SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MYRIAD GENETICS
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
[MYRIAD LOGO]
MYRIAD GENETICS, INC.
October 9, 2001
Dear Stockholder,
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Myriad Genetics, Inc. (the "Company") to be held at 9:00 a.m. on Thursday,
November 8, 2001, at the offices of Myriad Genetics, Inc., 320 Wakara Way, Salt
Lake City, Utah.
At the Annual Meeting, three persons will be elected to the Board of
Directors. The Company will seek Stockholder approval of an increase in the
aggregate number of shares for which stock options may be granted under the
Company's 1992 Employee, Director and Consultant Stock Option Plan. In
addition, the Company will ask the stockholders to ratify the selection of KPMG
LLP as the Company's independent public accountants. The Board of Directors
recommends the approval of each of these proposals. Such other business will be
transacted as may properly come before the Annual Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged to complete, sign, date and return the
enclosed proxy card promptly in accordance with the instructions set forth on
the card. This will ensure your proper representation at the Annual Meeting.
Sincerely,
/s/ Peter D. Meldrum
Peter D. Meldrum
President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
MYRIAD GENETICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held November 8, 2001
To the Stockholders of Myriad Genetics, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Myriad Genetics, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, November 8,
2001, at the offices of Myriad Genetics, Inc., 320 Wakara Way, Salt Lake City,
Utah, at 9:00 a.m. for the following purposes:
1. To elect three members to the Board of Directors to serve for a term
ending in 2004 and until their successors are duly elected and
qualified.
2. To consider and act upon a proposal to increase by 2,000,000 shares the
aggregate number of shares of the Company's Common Stock, $.01 par
value per share (the "Common Stock"), for which stock options may be
granted under the Company's 1992 Employee, Director and Consultant
Stock Option Plan.
3. To consider and act upon a proposal to ratify the appointment of KPMG
LLP as the Company's independent public accountants for the fiscal year
ending June 30, 2002.
4. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on September 27, 2001
as the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in accordance
with the instructions on the proxy card. A pre-addressed, postage prepaid
return envelope is enclosed for your convenience.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Christopher L. Wight
Christopher L. Wight
Secretary
October 9, 2001
MYRIAD GENETICS, INC.
320 WAKARA WAY
SALT LAKE CITY, UTAH 84108
(801) 584-3600
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Myriad Genetics, Inc., a Delaware corporation (the
"Company"), of proxies, in the accompanying form, to be used at the Annual
Meeting of Stockholders to be held at the Company's offices, 320 Wakara Way,
Salt Lake City, Utah, on Thursday, November 8, 2001, at 9:00 a.m., and any
adjournments thereof (the "Meeting").
Where the Stockholder specifies a choice on the enclosed proxy card as to
how his or her shares are to be voted on a particular matter, the shares will
be voted accordingly. If no choice is specified, the shares will be voted FOR
the election of the three nominees for director named herein, FOR the proposal
to increase by 2,000,000 shares the aggregate number of shares of the Company's
common stock, $.01 par value per share (the "Common Stock"), for which stock
options may be granted under the Company's 1992 Employee, Director and
Consultant Stock Option Plan and FOR the ratification of the appointment of
KPMG LLP as the Company's independent public accountants for the fiscal year
ending June 30, 2002.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date. Any
Stockholder who has executed a proxy but is present at the Meeting, and who
wishes to vote in person, may do so by revoking his or her proxy as described
in the preceding sentence. Shares represented by valid proxies in the form
enclosed, received in time for use at the Meeting and not revoked at or prior
to the Meeting, will be voted at the Meeting. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of the Company's
Common Stock, is necessary to constitute a quorum at the Meeting.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to approve each proposal, other than the
election of directors which requires a plurality of the shares voted
affirmatively or negatively at the Meeting. With respect to the tabulation of
votes on the matters proposed for the consideration of the Stockholders at the
Meeting, abstentions and broker non-votes will have no effect on the vote.
The enclosed proxy card also offers Stockholders the option to access
materials for any future Stockholder meeting electronically via the Internet. A
Stockholder who consents to accessing such materials electronically may revoke
such consent at any time. The Company will continue to distribute printed
materials for future Stockholder meetings to Stockholders who do not consent to
access such materials electronically.
The close of business on September 27, 2001 has been fixed as the record
date for determining the Stockholders entitled to notice of and to vote at the
Meeting. As of the close of business on September 27, 2001, the Company had
23,539,801 shares of Common Stock outstanding and entitled to vote. Holders of
Common Stock are entitled to one vote per share on all matters to be voted on
by Stockholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their
expenses in forwarding proxy material to such beneficial owners. Solicitation
of proxies by mail may be supplemented by telephone, telegram, telex and
personal solicitation by the directors, officers or employees of the Company.
No additional compensation will be paid for such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or about
October 9, 2001 to all Stockholders entitled to notice of and to vote at the
Meeting.
The Annual Report to Stockholders for the fiscal year ended June 30, 2001
("Fiscal 2001") is being mailed to the Stockholders with this Proxy Statement,
but does not constitute a part hereof.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 1, 2001
concerning the beneficial ownership of the Common Stock by each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, each current member of the Board of
Directors, each executive officer named in the Summary Compensation Table on
page 8 hereof, and all current directors and current executive officers as a
group.
Shares
Beneficially
Owned (1)
-----------------
Name and Address** Number Percent
------------------ --------- -------
Peter Friedli (2).......................................... 1,327,500 5.6%
Friedli Corporate Finance AG
Freigutstrasse 5
8002 Zurich, Switzerland
Mark H. Skolnick, Ph.D. (3)................................ 811,432 3.4%
Peter D. Meldrum (4)....................................... 316,554 1.3%
Walter Gilbert, Ph.D. (5).................................. 128,940 *
Adrian N. Hobden Ph.D. (6)................................. 128,745 *
Arthur H. Hayes, M.D. (7).................................. 105,000 *
Jay M. Moyes (8)........................................... 81,802 *
Gregory C. Critchfield M.D. (9)............................ 64,469 *
Sudhir R. Sahasrabudhe, Ph.D. (10)......................... 32,180 *
Dale A. Stringfellow, Ph.D. (7)............................ 15,742 *
Hugh A. D'Andrade.......................................... 4,000 *
Linda S. Wilson, Ph.D. (7)................................. 2,500 *
All executive officers and directors as a group (14
persons) (11)............................................. 1,776,341 7.3%
--------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
(1) The number of shares of Common Stock issued and outstanding on September
1, 2001 was 23,527,981 shares. The calculation of percentage ownership for
each listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding at September 1, 2001, plus shares of Common
Stock subject to options and warrants held by such person at September 1,
2001 and exercisable within 60 days thereafter. The persons and entities
named in the table have sole voting and investment power with respect to
all shares shown as beneficially owned by them, except as noted below.
Attached to each share of Common Stock is a Preferred Share Purchase Right
to acquire one one-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock, par value $.01 per share, which Preferred
Share Purchase Rights are not presently exercisable.
(2) Includes shares held by Inventure, Inc., Joyce, Ltd., Pine, Inc., and
Spring Technology Corp., in each of which Mr. Friedli has a controlling
interest. Also includes currently exercisable warrants to purchase
65,500 shares of Common Stock.
(3) Includes shares held directly by Dr. Skolnick and his wife, shares held by
a family limited partnership of which Dr. Skolnick is a general partner,
as well as shares held by certain family members. Also includes
214,000 shares of Common Stock subject to currently exercisable options.
(4) Includes 51,919 shares of Common Stock subject to currently exercisable
options.
(5) Includes 42,970 shares of Common Stock owned by Dr. Gilbert's wife, as to
which Dr. Gilbert disclaims beneficial ownership. Also includes 73,000
shares of Common Stock subject to currently exercisable options.
2
(6) Includes 100,628 shares of Common Stock subject to currently exercisable
options.
(7) Consists of shares of Common Stock subject to currently exercisable
options.
(8) Includes shares held directly by Mr. Moyes and his children. Also includes
64,400 shares of Common Stock subject to currently exercisable options.
(9) Includes 37,850 shares of Common Stock subject to currently exercisable
options.
(10) Includes 32,000 shares of Common Stock subject to currently exercisable
options.
(11) Includes 762,461 shares of Common Stock subject to currently exercisable
options.
3
MANAGEMENT
Directors
The Company's Restated Certificate of Incorporation, as amended, and
Restated By-Laws provide for the Company's business to be managed by or under
the direction of the Board of Directors. Under the Company's Restated
Certificate of Incorporation, as amended, and Restated By-Laws, the number of
directors is fixed from time to time by the Board of Directors. The Board of
Directors currently consists of seven members, classified into three classes as
follows: Hugh A. D'Andrade and Dale A. Stringfellow, Ph.D. constitute a class
with a term ending in 2003 (the "Class I directors"); Peter D. Meldrum, Mark H.
Skolnick, Ph.D., and Linda S. Wilson, Ph.D. constitute a class with a term
which expires at the upcoming Meeting (the "Class II directors"); and Walter
Gilbert, Ph.D. and Arthur H. Hayes, Jr., M.D. constitute a class with a term
ending in 2002 (the "Class III directors"). At each annual meeting of
Stockholders, directors are elected for a full term of three years to succeed
those directors whose terms are expiring.
The Board of Directors has voted to set the size of the Board of Directors
at seven and to nominate Peter D. Meldrum, Mark H. Skolnick, Ph.D., and Linda
S. Wilson, Ph.D. for election at the Meeting for a term of three years, to
serve until the 2004 annual meeting of Stockholders, and until their respective
successors have been elected and qualified. The Class I directors (Hugh A.
D'Andrade and Dale A. Stringfellow, Ph.D.) and the Class III directors (Walter
Gilbert, Ph.D. and Arthur H. Hayes, Jr., M.D.) will serve until the annual
meetings of Stockholders to be held in 2003 and 2002, respectively, and until
their respective successors have been elected and qualified.
Set forth below are the names of the persons nominated as directors and
directors whose terms do not expire this year, their ages, their offices in the
Company, if any, their principal occupations or employment for the past five
years, the length of their tenure as directors and the names of other public
companies in which they hold directorships.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Hugh A. D'Andrade......... 62 Chairman of the Board of Directors
Walter Gilbert, Ph.D...... 69 Vice Chairman of the Board of Directors
Peter D. Meldrum.......... 54 President, Chief Executive Officer, Director
Mark H. Skolnick, Ph.D.... 55 Chief Scientific Officer, Director
Arthur H. Hayes, Jr.,
M.D...................... 68 Director
Dale A. Stringfellow,
Ph.D..................... 56 Director
Linda S. Wilson, Ph.D..... 64 Director
Hugh A. D'Andrade, Chairman of the Board of Directors since joining the
Board in February 2001, served as the Vice Chairman of the Board of Directors
and Chief Administrative Officer of Schering-Plough Corporation from 1996
through 2001. Mr. D'Andrade joined Schering-Plough Corporation in 1981 as
Senior Vice President and was named to its board of directors in 1984. He has
also served on the Board of Directors of ALZA Corporation, Biogen N.V., and
Molecular Devices Corporation. Mr. D'Andrade was a Director of the
Biotechnology Industry Organizations and served as Chairman from 1988 to 1989.
He is currently a member of the Boards of Directors of AutoImmune, Inc.,
Chitogenics, Inc., and Atlantic Mutual Companies. He also serves on the Board
of Trustees of Drew University, the Board of Overlook Hospital Foundation and
The Seeing Eye and is a member of the Columbia Law School Board of Visitors.
Mr. D'Andrade earned a law degree, cum laude, from Columbia University School
of Law.
Walter Gilbert, Ph.D., Vice Chairman of the Board of Directors, joined the
Company as a founding scientist and Director in March 1992. Dr. Gilbert won the
Nobel Prize in Chemistry in 1980 for his contributions to the development of
DNA sequencing technology. He was a founder of Biogen, Inc. and its Chairman of
the Board and Chief Executive Officer from 1981 to 1985. He has held
professorships at Harvard University in the Departments of Physics, Biophysics,
Biology, Biochemistry and Molecular Biology, and Molecular and Cellular
Biology. He presently holds the Carl M. Loeb University Professorship at
Harvard University and serves on the Board of Directors of Transkaryotic
Therapies, Inc.
4
Peter D. Meldrum has been a Director of the Company since its inception in
May 1991 and has been President and Chief Executive Officer of the Company
since November 1991. Prior to joining the Company he was President and Chief
Executive Officer of Founders Fund, Inc., a venture capital group specializing
in the biotechnology industry. He received an M.B.A. degree from the University
of Utah in 1974 and a B.S. degree in Chemical Engineering from the University
of Utah in 1970.
Mark H. Skolnick, Ph.D., a scientific founder of the Company, has been a
director of the Company since its inception in 1991 and has served as Chief
Scientific Officer since 1997. Dr. Skolnick was also Executive Vice President
of Research and Development of the Company from its inception in 1991 through
July 2000. Dr. Skolnick and several colleagues were the first to conceive of
using restriction fragment length polymorphism technology as genetic markers, a
breakthrough that underpins the Human Genome Project. He received his Ph.D. in
Genetics from Stanford University in 1975, and a B.A. degree in Economics from
the University of California at Berkeley in 1968.
Arthur H. Hayes, Jr., M.D., a Director of the Company since November 1992,
served as Commissioner of the U.S. Food and Drug Administration from 1981 to
1983. Since 1991 he has served as the President and CEO of Mediscience
Associates. From 1986 to 1991, Dr. Hayes served as the President and CEO of EM
Pharmaceuticals, Inc., the United States affiliate of E. Merck of Darmstadt,
Germany. He also served as Provost and Dean of New York Medical College from
1983 to 1986. Dr. Hayes currently serves as the Vice Chairman and Medical
Director of Nelson Communications, Inc. Dr. Hayes serves on the Board of
Directors of the following publicly traded companies: Napro Biotherapeutics,
Inc., Celgene Corporation, and Premier Research Worldwide, Inc. He also serves
on the Board of Directors of the Macy Foundation and is the Chairman of the
Council on Family Health.
Dale A. Stringfellow, Ph.D., a Director of the Company since December 1991,
has been President and CEO of Berlex Laboratories, a wholly owned subsidiary of
Schering AG, since December 2000. Prior to that he was President of Berlex
BioSciences since June 1995 and President, CEO and a Director of Celtrix
Pharmaceuticals from July 1990 until April 1995. In addition, Dr. Stringfellow
has held other positions, including Vice President and Senior Director of
Preclinical Cancer Research at Bristol-Myers Squibb Co.; Research Head, Cancer
Virology and Cellular Biology Research at Upjohn Company; and Vice President,
Research and Development at Collagen Corporation. Dr. Stringfellow currently
serves on the Board of Directors of Collateral Therapeutics.
Linda S. Wilson, Ph.D., a Director of the Company since October 1999, served
as President of Radcliffe College, Cambridge, MA from 1989 to 1999. Dr. Wilson
has also served as Vice President for Research, University of Michigan, and as
Associate Vice Chancellor for Research and Associate Dean of the Graduate
College, University of Illinois. Dr. Wilson is a member of the Institute of
Medicine of the National Academy of Sciences. After serving seven years as
Trustee, she is now an Honorary Trustee of the Massachusetts General Hospital.
She currently serves on the Boards of Directors for INACOM, Inc.; Value Line,
Inc. and ICANN (the Internet Corporation for assigned Names and Numbers). She
is also a Trustee of the Committee on Economic Development. Dr. Wilson received
her Ph.D. in Chemistry from the University of Wisconsin and her B.A. from
Newcomb College, Tulane University.
Committees of the Board of Directors and Meetings
Meeting Attendance. During the fiscal year ended June 30, 2001 there were
eight meetings of the Board of Directors, and the various committees of the
Board of Directors met a total of four times. No director attended fewer than
75% of the total number of meetings of the Board and of committees of the Board
on which he served during Fiscal 2001.
Audit Committee. The Audit Committee, which met three times in Fiscal 2001,
has three members, Dale A. Stringfellow, Ph.D. (Chairman), Walter Gilbert,
Ph.D. and Arthur H. Hayes, Jr., M.D. The Audit Committee reviews the engagement
of the Company's independent accountants, reviews annual financial
5
statements, considers matters relating to accounting policy and internal
controls and reviews the scope of annual audits. Please also see the report of
the Audit Committee set forth elsewhere in this Proxy Statement.
Compensation Committee. The Compensation Committee, which met one time
during Fiscal 2001, has three members, Walter Gilbert, Ph.D. (Chairman), Hugh
A. D'Andrade and Dale A. Stringfellow, Ph.D. The Compensation Committee
administers the Company's stock plans and reviews, approves and makes
recommendations on the Company's compensation policies, practices and
procedures to ensure that legal and fiduciary responsibilities of the Board of
Directors are carried out and that such policies, practices and procedures
contribute to the success of the Company. Please also see the report of the
Compensation Committee set forth elsewhere in this Proxy Statement.
Nominating Committee. The Company does not have a standing Nominating
Committee.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee has three members, Walter Gilbert, Ph.D. (Chairman),
Hugh A. D'Andrade and Dale A. Stringfellow, Ph.D. No executive officer of the
Company is a member of the Compensation Committee. No executive officer of the
Company serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of
the Company's Board of Directors or Compensation Committee.
Compensation of Directors
The Company pays each non-employee director $2,000 for each meeting of the
Board of Directors that the director attends. All directors are reimbursed for
their out-of pocket expenses incurred in attending meetings.
Directors who are not employees of the Company or any affiliate are entitled
to receive options under the Company's 1992 Employee, Director and Consultant
Stock Option Plan (the "Plan"). The Plan provides for an annual grant to each
non-employee director of a non-qualified option to purchase 15,000 shares of
Common Stock, at an exercise price equal to the fair market value of the Common
Stock on the grant date. Options granted under the Plan to non-employee
directors vest in three equal installments beginning on the first anniversary
of the date of grant, assuming continued membership on the Board. Options to
purchase ninety thousand (90,000) shares were granted under this formula during
Fiscal 2001. Options granted during Fiscal 2001 to any named executive officers
serving on the Board are reported under "Executive Compensation-- Option Grants
in Last Fiscal Year."
Executive Officers
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below. Except for executive
officers who have employment agreements with the Company, the executive
officers serve at the pleasure of the Board of Directors.
Name Age Position
---- --- --------
Gregory C. Critchfield,
M.D. .................. 49 President, Myriad Genetic Laboratories, Inc.
Adrian N. Hobden,
Ph.D. ................. 48 President, Myriad Pharmaceuticals, Inc.
William A. Hockett
III ................... 43 Vice President of Corporate Communications
Jay M. Moyes............ 47 Chief Financial Officer, Vice President of Finance
Sudhir R. Sahasrabudhe,
Ph.D. ................. 40 Executive Vice President Research and Development
S. George Simon......... 40 Vice President of Business Development
Christopher L. Wight.... 43 Vice President, General Counsel
Gregory C. Critchfield, M.D., President of Myriad Genetic Laboratories,
Inc., a wholly owned subsidiary of the Company, joined the Company in July
1998. Dr. Critchfield previously served as Senior Vice President, Chief Medical
and Scientific Officer of Quest Diagnostics (formerly Corning Clinical
Laboratories). Prior to Quest Diagnostics, Dr. Critchfield was Director of
Clinical Pathology for Intermountain Health Care.
6
Dr. Critchfield received his M.D. from the University of Utah and his M.S. in
Biophysical Sciences from the University of Minnesota. He is Board Certified in
Clinical Pathology.
Adrian N. Hobden, Ph.D., President of Myriad Pharmaceuticals, Inc., a wholly
owned subsidiary of the Company, joined the Company in October 1998. Dr. Hobden
previously served as Director, Global Biotechnology Ventures with Glaxo
Wellcome Inc. During Dr. Hobden's 17-year tenure with Glaxo, he held several
senior management positions, including heading the Genetics, Molecular Science
and Pharmacology research department before undertaking the directorship. Dr.
Hobden received his Ph.D. from Leicester University in Microbiology/Molecular
Biology and his B.A in Biochemistry from Cambridge University.
William A. Hockett III, Vice President of Corporate Communications, joined
the Company in September 1993, serving as Vice President of Marketing for
Myriad Genetic Laboratories prior to assuming the head communications position.
Over 19 years in the medical diagnostics industry, in research, sales and
marketing roles, Mr. Hockett managed a diverse range of immunological products
and services. He was most recently Marketing Manager for a line of over 120
products for Diagnostic Products Corporation in Los Angeles. Mr. Hockett
received his B.A. in Biochemistry from the University of California, Santa
Cruz.
Jay M. Moyes, Vice President of Finance since July 1993 and named Chief
Financial Officer in June 1996, served as Vice President of Finance and Chief
Financial Officer of Genmark, Inc. from 1991 through July 1993. Mr. Moyes held
various positions with the accounting firm of KPMG LLP from 1979 through 1991,
most recently as a Senior Manager. He holds an M.B.A. degree from the
University of Utah, a B.A. degree in economics from Weber State University, and
is a Certified Public Accountant.
Sudhir R. Sahasrabudhe, Ph.D., has served as Executive Vice President,
Research and Development since July 2000. Beginning in 1993, Dr. Sahasrabudhe
served in various positions of importance with Aventis Pharmaceuticals, most
recently as Senior Director of U.S. Biotechnology. In that position, Dr.
Sahasrabudhe was responsible for all biotechnology activities within the United
States for Aventis, including the oversight of Cambridge Genomics Center and
other genomics facilities as well as programs in transgenics, gene expression
and disease genomics. Dr. Sahasrabudhe represented Aventis on the Board of
Directors of the SNP Consortium, a collaboration geared towards creating a
dense genome-wide SNP map. Dr. Sahasrabudhe received his Ph.D. in microbiology
from the University of Baroda, in Baroda, India.
S. George Simon has served as Vice President of Business Development since
June 2000. Mr. Simon previously served as Vice President, Corporate Development
with MorphGen Pharmaceuticals, Inc., a biopharmaceutical company working in
musculoskeletal tissue repair, from 1999 through 2000. Prior to his time with
MorhpGen, Mr. Simon was Senior Director, Corporate Development for the VivoRx
group of companies, which developed biotechnology and biopharmaceutical
products in oncology and cell therapy, from 1994 through 1998. Mr. Simon
received his Certificate in International Business Management from the
University of California, Los Angeles and his B.S. Business Administration from
California State University, Long Beach.
Christopher L. Wight, Vice President, General Counsel since September 1999,
joined the Company in August 1998. Mr. Wight served as Corporate General
Counsel before being named as an officer. Prior to joining the Company, Mr.
Wight held the position of Director of Intellectual Property at Immunex
Corporation beginning in 1996. He received his J.D. from the J. Reuben Clark
Law School at Brigham Young University and a bachelor's degree in Chemistry
from Brigham Young University.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth summary information as
to compensation received by the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers employed by the
Company as of June 30, 2001 (collectively, the "named executive officers") for
services rendered to the Company in all capacities during the three fiscal
years ended June 30, 2001.
Annual Long Term
Compensation Compensation
----------------- ------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options(#) Compensation (2)
--------------------------- ------ -------- -------- ------------ ---------------
Peter D. Meldrum............. 2001 $350,562 $110,761 55,000 $5,572
President and Chief 2000 $320,523 $100,507 100,000 $5,072
Executive Officer 1999 $305,420 $ 60,000 40,000 $5,072
Gregory C. Critchfield,
M.D....................... 2001 $260,562 $ 84,961 45,000 $5,572
President, Myriad Genetic 2000 $240,522 $ 84,507 80,000 $5,188
Laboratories, Inc. 1999 $181,714 $ 64,000 230,000 $6,829
Adrian N. Hobden, Ph.D....... 2001 $247,562 $ 76,961 40,000 $5,755
President, Myriad 2000 $215,559 $ 75,507 80,000 $5,277
Pharmaceuticals, Inc. 1999 $156,202 $ 60,000 238,048 $2,765
Jay M. Moyes................. 2001 $190,494 $ 57,261 35,000 $5,800
Vice President of Finance, 2000 $168,424 $ 60,507 60,000 $5,245
Chief Financial Officer 1999 $160,420 $ 34,000 46,000 $5,399
Sudhir R. Sahasrabudhe,
Ph.D...................... 2001(1) $188,426 $ 57,261 195,000 $4,596
Executive Vice President 2000 $ -- $ -- -- $ --
Research and Development 1999 $ -- $ -- -- $ --
--------
(1) Dr. Sahasrabudhe's employment began on July 24, 2000.
(2) All Other Compensation includes (i) the dollar value of premiums paid by
the Company with respect to term life insurance for the benefit of each
named executive officer and (ii) the Company's matching contributions made
under its 401(k) plan on behalf of each named executive officer.
8
Option Grants in Last Fiscal Year
The following table sets forth information regarding each stock option
granted during Fiscal 2001 to each of the named executive officers.
Individual Grants Potential Realizable
------------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term (4)
Options Employees in Price Expiration ----------------------
Name Granted (#) (1) Fiscal Year ($/Share) Date 5% 10%
---- --------------- ------------ --------- ---------- ---------- -----------
Peter D. Meldrum.......................... 25,000 (2) 2.1% $72.125 2/01/2011 $1,133,976 $ 2,873,717
Peter D. Meldrum.......................... 30,000 (2) 2.5% $57.260 6/27/2011 $1,080,315 $ 2,737,731
Gregory C. Critchfield, M.D............... 20,000 (2) 1.7% $72.125 2/01/2011 $ 907,181 $ 2,298,974
Gregory C. Critchfield, M.D.............. 25,000 (2) 2.1% $57.260 6/27/2011 $ 900,263 $ 2,281,442
Adrian N. Hobden, Ph.D.................... 20,000 (2) 1.7% $72.125 2/01/2011 $ 907,181 $ 2,298,974
Adrian N. Hobden, Ph.D.................... 20,000 (2) 1.7% $57.260 6/27/2011 $ 720,210 $ 1,825,154
Jay M. Moyes.............................. 17,500 (2) 1.5% $72.125 2/01/2011 $ 793,783 $ 2,011,602
Jay M. Moyes.............................. 17,500 (2) 1.5% $57.260 6/27/2011 $ 630,184 $ 1,597,010
Sudhir R. Sahasrabudhe, Ph.D............. 160,000 (3) 13.4% $66.407 8/01/2010 $6,682,031 $16,933,577
Sudhir R. Sahasrabudhe, Ph.D.............. 17,500 (2) 1.5% $72.125 2/01/2011 $ 793,783 $ 2,011,602
Sudhir R. Sahasrabudhe, Ph.D............. 17,500 (2) 1.5% $57.260 6/27/2011 $ 630,184 $ 1,597,010
--------
(1) Options were granted pursuant to the Plan. Options terminate ten years
after the grant date, subject to earlier termination in accordance with
the Plan and the applicable option agreement. Vesting of options will
accelerate upon a change in control of the Company in accordance with the
applicable option agreement. Options were granted at an exercise price
equal to the fair market value of the Company's Common Stock, as
determined by the closing price of the Common Stock on the Nasdaq Stock
Market on the trading day immediately preceding the grant date.
(2) Options granted vest 25% upon each anniversary date of the date of grant.
(3) Options granted vest 20% upon each anniversary date of the date of grant.
(4) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
optionee's continued employment through the option period and the date on
which the options are exercised.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides information regarding the exercises of options
by each of the named executive officers during Fiscal 2001. In addition, this
table includes the number of shares covered by both exercisable and
unexercisable stock options as of June 30, 2001 and the values of "in-the-
money" options, which values represent the positive spread between the exercise
price of any such option and the fiscal year-end value of the Company's Common
Stock.
Number of Securities
Underlying Unexercised Value of the Unexercised
Shares Options at Fiscal Year- In-The-Money Options at
Acquired Value End Fiscal Year-End (2)
on Realized ------------------------- -------------------------
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
Peter D. Meldrum............... 57,777 $4,530,055 51,919 207,000 $2,203,463 $ 6,253,516
Gregory C. Critchfield, M.D.... 58,000 $4,245,749 18,000 247,000 $ 819,546 $ 9,850,242
Adrian N. Hobden, Ph.D......... 42,000 $3,421,964 56,019 290,029 $2,795,151 $12,798,378
Jay M. Moyes................... 54,287 $3,963,470 64,400 130,599 $3,152,711 $ 4,299,244
Sudhir R. Sahasrabudhe, Ph.D... -- $ -- -- 195,000 $ -- $ 106,050
9
--------
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) The value of unexercised "in-the-money" options at fiscal year end assumes
a fair market value for the Company's Common Stock of $63.32, the closing
sale price per share of the Company's Common Stock as reported by The
Nasdaq Stock Market on June 29, 2001.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Company entered into employment agreements with no defined term with
Peter D. Meldrum, Gregory C. Critchfield, M.D., Jay M. Moyes, and Sudhir R.
Sahasrabudhe, Ph.D. in May 1993, July 1998, July 1993, and July 2000
respectively. Either party may terminate employment without cause at any time
upon 15 days written notice to the other party or immediately with cause upon
written notice to the other party. Each employment agreement also provides that
the employee will not disclose confidential information of the Company during
and after employment and will not compete with the Company during the term of
employment with the Company.
The Company entered into an employment agreement with no defined term with
Adrian N. Hobden, Ph.D. in October 1998. Pursuant to the agreement, either
party may terminate employment with or without cause, provided that Dr. Hobden
must provide the Company with 30 days written notice. If the Company terminates
Dr. Hobden without cause, the Company must pay Dr. Hobden's salary for 9 months
following termination. If Dr. Hobden terminates his employment as a result of a
reduction of his responsibilities after a change in control of the Company,
then the Company must pay Dr. Hobden's salary for 12 months following
termination. The employment agreement also provides that Dr. Hobden will not
disclose confidential information of the Company during and after employment
and will not compete with the Company during the term of employment with the
Company.
In the event of a change in control of the Company (as defined in the Plan),
all outstanding unvested options, including options held by Messrs. Meldrum,
Critchfield, Hobden, Moyes and Sahasrabudhe will become immediately vested,
unless provision is made for the continuation of such options pursuant to the
applicable provisions of the Plan.
10
Performance Graph
The following graph compares the annual percentage change in the Company's
cumulative total stockholder return on its Common Stock during a period
commencing on October 6, 1995 (the date of the Company's initial public
offering) and ending on June 30, 2001 (as measured by dividing (A) the
difference between the Company's share price at the end and the beginning of
the measurement period by (B) the share price at the beginning of the
measurement period) with the cumulative total return of The Nasdaq Stock Market
and the Nasdaq Health Services Stock Index during such period. It should be
noted that the Company has not paid any dividends on the Common Stock, and no
dividends are included in the representation of the Company's performance. The
stock price performance on the graph below is not necessarily indicative of
future price performance.
[PERFORMANCE GRAPH]
10/6/95 6/28/96 6/30/97 6/30/98 6/30/99 6/30/00 6/29/01
------- ------- ------- ------- ------- ------- -------
Myriad Genetics, Inc.... $100.00 $138.89 $150.00 $ 81.25 $ 50.00 $822.66 $351.78
Nasdaq Stock Index
(U.S.)................. $100.00 $118.18 $143.71 $189.15 $272.07 $402.25 $218.05
Nasdaq Health Services
Stocks................. $100.00 $134.98 $124.73 $121.52 $114.36 $ 88.27 $125.83
This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by reference
in any filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934 whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
Information used on the graph was obtained from the CRSP Total Return Indexes,
a source believed to be reliable, but the Company is not responsible for any
errors or omissions in such information.
11
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is composed entirely of outside directors. The Compensation
Committee, which consists of Dr. Gilbert, Mr. D'Andrade and Dr. Stringfellow,
is responsible for establishing and administering the Company's executive
compensation policies. This report addresses the compensation policies for
fiscal year 2001 as they affected Mr. Meldrum, in his capacity as President and
Chief Executive Officer of the Company, and the other executive officers of the
Company.
General Compensation Policy
The objectives of the Company's executive compensation program are to:
. Provide a competitive compensation package that will attract and retain
superior talent and reward performance.
. Support the achievement of desired Company performance.
. Align the interests of executives with the long-term interests of
stockholders through award opportunities that can result in ownership of
Common Stock, thereby encouraging the achievement of superior results
over an extended period.
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of: (i)
base salary, which is set on an annual basis; (ii) annual incentive bonuses,
which are based on the achievement of predetermined objectives; and (iii) long-
term incentive compensation in the form of periodic stock option grants, with
the objective of aligning the executive officers' long-term interests with
those of the stockholders and encouraging the achievement of superior results
over an extended period.
The Compensation Committee performs annual reviews of executive compensation
to confirm the competitiveness of the overall executive compensation packages
as compared with companies who compete with the Company to attract and retain
employees.
In considering compensation of the Company's executives, one of the factors
the Compensation Committee takes into account is the anticipated tax treatment
to the Company of various components of compensation. The Company does not
believe Section 162(m) of the Internal Revenue Code of 1986, as amended, which
generally disallows a tax deduction for certain compensation in excess of $1
million to any of the executive officers appearing in the Summary Compensation
Table above, will have an effect on the Company. The Compensation Committee has
considered the requirements of Section 162(m) of the Code and its related
regulations. It is the Compensation Committee's present policy to take
reasonable measures to preserve the full deductibility of substantially all
executive compensation, to the extent consistent with its other compensation
objectives.
Base Salary
The Compensation Committee reviews base salary levels for the Company's
executive officers on an annual basis. Base salaries are set competitively
relative to companies in the biotechnology industry and other comparable
companies. In determining salaries the Compensation Committee also takes into
consideration individual experience and performance. The Compensation Committee
seeks to compare the salaries paid by companies similar in size and stage of
development to the Company. Within this comparison group, the Company seeks to
make comparisons to executives at a comparable level of experience, who have a
comparable level of responsibility and expected level of contribution to the
Company's performance. In setting base salaries, the Compensation Committee
also takes into account the intense level of competition among biotechnology
companies to attract talented personnel.
12
Annual Incentive Bonuses
The Company, along with each executive officer, establishes goals related
specifically to that officer's areas of responsibility. The Compensation
Committee determines the amount of each executive's bonus based on a subjective
assessment by the Compensation Committee of the officer's progress toward
achieving the established goals. Bonuses are awarded on an annual basis.
Long-term Incentive Compensation
Long-term incentive compensation, in the form of stock options, allows the
executive officers to share in any appreciation in the value of the Company's
Common Stock. The Compensation Committee believes that stock option
participation aligns executive officers' interests with those of the
stockholders. The amounts of the awards are designed to reward past performance
and create incentives to meet long-term objectives. Awards are made at a level
calculated to be competitive within the biotechnology industry as well as a
broader group of companies of comparable size and complexity. In determining
the amount of each grant, the Compensation Committee takes into account the
number of shares held by the executive prior to the grant.
Chief Executive Officer Compensation
Mr. Meldrum was appointed to the position of President and Chief Executive
Officer in November 1991. In May 1993, Mr. Meldrum entered into the Company's
standard Employment Agreement as required of all Company employees. Under this
agreement, Mr. Meldrum receives an annual base salary of $100,000, which salary
has been increased by the Board of Directors periodically. This is consistent
with the range of salary levels received by his counterparts in companies in
the biotechnology industry and other comparable companies. The Compensation
Committee believes Mr. Meldrum has managed the Company well in a challenging
business climate and has continued to move the Company towards its long-term
objectives.
The Company granted stock options to Mr. Meldrum to purchase 40,000 shares
at an exercise price of $4.781 in fiscal 1999, 100,000 shares at a weighted
average exercise price of $38.545 in fiscal 2000, and 55,000 shares at a
weighted average exercise price of $64.02 in Fiscal 2001. This option package
is designed to align the interests of Mr. Meldrum with those of the Company's
stockholders with respect to short-term operating results and long term
increases in the price of the Company's stock. The grant of these options is
consistent with the goals of the Company's stock option program as a whole.
THE COMPENSATION COMMITTEE:
Walter Gilbert, Ph.D., Chairman
Hugh A. D'Andrade
Dale A. Stringfellow, Ph.D.
13
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors (the "Audit Committee") has
three members, Dale A. Stringfellow, Ph.D. (Chairman), Walter Gilbert, Ph.D.
and Arthur H. Hayes, Jr., M.D. Each of the members of the Audit Committee are
independent nonexecutive directors who meet the independence and experience
requirements of the Nasdaq National Market System. The Audit Committee has
furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the
integrity of the Company's financial reporting process, its compliance with
legal and regulatory requirements and the quality of its internal and external
audit processes. The role and responsibilities of the Audit Committee are set
forth in a written Charter adopted by the Board, which is attached as
Appendix A to this Proxy Statement. The Audit Committee reviews and reassesses
the Charter annually and recommends any changes to the Board for approval. The
Audit Committee is responsible for overseeing the Company's overall financial
reporting process. In fulfilling its responsibilities for the financial
statements for Fiscal 2001, the Audit Committee took the following actions:
. Reviewed and discussed the audited financial statements for the fiscal
year ended June 30, 2001 with management and KPMG LLP, the Company's
independent auditors;
. Discussed with KPMG LLP the matters required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit; and
. Received written disclosures and the letter from KPMG LLP regarding its
independence as required by Independence Standards Board Standard No. 1.
The Audit Committee further discussed with KPMG LLP their independence.
The Audit Committee also considered the status of pending litigation,
taxation matters and other areas of oversight relating to the financial
reporting and audit process that the Audit Committee determined
appropriate.
The following is a summary of the fees charged by KPMG LLP for services
rendered to the Company:
Audit Fees.
Fees for the audit of the Company's annual financial statements and reviews
of its quarterly financial statements included in the Company's reports on
Form 10-Q for Fiscal 2001 were $56,000.
Financial Information Systems Design and Implementation Fees.
No services were performed by, and no fees were incurred to KPMG LLP in
connection with financial information systems design and implementation
projects for Fiscal 2001.
All Other Fees.
The aggregate fees invoiced to the Company by KPMG LLP for all other
services for Fiscal 2001 were $87,500.
The Audit Committee has considered whether the provision of any financial
information systems design and other non-audit services noted above is
compatible with maintaining the independence of KPMG LLP.
Based on the Audit Committee's review of the audited financial statements
and discussions with management and KPMG LLP, the Audit Committee recommended
to the Board that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001
for filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Dale A. Stringfellow, Ph.D., Chairman
Walter Gilbert, Ph.D.
Arthur H. Hayes, Jr., M.D.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 2001, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that Mr. Moyes
inadvertently failed to timely report one transaction on a Form 4, which he
subsequently reported on a timely filed Form 5.
ELECTION OF DIRECTORS
(Notice Item 1)
Under the Company's Restated Certificate of Incorporation, as amended, and
Restated By-Laws, the number of directors is fixed from time to time by the
Board of Directors. The Board of Directors currently consists of seven members,
classified into three classes as follows: Hugh A. D'Andrade, and Dale A.
Stringfellow, Ph.D. constitute a class with a term ending in 2003 (the "Class I
directors"); Peter D. Meldrum, Mark H. Skolnick, Ph.D., and Linda S.
Wilson, Ph.D. constitute a class with a term which expires at the upcoming
Meeting (the "Class II directors"); and Walter Gilbert, Ph.D. and Arthur H.
Hayes, Jr., M.D. constitute a class with a term ending in 2002 (the "Class III
directors"). At each annual meeting of Stockholders, directors are elected for
a full term of three years to succeed those directors whose terms are expiring.
The Board of Directors has voted to set the size of the Board of Directors
at seven and to nominate Peter D. Meldrum, Mark H. Skolnick, Ph.D., and
Linda S. Wilson, Ph.D. for election at the Meeting for a term of three years,
to serve until the 2004 annual meeting of Stockholders, and until their
respective successors have been elected and qualified. The Class I directors
(Hugh A. D'Andrade and Dale A. Stringfellow, Ph.D.) and the Class III directors
(Walter Gilbert, Ph.D. and Arthur H. Hayes, Jr., M.D.) will serve until the
annual meetings of Stockholders to be held in 2003 and 2002, respectively, and
until their respective successors have been elected and qualified.
Unless authority to vote for either of the nominees named above is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in that nominee's place. The Board has no reason to believe that any
nominee will be unable or unwilling to serve.
A plurality of the shares voted affirmatively or negatively at the Meeting
is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. PETER D. MELDRUM, DR.
MARK H. SKOLNICK AND DR. LINDA S. WILSON AS DIRECTORS, AND PROXIES SOLICITED BY
THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
15
AMENDMENT TO THE COMPANY'S 1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION
PLAN TO INCREASE THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR
ISSUANCE THEREUNDER
(Notice Item 2)
General
The Company's Board of Directors and the Stockholders approved the 1992
Employee, Director and Consultant Stock Option Plan (the "Plan") in 1992 and
subsequently amended and/or restated the Plan several times, most recently in
September 2001. Prior to September 2001, a total of 6,000,000 shares of Common
Stock were reserved for issuance under the Plan. By the terms of the Plan, the
Plan may be amended by the Board of Directors provided that any amendment
approved by the Board of Directors which is of a scope that requires
Stockholder approval in order to ensure favorable federal income tax treatment
for any incentive stock options under the Internal Revenue Code of 1986 ("the
Code") Section 422 is subject to obtaining such Stockholder approval. On
September 20, 2001, the Board of Directors voted to approve an amendment to the
Plan to increase by 2,000,000 shares the aggregate number of shares of Common
Stock for which stock options may be granted under the Plan. The Board believes
that the increase in the number of shares reserved for issuance under the Plan
is advisable to give the Company the flexibility needed to attract, retain and
motivate employees, directors and consultants. This amendment is being
submitted for Stockholder approval to ensure continued favorable income tax
treatment under Section 422 of the Code and to comply with the requirements of
The Nasdaq Stock Market.
Material Features of the Plan
The purpose of the Plan is to attract, retain and motivate employees,
directors and consultants through the issuance of stock options and to
encourage ownership of shares of Common Stock by employees, directors and
consultants of the Company. The Plan is administered by the Board of Directors.
Subject to the provisions of the Plan, the Board of Directors determines the
persons to whom options will be granted, the number of shares to be covered by
each option and the terms and conditions upon which an option may be granted,
and has the authority to administer the provisions of the Plan. All employees,
directors and consultants of the Company and its affiliates are eligible to
participate in the Plan. The Company currently has 452 full-time equivalent
employees.
Options granted under the Plan may be either (i) options intended to qualify
as "incentive stock options" under Section 422 of the Code, or (ii) non-
qualified stock options. Incentive stock options may be granted under the Plan
to employees of the Company and its affiliates. Non-qualified stock options may
be granted to consultants, directors and employees of the Company and its
affiliates. The Plan also provides for the automatic grant of 15,000 non-
qualified options to non-employee directors of the Company. The automatic
grant, which is issued annually on the date of the shareholders' meeting, has a
ten year exercise life and vests one-third (1/3) per year, assuming continued
membership on the Board. Non-employee directors nominated pursuant to a
contractual obligation are not entitled to such automatic grants. Ninety
thousand (90,000) options were granted under this formula during Fiscal 2001.
The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options which become exercisable in any
calendar year under any incentive stock option plan of the Company may not
exceed $100,000. Incentive stock options granted under the Plan may not be
granted at a price less than the fair market value of the Common Stock on the
date of grant, or 110% of fair market value in the case of employees holding
10% or more of the voting stock of the Company. Non-qualified stock options
granted under the Plan may not be granted at an exercise price less than the
par value per share of the Common Stock. Incentive stock options granted under
the Plan expire not more than ten years from the date of grant, or not more
than five years from the date of grant in the case of incentive stock options
granted to an employee holding 10% or more of the voting stock of the Company.
An option granted under the Plan is exercisable,
16
during the optionholder's lifetime, only by the optionholder and is not
transferable by him or her except (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set
forth in the applicable Option agreement.
An incentive stock option granted under the Plan may, at the Board of
Director's discretion, be exercised after the termination of the optionholder's
employment with the Company (other than by reason of death, disability or
termination for cause as defined in the Plan) to the extent exercisable on the
date of such termination, at any time prior to the earlier of the option's
specified expiration date or three (3) months after such termination. In
granting any non-qualified stock option, the Board of Directors may specify
that such non-qualified stock option shall be subject to such termination or
cancellation provisions as the Board of Directors shall determine. In the event
of the optionholder's death or disability, both incentive stock options and
non-qualified stock options may be exercised, to the extent exercisable on the
date of death or disability (plus a prorata portion of the option if the option
vests periodically), by the optionholder or the optionholder's survivors at any
time prior to the earlier of the option's specified expiration date or one year
from the date of the optionholder's death or disability. Generally, in the
event of the optionholder's termination for cause, all outstanding and
unexercised options are forfeited.
If the shares of Common Stock shall be subdivided or combined into a greater
or smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, the number of shares
of Common Stock deliverable upon the exercise of an option granted under the
Plan shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend. If the Company is to
be consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"), the
Board of Directors or the Board of Directors of any entity assuming the
obligations of the Company under the Plan (the "Successor Board"), shall, as to
outstanding options under the Plan either (i) make appropriate provision for
the continuation of such options by substituting on an equitable basis for the
shares then subject to such options the consideration payable with respect to
the outstanding shares of Common Stock in connection with the Acquisition or
securities of the successor or acquiring entity; or (ii) upon written notice to
the participants, provide that all options must be exercised (either to the
extent then exercisable or, at the discretion of the Board of Directors, all
options being made fully exercisable for purposes of such transaction) within a
specified number of days of the date of such notice, at the end of which period
the options shall terminate; or (iii) terminate all options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to each such option (either to the extent then exercisable or, at the
discretion of the Board of Directors, all options being made fully exercisable
for purposes of such transaction) over the exercise price thereof. In the event
of a recapitalization or reorganization of the Company (other than an
Acquisition) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
an optionholder upon exercising an option under the Plan, shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such option prior to such
recapitalization or reorganization.
The Plan may be amended by the Stockholders of the Company. The Plan may
also be amended by the Board of Directors, provided that any amendment approved
by the Board of Directors which is of a scope that requires Stockholder
approval in order to ensure favorable federal income tax treatment for any
incentive stock options under Code Section 422, is subject to obtaining such
Stockholder approval.
17
Option Information
The following table sets forth, as of September 1, 2001, all options granted
pursuant to the Plan to (i) the named executive officers, (ii) all current
executive officers of the Company as a group, (iii) all current directors of
the Company who are not executive officers as a group, and (iv) all employees,
including all current officers who are not executive officers, as a group.
No. of Options
Name Title Granted
---- ----- --------------
Peter D. Meldrum........ President and Chief Executive Officer 535,000
Gregory C. Critchfield,
M.D. .................. President, Myriad Genetic Laboratories, Inc. 355,000
Adrian N. Hobden,
Ph.D. ................. President, Myriad Pharmaceuticals, Inc. 430,048
Jay M. Moyes............ Vice President of Finance and Chief Financial Officer 305,002
Sudhir R. Sahasrabudhe,
Ph.D. ................. Executive Vice President Research and Development 195,000
All current executive officers as a group (9 persons)......................... 2,643,214
All current directors who are not executive officers as a group (5 persons)... 350,000
All employees who are not executive officers as a group (1)................... 2,626,130
--------
(1) Net of all canceled options.
On September 4, 2001, the closing market price per share of the Company's
Common Stock was $43.00 as quoted on The NASDAQ Stock Market.
Federal Income Tax Considerations
The following is a description of certain United States federal income tax
consequences of the issuance and exercise of options under the Plan:
Stock options granted under the Plan may be either incentive stock options,
or ISOs, which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-qualified stock options, or NQSOs, which are not intended to meet
such requirements. The federal income tax treatment for the two types of
options differs as follows:
ISOs. No taxable income is recognized by the optionee at the time of the
option grant, and no taxable income is generally recognized at the time the
option is exercised. The optionee will, however, recognize taxable income in
the year in which the purchased shares are sold or otherwise made the subject
of a taxable disposition. For federal tax purposes, dispositions are divided
into two categories: qualifying and disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two years after the option grant date and more than one
year after the exercise date. If either of these two holding periods is not
satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of the amount realized
upon the sale or other disposition of the purchased shares over the exercise
price paid for those shares. If there is a disqualifying disposition of the
shares, then the excess of the fair market value of the shares on the exercise
date (or the amount realized on a disqualifying sale, if less) over the
exercise price paid for those shares will be taxable as ordinary income to the
optionee; any additional gain or loss recognized upon the disposition will be
taxable as a capital gain or loss.
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
18
The Company will generally be entitled to an income tax deduction equal to
the amount of ordinary income recognized by the optionee with respect to the
exercise of a non-statutory option or the disqualifying disposition of an
incentive stock option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to approve the increase in the aggregate
number of shares of Common Stock available under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT
TO THE PLAN TO INCREASE BY 2,000,000 SHARES THE AGGREGATE NUMBER OF SHARES FOR
WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE PLAN, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A STOCKHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
19
INDEPENDENT PUBLIC ACCOUNTANTS
(Notice Item 3)
The Board of Directors has appointed KPMG LLP, independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending June 30, 2002. The Board proposes that the Stockholders ratify this
appointment, although such ratification is not required under Delaware law or
the Company's Restated Certificate of Incorporation, as amended, or Restated
By-Laws. KPMG LLP audited the Company's financial statements for the fiscal
year ended June 30, 2001. The Company expects that representatives of KPMG LLP
will be present at the Meeting, with the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to ratify the appointment of the
independent public accountants.
In the event that ratification of the appointment of KPMG LLP as the
independent public accountants for the Company is not obtained at the Meeting,
the Board of Directors will reconsider its appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy statement for the
Company's 2002 Annual Meeting of Stockholders, Stockholder proposals must be
received by the Company no later than June 12, 2002. To be considered for
presentation at such meeting, although not included in the proxy statement,
proposals must be received no earlier than August 8, 2002 and no later than
September 8, 2002. Proposals received after that date will not be voted on at
the Annual Meeting. If a proposal is received before that date, the proxies
that management solicits for the meeting may still exercise discretionary
voting authority on the proposal under circumstances consistent with the proxy
rules of the Securities and Exchange Commission. All Stockholder proposals
should be marked for the attention of: Secretary, Myriad Genetics, Inc.,
320 Wakara Way, Salt Lake City, Utah 84108.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE.
By order of the Board of Directors:
/s/ Christopher L. Wight
Christopher L. Wight
Secretary
October 9, 2001
20
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30,
2001 (OTHER THAN EXHIBITS THERETO) FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT THE COMPANY, IS
AVAILABLE ON THE INTERNET AT WWW.MYRIAD.COM AND IS AVAILABLE IN PAPER FORM TO
BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK WITHOUT CHARGE UPON WRITTEN
REQUEST TO: SECRETARY, MYRIAD GENETICS, INC., 320 WAKARA WAY, SALT LAKE CITY,
UTAH 84108 (801-584-3600).
21
APPENDIX A
MYRIAD GENETICS, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
. Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
. Monitor the independence and performance of the Company's independent
auditors.
. Provide an avenue of communication among the independent auditors,
management, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities and shall have direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
So long as the Company is listed on the National Association of Securities
Dealers ("Nasdaq"), the Audit Committee members shall meet the requirements of
the Nasdaq. The Audit Committee shall be comprised of three or more directors
as determined by the Board, each of whom shall be independent nonexecutive
directors, free from any relationship that would interfere with the exercise of
his or her independent judgment. All members of the Committee shall have a
basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board. If an audit committee
Chair is not designated or present, the members of the Committee may designate
a Chair by majority vote of the Committee membership.
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. The Committee should meet privately in executive session
at least annually with management, the independent auditors and as a committee
to discuss any matters that the Committee or each of these groups believe
should be discussed.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually. Submit
the charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
3. In consultation with the management, and the independent auditors, consider
the integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor, control and report such exposures. Review significant
findings prepared by the independent auditors together with management's
responses.
Independent Auditors
4. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
5. Review and approve requests for significant management consulting
engagements to be performed by the independent auditors firm and be advised
of any other significant study undertaken at the request of management that
is beyond the scope of the audit engagement letter.
6. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
7. Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
8. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Legal Compliance
9. On at least an annual basis, review with the Company's counsel, any legal
matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
10. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
annual proxy statement.
11. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary
or appropriate.
12. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
Appendix B
MYRIAD GENETICS, INC.
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(AS AMENDED AND RESTATED SEPTEMBER 20, 2001)
1. DEFINITIONS.
-----------
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Myriad Genetics, Inc. 1992 Employee,
Director and Consultant Stock Option Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated
-------------
power to act on its behalf to a committee. (See Paragraph 4)
Affiliate means a corporation which, for purposes of Section 424 of
---------
the Code, is a parent or subsidiary of the Company, direct or
indirect.
Board of Directors means the Board of Directors of the Company.
------------------
Code means the United States Internal Revenue Code of 1986, as
----
amended.
Committee means the Committee to which the Board of Directors has
---------
delegated power to act under or pursuant to the provisions of the
Plan.
Common Stock means shares of the Company's common stock, $.01 par
------------
value.
Company means Myriad Genetics, Inc., a Delaware corporation.
-------
Disability or Disabled means permanent and total disability as defined
---------- --------
in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
-----------------
(1) If the Common Stock is listed on a national securities exchange or
traded in the over-the-counter market and sales prices are regularly
reported for the Common Stock, either (a) the average of the closing
or last prices of the Common Stock on the Composite Tape or other
comparable reporting system for the ten (10) consecutive trading days
immediately preceding the applicable date or (b) the closing or last
price of the Common Stock on the Composite Tape or other comparable
reporting system for the trading day immediately preceding the
applicable date, as the Administrator shall determine;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales prices
are not regularly reported for the Common Stock for the trading days
or day referred to in clause (1), and if bid and asked prices for the
Common Stock are regularly reported, either (a) the average
of the mean between the bid and the asked price for the Common Stock
at the close of trading in the over-the-counter market for the ten
(10) days on which Common Stock was traded immediately preceding the
applicable date or (b) the mean between the bid and the asked price
for the Common Stock at the close of trading in the over-the-counter
market for the trading day on which Common Stock was traded
immediately preceding the applicable date, as the Administrator shall
determine; and
(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option
---
under Code Section 422.
Key Employee means an employee of the Company or of an Affiliate
------------
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by
the Administrator to be eligible to be granted one or more Options
under the Plan.
Non-Qualified Option means an option which is not intended to qualify
--------------------
as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
------
Option Agreement means an agreement between the Company and a
----------------
Participant delivered pursuant to the Plan.
Participant means a Key Employee, director or consultant to whom one
-----------
or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.
Participant's Survivors means a deceased Participant's legal
-----------------------
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of descent
and distribution.
Plan means this Myriad Genetics, Inc. 1992 Employee, Director and
----
Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which Options have been
------
or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within
the provisions of Paragraph 3 of the Plan. The Shares issued upon
exercise of Options granted under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or
both.
2. PURPOSES OF THE PLAN.
--------------------
The Plan is intended to encourage ownership of Shares by Key Employees,
directors and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and Non-
Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 8,000,000 or the equivalent of such number of
Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 16 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
--------------------------
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. Following the date on which the Common Stock is registered
under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the
Plan is intended to comply in all respects with Rule 16b-3 or its successors,
promulgated pursuant to Section 16 of the 1934 Act with respect to Participants
who are subject to Section 16 of the 1934 Act, and any provision in this Plan
with respect to such persons contrary to Rule 16b-3 shall be deemed null and
void to the extent permissible by law and deemed appropriate by the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees, directors
and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options shall be
granted; and
d. Specify the terms and conditions upon which an Option or Options may
be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.
5. ELIGIBILITY FOR PARTICIPATION.
-----------------------------
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of an Option to a person not then an employee, director or consultant of
the Company or of an Affiliate. The actual grant of such Option, however, shall
be conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Option Agreement evidencing such
Option. ISOs may be granted only to Key Employees. Non-Qualified Options may be
granted to any Key Employee, director or consultant of the Company or an
Affiliate. In no event shall any employee be granted in any calendar year
Options to purchase more than 1,000,000 shares of the Company's Common Stock
pursuant to this Plan. The granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be,
granted subject to such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the stockholders of the
Company of this Plan or any amendments thereto. The Option Agreements shall be
subject to at least the following terms and conditions:
A. Non-Qualified Options: Each Option intended to be a Non-Qualified
---------------------
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:
a. Option Price: The option price (per share) of the Shares covered
by each Option shall be determined by the Administrator but shall
not be less than the par value per share of Common Stock.
b. Each Option Agreement shall state the number of Shares to which
it pertains;
c. Each Option Agreement shall state the date or dates on which it
first is exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or
become exercisable in installments over a period of months or
years, or upon the occurrence of certain conditions or the
attainment of stated goals or events; and
d. Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to
the Administrator providing for certain protections for the
Company and its other shareholders including requirements that:
i. The Participant's or the Participant's Survivors' right to
sell the Shares may be restricted; and
ii. The Participant or the Participant's Survivors may be
required to execute letters of investment intent and must
also acknowledge that the Shares will bear legends noting
any applicable restrictions.
e. On the date of each annual meeting of the Company's shareholders,
each director of the Company who is not (i) an employee of the
Company or (ii) nominated or elected pursuant to or in
satisfaction of a contractual obligation of the Company, provided
that on such dates such director has been in the continued and
uninterrupted service of the Company as a director since his or
her election or appointment, shall be granted a Non-Qualified
Option to purchase 15,000 Shares. Each Option granted under this
subparagraph shall (i) have an exercise price equal to the Fair
Market Value (per share) of the Shares on the date of grant of
the Option, (ii) have a term of ten (10) years, and (iii) shall
become cumulatively exercisable in three (3) equal annual
installments of thirty-three and 33/100 percent (33.33%) each,
upon completion of one full year of service on the Board of
Directors after the date of grant, and continuing on each of the
next two (2) full years of service thereafter. Any director
entitled to receive an Option grant under this subparagraph may
elect to decline the Option. The provisions of Paragraphs 10,
11, 12 and 13 below shall not apply to Options granted pursuant
to this subparagraph.
Except as otherwise provided in the pertinent Option Agreement, if a
director who receives Options pursuant to this subparagraph:
i. ceases to be a member of the Board of Directors of the
Company for any reason other than death or disability, any
then unexercised Options granted to such director may be
exercised by the director within a period of ninety (90)
days after the date the director ceases to be a member of
the Board of Directors, but only to the extent of
the number of Shares with respect to which the Options are
exercisable on the date the director ceases to be a member
of the Board of Directors, and in no event later than the
expiration date of the Option; or,
ii. ceases to be a member of the Board of Directors of the
Company by reason of his or her death or Disability, any
then unexercised Options granted to such Director may be
exercised by the Participant (or by the Participant's
personal representative, or the Participant's Survivors)
within a period of one hundred eighty (180) days after the
date the director ceases to be a member of the Board of
Directors, but only to the extent of the number of Shares
with respect to which the Options are exercisable on the
date the director ceases to be a member of the Board of
Directors, and in no event later than the expiration date of
the Option.
B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
----
Employee and be subject to at least the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with Code
Section 422 and relevant regulations and rulings of the Internal
Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described above, except
clause (a) thereunder.
b. Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable
attribution rules in Code Section 424(d):
i. Ten percent (10%) or less of the total combined voting power
-------
of all classes of share capital of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred percent
(100%) of the Fair Market Value per share of the Shares on
the date of the grant of the Option.
ii. More than ten percent (10%) of the total combined voting
power of all classes of share capital of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred ten
percent (110%) of the said Fair Market Value on the date of
grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total combined voting power
-------
of all classes of share capital of the Company or an
Affiliate, each Option
shall terminate not more than ten (10) years from the date
of the grant or at such earlier time as the Option Agreement
may provide;
ii. More than ten percent (10%) of the total combined voting
power of all classes of share capital of the Company or an
Affiliate, each Option shall terminate not more than five
(5) years from the date of the grant or at such earlier time
as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in any
calendar year (under this or any other ISO plan of the Company or
an Affiliate) so that the aggregate Fair Market Value (determined
at the time each ISO is granted) of the stock with respect to
which ISOs are exercisable for the first time by the Participant
in any calendar year does not exceed one hundred thousand dollars
($100,000), provided that this subparagraph (e) shall have no
force or effect if its inclusion in the Plan is not necessary for
Options issued as ISOs to qualify as ISOs pursuant to Section
422(d) of the Code.
e. Limitation on Grant of ISOs: No ISOs shall be granted after the
date which is the earlier of ten (10) years from the date of the
-------
adoption of the Plan by the Company and the date of the approval
of the Plan by the shareholders of the Company.
7. EXERCISE OF OPTION AND ISSUE OF SHARES.
--------------------------------------
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing,
the Administrator shall accept only such payment on exercise of an ISO as is
permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).
The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, (iii) any such amendment of any ISO shall be made only after the
Administrator, after consulting the counsel for the Company, determines whether
such amendment would constitute a "modification" of any Option which is an ISO
(as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISO, and (iv) with respect to
any Option held by any Participant who is subject to the provisions of Section
16(a) of the 1934 Act, any such amendment shall be made only after the
Administrator, after consulting with counsel for the Company, determines whether
such amendment would constitute the grant of a new Option.
8. RIGHTS AS A SHAREHOLDER.
-----------------------
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
--------------------------------------------
By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option agreement. The designation of a
beneficiary of an Option by a Participant shall not be deemed a transfer
prohibited by this Paragraph. Except as provided above, an Option shall only be
exercisable, during the Participant's lifetime, by the Participant (or by his or
her legal representative)and shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
-------------------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than termination
"for cause", Disability, or death for which events there are special
rules in Paragraphs 11, 12, and 13, respectively), may exercise any
Option granted to him or her to the extent that the right to purchase
Shares has accrued on the date of such termination of service, but
only within such term as the Administrator has designated in the
pertinent Option Agreement.
b. In no event may an Option Agreement provide, if the Option is intended
to be an ISO, that the time for exercise be later than three (3)
months after the Participant's termination of employment.
c. The provisions of this paragraph, and not the provisions of Paragraph
12 or 13, shall apply to a Participant who subsequently becomes
disabled or dies after the termination of employment, director status
or consultancy, provided, however, in the case of a Participant's
death within three (3) months after the termination of employment,
director status or consulting, the Participant's Survivors may
exercise the Option within one (1) year after the date of the
Participant's death, but in no event after the date of expiration of
the term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of an
Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant engaged
in conduct which would constitute "cause", then such Participant shall
forthwith cease to have any right to exercise any Option.
e. A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1
hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment,
director status or consultancy with the Company or with an Affiliate,
except as the Administrator may otherwise expressly provide.
f. Options granted under the Plan shall not be affected by any change of
employment or other service within or among the Company and any
Affiliates, so long as the Participant continues to be an employee,
director or consultant of the Company or any Affiliate, provided,
however, if a Participant's employment by either the Company or an
Affiliate should cease (other than to become an employee of an
Affiliate or the Company), such termination shall affect the
Participant's rights under any Option granted to such Participant in
accordance with the terms of the Plan and the pertinent Option
Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
--------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the date the Participant
is notified his or her service is terminated "for cause" will
immediately be forfeited, unless the Option Agreement provides
otherwise.
b. For purposes of this Article, "cause" shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The
determination of the Administrator as to the existence of cause will
be conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the Company
or an Affiliate, which contains a conflicting definition of "cause"
for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect
to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
-----------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of Disability;
and
b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights as would have
accrued had the Participant not become Disabled prior to the end of
the accrual period which next ends following the date of Disability.
The proration shall be based upon the number of days of such accrual
period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
---------------------------------------------------------
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death; and
b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights which would have
accrued had the Participant not died prior to the end of the accrual
period which next ends following the date of death. The proration
shall be based upon the number of days of such accrual period prior to
the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of
the Shares on a later date if he or she had not died and had continued to be an
employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
-----------------------
Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:
a. The person(s) who exercise such Option shall warrant to the Company,
prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not
with a view to, or for sale in connection with, the distribution of
any such Shares, in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following legend which shall
be endorsed upon the certificate(s) evidencing their Shares issued
pursuant to such exercise or such grant:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by
any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, or (b)
the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such
Act is then available, and (2) there shall have been compliance
with all applicable state securities laws.
b. The Company shall have received an opinion of its counsel that the
Shares may be issued upon such particular exercise in compliance with
the 1933 Act without registration thereunder.
The Company may delay issuance of the Shares until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the Option is exercisable as of the date immediately prior to
such dissolution or liquidation.
16. ADJUSTMENTS.
-----------
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock shall
--------------------------------
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend. The number
of Shares subject to options to be granted to directors pursuant to Subparagraph
e of Paragraph 6 shall also be proportionately adjusted upon the occurrence of
such events.
B. Consolidations or Mergers. If the Company is to be consolidated with or
-------------------------
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either, to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this subsection), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this subsection) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a recapitalization
----------------------------------
or reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
--------------------
made pursuant to subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
17. ISSUANCES OF SECURITIES.
-----------------------
Except as expressly provided herein, 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 Options. Except as expressly provided
herein, no adjustments shall be made for dividends paid in cash or in
property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
-----------------
No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs.
-------------------------------------------------------------------
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's ISO's converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action. The Administrator, with the consent
of the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.
20. WITHHOLDING.
-----------
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Optionholder's salary, wages or other
remuneration in connection with the exercise of an Option or a Disqualifying
Disposition (as defined in Paragraph 21), the Optionholder shall advance in cash
to the Company, or to any Affiliate of the Company which employs or employed the
Optionholder, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Administrator (and permitted by law); provided, however, that
with respect to persons subject to Section 16 of the 1934 Act, any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule 16b-3 promulgated under Section 16 of the 1934 Act. For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Optionholder may be required to advance the difference in cash to the
Company or the Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant's payment of such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
-----------------------
The Plan will terminate on November 9, 2002, the date which is ten (10)
years from the earlier of the date of its adoption and the date of its approval
-------
by the shareholders of the Company. The Plan may be terminated at an earlier
date by vote of the shareholders of the Company; provided, however, that any
such earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
------------------------------------
The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the extent necessary
to ensure the qualification of the Plan under Rule 16b-3, at such time, if any,
as the Company has a class of stock registered pursuant to Section 12 of the
1934 Act, and to the extent necessary to qualify the shares issuable upon
exercise of any outstanding Options granted, or Options to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated
quotation system of securities dealers. Any amendment approved by the
Administrator which is of a scope that requires shareholder approval in order to
ensure favorable federal income tax treatment for any incentive stock options or
requires shareholder approval in order to ensure the compliance of the Plan with
Rule 16b-3 at such time, if any, as the Company has a class of stock registered
pursuant to Section 12 of the 1934 Act, shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, affect his or her rights under an Option
previously granted to him or her. With the consent of the Participant affected,
the Administrator may amend outstanding Option Agreements in a manner which may
be adverse to the Participant but which is not inconsistent with the Plan. In
the discretion of the Administrator, outstanding Option Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
--------------------------------
Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.
25. GOVERNING LAW.
-------------
This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.
Appendix C
MYRIAD GENETICS, INC.
THIS PROXY IS BEING SOLICITED BY MYRIAD GENETICS, INC.'S
BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated October 9,
2001 in connection with the Annual Meeting to be held at 9:00 a.m. on Thursday,
November 8, 2001 at the offices of Myriad Genetics, Inc., 320 Wakara Way, Salt
Lake City, Utah and hereby appoints Peter D. Meldrum and Jay M. Moyes, and each
of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of MYRIAD GENETICS, INC. registered in the name provided herein
which the undersigned is entitled to vote at the 2001 Annual Meeting of
Stockholders, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed to
vote or act as follows on the proposals set forth in said Proxy.
SEE REVERSE SIDE FOR ALL PROPOSALS. If you wish to vote in accordance with
the Board of Directors' recommendations, just sign on the reverse side. You need
not mark any boxes. Please mark, date and return this card promptly, using the
enclosed envelope. No postage is required if mailed in the United States.
(SEE REVERSE SIDE)
------------------
DETACH HERE
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR Proposals 1, 2 and 3.
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
1. Election of three Class II Directors (or if any nominee is not available
for election, such substitute as the Board of Directors may designate) for a
three-year term.
Nominees: Peter D. Meldrum, Mark H. Skolnick, Ph.D., and Linda S. Wilson,
Ph.D.
FOR WITHHELD
[ ] [ ]
[ ] __________________________________________
For all nominees except as noted above.
2. Proposal to increase by 2,000,000 shares the aggregate number of shares of
the Company's Common Stock for which stock options may be granted under the
Company's 1992 Employee, Director and Consultant Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify the appointment of KPMG LLP as the Company's independent
public accountants for the fiscal year ending June 30, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments thereof.
By checking the box to the right, I consent to future access of the Annual
Report, Proxy Statements prospectuses and other communications electronically
via the Internet. I understand that the Company may no longer distribute
printed materials to me for any future shareholder meeting until such consent is
revoked. I understand that I may revoke any consent at any time by contacting
the Company's transfer agent, Mellon Investor Services, Ridgefield Park, NJ and
that costs normally associated with electronic access, such as usage and
telephone charges, will be my responsibility. [ ]
Please sign exactly as name(s) appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature:________________________
Signature:________________________
Date:_____________________________
2