1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
AMERICAN BIOGENETIC SCIENCES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No 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:
- --------------------------------------------------------------------------------
2
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
JUNE 19, 2001
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders of
American Biogenetic Sciences, Inc., a Delaware corporation (the "Company"), will
be held at The Huntington Hilton, 598 Broadhollow Road, Melville, New York, on
Tuesday, June 19, 2001 at 3:00 p.m., Eastern Daylight Savings Time. The
following matters are to be presented for consideration at the meeting:
1. The election of seven directors to serve until the next annual meeting
of stockholders, to be held in the year 2002, and until their respective
successors are elected and qualified;
2. A proposal to authorize an amendment of the Company's Certificate of
Incorporation to increase the number of shares of Class A Common Stock
which the Company is authorized to issue from 100,000,000 shares to
150,000,000 shares;
3. A proposal to authorize an amendment of the Company's Certificate of
Incorporation in order to effect a reverse stock split, pursuant to
which the Company's outstanding shares of Class A Common Stock and Class
B Common Stock would be exchanged for new shares of Class A Common Stock
and Class B Common Stock, respectively, in an exchange ratio to be
approved by the Board of Directors, ranging from one newly issued share
for each two outstanding shares to one newly issued share for each ten
outstanding shares;
4. A proposal to amend the Company's 1993 Non-Employee Director Stock
Option Plan to increase the number of shares subject to options to be
granted thereunder at the time of a director's initial election and at
each annual meeting of stockholders from 10,000 shares to 25,000 shares;
5. A proposal to ratify the selection by the Board of Directors of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year
ending December 31, 2001; and
6. The transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The close of business on April 25, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
meeting and any adjournments or postponements thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting at the offices of the Company located at 1375
Akron Street, Copiague, New York.
By Order of the Board of Directors,
TIMOTHY J. ROACH
Secretary
Copiague, New York
May , 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NEEDED IF MAILED IN THE
UNITED STATES.
3
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished to the holders of Class A Common Stock
("Class A Common Stock") and to the sole holder of Class B Common Stock ("Class
B Common Stock") of American Biogenetic Sciences, Inc. (the "Company") in
connection with the solicitation by the Board of Directors of the Company of
proxies in the accompanying form ("Proxy" or "Proxies") to be used at the 2001
Annual Meeting of Stockholders of the Company to be held on Tuesday, June 19,
2001, at 3:00 p.m., Eastern Daylight Savings Time, at The Huntington Hilton, 598
Broadhollow Road, Melville, New York, and at any adjournments and postponements
thereof (the "Meeting"), for the purposes set forth in the accompanying Notice
of Annual Meeting. It is anticipated that this Proxy Statement and the Proxies
will be mailed to stockholders on or about May , 2001.
VOTING PROCEDURES AND STOCK OWNERSHIP
VOTING RIGHTS
The close of business on April 25, 2001 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting (the "Record Date"). There were outstanding, as of the close of business
on that date, 41,102,255 shares of Class A Common Stock, 3,000,000 shares of
Class B Common Stock, and 7,000 shares of Series A Preferred Stock.
A majority of the total outstanding shares of Class A Common Stock and
Class B Common Stock represented in person or by Proxy at the Meeting is
required to constitute a quorum for the transaction of business at the Meeting.
Holders of Class A Common Stock have one vote for each share thereof held of
record and the holder of Class B Common Stock has ten votes for each share
thereof held of record. The Class A Common Stock and Class B Common Stock will
vote as one class on all matters proposed herein to be submitted to stockholders
at the Meeting. Holders of Series A Preferred Stock have no right to vote except
on certain matters affecting the Series A Preferred Stock.
Proxies properly executed and received in time for the Meeting will be
voted. A stockholder who signs and returns a Proxy has the power to revoke it at
any time before it is exercised by giving written notice of revocation to the
Company, 1375 Akron Street, Copiague, New York 11726, Attention: Secretary, by a
duly executed Proxy of later date, or by voting in person at the Meeting. Unless
otherwise specified, all Proxies received will be voted for the election of all
nominees named herein to serve as directors, and in favor of each of the other
proposals. Proxies submitted which contain abstentions or broker nonvotes will
be deemed present at the Meeting in determining the presence of a quorum.
Abstentions and broker nonvotes will have no effect on the outcome of the
election of directors. Abstentions will, in effect, be deemed negative votes on
each of Proposals 2 - 5. Broker nonvotes will not affect the results of
Proposals 4 and 5 but will, in effect, be deemed negative votes on Proposals 2
and 3.
The Board of Directors does not intend to bring before the Meeting any
matter other than those specifically described above and knows of no matters
other than the foregoing to come before the Meeting. If any other matters or
motions come before the Meeting, it is the intention of the persons named in the
accompanying Proxy to vote such Proxy in accordance with their judgment on such
matters or motions, including any matters dealing with the conduct of the
Meeting.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and Proxies will be borne by the Company. The Company will
also reimburse brokers who are holders of record of Class A Common Stock for
their expenses in forwarding Proxies and Proxy soliciting materials to the
beneficial owners of such shares. In addition to the use of the mails, Proxies
may be solicited without extra
4
compensation by directors, officers and employees of the Company by telephone,
telecopy, telegraph or personal interview. The Company has retained W.F. Doring
& Co., Inc., 150 Bay Street, Jersey City, New Jersey 07302 to aid in the
solicitation of Proxies. For its services, W.F. Doring & Co., Inc. will receive
a fee of $2,500, plus reimbursement for certain out-of-pocket expenses.
SECURITY HOLDINGS OF CERTAIN STOCKHOLDERS, MANAGEMENT AND NOMINEES
The following table sets forth information as at the Record Date with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock by (i) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Class A Common Stock or Class B Common
Stock, (ii) each director or nominee for director of the Company, (iii) each
executive officer named in the Summary Compensation Table under the caption
"Executive Compensation" and (iv) all executive officers and directors of the
Company as a group. Except as noted, each beneficial owner has sole voting and
investment power with respect to all shares attributable to such owner. This
information is based upon information provided by the person or upon Schedule
13D or Schedule 13G filings which they have made with the Securities and
Exchange Commission. Each share of Class A Common Stock is entitled to one vote
per share while each share of Class B Common Stock is entitled to ten votes per
share.
CLASS A COMMON STOCK (1) CLASS B COMMON STOCK
----------------------------- ---------------------
NO. PERCENT NO. PERCENT
BENEFICIAL OWNERS OF SHARES OF CLASS OF SHARES OF CLASS
----------------- --------------- -------- --------- --------
Directors and Officers:
Alfred J. Roach........................... 10,947,250(2) 23.0% 3,000,000 100%
Josef C. Schoell.......................... 328,000(3)(4) * -- 0
Ellena Byrne.............................. 115,000(3)(5) * -- 0
Timothy J. Roach.......................... 855,000(3) 2.0% -- 0
Glenna M. Crooks.......................... 45,000(3) * -- 0
Joseph M. Danis........................... 10,000(3) * -- 0
Joseph C. Hogan........................... 70,000(3) * -- 0
John S. North............................. 296,200(6) * -- 0
All executive officers and directors as a
group (9 persons, including the
foregoing).............................. 12,908,950(7) 26.3% 3,000,000 100%
5% Owners:
BVF Partners, L.P......................... 12,000,000(8) 23.0% -- 0
Abbott Laboratories....................... 2,782,931(9) 7.0% -- 0
- ---------------
(1) Asterisk indicates less than one percent. Shares of Class A Common Stock
subject to issuance upon conversion of Class B Common Stock or of Series A
Preferred Stock into Class A Common Stock and upon exercise of options and
warrants that were exercisable on, or become exercisable within 60 days
after, the Record Date are considered owned by the holder thereof and
outstanding for purposes of computing the percentage of outstanding Class A
Common Stock that would be owned by such person, but (except for the
computation of beneficial ownership by all executive officers and directors
as a group) are not considered outstanding for purposes of computing the
percentage of outstanding Class A Common Stock owned by any other person.
(2) The address of Mr. Roach is c/o American Biogenetic Sciences, Inc..
Beneficial ownership of Class A Common Stock includes 3,000,000 shares of
Class A Common Stock issuable upon conversion of the same number of shares
of Class B Common Stock on a share for share basis, 1,000,000 shares of
Class A Common Stock issuable upon conversion of 1,000 shares of Series A
Preferred Stock, 1,000,000 shares of Class A Common Stock subject to
outstanding warrants and 1,475,000 shares of Class A Common Stock subject to
outstanding options.
2
5
(3) Includes shares of Class A Common Stock subject to options as follows: for
Josef C. Schoell, 255,000; for Ellena Byrne, 107,500; for Timothy J. Roach,
845,000; for Glenna M. Crooks, 45,000; for Joseph M. Danis, 10,000; and for
Joseph C. Hogan, 50,000.
(4) Includes 200 shares owned by his wife and 2,000 shares owned by his
daughters. The inclusion of these amounts should not be construed as an
admission that Mr. Schoell is the beneficial owner of these shares.
(5) Includes 7,500 shares owned, and 20,000 shares subject to options held, by
her husband. The inclusion of these amounts should not be construed as an
admission that Ms. Byrne is the beneficial owner of these shares.
(6) Mr. North resigned as President and Chief Executive Officer of the Company
effective January 11, 2001 and his outstanding options were subsequently
cancelled.
(7) Includes 3,000,000 shares of Class A Common Stock issuable upon conversion
of the same number of shares of Class B Common Stock, 1,000,000 shares of
Class A Common Stock issuable upon conversion of 1,000 shares of Series A
Preferred Stock, 1,000,000 shares of Class A Common Stock subject to
outstanding warrants, and 3,015,000 shares of Class A Common Stock subject
to outstanding options.
(8) Beneficial ownership of Class A Common Stock consists of 6,000,000 shares
issuable upon conversion of 6,000 shares of Series A Preferred Stock and
6,000,000 shares of Class A Common Stock subject to outstanding warrants.
These securities are held by certain investment partnerships for which BVF
Partners, L.P. serves as the general partner and BVF, Inc. (of which Mark
Lampert is sole owner) acts as investment adviser, sharing the power to vote
and dispose the shares with such investment partnerships. The address of BVF
Partners is 227 West Monroe Street, Suite 4800, Chicago, IL 60606.
(9) The address of Abbott Laboratories is 100 Abbott Park Road, Abbott Park, IL
60064.
3
6
PROPOSAL 1.
ELECTION OF DIRECTORS
The Company's By-Laws provide that the number of members of the Board of
Directors shall be not less than three or more than nine, the exact number to be
fixed by resolution of the Board of Directors. The Board of Directors presently
consists of seven members. Each of the nominees, other than Josef C. Schoell and
Joseph M. Danis (who were elected as directors by the Board in January 2001) has
been previously elected by stockholders of the Company.
Unless authority to do so is withheld, Proxies will be voted at the Meeting
for the election of each of the nominees named below to serve as directors of
the Company until the next annual meeting of stockholders and until their
respective successors are elected and qualified. In the event that any of the
nominees should become unavailable or unable to serve for any reason, the
holders of Proxies have discretionary authority to vote for one or more
alternate nominees designated by the Board of Directors. The Company believes
that all of the nominees are available to serve as directors.
BACKGROUND OF NOMINEES
Alfred J. Roach, 85, has been Chairman of the Board of Directors of the
Company since its organization in September 1983 and, from September 1983 until
November 1998 and since January, 2001 has also served as the Company's Chief
Executive Officer. Mr. Roach has served as Chairman of the Board and/or
President of TII Industries, Inc. ("TII"), a corporation engaged in
manufacturing and marketing telecommunications products, and its predecessor
since its founding in 1964. Mr. Roach devotes a majority of his time to the
business of the Company.
Josef C. Schoell, 51, has been President and Chief Operating Officer and a
member of the Board of Directors of the Company since January 2001. From July
1995 until January 2001 he was Chief Financial Officer and Vice
President-Finance of the Company. Mr. Schoell joined the Company in 1992 as
Controller. From 1988 until joining ABS, Mr. Schoell was an independent
consultant providing financial accounting and computer services. From 1978 until
1988, Mr. Schoell served in various financial and accounting positions with JP
Stevens. Mr. Schoell is a graduate of New York University Stern School of
Business, is a Certified Public Accountant in New York State and a member of the
New York State Society of Certified Public Accountants, American Institute of
Certified Public Accountants and Financial Executives International.
Ellena M. Byrne, 50, has been Executive Vice President and a director of
the Company since March 1995. From January 1986 until December 1991, Ms. Byrne
served as Vice President-Administration of the Company and from December 1991
until March 1995, Ms. Byrne served in various capacities with the Company,
including Director of Operations for Europe and Asia.
Timothy J. Roach, 54, has been Treasurer, Secretary and a director of the
Company since September 1983. He has also been affiliated with TII since 1974,
serving as its President since July 1980, Chief Operating Officer since May
1987, Vice Chairman of the Board since October 1993, Chief Executive Officer
since January 1995 and a director since January 1978. Mr. Roach devotes such
time as is necessary to the business of the Company to discharge his duties as
Treasurer, Secretary and a director. Timothy J. Roach is the son of Alfred J.
Roach.
Glenna M. Crooks, Ph.D., 51, has been a director of the Company since March
1999. Dr. Crooks has been President of Strategic Health Policy International,
Inc., a health care consulting and planning firm that advises governments,
businesses and industry trade associations in the U.S. and overseas on the
development and application of business strategy, a company she formed in
October 1994. From January 1991 until September 1994, Dr. Crooks served as Vice
President -- Worldwide Sales and Operations for the Vaccines Division of Merck &
Co., Inc., a pharmaceutical company that develops, manufactures and markets
human and animal health products.
Joseph M. Danis, 55, has been a director of and a business development
consultant to the Company since January 2001. Mr. Danis has been President of
Danis Associates since April 1996, a consulting firm he
4
7
founded that focuses on technology transfers, structuring ventures and all
phases of due diligence for pharmaceutical and biotechnology companies. From
January 1996 to March 1996, Mr. Danis served as Executive Director of Cultor
Food Science, Inc. From 1986 to January 1996, he served in various capacities
with Pfizer, Inc., including Director of Technical Service and Licensing and
Director, Acquisitions and Licensing.
Joseph C. Hogan, Ph.D., 78, has been a director of the Company since
December 1983. Dr. Hogan served as Dean of the College of Engineering of the
University of Notre Dame from 1967 until 1981, following which he performed
various services for the University of Notre Dame until 1985, where he remains
Dean Emeritus. From 1985 until his retirement in 1987, Dr. Hogan was Director of
Engineering Research and Resource Development at Georgia Institute of Technology
("Georgia Tech"). Dr. Hogan is a director of TII.
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 2000, the Board of Directors held four
meetings and acted by unanimous written consent on twelve occasions following
informal discussions. Each director was present for at least 75% of the meetings
of the Board of Directors and committees of the Board on which such director
served that were held during calendar 2000, except William Sharwell, who
resigned from the Board of Directors effective February 25, 2000 prior to
attending any meetings in calendar 2000.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit and Compensation Committee, but does
not have a nominating committee.
The Audit Committee, which presently consists of Mr. Hogan, Ms. Crooks and
Mr. Danis, is authorized to examine and consider matters related to the audit of
the Company's accounts, the financial affairs and accounts of the Company, the
scope of the independent auditors' engagement and their compensation, the effect
on the Company's financial statements of any proposed changes in generally
accepted accounting principles, disagreements, if any, between the Company's
independent auditors and management, and matters of concern to the independent
auditors resulting from the audit, including the results of the independent
auditors' review of internal accounting controls. This committee is also
authorized to nominate independent auditors, subject to approval by the Board of
Directors. The Audit Committee met on three occasions during 2000.
The Compensation Committee is authorized to consider and recommend to the
Board of Directors the salaries, bonuses and other compensation arrangements
with respect to the executive officers of the Company. This Committee is also
empowered to grant all options under, and administer, the Company's stock option
plans. The Compensation Committee is further empowered to examine, administer
and make recommendations to the full Board with respect to other employee
benefit plans and arrangements of the Company. The Compensation Committee
presently consists of Mr. Hogan and Ms. Crooks. The Compensation Committee acted
by unanimous written consent on five occasions during 2000 following informal
discussions.
REMUNERATION OF DIRECTORS
Each non-employee director receives a fee of $1,000 for each meeting of the
Board of Directors attended by that director in person and not telephonically.
Each director serving on the Audit Committee receives a fee of $600 for each
meeting of the committee attended by that director in person and not
telephonically. All directors are reimbursed for travel expenses incurred in
attending Board and committee meetings.
The Company's 1993 Non-Employee Director Stock Option Plan, as amended,
provides for the automatic grant of an option to purchase 10,000 shares of the
Company's Class A Common Stock to each non-employee director holding office
immediately after each annual meeting of stockholders. The exercise price for
each option is equal to the fair market value of the Company's Class A Common
Stock on the date of grant. All options have a term of ten years and are
immediately exercisable.
5
8
EXECUTIVE OFFICERS
The only executive officer of the Company in addition to Alfred J. Roach,
Josef C. Schoell, Timothy J. Roach and Ellena M. Byrne (whose backgrounds are
described under the caption "Election of Directors -- Background of Nominees"
above) is James H. McLinden, Ph.D. Mr. McLinden, 50, has been Senior Vice
President and Chief Scientific Officer of the Company since January 2001. From
November 1991 until January 2001 he served as Vice President -- Molecular
Biology of the Company, and from January 1987 to November 1991 as Director of
Molecular Biology of the Company.
REQUIRED VOTE
A plurality of the votes cast at the Meeting by the holders of Class A
Common Stock and Class B Common Stock, voting together as one class, with Class
A Common Stock having one vote per share and Class B Common Stock having ten
votes per share, will be required for the election of directors. The Board of
Directors recommends that stockholders vote FOR each of Alfred J. Roach, Josef
C. Schoell, Ellena M. Byrne, Timothy J. Roach, Glenna M. Crooks, Joseph M. Danis
and Joseph C. Hogan to serve as directors of the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company during
2000, 1999 and 1998 of each person who served as the Company's chief executive
officer during 2000 and each other person who served as an executive officer of
the Company during 2000 and whose annual compensation for 2000 exceeded
$100,000:
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ----------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
------------------ ---- ---------- --------- ------------ ----------------
Alfred J. Roach,............... 2000 250,000 -- 100,000 --
Chairman of the Board(1) 1999 250,000(4) -- 300,000 --
1998 250,000 -- 100,000 --
John S. North,................. 2000 235,000 -- 50,000 --
President and Chief Executive 1999 260,000(5) 25,000(2) 250,000 100,000(2)
Officer(2) 1998 25,000 -- 300,000 --
Josef C. Schoell,.............. 2000 120,000 -- 50,000 --
Vice President Finance and 1999 120,000(6) -- 200,000 --
Chief Financial Officer(3) 1998 120,000 -- -- --
- ---------------
(1) Mr. Roach served as the Company's Chief Executive Officer until November 16,
1998, and was again appointed to that position in January 2001.
(2) Mr. North joined the Company as President and Chief Executive Officer on
November 16, 1998 and resigned effective January 11, 2001. Under the terms
of his employment agreement, he received a one-time $25,000 bonus in January
1999 and a $100,000 interest free loan during 1999. The entire amount of the
loan had been forgiven as of December 31, 2000.
(3) Mr. Schoell was appointed President and Chief Operating Officer of the
Company by the Board of Directors in January 2001.
(4) Includes $115,000 which was deferred during 1999 at the election of Mr.
Roach and paid in February 2000.
(5) Includes $110,000 which was deferred during 1999 at the election of Mr.
North and paid in February 2000.
6
9
(6) Includes $10,000 which was deferred during 1999 at the election of Mr.
Schoell and paid in February 2000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options to purchase
shares of the Company's capital stock granted by the Company during the year
ended December 31, 2000 to the executive officers named in the Summary
Compensation Table. No stock appreciation rights have been granted by the
Company.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL OPTIONS TERM(3)
---------------------------------------------------------- ----------------------
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PER SHARE(2) DATE 5% 10%
---- ---------- ------------ -------------- ---------- --------- ---------
Alfred J. Roach....... 100,000 19% $.41 1/7/2005 $11,328 $25,031
John S. North......... 50,000 10% .38 1/7/2010 11,792 29,883
Josef C. Schoell...... 50,000 10% .38 1/7/2010 11,792 29,883
- ---------------
(1) Exercisable as to 50% of the number of shares of Class A Common Stock
underlying the option during each six months commencing six months after the
date of grant, on a cumulative basis.
(2) The exercise price of the options granted to Messrs. Roach, North and
Schoell was 110%, 100% and 100%, respectively, of the market value of the
Class A Common Stock on the date of grant.
(3) These are hypothetical values using assumed 5% and 10% compound growth rates
prescribed by Securities and Exchange Commission rules and are not intended
to forecast possible future appreciation, if any, in the market price of the
Company's Class A Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
The following table contains information concerning options exercised
during 2000 by the executive officers named in the Summary Compensation Table
and Class A Common Stock underlying unexercised options held at December 31,
2000 by such persons.
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
SHARES ACQUIRED FISCAL YEAR-END(#) FISCAL YEAR-END($)
NAME ON EXERCISE(#) VALUE REALIZED($)(1) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(2)
---- --------------- -------------------- --------------------------- ------------------------------
Alfred J. Roach...... -- -- 1,450,000/1,525,000 $86,138/20,813
John S. North........ 262,500 $696,375 150,000/ 337,500 32,813/77,344
Josef C. Schoell..... 100,000 198,488 242,500/ 280,000 24,281/11,719
- ---------------
(1) The "value realized" reflects the appreciation on the date of exercise
(based upon the excess of the market price of the shares on that date over
the exercise price). However, because the named executive officers may keep
the shares acquired upon exercise or sell them at a different price, these
amounts do not necessarily reflect cash realized upon sale of those shares.
(2) Based upon the closing price of the Company's Class A Common Stock on the
Nasdaq SmallCap Market on December 31, 2000 ($.6875), less the exercise
price of each option.
7
10
PERFORMANCE GRAPH
The following graph compares the cumulative return to stockholders of Class
A Common Stock for the last five calendar years with the Nasdaq Market Index and
the Dow Jones Industry Group BTC -- Biotechnology Index for that period. The
comparison assumes $100 was invested on December 31, 1995 in Class A Common
Stock and in each of the comparison groups, and assumes reinvestment of all
dividends (the Company paid no dividends during the periods):
[Performance Graph]
- ----------------------------------------------------------------------------------------------------------------
At December 31, 1995 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------------------------------------------
American Biogenetic Sciences,
Inc. $100.00 $147.73 $ 69.32 $ 27.27 $ 18.18 $ 25.02
- ----------------------------------------------------------------------------------------------------------------
Peer Group Index $100.00 $101.02 $103.17 $141.43 $283.95 $339.00
- ----------------------------------------------------------------------------------------------------------------
NASDAQ Market Index $100.00 $124.27 $152.00 $214.39 $378.12 $237.66
- ----------------------------------------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Class A Common Stock, to file initial reports of ownership, and
reports of changes of ownership, of the Company's equity securities with the
Securities and Exchange Commission and furnish copies of those reports to the
Company. Based solely on a review of copies of the reports furnished to the
Company, or written representation that no reports were required, the Company
believes that all reports required to be filed by such persons with respect to
the Company's year ended December 31, 2000 were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between September 3, 1999 and January 19, 2000, Alfred J. Roach loaned the
Company an aggregate of $776,000 at an interest rate of 6% per annum. On March
3, 2000, $500,000 of the principal amount of the Company's indebtedness to Mr.
Roach was exchanged for 1,000 shares of the Company's Series A Preferred Stock
which are convertible into 1,000,000 shares of the Class A Common Stock and
1,000,000 warrants to purchase the Class A Common Stock at a price of $1.00 per
share. The Company made principal payments on Mr. Roach's loans in February and
March 2000 and repaid the remaining principal amount of and accrued interest on
these loans in April 2000.
On March 8, 1999, Mr. Roach purchased directly from the Company 440,000
shares of the Company's Class A Common Stock for $495,000 ($1.1250 per share).
8
11
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors, consisting of Joseph
C. Hogan and Glenna M. Crooks, two non-employee directors, is authorized to
consider and recommend to the Board of Directors salaries, bonuses and other
compensation arrangements for executive officers and to grant all options under,
and administer, the Company's employee stock option plans.
The Compensation Committee believes that the Company, as a development
stage company, should create compensation packages to attract and retain
executives who can bring the experience and skills to the Company necessary for
the development of the Company and development and marketing of its products. To
date, this has been accomplished by utilizing salary as the base compensation
and stock options to promote long-term incentives and conserve the Company's
available cash and, in certain cases, a bonus as an inducement to an executive
to join the Company. As the Company grows, other forms of annual and long-term
compensation arrangements may be developed to provide appropriate incentives and
to reward specific accomplishments.
In determining base salaries, the Compensation Committee examines, among
other factors, the executive's performance, degree of responsibility and
experience, as well as general employment conditions, competition and economic
factors. No specific weights are assigned to any of the factors employed by the
Compensation Committee.
The Compensation Committee also makes use of stock options to provide
long-term incentive compensation to many of the Company's employees, including
executive officers, enabling them to benefit, along with all stockholders, if
the market price for Class A Common Stock rises. The Compensation Committee
believes that the use of stock options ties employee interests to those of the
Company's stockholders through stock ownership and potential stock ownership,
while also providing the Company with a means of compensating employees using a
method which enables the Company to conserve its available cash for operations,
including research and development and product development. To assure the
long-term nature of the incentive, options granted have generally not become
exercisable during the first six months to one year after grant and thereafter
have become exercisable over a period of two to four years. Decisions of the
Compensation Committee as to option grants are based, in large measure, upon a
review of such factors as the executive's level of responsibility, other
compensation, accomplishments and goals, and when the last option was granted to
such executive, as well as recommendations and evaluations of the executive's
performance and prospective contributions by the Company's Chairman of the Board
and Chief Executive Officer. Determinations have been made subjectively without
giving weight to specific factors.
Chief Executive Officer Compensation. Mr. John S. North joined the Company
as President and Chief Executive Officer in November 1998 and served in this
capacity until his resignation in January 2001. His base salary, bonus, stock
option grant and other benefits were negotiated in connection with Mr. North's
agreement to join the Company. Mr. Alfred J. Roach reassumed the position of
Chief Executive Officer of the Company in January 2001. The salary of Mr. Roach
has remained unchanged for the past eight years.
Certain Tax Legislation. Section 162(m) precludes a public company from
taking a federal income tax deduction for annual compensation in excess of
$1,000,000 paid to its chief executive officer or any of its four other most
highly compensated executive officers. Certain "performance based compensation"
is excluded from the deduction limitation. Any compensation resulting from the
exercise of stock options granted by the Company should be eligible for
exclusion since all options were either granted prior to the adoption of Section
162(m) or under a plan approved by the Company's stockholders which was designed
to conform to regulations for determining whether options are deemed
"performance based compensation." The Committee believes that the limitations on
compensation deductibility under Section 162(m) will have no effect on the
Company in the foreseeable future, and intends to take such action as may be
necessary, including obtaining stockholder approval where required, in order for
compensation not to be subject to the limitation on deductibility imposed by
Section 162(m) of the Code.
Respectfully submitted,
JOSEPH C. HOGAN
GLENNA M. CROOKS
9
12
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is currently comprised of
three of the Company's directors, Mr. Hogan, Ms. Crooks and Mr. Danis. All
members of the Audit Committee are "independent" as such term is defined under
the listing standards of the National Association of Securities Dealers, Inc.
The Audit Committee operates pursuant to a written charter, a copy of which is
attached as Exhibit A to this Proxy Statement. Under its charter, the Audit
Committee is charged with assisting the Board of Directors in fulfilling its
oversight responsibilities with respect to: (i) annual financial information
provided to stockholders and the Securities and Exchange Commission; (ii) the
systems of internal controls that management has established; and (iii) the
internal and external audit process.
The Audit Committee met three times during calendar 2000 with the Company's
independent auditors, Arthur Andersen LLP ("Arthur Andersen"). The Audit
Committee has reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended December 31, 2000.
The Audit Committee has also discussed with Arthur Andersen the matters required
to be discussed by the Auditing Standards Board Statement on Auditing Standards
No. 61, as amended. As required by Independence Standards Board Standard No. 1,
as amended, "Independence Discussion with Audit Committees," the Audit Committee
has received and reviewed the required written disclosures and a confirming
letter from Arthur Andersen regarding their independence, and has discussed the
matter with the auditors.
Based on its review and discussions of the foregoing, the Audit Committee
has recommended to the Board of Directors that the Company's audited
consolidated financial statements for the fiscal year 2000 be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000. Further, the Audit Committee recommends that the Board of Directors engage
Arthur Andersen as the Company's independent auditors for the fiscal year ending
December 31, 2001.
This Audit Committee Report shall not be deemed to be incorporated by
reference in any document previously or subsequently filed with the Securities
and Exchange Commission that incorporated by reference all or any portion of
this Proxy Statement, except to the extent that the Company specifically
requests that this report be specifically incorporated by reference.
Respectfully submitted,
JOSEPH C. HOGAN
GLENNA M. CROOKS
JOSEPH M. DANIS
10
13
PROPOSAL NO. 2
AUTHORIZATION OF AN AMENDMENT OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED CLASS A COMMON STOCK
On March 21, 2001, the Board of Directors unanimously adopted a resolution
approving a proposal to amend the Company's Certificate of Incorporation to
increase the number of shares of Class A Common Stock that the Company is
authorized to issue from 100,000,000 to 150,000,000 shares (the "Increased
Capital Amendment"). The Board of Directors determined that the Increased
Capital Amendment is advisable and directed that it be considered at the
Meeting. However, in the event that Proposal No. 3 is also approved and the
Board of Directors determines to implement it before the Increased Capital
Amendment has been implemented, the Board reserves the right to determine not to
implement the Increased Capital Amendment.
The additional 50,000,000 shares of Class A Common Stock authorized by the
Increased Capital Amendment, if and when issued, will have the same rights and
privileges as the shares of Class A Common Stock presently issued and
outstanding. Each holder of Class A Common Stock is entitled to one vote per
share, and each holder of Class B Common Stock is entitled to ten votes per
share, on all matters submitted to a vote of stockholders. Neither Class A
Common Stock nor Class B Common Stock have cumulative voting rights. The holders
of Class A Common Stock and Class B Common Stock share ratably on a per share
basis in any dividends when, as and if declared by the Board of Directors out of
funds legally available therefor and in all assets remaining after the payment
of liabilities in the event of the liquidation, dissolution or winding up of the
Company. There are no preemptive or other subscription rights, conversion rights
or redemption or sinking fund provisions with respect to the Class A Common
Stock or Class B Common Stock, except that each share of Class B Common Stock is
convertible into Class A Common Stock on a share for share basis.
PURPOSES AND CERTAIN POSSIBLE EFFECTS OF INCREASING THE NUMBER OF AUTHORIZED
SHARES OF CLASS A COMMON STOCK
The Company's Certificate of Incorporation presently authorizes the Company
to issue 100,000,000 shares of Class A Common Stock, $.001 par value per share,
of which 41,102,255 shares were issued and outstanding as of April 25, 2001, and
3,000,000 shares of Class B Common Stock, $.001 par value per share, all of
which were outstanding on that date. In addition to the 41,102,255 shares of
Class A Common Stock outstanding, as of that date (i) 3,000,000 shares are
reserved for issuance upon conversion of the Class B Common Stock, (ii)
7,000,000 shares are reserved for issuance upon conversion of the Series A
Preferred Stock and 7,000,000 additional shares upon exercise of warrants issued
to holders of Series A Preferred Stock; (iii) 8,502,656 shares are reserved for
issuance upon the exercise of options granted or to be granted under the
Company's stock option plans (of which 6,062,119 shares were subject to
outstanding options at exercise prices ranging from $0.25 to $10.00 per share),
and (iv) 1,157,814 shares are reserved for issuance upon the exercise of
warrants not included in clauses (ii) and (iii) above (which have exercise
prices ranging from $0.75 to $3.00 per share). Accordingly, only 32,237,275
shares of the Company's Class A Common Stock are unrestricted for future
issuance.
The Company has historically either publicly offered or privately placed
its capital stock to raise funds to finance its operations, including research
and development, product development activities and to compensate consultants.
The Company expects to continue to make substantial expenditures for research
and product development, in the development of products being commercially
developed and for the marketing of products. Except for the potential issuance
of reserved shares, there are no present understandings or arrangements as to
the issuance or sale of any shares of Class A Common Stock. However, the Company
continues to periodically explore and negotiate the additional financing that it
will require. These activities are likely to require the Company to sell shares
of Class A Common Stock or securities convertible into or exchangeable for Class
A Common Stock. The Company has, at times in the past, sold shares at below the
market price of its Class A Common Stock at the date of issuance and may be
required to do so in the future in order to raise financing. The Board of
Directors believes that the increase in the number of authorized
11
14
shares of Class A Common Stock at this time will provide the Company with the
flexibility of having an adequate number of authorized but unissued shares of
Class A Common Stock available for future financing requirements, including for
funding research and product development, and other corporate purposes, without
the expense or delay attendant in seeking stockholder approval at any special or
annual meeting. The proposed amendment would provide additional authorized
shares of Class A Common Stock that could be used from time to time, without
further action or authorization by the stockholders (except as may be required
by law or by any stock exchange or over-the-counter market on which the
Company's securities may then be listed).
Although it is not the purpose of the proposed amendment and the Board of
Directors is not aware of any pending or proposed effort to acquire control of
the Company, the authorized but unissued shares of Class A Common Stock also
could be used by the Board of Directors to discourage, delay or make more
difficult a change in control of the Company.
The Increased Capital Amendment will not affect the rights of existing
holders of Class A Common Stock except to the extent that further issuances of
Class A Common Stock will reduce each existing stockholder's proportionate
ownership.
REQUIRED VOTE
Authorization of the Increased Capital Amendment requires the affirmative
vote of both (a) a majority of the outstanding shares of Class A Common Stock
and Class B Common Stock, voting together as one class, with Class A Common
Stock having one vote per share and Class B Common Stock having ten votes per
share and (b) a majority of the outstanding shares of Class A Common Stock
voting as a separate class, with each share of Class A Common Stock having one
vote per share. The Board of Directors unanimously recommends a vote FOR
approval of this proposal.
PROPOSAL NO. 3
AUTHORIZATION OF AN AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO ENABLE THE BOARD OF DIRECTORS
TO EFFECT A REVERSE SPLIT OF EACH CLASS OF COMMON STOCK
GENERAL
The Company's Board of Directors has unanimously adopted a resolution
recommending that the stockholders authorize an amendment to the Company's
Restated Certificate of Incorporation (the "Reverse Split Amendment") to (i)
effect a stock combination (reverse stock split) of the Company's outstanding
shares of each of its Class A Common Stock and Class B Common Stock (the
"Reverse Split") and (ii) provide for the payment of cash in lieu of fractional
shares otherwise issuable in connection therewith. There would be no change in
the number of the Company's authorized shares of Class A Common Stock or Class B
Common Stock and no change in the par value of either class as a result of the
Reverse Split Amendment. If the Reverse Split is approved, the Board will have
authority, without further stockholder approval, to effect the Reverse Split
pursuant to which the Company's outstanding shares (the "Old Shares") of Class A
Common Stock and Class B Common Stock would be exchanged for new shares (the
"New Shares") of Class A Common Stock and Class B Common Stock, respectively, in
an exchange ratio to be approved by the Board of Directors, ranging from one New
Share for each two Old Shares to one New Share for each ten Old Shares. The
number of Old Shares for which each New Share is to be exchanged is referred to
as the "Exchange Number". The Exchange Number may, within such range, be a whole
number or a whole number and fraction of a whole number. The Reverse Split will
be effected simultaneously for each of Class A Common Stock and Class B Common
Stock and the Exchange Number will be the same for each class. In addition, the
Board will have the authority to determine the exact timing of the effective
date of the Reverse Split, which may be any time prior to June 30, 2002, without
further stockholder approval. Such timing and Exchange Number will be determined
in the judgment of the Board of Directors, with the intention of maximizing the
Company's ability to remain in compliance with the continued listing maintenance
requirements of The Nasdaq Stock Market, Inc. ("Nasdaq") and other intended
benefits of the Reverse Split to
12
15
stockholders and the Company. See "--Purpose of the Reverse Split" below. The
text of the proposed Reverse Split Amendment (subject to inserting the effective
date of the Reverse Split, the Exchange Number and the per share amount to be
paid for fractional shares) is set forth in Exhibit B to this Proxy Statement.
The Board of Directors also reserves the right, notwithstanding stockholder
approval and without further action by stockholders, to determine not to proceed
with the Reverse Split if, at any time prior to filing the Reverse Split
Amendment with the Secretary of State of the State of Delaware, the Board of
Directors, in its sole discretion, determines that the Reverse Split is no
longer in the best interests of the Company and its stockholders. The Board of
Directors may consider a variety of factors in determining whether or not to
implement the Reverse Split and in determining the Exchange Number including,
but not limited to, overall trends in the stock market, recent changes and
anticipated trends in the per share market price of the Company's Class A Common
Stock, business and transactional developments and the Company's actual and
projected financial performance.
The Reverse Split will not change the proportionate equity interests of the
Company's stockholders, nor will the respective voting rights and other rights
of stockholders be altered, except for possible immaterial changes due to the
Company's purchase of fractional shares. The Common Stock issued pursuant to the
Reverse Split will remain fully paid and nonassessable. The Company will
continue to be subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended.
PURPOSES OF THE REVERSE SPLIT
The Company's Class A Common Stock is quoted on the Nasdaq SmallCap Market
(the "SmallCap Market"). In order for the Class A Common Stock to continue to be
quoted on that market, the Company and its Class A Common Stock are required to
continue to comply with various listing maintenance standards established by
Nasdaq. Among other things (i) the Company is required to maintain adjusted
tangible net assets of at least $2,000,000, (ii) its Class A Common Stock must
have an aggregate market value of shares held by persons other than officers and
directors ("public float") of at least $1,000,000, (iii) at least 300 persons
must own at least 100 shares, and (iv) the Class A Common Stock must have a
minimum bid price of at least $1.00 per share. Under Nasdaq's listing
maintenance standards for the SmallCap Market, if the closing bid price of the
Class A Common Stock is under $1.00 per share for a thirty consecutive business
days and does not thereafter regain compliance for a minimum of ten consecutive
business days during the ninety calendar days following notification by Nasdaq,
Nasdaq may delist the Class A Common Stock from trading on the SmallCap Market.
If a delisting were to occur, the Class A Common Stock would trade on the OTC
Bulletin Board or in the "pink sheets" maintained by the National Quotation
Bureau, Inc. Such alternatives are generally considered to be less efficient
markets. Furthermore, the Company believes that maintaining the Company's
SmallCap listing may provide the Company with a broader market for its Class A
Common Stock and facilitate the use of the Class A Common Stock in acquisitions
and financing transactions in which the Company may engage.
On April 11, 2001, the Company received a letter from Nasdaq advising it
that the Company's Class A Common Stock had not met Nasdaq's minimum bid price
closing requirement for thirty consecutive trading days and that, if the Company
is unable to demonstrate compliance with this requirement during the ninety
calendar days ending July 10, 2001, its Class A Common Stock may be delisted
(subject to the Company's right for a hearing and stay of the delisting during
the hearing period). It is Nasdaq's position that an ability to demonstrate
sustained compliance is also required to achieve compliance with this
requirement. The principal purpose of the Reverse Split Proposal is to increase
the market price of the Company's Class A Common Stock above the Nasdaq minimum
bid requirement (which does not adjust for the Reverse Split). Giving the Board
of Directors authority to implement the Reverse Split will avoid the need to
call a special meeting of, or seek consents from, stockholders under time
constraints to authorize a reverse split should it become necessary in order to
seek to meet Nasdaq's listing maintenance criteria. However, there can be no
assurance that, even after effectuating the Reverse Split, the Company will
continue to meet the minimum bid price and otherwise meet the requirements of
Nasdaq for continued inclusion for trading on the SmallCap Market.
13
16
CERTAIN EFFECTS OF THE REVERSE SPLIT
The following tables illustrate the principal effects of the Reverse Split
on the Company's Common Stock:
PRIOR TO AFTER 1-FOR-2 AFTER 1-FOR-5 AFTER 1-FOR-10
REVERSE REVERSE REVERSE REVERSE
STOCK STOCK STOCK STOCK
SPLIT SPLIT SPLIT SPLIT
NUMBER OF SHARES ------------ ------------- ------------- --------------
Class A Common Stock:
Authorized...................... 100,000,000 100,000,000 100,000,000 100,000,000
Outstanding (1)................. 41,102,255 20,551,128 8,220,451 4,110,226
Available for Future Issuance... 58,897,745 79,448,872 91,779,549 95,889,774
Class B Common Stock:
Authorized...................... 3,000,000 3,000,000 3,000,000 3,000,000
Outstanding..................... 3,000,000 1,500,000 600,000 300,000
Available for Future Issuance... 0 1,500,000 2,400,000 2,700,000
PER SHARE FINANCIAL DATA(2)
Net Loss per Common Share for year
ended December 31, 2000......... $ (0.14) $ (0.28) $ (0.71) $ (1.41)
Book Value Per Common Share at
December 31, 2000............... $ 0.10 $ 0.20 $ 0.50 $ 1.01
- ---------------
(1) Gives effect to the Reverse Split as if it occurred on the Record Date,
subject to adjustment resulting from the repurchase of fractional shares.
Excludes, on a pre-Reverse Split basis, (i) 3,000,000 shares reserved for
issuance upon conversion of the Class B Common Stock, (ii) 7,000,000 shares
reserved for issuance upon conversion of the Series A Preferred Stock and
7,000,000 additional shares issuable upon exercise of warrants issued to
holders of Series A Preferred Stock; (iii) 6,062,119 shares reserved for
issuance upon the exercise of options under the Company's stock option
plans, and (iv) 1,157,814 shares reserved for issuance upon the exercise of
warrants not included in clauses (ii) or (iii). Upon effectiveness of the
Reverse Split, each option, warrant and conversion right would entitle the
holder to acquire a number of shares equal to the number of shares which the
holder was entitled to acquire prior to the Reverse Split, divided by the
Exchange Number at the exercise or conversion price in effect immediately
prior to the Reverse Split multiplied by the Exchange Number.
(2) Balance sheet data gives effect to the Reverse Split as if it occurred on
December 31, 2000, subject to adjustment resulting from the repurchase of
fractional shares.
Stockholders should recognize that if the Reverse Split is effectuated,
they will own a fewer number of shares than they presently own (a number equal
to the number of shares owned immediately prior to the filing of the Amendment
divided by the Exchange Number). While the Company expects that the Reverse
Split will result in an increase in the market price of the Class A Common
Stock, there can be no assurance that the Reverse Split will increase the market
price of the Class A Common Stock by a multiple equal to the Exchange Number or
result in the permanent increase in the market price (which is dependent upon
many factors, including the Company's performance and prospects). Also, should
the market price of the Company's Class A Common Stock decline, the percentage
decline may be greater than would occur in the absence of a Reverse Split.
Furthermore, the possibility exists that liquidity in the market price of the
Class A Common Stock could be adversely affected by the reduced number of shares
that would be outstanding after the Reverse Split. In addition, the Reverse
Split will increase the number of stockholders of the Company who own odd-lots
(less than 100 shares). Stockholders who hold odd-lots typically will experience
an increase in the cost of selling their shares, as well as greater difficulty
in effecting such sales. Consequently, there can be no assurance that the
Reverse Split will achieve the desired results that have been outlined above.
14
17
PROCEDURE FOR EFFECTING REVERSE SPLIT AND EXCHANGE OF STOCK CERTIFICATES
If the Reverse Split Amendment is approved by the Company's stockholders,
and if the Board of Directors still believes that the Reverse Split is in the
best interests of the Company and its stockholders, the Company will file the
Reverse Split Amendment with the Secretary of State of the State of Delaware at
such time as the Board has determined the appropriate Exchange Number and the
appropriate effective time for such split. The Board may delay effecting the
Reverse Split until June 30, 2002 without resoliciting such stockholder
approval. The Reverse Split will become effective on the date of filing the
Reverse Split Amendment (the "Effective Date"). Beginning on the Effective Date,
each certificate representing Old Shares will be deemed for all corporate
purposes to evidence ownership of New Shares.
As soon as practicable after the Effective Date, stockholders will be
notified that the Reverse Split has been effected and of the exact Exchange
Number. The Company's transfer agent will act as exchange agent (the "Exchange
Agent") for purposes of implementing the exchange of stock certificates. Holders
of Old Shares will be asked to surrender to the Exchange Agent certificates
representing Old Shares in exchange for certificates representing New Shares in
accordance with the procedures to be set forth in a letter of transmittal to be
sent by the Company. No new certificates will be issued to a stockholder until
such stockholder has surrendered such stockholder's outstanding certificate(s)
together with the properly completed and executed letter of transmittal to the
Exchange Agent. Stockholders should not destroy any stock certificate and should
not submit any certificates until requested to do so.
FRACTIONAL SHARES
No scrip or fractional certificates will be issued in connection with the
Reverse Split. Stockholders who otherwise would be entitled to receive
fractional shares because they hold a number of Old Shares not evenly divisible
by the Exchange Number, will be entitled, upon surrender to the Exchange Agent
of certificates representing such shares, to a cash payment in lieu thereof at a
price equal to the fraction to which the stockholder would otherwise be entitled
multiplied by the closing price of the Class A Common Stock, as reported in The
Wall Street Journal, on the last trading day prior to the Effective Date (or if
such price is not available, the average of the last bid and ask prices of the
Class A Common Stock on such day or other price determined by the Board of
Directors). The ownership of a fractional interest will not give the holder
thereof any voting, dividend, or other rights except to receive payment therefor
as described herein.
Stockholders should be aware that, under the escheat laws of the various
jurisdictions where stockholders reside, where the Company is domiciled, and
where the funds will be deposited, sums due for fractional interests that are
not timely claimed after the Effective Date may be required to be paid to the
designated agent for each such jurisdiction, unless correspondence has been
received by the Company or the Exchange Agent concerning ownership of such funds
within the time permitted in such jurisdiction. Thereafter, stockholders
otherwise entitled to receive such funds will have to seek to obtain them
directly from the state to which they were paid.
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's rights
with respect to the proposed Amendment.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a summary of certain material federal income tax
consequences of the Reverse Split, and does not purport to be complete. The
discussion is based on the provisions of the United States federal income tax
law as of the date hereof, which is subject to change prospectively or
retroactively. It does not discuss any state, local, foreign or other U.S.
federal tax consequences. Also, it does not address the tax consequences to
holders that are subject to special tax rules, such as banks, insurance
companies, regulated investment companies, personal holding companies, foreign
entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
This summary also assumes that the Old Shares were, and the New Shares will be,
held as a "capital asset," as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), generally,
15
18
property held for investment. The tax treatment of a stockholder may vary
depending upon the particular facts and circumstances of such stockholder. Each
stockholder should consult with such stockholder's own tax advisor with respect
to the consequences of the Reverse Split.
No gain or loss is recognized by a stockholder of the Company upon such
stockholder's exchange of Old Shares for New Shares pursuant to the Reverse
Split (except to the extent of any cash received in lieu of a fraction of a New
Share). Cash payments in lieu of fractional New Shares are treated as if the
fractional share were issued to the stockholder and then redeemed by the Company
for cash. A Company stockholder receiving such payment recognizes gain or loss
equal to the difference, if any, between the amount of cash received and the
stockholder's basis in the fractional share (determined as provided below). Such
gain or loss will be capital gain or loss if the payment of cash in lieu of the
fractional share is a mere mechanical rounding off of fractions and not
separately bargained for consideration, and the payment is "not essentially
equivalent to a dividend" with respect to the stockholder under the federal
income tax law.
The aggregate tax basis of the New Shares received in the Reverse Split
(including any fraction of a New Share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the Old Shares exchanged
therefor. The stockholder's holding period for the New Shares will include the
period during which the stockholder held the Old Shares surrendered in the
Reverse Split.
REQUIRED VOTE
Authorization of the Reverse Split Amendment requires the affirmative vote
of a majority of the votes represented by all outstanding shares of Class A
Common Stock and Class B Common Stock, voting together as one class, with Class
A Common Stock having one vote per share and Class B Common Stock having ten
votes per share. The Board of Directors unanimously recommends that stockholders
vote FOR this proposal.
PROPOSAL 4.
PROPOSAL TO APPROVE AN AMENDMENT
TO THE COMPANY'S 1993 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
At the Company's 1993 annual meeting, stockholders approved the Company's
1993 Stock Option Plan (as amended, the "Non-Employee Director Plan") for the
purpose of granting options, within the limits and subject to the terms and
conditions of the plan, to directors who are not employees of the Company
("Outside Directors"). The Board of Directors believes that the Non-Employee
Director Plan has been instrumental in attracting and retaining Outside
Directors and that this objective will be furthered by amending the Non-
Employee Director Plan in the manner described below.
On March 21, 2001, the Board of Directors adopted, subject to stockholder
approval at the Meeting, an amendment to the Non-Employee Director Plan to
increase the number of options automatically granted to each director covered by
the plan upon his or her initial election as a director and at each meeting of
stockholders, commencing with the Meeting, from 10,000 to 25,000 shares.
The following is a summary of the Non-Employee Director Plan.
NUMBER OF SHARES, ADMINISTRATION AND ELIGIBILITY
The maximum number of shares of Common Stock as to which options may be
granted under the Non-Employee Director Plan is 500,000. The number of shares is
subject to adjustment as discussed below under "Adjustment in Event of Capital
Changes". Upon the expiration, cancellation or termination of unexercised
options, the shares subject thereto will again be available for grant under the
Non-Employee Director Plan. The Non-Employee Director Plan is administered by
the Board of Directors subject to the provisions of the Non-Employee Director
Plan. Participation in the Non-Employee Director Plan is limited to Outside
Directors.
16
19
GRANT OF OPTIONS
The Non-Employee Director Plan presently provides for the granting of an
option to a person to purchase 10,000 shares of Class A Common Stock on the date
the person becomes an Outside Director and immediately following each annual
meeting of stockholders (whether or not elected at that meeting). However, an
Outside Director elected a director for the first time at an annual meeting
receives only one option to purchase 10,000 shares of Class A Common Stock at
such meeting. If the proposed amendment is approved, the number of shares that
would be subject to options granted to Outside Directors, both upon their
initial election and immediately following each annual meeting (including the
Meeting), would be increased to 25,000, provided, that an Outside Director
elected a director for the first time at an annual meeting would receive only
one option to purchase 25,000 shares of Class A Common Stock at such time. A
director who is an employee or consultant of the Company who ceases such
relationship but remains a director does not become an Outside Director unless
and until such director is serving as an Outside Director immediately following
the next annual meeting of stockholders at which directors are elected.
EXERCISE PRICE
The option exercise price of each share granted under the Non-Employee
Director Plan is 100% of the fair market value of the Class A Common Stock on
the date of grant. Upon exercise of the option, the exercise price is to be paid
in full in cash. The closing price of the Company's Common Stock on the Nasdaq
SmallCap Market on April 25, 2001 was $ . per share.
OPTION TERM
Each option granted under the Non-Employee Director Plan is exercisable at
any time during its ten year term, subject to early termination as discussed
below.
An option may not be transferred by an Outside Director other than by will
or by the laws of descent and distribution, and an option may be exercised
during the optionee's lifetime only by the optionee. In the event that an
optionee ceases to serve on the Board of Directors for any reason (including as
a result of not being re-elected to the Board), options held by the optionee may
be exercised at any time within one year after such cessation of service, but in
no event after the date on which the option would otherwise expire. Further, if
the optionee dies within one year after ceasing to serve as a director by reason
of disability or within three months after ceasing to serve as a director for
any other reason, then options held by such optionee may be exercised by the
legal representatives or beneficiaries of the optionee within one year after the
optionee's death, but in no event after the date on which the option would
otherwise expire. However, if the Outside Director's service on the Board is
terminated for cause or if the Outside Director resigns without the consent of a
majority of the remaining members of the Board, the Outside Director's options
shall terminate immediately.
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
In the event of any change in the outstanding Class A Common Stock by
reason of a stock dividend, stock split, stock combination, recapitalization,
merger in which the Company is the surviving corporation, reorganization or the
like, the number and kind of shares available for grant under the Non-Employee
Director Plan, the number and kind of shares to be granted initially and
annually to Outside Directors, and the option price and number and kind of
shares purchasable under outstanding options will be equitably adjusted. In the
event of the liquidation or dissolution of the Company, a merger or
consolidation in which the Company is not the surviving corporation, or any
other capital reorganization in which more than 50% of the Class A Common Stock
is exchanged, outstanding options under the Non-Employee Director Plan shall
terminate unless other provision is made therefor in the transaction (which
provision shall be made in a manner similar to that for options granted under
the Company's employee stock option plans).
DURATION AND AMENDMENT OF THE NON-EMPLOYEE DIRECTOR PLAN
No options may be granted under the Non-Employee Director Plan after April
5, 2003. Options outstanding on that date, however, shall in all respects
continue subject to the Non-Employee Director Plan.
17
20
The Board may amend, suspend or terminate the Non-Employee Director Plan at any
time, except that without the approval of stockholders, no amendment may be made
which would (a) change the class of eligible participants who may receive
options, (b) increase the total number of shares available for option (except
for anti-dilution adjustments described above), (c) decrease the option price at
which options may be granted (except pursuant to anti-dilution adjustments
described above), or (d) materially increase the benefits accruing to
participants under the Non-Employee Director Plan. No amendment may adversely
affect the rights of an optionee under any then outstanding option without the
consent of the optionee.
FEDERAL INCOME TAX TREATMENT
The following is a summary of certain material federal income tax
consequences under the Non-Employee Director Plan. The discussion is based on
the provisions of United States federal income tax law on the date hereof, which
is subject to change prospectively or retroactively. It does not discuss any
state, local, foreign or other U.S. federal tax consequences. Also, it does not
cover all of the special rules that can apply to an option or an optionee,
including rules that apply to the exercise of an option with previously-acquired
shares.
All options granted under the Non-Employee Director Plan are nonqualified
stock options ("NQSOs") which do not qualify as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO. Upon the exercise of a NQSO, the optionee
will recognize ordinary compensation income in an amount equal to the excess, if
any, of the fair market value of the shares acquired on the exercise date over
the exercise price thereof, and the Company will generally be entitled to a
deduction for such amount at that time, provided the Company reports the income
on a form 1099 that is timely provided to the option holder and timely filed
with the IRS. If the optionee later sells shares acquired pursuant to the
exercise of a NQSO, he or she will recognize long-term or short-term capital
gain or loss (depending upon the holding period) equal to the excess of the
difference between the amount realized over the fair market value of the shares
on the date of exercise. Long-term capital gain is generally subject to more
favorable tax treatment than ordinary income or short-term capital gain. In
addition, an even lower rate may apply to the sale of shares which were held for
at least five years, provided they were acquired on or after January 1, 2001 (in
some situations, an election can be made to receive this treatment even if the
shares were acquired prior to January 1, 2001). Although special rules can apply
to optionees subject to Section 16(b) of the Exchange Act, the grants of options
under this Non-Employee Director Plan are intended to benefit from the exemption
provided by Rule 16(b)-3 of the Securities Exchange Act of 1934, as amended.
OPTIONS RECENTLY GRANTED UNDER THE NON-EMPLOYEE DIRECTOR PLAN
Immediately following the 2000 Annual Meeting of Stockholders on June 13,
2000, options to purchase 10,000 shares were granted to each of Mr. Gustav Born
(who resigned from the Board effective July 10, 2000), Ms. Crooks and Mr. Hogan,
the Company's then non-employee directors, at an exercise price of $1.53 per
share, the fair market value of the Company's Class A Common Stock on the Nasdaq
National Market on that date.
PLAN BENEFITS
If the proposed amendments to the Non-Employee Director Plan are adopted,
Ms. Crooks, Mr. Danis and Mr. Hogan, the Company's Outside Directors, would be
granted an option, following the Meeting, to purchase 25,000 shares of Class A
Common Stock at 100% of the fair market value of the Class A Common Stock on the
date of the Meeting and options to purchase 25,000 shares would be granted to
each Outside Director at each annual meeting thereafter held (and to new Outside
Directors on the date they join the Board).
18
21
REQUIRED VOTE
Approval of the amendments to the Non-Employee Director Plan requires the
affirmative vote of both (a) a majority of the votes entitled to be cast by the
outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as one class, with Class A Common Stock having one vote per share and
Class B Common Stock having ten votes per share and (b) a majority of
outstanding shares of Class A Common Stock voting as a separate class, with each
share of Class A Common Stock having one vote per share. If the proposed
amendments are not approved by stockholders, the Non-Employee Director Plan will
continue in its present form. The Board of Directors unanimously recommends that
stockholders vote FOR this proposal.
PROPOSAL 5.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Arthur Andersen as the
independent auditors of the Company for the year ending December 31, 2001.
Arthur Andersen has acted for the Company in such capacity since 1989. The Board
proposes that the stockholders ratify such selection at the Meeting.
Representatives of Arthur Andersen are expected to be present at the
Meeting and will be afforded an opportunity to make a statement if they so
desire and to respond to appropriate questions.
INDEPENDENT AUDITOR FEES
Audit Fees. Arthur Andersen billed the Company an aggregate of $59,500 for
professional services rendered by it in connection with its audit of the
Company's financial statements for the fiscal year ended December 31, 2000 and
its review of the Company's quarterly reports on Form 10-Q during fiscal 2000.
Financial Information Systems Design and Implementation. During fiscal
2000, Arthur Andersen did not directly or indirectly, operate, or supervise the
operation of, the Company's information systems or manage the Company's local
area network. Nor did Arthur Andersen design or implement a hardware or software
system that aggregates source data underlying the financial statements of the
Company or generates information that is significant to the Company's financial
statements taken as a whole.
All Other Fees. Arthur Andersen billed the Company an additional $35,100
for professional services rendered during fiscal 2000 for services not otherwise
described above. These fees include fees for tax return preparation and review
of registration statements.
The Company's Audit Committee considered the non-audit services rendered by
Arthur Andersen during fiscal 2000, as described under the caption "All Other
Fees" above, and determined that such services were compatible with Arthur
Andersen's independence.
REQUIRED VOTE
Ratification of Arthur Andersen's selection requires the affirmative vote
of a majority of the votes entitled to be cast by the outstanding shares of
Class A Common Stock and Class B Common Stock present, in person or by proxy, at
the Meeting and entitled to vote on this proposal, voting together as one class,
with Class A Common Stock having one vote per share and Class B Common Stock
having ten votes per share. The Board of Directors unanimously recommends that
stockholders vote FOR approval of this proposal.
19
22
MISCELLANEOUS
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals which may be proper
subjects for inclusion in the proxy statement and form of proxy relating to that
meeting. In order to be considered, such proposals must be submitted in writing
on a timely basis. Stockholder proposals intended to be included in the Board of
Directors' proxy statement and form of proxy relating to the Company's next
Annual Meeting of Stockholders must be received by December 31, 2001. As to any
proposals intended to be presented by a stockholder without inclusion in the
Board of Directors' proxy statement and form of proxy for the Company's next
Annual Meeting of Stockholders, the proxies named in the Board of Directors'
form of proxy for that meeting will be entitled to exercise discretionary
authority on that proposal unless the Company receives notice of the matter on
or before March 29, 2002. However, even if such notice is timely received, such
proxies nevertheless may be entitled to exercise discretionary authority on that
matter to the extent permitted by Securities and Exchange Commission
regulations. Any such proposals, as well as any questions relating thereto,
should be directed to the Secretary of the Company at 1375 Akron Street,
Copiague, New York 11726.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, which has been filed with the Securities and Exchange
Commission, is also available, without charge, to stockholders who are
interested in more detailed information about the Company. Requests for a copy
of that report should be addressed to Josef C. Schoell, President and Chief
Operating Officer, at 1375 Akron Street, Copiague, New York 11726.
By Order of the Board of Directors,
TIMOTHY J. ROACH
Secretary
May , 2001
20
23
EXHIBIT A
AMERICAN BIOGENETIC SCIENCES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee ("the Committee" or the "Audit Committee") of the Board
of Directors ("the Board") of American Biogenetic Sciences, Inc. (the "Company")
will have the oversight responsibility, authority and specific duties as
described below.
COMPOSITION
Effective June 14, 2001, the Committee will be comprised of three or more
directors as determined by the Board. The members of the Committee will meet the
independence and experience requirements of the NASDAQ. The members of the
Committee will be elected annually at the organizational meeting of the full
Board held in June and will be listed in the annual report to shareholders.
Unless a chairman of the Audit Committee (the "Chairman") is elected by the
Board, the members of the Committee may designate a Chairman by majority vote of
the full Audit Committee membership.
RESPONSIBILITY
The Committee is a part of the Board. It's primary function is to assist
the Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the audit process. In addition, the
Committee provides an avenue for communication between the independent
accountants, financial management and the Board. The Committee should have a
clear understanding with the independent accountants that they must maintain an
open and transparent relationship with the Committee, and that the ultimate
accountability of the independent accountants is to the Board and the Committee.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent accountant. Nor is
it the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent accountant or to
assure compliance with laws and regulations and the Company's business conduct
guidelines.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
MEETINGS
The Committee shall meet from time to time as called by the Chairman or as
requested by Management or the independent accountants. Content of the agenda
for each meeting should be cleared by the Committee Chair. The Committee shall
meet in separate executive sessions with the chief financial officer and
independent accountants at least once each year and at other times when
considered appropriate. The Audit Committee shall maintain minutes or other
records of meetings and activities of the Audit Committee.
21
24
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary
or desirable, the Committee Chair may request that members of management and
representatives of the independent accountants be present at Committee meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable NASDAQ Audit Committee Requirements.
2. Review with the Company's management and independent accountants the
Company's accounting and financial reporting controls.
3. Review with the Company's management and independent accountants significant
accounting and reporting principles, practices and procedures applied by the
Company in preparing its financial statements. Discuss with the independent
accountants their judgements about the quality, not just the acceptability,
of the Company's accounting principles used in financial reporting.
4. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent accountants should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with the
independent accountants.
5. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent accountants
and the Company as contemplated by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees.
6. Have a predetermined arrangement with the independent accountants that they
will advise the Committee through its Chair and management of the Company of
any matters identified through procedures followed for interim quarterly
financial statements, and that such notification is to be made prior to the
related press release or, if not practicable, prior to filing Forms 10-Q.
7. At the completion of the annual audit, review with management and the
independent accountants the following:
- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to
shareholders and on Form 10-K.
- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the
year in accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the
audit. Inquire about the cooperation received by the independent
accountants during their audit, including access to all requested
records, data and information. Inquire of the independent
accountants whether there have been any disagreements with
management which, if not satisfactorily resolved, would have caused
them to issue a nonstandard report on the Company's financial
statements.
- Other communications as required to be communicated by the
independent accountants by Statement of Auditing Standards (SAS) 61
as amended by SAS 90 relating to the conduct of the audit. Further,
discuss with the independent accountants concerning their judgment
about the quality of the Company's accounting principles, as
outlined in SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
22
25
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in the Company's annual
report on Form 10-K.
8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the Company's
annual proxy statement. The charter is to be published as an appendix to the
proxy statement every three years.
9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent accountants to the Company's
needs.
10. Meet with management and the independent accountants to discuss any relevant
significant recommendations that the independent accountants may have,
particularly those characterized as "material" or "serious". Typically, such
recommendations will be presented by the independent accountants in the form
of a Letter of Comments and Recommendations to the Committee. The Committee
should review responses of management to the Letter of Comments and
Recommendations from the independent accountants and receive follow-up
reports on action taken concerning the aforementioned recommendations.
11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
12. Review with management and the independent accountants the methods used to
establish and monitor the Company's policies with respect to unethical or
illegal activities by Company employees that may have a material impact on
the financial statements.
13. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from the Company's general counsel
concerning legal and regulatory matters that may have a material impact on
the financial statements.
14. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of the NASDAQ, Statements on
Auditing Standards and other accounting, legal and regulatory provisions.
23
26
EXHIBIT B
Article 4 of the Company's Restated Certificate of Incorporation, as
amended, is to be amended to add the following immediately after the present
first paragraph thereof (which sets forth the number and par value of the
Company's authorized capital stock, none of which is being amended):
"Effective 12:01 a.m. on(*) (the "Effective Time"), each (+) shares of
Class A Common Stock then issued shall be automatically combined into one
share of Class A Common Stock of the Corporation and each (+) shares of
Class B Common Stock then issued shall automatically combined into one
share of Class B Common Stock of the Corporation. There shall be no
fractional shares issued. A holder of record Class A or Class B Common
Stock at the Effective Time who would otherwise be entitled to a fraction
of a share shall, in lieu thereof, be entitled to receive cash payment in
an amount equal to the fraction to which the stockholder would otherwise be
entitled multiplied by the closing price of the Class A Common Stock, as
reported in the Wall Street Journal, on the Effective Date (or if such
price is not available, the average of the last bid and ask prices of the
Class A Common Stock on such day or other price determined by the Board of
Directors)."
- ---------------
(*) Insert the date of the Effective Time of the Amendment determined by the
Company's Board of Directors.
(+) Insert Exchange Number, ranging from two to ten, determined by the Company's
Board of Directors.
24
27
AMERICAN BIOGENETIC SCIENCES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 19, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, AIDA
PADILLA, TIMOTHY J. ROACH and LEONARD W. SUROFF, or any one or more of them,
with full power of substitution, to vote all shares of the capital stock of
American Biogenetic Sciences, Inc. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
on Tuesday, June 19, 2001, at 3:00 p.m., Eastern Daylight Savings Time, at The
Huntington Hilton, 598 Broadhollow Road, Melville, New York, and at any
adjournments or postponements thereof, receipt of Notice of which meeting and
the Proxy Statement accompanying the same being hereby acknowledged by the
undersigned, upon the matters described in the Notice of Meeting and Proxy
Statement and upon such other business as may properly come before the meeting
and any adjournments or postponements thereof, hereby revoking any proxies
heretofore given.
Each properly executed proxy will be voted in accordance with the
specifications made below and on the reverse side hereof. If no specifications
are made, the proxies will be voted FOR each listed nominee to serve as a
director and FOR Proposals 2 through 5.
A vote FOR each nominee and FOR Proposals 2 through 5 is recommended by the
Board of Directors.
1. Election of Directors (check one box only)
[ ] [ ]
FOR EACH NOMINEE LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
below
ALFRED J. ROACH, JOSEF C. SCHOELL, ELLENA M. BYRNE, TIMOTHY J. ROACH,
GLENNA M. CROOKS, JOSEPH M. DANIS AND JOSEPH C. HOGAN
(Instruction: To withhold authority to vote for any nominee, circle that
nominee's name in the above list)
(continued and to be signed on reverse side)
28
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of Class A Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve an amendment to the Company's Certificate of Incorporation
authorizing a combination (reverse stock split)
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve amendments to the Company's 1993 Non-Employee Director Stock
Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. To ratify the selection of Arthur Andersen LLP as independent auditors for
the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: , 2001
---------------------------------------
----------------------------------------------------
(SIGNATURE OF STOCKHOLDER)
----------------------------------------------------
(SIGNATURE OF STOCKHOLDER)
NOTE: PLEASE SIGN YOUR NAME OR NAMES EXACTLY AS SET
FORTH HEREON. FOR JOINTLY OWNED SHARES, EACH OWNER
SHOULD SIGN. IF SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE INDICATE
THE CAPACITY IN WHICH YOU ARE ACTING. PROXIES
EXECUTED BY
29
CORPORATIONS SHOULD BE SIGNED BY A DULY AUTHORIZED
OFFICER AND SHOULD BEAR THE CORPORATE SEAL.
PLEASE DATE AND SIGN THIS PROXY AND MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.