contain such other provisions, not inconsistent with the Plan, as
the Board or the Committee deems advisable. Among these provisions may
be a requirement that an optionee represent to the Company in writing,
when an option is granted, and when he purchases shares on its
exercise, that he is accepting such option, or purchasing such shares,
unless they are then covered by an effective registration statement
under the Securities Act of 1933, as amended ("Securities Act"), for
his own account for investment and not with a view to distribution of
any such shares. The stock certificate issued upon exercise of the
option may bear such legend as counsel for the Company may deem
advisable in connection with the Act. The Company shall have no
obligation to register the shares issuable upon exercise of the options
granted hereunder under the Securities Act or to list such shares on
any quotation service, market or stock exchange or to continue such
registration or listing.
7. Adjustments, Termination and Acceleration of Options in Certain Events.
To the extent deemed equitable and appropriate by the Board or the Committee, in
its sole discretion, the number, price and class of shares covered by each
option and the total number of shares that may be sold under the Plan shall be
appropriately adjusted to reflect any stock dividend, stock split or share
combination of the Common Stock or any recapitalization of the Company,
spin-off, split-up, rights offering, and in any merger or consolidation,
reorganization, exchange of shares, or other change in the corporate structure
("corporate change"), liquidation or dissolution. Any option granted under the
Plan may pertain to the securities and other property which holders of Common
Stock would be entitled to receive in connection with such event.
Notwithstanding the foregoing, and unless the acquiring, surviving or continuing
corporation agrees in writing to assume the obligations under the option, in the
event of a dissolution or liquidation of the Company, or a transfer of all or
substantially all of its assets, or a merger or consolidation, or corporate
change, the Board or the Committee may, in its sole discretion, terminate
options as of the effective date of such event or accelerate the date when any
or all installments of options shall become exercisable. Options granted under
the Plan or any other plan need not be treated identically by the Board or the
Committee with respect to termination, acceleration, or assumption. All
decisions of the Committee or the Board hereunder shall be final and binding
upon the option holder, provided, however, no Incentive Stock Option granted
pursuant to this Plan shall be adjusted or accelerated in a manner that causes
such Incentive Stock Option to fail to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code.
8. Effect on Optionee's Rights. All payments and benefits under the Plan
shall constitute special benefits and shall not affect the level of benefits
provided to or received by any optionee (or the optionee's estate or
beneficiaries) as part of any employee benefit plan of the Company. The Plan
shall not be construed to affect in any way an optionee's rights and obligations
under any other plan maintained by the Company on behalf of employees. Nothing
in the Plan or in any option granted pursuant to the Plan shall confer upon any
employee the right to continue in the employment of the Company or restrict the
right of the Company to terminate the employment of any employee.
9. Indemnification of Board and Committee. In addition to such other rights
of indemnification as they may have as members of the Board or as members of the
Committee, the members of the Board and the Committee shall be indemnified by
the Company against all costs and expenses reasonably incurred by them in
connection with any claim, action, suit or proceeding to which they or any of
them may be or become a party by reason of any action taken or failure to act
under or in connection with the Plan, or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except a
judgment based upon a finding of bad faith. Upon the making of any such claim or
commencement of any such action, suit or proceeding, a Board or Committee member
shall notify the Company in writing, giving the Company an opportunity, at its
own expense, to handle, settle or defend the same before such Board or Committee
member undertakes to handle, settle or defend the same on his own behalf.
10. Compliance with Rule 16b-3. It is the Company's intent that the Plan
comply in all respects with Rule 16b-3 of the Exchange Act and any regulations
promulgated thereunder. If any provision of this Plan is later found not to be
in compliance with the Rule, the provision shall be construed so as to comply
therewith.
11. Term and Amendments of the Plan. The Plan shall be effective upon the
date of approval of the Plan by the Stockholders of the Company at the 1994
Annual Meeting ("effective date") and shall, with the exception of options then
outstanding, expire on the tenth (10th) anniversary of the effective date, and
no option shall be granted under the Plan after its expiration. The Board may
terminate or amend the Plan in any respect at any time provided that, except as
provided in Section 7 of the Plan: (a) no action of the Board or the
Stockholders may alter or impair an optionee's rights under any outstanding
option without his consent, and (b) without the approval of the holders of a
majority of all outstanding shares of the Company entitled to vote thereon, the
total number of shares that may be sold under the Plan may not be increased, the
provisions of Section 3, regarding eligibility, may not be modified, the price
at which shares may be purchased pursuant to options may not be reduced and the
expiration date of the Plan may not be extended.
12. Use of Proceeds. Proceeds from the sale of stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
13. Pronouns. Pronouns used in this Plan in the masculine shall be deemed
to include the feminine and pronouns in the singular shall be deemed to include
the plural, and the reverse, as appropriate in the context where the pronoun
appears.
REVOCABLE PROXY
UNIGENE LABORATORIES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
JUNE 30, 1997
The undersigned stockholder of Unigene Laboratories, Inc. hereby appoints
Warren P. Levy, Ronald S. Levy and Jay Levy, and each of them, as the
undersigned's proxies (with the power of substitution), to vote all the shares
of Common Stock of Unigene Laboratories, Inc. which the undersigned would be
entitled to vote at the Annual Meeting of Stockholders of Unigene Laboratories,
Inc. to be held on June 30, 1997 at 11:00 A.M., Eastern Daylight time, and any
adjournments thereof, on the following matters:
1. Election of directors
Jay Levy, Ronald S. Levy,
Warren P. Levy, Robert G. Ruark,
Robert F. Hendrickson and George M. Weimer.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. Approval of amendment to the Certificate of Incorporation to increase the
number of authorized shares of Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of amendment to the Company's 1994 Employee Stock Option Plan to
increase the total number of shares that may be sold.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion in the transaction of any other business that may
properly come before such meeting.
The undersigned hereby revokes any proxy heretofore given.
Please be sure to sign and date this Proxy in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
UNIGENE LABORATORIES, INC.
This proxy will be voted in accordance with instructions specified above, but
in the absence of any instructions will be voted "FOR" Items 1, 2, 3 and 4. If
any other business is presented at the meeting, the proxies are authorized to
vote thereon in their discretion.
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4 noted above.
Please sign exactly as your name appears on this card. If stock is registered
in the names of two or more joint owners or trustees, each joint owner or
trustee should sign this proxy. When signing as an executor, administrator,
trustee, guardian, agent or attorney, please give your full title as such.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY