SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
IGEN INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
IGEN INTERNATIONAL, INC.
16020 Industrial Drive
Gaithersburg, Maryland 20877
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 13, 2001
To The Stockholders of IGEN International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of IGEN
International, Inc. will be held on September 13, 2001 at 10:00 a.m. local time
at The Four Seasons Hotel, 2800 Pennsylvania Avenue, N.W., Washington, DC 20007
for the following purposes:
1. To elect two Class II directors for a three-year term (Proposal One).
2. To approve an increase in the number of shares available for issuance
under the Company's 1994 Stock Option Plan from 1,750,000 to 2,500,000
(Proposal Two).
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the close
of business on July 23, 2001 as the record date for the Annual Meeting. Only
holders of the Company's common stock at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
Annual Meeting will be open for examination by any stockholder, for any purpose
germane to the meeting, during ordinary business hours at 16020 Industrial
Drive, Gaithersburg, Maryland, 20877 from August 30, 2001, through September 12,
2001.
By Order of the Board of Directors
George V. Migausky
Secretary
Gaithersburg, Maryland
July 30, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD
BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE ANNUAL MEETING,
YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
IGEN International, Inc.
16020 Industrial Drive
Gaithersburg, Maryland 20877
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 13, 2001
INTRODUCTORY STATEMENT
This Proxy Statement is being furnished to the stockholders of IGEN
International, Inc., a Delaware corporation (the "Company"), as part of the
solicitation of the enclosed proxy by its board of directors (the "Board of
Directors" or "Board") from holders of the outstanding shares of the Company's
common stock, par value $0.001 per share ("Common Stock"), for use at the Annual
Meeting of Stockholders to be held on September 13, 2001, at 10:00 a.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the Four Seasons Hotel, 2800 Pennsylvania
Avenue, N.W., Washington, DC 20007. The Company first mailed this Proxy
Statement, the accompanying proxy card and the Company's Annual Report for the
fiscal year ended March 31, 2001 on or about August 1, 2001, to all stockholders
entitled to vote at the Annual Meeting.
VOTING, SOLICITATION, AND REVOCABILITY OF PROXIES
Voting
Each outstanding share of Common Stock is entitled to one vote on all matters
as to which a vote is taken at the Annual Meeting. The Board of Directors has
fixed the record date as July 23, 2001 (the "Record Date") for determination of
stockholders entitled to notice of and to vote at the Annual Meeting. The number
of shares of Common Stock outstanding on the Record Date was 19,350,512. The
presence, in person or by proxy, of at least a majority of the shares of Common
Stock outstanding on the Record Date is necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes will be treated as shares that
are present and entitled to vote for purposes of determining a quorum but are
not counted for any purpose in determining whether a matter is approved.
At the Annual Meeting, stockholder votes will be tabulated by one or more
persons appointed to act as inspectors of election. The inspectors of election
will separately tabulate affirmative and negative votes, abstentions and broker
non-votes.
All proxies in the enclosed form of proxy that are properly executed and
returned to the Company prior to commencement of voting at the Annual Meeting
will be voted at the Annual Meeting or any adjournments or postponements thereof
in accordance with the instructions thereon. Executed but unmarked proxies will
be voted FOR all proposals set forth in this Proxy Statement.
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Solicitation
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke such proxy at any time before it is exercised. A proxy may be revoked by
filing with the Secretary of the Company at the Company's principal executive
office, 16020 Industrial Drive, Gaithersburg, Maryland 20877, a written notice
of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors consists of six directors divided equally into three
classes designated as Class I, Class II and Class III. The term of office of the
Class II directors will expire at the Annual Meeting and Class II directors
will be elected for a three-year term. The terms of office of the Class I
directors and Class III directors will expire at the annual meetings of
stockholders in 2003 and 2002, respectively, and their successors will be
elected for a three-year term. The nominees listed below are currently directors
of the Company.
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as director of the
persons named below as nominees, if authority to do so is not withheld. The
Company believes that each nominee will stand for election and will serve if
elected as director. However, if a person nominated by the Board of Directors
fails to stand for election or will be unable to accept election, the proxies
will be voted for the election of such other person or persons as the Company's
Board of Directors may propose.
The two candidates receiving the highest number of affirmative votes cast at
the meeting will be elected directors of the Company. Proxies may not be voted
for a greater number of persons than the number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF THE NAMED NOMINEES
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Information as to the Nominees and Continuing Directors
The following table sets forth, as of July 23, 2001, the names and certain
other information regarding the nominees for election as director and those
directors who will continue to serve after the Annual Meeting.
Director Expiration
Nominees for a Three-year Term Age Since of Term Positions Held With the Company
------------------------------ --- ----- ------- -------------------------------
Richard J. Massey, Ph.D./(1)/ 55 1990 2001 President, Chief Operating Officer
and Director
Joop Sistermans/(2)(3)/ 58 1999 2001 Director
Continuing Directors
--------------------
Robert Salsmans/(2)(3)/ 56 1995 2003 Director
Anthony Rees/(2)/ 57 2000 2003 Director
Richard Cass 55 2000 2002 Director
Samuel J. Wohlstadter/(1)/ 59 1982 2002 Chairman, Chief Executive Officer
and Director
________________________
(1) Member of Non-Officer Stock Option Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
Set forth below is certain biographical information regarding the directors of
the Company.
Nominees for a Three-Year Term
RICHARD J. MASSEY, Ph.D. is a founder of the Company, has been President and
Chief Operating Officer of the Company since February 1992, and served as Senior
Vice President of the Company from 1985 to 1992. From 1981 until he joined IGEN
in 1983, Dr. Massey was a faculty member in the Microbiology and Immunology
Department at Rush Medical Center in Chicago. Prior to that, he was Senior
Research Scientist at the National Cancer Institute, Frederick Cancer Research
Center.
JOOP SISTERMANS currently serves as Chairman, Supervisory Board of Thuiszorg
Kempenstreek (Netherlands), a public organization for homecare, and serves on
the Advisory Committee Economy, Ecology and Technology, for the Dutch Ministry
of Economic Affairs. Mr. Sistermans also is Vice Chairman of the Framework
Programme Expert Advisory Group of the European Commission for Innovative
Products, Processes and Organizations and is a Supervisory Board member for the
University of Twente and of the Maastricht School of Management. From 1999 to
2000, Mr. Sistermans served as Executive Vice President of Origin International
B.V., a member company of the Phillips Electronics Group of Companies based in
Eindhoven, Netherlands. Mr. Sistermans was employed by Akzo Nobel from 1986 to
1999, most recently as Executive Vice President and member of the Executive
Council responsible for Strategy and Technology. Mr. Sistermans previously
served on the Board of Directors of the Company from 1993 to 1995 while in the
position of President and Chief Executive Officer of Akzo Nobel's Organon
Teknika business unit.
Continuing Directors
Class I (term expires 2003)
ROBERT R. SALSMANS has served as President and Chief Executive Officer of
Organon Teknika B.V., a business unit that is part of the Pharma group of Akzo
Nobel N.V., a holding company with high technology operating units in the
biotechnology, medical, and pharmaceutical industries, in the
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Netherlands. From October 1993 through August 1994, Mr. Salsmans served as
Managing Director of Organon Teknika B.V. and from 1990 through September 1993,
he served as Managing Director of Organon International B.V.
ANTHONY REES, D. Phil. is Director of Science at Synt:em, a French
biotechnology company, a position he has held since January 2000. During 1999
he served as a non-executive Director of Synt:em. Dr. Rees has held academic
positions at the University of Oxford (1980-90) and the University of Bath,
Great Britain, including Professorial Research Fellow since January 2000 and
from 1990 to 1997 he served as Head of the Biochemistry Department. Since 1987
Dr. Rees has been Executive Editor of the journal Protein Engineering. In 1989
Dr. Rees co-founded Oxford Molecular PLC, a British software company. While on
sabbatical from Oxford University from 1989 to 1990, Dr. Rees was Vice President
of Research at IGEN. Dr. Rees received his doctoral degree from Oxford
University.
Class III (term expires 2002)
RICHARD W. CASS has been a partner with the law firm of Wilmer, Cutler &
Pickering since 1979 and is a member of his firm's Management Committee and co-
chairman of its Corporate Practice Group. He specializes in corporate and
securities law and represents companies and entrepreneurs in acquisitions,
dispositions, joint ventures, and public securities offerings. Mr. Cass
received his bachelor's degree from Princeton University and his law degree from
Yale University.
SAMUEL J. WOHLSTADTER is a founder of the Company and has been Chairman of the
Board and Chief Executive Officer since its formation in 1982. Mr. Wohlstadter
has been a venture capitalist for more than 25 years and has experience in
founding, supporting and managing high technology companies, including Amgen
Inc., a biopharmaceutical company, and Applied Biosystems, Inc., a medical and
biological research products company. Mr. Wohlstadter is also Chief Executive
Officer of Hyperion Catalysis International, an advanced materials company,
which he founded in 1981; of Pro-Neuron, Inc., a drug discovery company, which
he founded in 1985; of Proteinix Corporation, a development stage company
organized to conduct research in intracellular metabolic processes, which he
founded in 1988; and of Pro-Virus, Inc., a drug discovery company, which
commenced operations in 1994.
Corporate Governance and Other Matters
The Board of Directors acts as nominating committee for selecting nominees for
election as directors. The Company's Bylaws permit stockholders eligible to vote
for the election of directors at the Annual Meeting to make nominations for
directors, but only if such nominations are made pursuant to timely notice in
writing to the Secretary of the Company. The Bylaws also permit stockholders to
propose other business brought before an annual meeting, provided that such
proposals are made pursuant to timely notice to the Secretary of the Company. To
be timely, notice must be received at the principal executive offices of the
Company no later than the date designated for receipt of stockholder proposals.
See "Stockholder Proposals".
The Board of Directors has an Audit Committee and a Compensation Committee,
each of which consist entirely of non-employee directors. The Board of
Directors does not have a Nominating Committee. The Audit Committee meets with
the Company's independent auditors at least quarterly to review the results of
the quarterly reviews and annual audit and to discuss the financial statements;
recommends to the Board the independent auditors to be retained; and receives
and considers the accountants' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls. During fiscal 2001, the Audit Committee was composed of Messrs.
Salsmans, Sistermans and Rees. Six meetings were held by the Audit Committee
during fiscal 2001. The Board of Directors has adopted a written charter for
the Audit Committee which was included as an appendix to the Company's 2000
Proxy Statement.
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The Compensation Committee is responsible for establishing the Company's
compensation programs for executive officers and makes determinations concerning
executive salaries and incentive compensation, awards stock options to executive
officers under the Company's stock option plans and otherwise determines
executive compensation levels and performs such other functions regarding
compensation as the Board may delegate. Until July 14, 2000 during fiscal 2001,
the Compensation Committee of the Board of Directors had no meetings and was
composed of two former directors, Messrs. Lurier and O'Neill, neither of whom
has been an officer or employee of the Company. Effective July 14, 2000, the
Compensation Committee became composed of Messrs. Salsmans and Sistermans both
of whom are "non-employee directors" and "outside directors" as defined in the
rules promulgated by the Securities and Exchange Commission and Section 162(m)
of the Internal Revenue Code. Prior to July 14, 2000, no meetings were held by
the Compensation Committee during fiscal 2001 and one meeting was held
thereafter.
The Board of Directors has also established a Non-Officer Stock Option
Committee with authority to grant stock options to persons who are not, at the
time of the grant of the option, executive officers of the Company subject to
Section 16 of the Securities Exchange Act of 1934, as amended. The members of
the Non-Officer Stock Option Committee are Mr. Wohlstadter and Dr. Massey. The
Non-Officer Stock Option Committee held two meetings during fiscal year ended
March 31, 2001.
During the fiscal year ended March 31, 2001 the Board of Directors held 16
meetings. All directors attended at least 75% of the meetings of the Board and
of the committees on which they served.
Compensation Committee Interlocks and Insider Participation
All members of the Compensation Committee have been and are outside directors
and no director or executive officer of the Company serves on the compensation
committee of the board of directors of any company for which Messrs. Salsmans or
Sistermans serves as an executive officer or director.
Independent Accountants
The Company's independent auditor for the fiscal year ended March 31, 2001 was
Deloitte & Touche LLP. Representatives of Deloitte & Touche LLP are expected
to be present at the meeting with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions. The Board of Directors has not selected an independent auditor for
the fiscal year ending March 31, 2002. Currently, management and the Audit
Committee are evaluating auditor services. After review of the services, the
Board of Directors, on recommendation from the Audit Committee, will appoint the
auditor.
Report of the Audit Committee
The Audit Committee is comprised of three directors named below, all of whom
meet the independence and experience requirements of Rule 4200(a)(15) of the
National Association of Securities Dealers' listing standards. The Audit
Committee has adopted a written charter that has been approved by the Board of
Directors.
The Audit Committee has reviewed and discussed the Company's audited financial
statements for the fiscal year ended March 31, 2001 with management and Deloitte
& Touche LLP, the Company's independent auditors. The Audit Committee has
discussed with Deloitte & Touche LLP the matters required to be discussed by
Statement of Audit Standards No. 61 (Communication with Audit Committees)
relating to the conduct of the audit, including discussions relating to that
firm's
5
independence. The Audit Committee has received the written disclosures and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
Based on the considerations referred to above, the Audit Committee recommended
to the Board of Directors that the audited financial statements for fiscal year
ended March 31, 2001 be included in the Company's Annual Report on Form 10-K
for 2001 for filing with the Securities and Exchange Commission.
The foregoing report is provided by the following independent directors, who
constitute the Audit Committee:
Joop Sistermans
Robert Salsmans
Anthony Rees
Relationship with Independent Accountants
Deloitte & Touche LLP is the independent accounting firm that audits the
Company's financial statements. In accordance with standing policy, Deloitte &
Touche LLP periodically changes the personnel who work on the audit.
In addition to performing the audit of the Company's consolidated financial
statements, Deloitte & Touche LLP provided various other services during 2001.
The aggregate fees billed for 2001 for each of the following categories of
services are set forth below:
. Audit Fees: $162,000 for services rendered for the annual audit of
the Company's consolidated financial statements for 2001 and the
quarterly review of the financial statements included in the
Company's Form 10-Q; and
. All Other Fees: $36,000 for all other services. "All other services"
primarily includes (i) the preparation of tax returns of the Company,
(ii) review and other procedures related to Form S-3 registration
statement and (iii) a compliance report relating to a debt
agreement.
Deloitte & Touche LLP did not provide any services related to financial
information systems design and implementation during 2001. The Audit Committee
has considered whether the provision of services described in All Other Fees,
above, is consistent with maintaining Deloitte & Touche's independence.
Compensation of Directors
Each non-employee director of the Company receives a per meeting attendance
fee of $1,000. In the fiscal year ended March 31, 2001, the total compensation
paid to non-employee directors (all directors except Mr. Wohlstadter and Dr.
Massey) was $13,000. In accordance with Company policy, the Company pays for or
reimburses for all expenses incurred by members of the Board of Directors in
connection with attendance at Board meetings.
Under the Company's 1994 Non-Employee Directors' Stock Option Plan, each non-
employee director of the Company is automatically granted an option to purchase
10,000 shares of the Company's Common Stock effective on the date of such
director's election or appointment to the Board. Effective June 6, 2001, the
Board of Directors adopted an amendment to the plan. Under the plan, as
amended, each non-employee director was granted as of June 6, 2001 an additional
10,000 shares of the Company's Common Stock. Additional options may be granted
in the future to non-employee directors at a date or dates set by the Board of
Directors. The options have an exercise price set at 100% of the fair market
6
value on the date of grant, have a ten year term, and vest over a period of five
years with one-fifth of the option becoming exercisable one year from the date
of grant and an additional one-twentieth becoming exercisable every three months
thereafter. Such vesting is conditioned upon continued service as a director of
the Company. Set forth below is a table of options granted under this plan to
and held by the non-employee directors as of the Record Date.
Option Grants to Non-Employee Directors
Number of Shares Number
Underlying Options of Shares Exercise or Base
Name Granted Vested Price ($/Sh) Expiration Date
---- ------- ------ ------------ ---------------
Richard W. Cass 10,000 2,000 $15.69 June 2010
10,000 0 $23.06 June 2011
Anthony R. Rees 10,000 2,000 $15.69 June 2010
10,000 0 $23.06 June 2011
Robert R. Salsmans 10,000 10,000 $ 6.25 August 2005
10,000 0 $23.06 June 2011
Joop Sistermans 10,000 4,000 $24.69 September 2009
10,000 0 $23.06 June 2011
PROPOSAL TWO
TO APPROVE AN INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE
COMPANY'S 1994 STOCK OPTION PLAN FROM 1,750,000 TO 2,500,000
The essential features of the Company's 1994 Stock Option Plan, as amended
through July 23, 2001 (the "1994 Plan"), are outlined below. This summary is
qualified in its entirety by reference to the full text of such plan. The full
text of the amendment subject to stockholder approval is attached as Exhibit A
to this Proxy Statement. The increase in the number of shares available for
issuance under the 1994 Plan is contingent on stockholder approval at the Annual
Meeting.
Proposed Amendment To The 1994 Plan
This amendment to the 1994 Plan will increase the number of shares of common
stock available for issuance under the 1994 Plan from 1,750,000 to 2,500,000.
The Board believes that this amendment is necessary to provide sufficient shares
to meet the needs of a competitive hiring environment in an industry that
typically offers stock-based compensation as an important incentive. The
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote is required to approve this proposal.
General
The 1994 Plan provides for the grant of both incentive and nonstatutory stock
options. Incentive stock options granted under the 1994 Plan are intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Nonstatutory stock
options granted under the 1994 Plan are intended not to qualify as incentive
stock options under the Code. See "Federal Income Tax Information" for a
discussion of the tax treatment of incentive and nonstatutory stock options.
Assuming the stockholders approve the increase to the options available under
the 1994 Plan at the Annual Meeting, the Company, under the 1994 Plan, will be
able to issue up to 2,500,000 options from the previous limit of 1,750,000
options. In July 2001, the Board approved and the Company implemented an
additional option plan, the IGEN International, Inc. 2001 Broad Based Option
7
Plan. Under that plan, the Company can issue up to 250,000 shares of the
Company's common stock to persons other than directors and officers of the
Company in the form of non-qualified stock options under terms similar to those
provided in the 1994 Plan.
Purpose
The 1994 Plan was adopted to provide a means by which selected officers and
other employees of and consultants to the Company and its affiliates would have
an opportunity to purchase the Common Stock of the Company, to assist in
retaining the services of employees holding key positions, to secure and retain
the services of persons capable of filling such positions and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
Administration
The 1994 Plan is administered by the Board of Directors of the Company or its
delegate. The Board has the power to construe and interpret the 1994 Plan and,
subject to the provisions of the 1994 Plan, to determine the persons to whom and
the dates on which options will be granted, the number of shares to be subject
to each option, the time or times during the term of each option within which
all or a portion of such option may be exercised, the exercise price, the type
of consideration and other terms of the option. The Board of Directors is
authorized to delegate administration of the 1994 Plan to a committee composed
of not fewer than two members of the Board. The Board has delegated
administration of the 1994 Plan to the Compensation Committee of the Board. The
Board also delegated to a Non-Officer Stock Option Committee, composed of Mr.
Wohlstadter and Dr. Massey, the authority to grant stock options to persons who
are not at the time of the grant of options named executive officers subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As used herein with respect to the 1994 Plan, the "Board" refers to the
Compensation Committee as well as to the Board of Directors itself.
The Company limits the directors who may serve as members of the Compensation
Committee to those who are "outside directors" under the tax rules.
Eligibility
Incentive stock options may be granted under the 1994 Plan only to selected
employees (including officers) of the Company and its affiliates. Selected
employees (including officers) and consultants are eligible to receive
nonstatutory stock options under the 1994 Plan. Directors who are not salaried
employees of or consultants to the Company or to any affiliate of the Company
participate in the Company's 1994 Non-Employee Director's Stock Option Plan and
are not eligible to participate in the 1994 Plan. As of July 23, 2001,
approximately 338 employees (excluding officers), three officers, and one
consultant of the Company and its affiliates were eligible to be considered for
stock options under the 1994 Plan.
No incentive stock option may be granted under the 1994 Plan to any person
who, at the time of the grant, owns (or is deemed to own) stock possessing more
than 10% of the total combined voting power of the Company or any affiliate of
the Company, unless the option exercise price is at least 110% of the fair
market value of the stock subject to the option on the date of grant, and the
term of the option does not exceed five years from the date of grant. For
incentive stock options granted under the 1994 Plan, the aggregate fair market
value, determined at the time of grant, of the shares of Common Stock with
respect to which such options are exercisable for the first time by an optionee
during any calendar year (under all such plans of the Company and its
affiliates) may not exceed $100,000. In addition, no one may receive options
within a twelve-month period for more than 200,000 shares.
8
Future Plan Benefits
The amount of future option grants under the 1994 Plan to (i) the Company's
Chief Executive Officer, (ii) the Company's Named Executive Officers (other than
the Chief Executive Officer), (iii) all current executive officers as a group,
(iv) all current directors, who are not executive officers, as a group, and (v)
all employees including all current officers who are not executive officers as a
group are not determinable because, under the terms of the 1994 Plan, such
grants are made in the discretion of the Compensation Committee. Future option
exercise prices under the 1994 Plan are not determinable because they are based
upon the fair market value of the Company's Common Stock on the date of the
grant.
Stock Subject To The 1994 Plan
If options granted under the 1994 Plan expire or otherwise terminate without
being exercised, the Common Stock not purchased pursuant to such options again
becomes available for issuance under the 1994 Plan.
Terms Of The Options
The following is a description of the permissible terms of options under the
1994 Plan. Individual option grants may be more restrictive as to any or all of
the permissible terms described below.
Exercise Price; Payment. The exercise price of incentive stock options under
the 1994 Plan may not be less than the fair market value of the Common Stock
subject to the option on the date of the option grant, and in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value. The
exercise price of nonstatutory options under the 1994 Plan may not be less than
85% of the fair market value of the Common Stock subject to the option on the
date of the option grant. On July 23, 2001, the closing price of the Company's
Common Stock as reported on the Nasdaq National Market was $27.75 per share.
The exercise price of options granted under the 1994 Plan must be paid either:
(a) in cash at the time the option is exercised; or (b) at the discretion of the
Board (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement, or (iii) in any other form of legal consideration
acceptable to the Board.
Option Exercise. Options granted under the 1994 Plan may become exercisable
in cumulative increments as determined by the Board. Options generally vest 20%
one year from the date of grant and 5% for each additional quarter thereafter,
with the effect that such shares are fully vested after five years from the date
of grant. The Board has the power to accelerate the time during which an option
may be exercised. In addition, nonstatutory options granted under the 1994 Plan
may permit exercise prior to vesting, but in such event the optionee may be
required to enter into an early exercise stock purchase agreement that allows
the Company to repurchase shares not yet vested at their exercise price should
the optionee leave the employ of the Company before vesting. To the extent
provided by the terms of an option, an optionee may satisfy any federal, state
or local tax withholding obligation relating to the exercise of such option by a
cash payment upon exercise, by authorizing the Company to withhold a portion of
the stock otherwise issuable to the optionee, by delivering already-owned stock
of the Company or by a combination of these means.
Term. The maximum term of options under the 1994 Plan is 10 years, except
that in certain cases (see "Eligibility") the maximum term is five years.
Options under the 1994 Plan terminate three months after the optionee ceases to
be employed by the Company or any affiliate of the Company, unless (a) the
termination of employment is due to such person's permanent and total disability
(as defined in the Code), in which case the option may, but need not, provide
that it may be exercised at any time within one year
9
of such termination; (b) the optionee dies while employed by the Company or any
affiliate of the Company, or within three months after termination of such
employment, in which case the option may, but need not, provide that it may be
exercised (to the extent the option was exercisable at the time of the
optionee's death) within 18 months of the optionee's death by the person
or persons to whom the rights to such option pass by will or by the laws of
descent and distribution; or (c) the option by its terms specifically provides
otherwise. Individual options by their terms may provide for exercise within a
longer period of time following termination of employment or the consulting
relationship. The option term may also be extended if exercise of the option
within these periods is prohibited for specified reasons.
Adjustment Provisions
Each of the limits described relating to the number of shares of Common Stock
available for grant under the 1994 Plan is subject to adjustment for stock
dividends, splits and other similar events. In addition, if any outstanding
option for any reason expires or is terminated or canceled and/or shares of
Common Stock subject to repurchase are repurchased by the Company, then the
shares allocable to the unexercised portion of such option or such repurchased
shares may again be subject to an option under the 1994 Plan.
Effect of Certain Corporate Events
The 1994 Plan provides that, in the event of a dissolution or liquidation of
the Company, specified type of merger or other corporate reorganization, to the
extent permitted by law, any surviving corporation will be required to either
assume options outstanding under the 1994 Plan or substitute similar options for
those outstanding under such plan, or such outstanding options will continue in
full force and effect. If any surviving corporation declines to assume or
continue options outstanding under the 1994 Plan, or to substitute similar
options, then the time during which such options may be exercised will be
accelerated and the options terminated if not exercised during such time.
Duration, Amendment and Termination
The Board may suspend or terminate the 1994 Plan without shareholder approval
or ratification at any time or from time to time. Unless sooner terminated, the
1994 Plan will terminate on July 10, 2004.
The Board may also amend the 1994 Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within 12 months before or after its adoption by the Board if
the amendment would: (a) modify the requirements as to eligibility for
participation (to the extent such modification requires stockholder approval for
the Plan to satisfy Section 422 of the Code, if applicable, or Rule 16b-3 of the
Exchange Act; (b) increase the number of shares reserved for issuance upon
exercise of options; or (c) change any other provision of the Plan in any other
way if such modification requires stockholder approval to comply with Rule 16b-3
of the Exchange Act or satisfy the requirements of Section 422 of the Code.
Restrictions on Transfer
Under the 1994 Plan, an option may not be transferred by the optionee
otherwise than by will or by the laws of descent and distribution. During the
lifetime of an optionee, an option may be exercised only by the optionee. In
addition, shares subject to repurchase by the Company under an early exercise
stock purchase agreement may be subject to restrictions on transfer which the
Board deems appropriate.
10
Federal Income Tax Information
Incentive Stock Options. Incentive Stock options under the 1994 Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or the
Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option is granted and
more than one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The optionee's
additional gain, or any loss upon the disqualifying disposition, will be a
capital gain or loss which will be long-term or short-term depending on whether
the stock was held for more than one year. Capital gains currently are generally
subject to lower tax rates than ordinary income. Slightly different rules may
apply to optionees who acquire stock subject to certain repurchase options or
who are subject to Section 16(b) of the Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and perhaps, in the future, the satisfaction of a withholding obligation) to a
corresponding business expense deduction in the tax year in which the
disqualifying disposition occurs.
Nonstatutory Stock Options. Nonstatutory stock options granted under the 1994
Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of the
grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of any withholding obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be
long-term or short-term depending on whether the stock was held for more than
one year. Slightly different rules may apply to optionees who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
Potential Limitation On Company Deductions. Code section 162(m) denies a
deduction to any publicly held corporation for compensation paid to certain
employees in a taxable year to the extent that compensation exceeds $1 million
for a covered employee. It is possible that compensation attributable to stock
options, when combined with all other types of compensation received by a
covered employee from the Company, may cause this limitation to be exceeded in
any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued
11
under Code Section 162(m), compensation attributable to stock options will
qualify as performance-based compensation, provided that: (i) the option plan
contains a per-employee limitation on the number of shares for which options may
be granted during a specified period; (ii) the per-employee limitation is
approved by the shareholders; (iii) the option is granted by a compensation
committee comprised solely of "outside directors"; and (iv) either the exercise
price of the option is no less than the fair market value of the stock on the
date of grant, or the option is granted (or exercisable) only upon the
achievement (as certified by the Compensation Committee) of an objective
performance goal established by the Compensation Committee while the outcome is
substantially uncertain.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE INCREASE IN THE NUMBER
OF OPTIONS AUTHORIZED FOR ISSUANCE UNDER THE 1994 STOCK OPTION PLAN
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of July 23, 2001 (except as otherwise
footnoted below), certain information regarding the ownership of the Company's
Common Stock of: (i) each current director; (ii) each nominee for director;
(iii) each of the Named Executive Officers (see Executive Compensation); (iv)
each person known by the Company to be the beneficial owner of more than 5% of
its outstanding Common Stock; and (v) all executive officers and directors of
the Company as a group. As of July 23, 2001, none of the individuals identified
in the foregoing sentence owned any of the Company's Series B Convertible
Preferred Stock.
Number Percent
------ -------
Name (1) of Shares of Total
-------- --------- --------
Samuel J. and Nadine Wohlstadter (2) 4,451,437 23.0%
c/o IGEN International, Inc.
16020 Industrial Drive
Gaithersburg, MD 20877
Richard J. Massey, Ph.D.(3) 1,348,500 6.8%
c/o IGEN International, Inc.
16020 Industrial Drive
Gaithersburg, MD 20877
George V. Migausky(4) 228,267 1.2%
Robert R. Salsmans(5) 10,000 *
Joop Sistermans(6) 4,000 *
Richard Cass (7) 2,000 *
Anthony Rees (8) 5,100 *
All directors and executive officers as a group(9) (7 persons) 6,049,304 31.3%
_____________________
* Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders. Unless otherwise indicated in the notes to this
table and subject to the community property laws where applicable, each of
the stockholders named in this table has sole voting and investment power
with respect to the shares shown as beneficially owned by him.
(2) Includes 40,000 shares issuable upon exercise of options held by Mr.
Wohlstadter that are currently exercisable or exercisable within 60 days.
Also, includes 35,000 shares that were issued under an early exercise
feature in an option granted to Mr. Wohlstadter, subject to a limited
repurchase right in favor of the Company at the option exercise price. Does
not include 128,100 shares held by Mr. Wohlstadter's adult children. Also
excludes 195,000 shares issuable upon exercise of options held by Jacob
Wohlstadter, the adult son of Mr. Wohlstadter,
12
that is currently exercisable or exercisable within 60 days. See "Certain
Transactions".
(3) Includes 391,500 shares issuable upon exercise of options held by Dr.
Massey that are currently exercisable or exercisable within 60 days.
Also includes 28,000 shares that were issued under an early exercise
feature in an option granted to Dr. Massey, subject to a limited repurchase
right in favor of the Company at the option exercise price.
(4) Includes 177,000 shares issuable upon exercise of options held by Mr.
Migausky that are currently exercisable or exercisable within 60 days.
Also includes 23,463 shares held by Mr. Migausky's minor children and
excludes 11,733 shares held by Mr. Migausky's adult child.
(5) Includes 10,000 shares issuable upon exercise of an option held by Mr.
Salsmans that is currently exercisable or exercisable within 60 days.
(6) Includes 4,000 shares issuable upon exercise of an option held by Mr.
Sistermans that is exercisable within 60 days.
(7) Includes 2,000 shares issuable upon exercise of an option held by Mr. Cass
that is currently exercisable within 60 days.
(8) Includes 2,000 shares issuable upon exercise of an option held by Mr. Rees
that is currently exercisable within 60 days.
(9) Includes 626,500 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based on the Company's records and other information, the Company believes
that its current directors and officers reported all transactions in the
Company's common stock and options on a timely basis during the fiscal year
ended March 31, 2001.
13
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table shows for the fiscal years ending March 31, 2001, 2000 and
1999, compensation awarded or paid to, or earned by each of the following (the
"Named Executive Officers"):
Summary Compensation Table
Annual
Compensation Other Annual Long-Term
Salary Bonus Compensation Compensation
------ ----- ------------ Awards/Options
Name and Principal Position Year ($) ($) ($) (# shares)
-------------------------------------- ---- --- --- --- ----------
Samuel J. Wohlstadter 2001 $370,000 $170,400/(1)/ -- 200,000
Chairman and Chief Executive Officer 2000 $370,000 -- -- --
1999 $370,000 -- -- --
Richard J. Massey, Ph.D. 2001 $308,750 $136,200/(1)/ $15,359/(2)/ 100,000
President and Chief Operating Officer 2000 $298,000 -- $15,234/(3)/ --
1999 $298,000 -- $15,188/(4)/ --
George V. Migausky 2001 $209,000 $ 60,000/(1)/ $ 5,225/(5)/ 25,000
Vice President and Chief Financial 2000 $209,000 -- $ 5,000/(5)/ --
Officer 1999 $209,000 -- $ 4,500/(5)/ --
_____________________________
(1) Paid to employee after end of fiscal year.
(2) Consists of annual lease value of Company provided automobile of $11,750 and
401(k) match of $3,609.
(3) Consists of annual lease value of Company provided automobile of $11,750 and
401(k) match amount of $3,484.
(4) Consists of annual lease value of Company provided automobile of $11,750 and
401(k) match amount of $3,438.
(5) Consists of 401(k) match amount.
Stock Option Grants and Exercises
The Company has granted options to its executive officers under its 1985 Stock
Option Plan (the "1985 Plan") and its 1994 Stock Option Plan ("1994 Plan"). The
1985 Plan has expired although options granted under that plan remain
outstanding and exercisable.
Option Grants in Last Fiscal Year
The following table sets forth information relating to options granted to each
of the Named Executive Officers during the fiscal year ended March 31, 2001.
14
Option Grants in Last Fiscal Year
Potential Realized Value at
Individual Grants (a) Assume Annual Rates of Stock
Price Appreciation for Option
Term (b)
-----------------------------------------------------------------------------------------------------------
# of Shares % of Total
Underlying Options Granted
Name Options to Employees in Exercise Expiration
Granted Fiscal Year Price Date 5% 10%
-----------------------------------------------------------------------------------------------------------
Samuel J.
Wohlstadter 200,000 23% $18.75 Aug 1, 2010 $2.4 million $6.0 million
Richard J.
Massey 100,000 11.5% $18.75 Aug 1, 2010 $1.2 million $3.1 million
George V.
Migausky 25,000 2.9% $18.75 Aug 1, 2010 $ 294,800 $ 746,900
_______________________
(a) Each of these options was granted pursuant to the Company's 1994 Stock
Option Plan and is subject to the terms of such plan.
(b) In accordance with the rules of the SEC, shown are the hypothetical gains
or "option spreads" that would exist for the respective options. These
gains are based on assumed rates of annual compounded stock price
appreciation of 5% and 10% from the date the option was granted over the
full option term. The 5% and 10% assumed rates of appreciation are
mandated by the rules of the SEC and do not represent the Company's
estimate or projection of future increase in the price of the Company's
common stock.
Aggregated Option Exercises in Last Fiscal Year, and Fiscal Year End Stock
Option Values
The following table sets forth information related to options exercised by the
Named Executive Officers during the fiscal year ending March 31, 2001 and the
number and value of options held at year-end.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Stock Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Value March 31, 2001 March 31, 2001
Acquired on Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name Exercise (1) (2) (3)
---- -------- --- --- ---
Samuel J. Wohlstadter 100,000(4) $0 577,500/205,000 $8.0 million/$107,200
Richard J. Massey, Ph.D. 80,000(5) $0 367,500/104,000 $5.0 million/$ 74,500
George V. Migausky 4,000 $42,000 164,500/47,500 $1.8 million/$ 39,500
_______________________
(1) Based on the Fair Market Value of the Company's Common Stock on the date of
exercise (the closing price) minus the exercise price and multiplied by the
number of shares acquired.
(2) Includes both "in-the-money" and "out-of-the-money" options. "In-the-money"
options are options with exercise prices below the market price of the
Company's Common Stock on March 31, 2001.
15
(3) Based on the closing price of the Company's Common Stock on March 31, 2001
of $18.9375 minus the exercise price.
(4) Includes shares exercised under an early exercise feature of the options
granted under the 1994 Stock Option Plan. As of July 23, 2001, 35,000
shares may be repurchased by the Company at the exercise price per share in
the event the named individual leaves the employ of the Company before
vesting. In addition, the shares were acquired pursuant to a 6.62% simple
interest only, full recourse loan against all assets of Mr. Wohlstadter in
the principal amount of $2,060,500 maturing in July 2008. The loan is
collateralized by the pledge of 100,000 shares of the Company's Common
Stock.
(5) Includes shares exercised under an early exercise feature of the options
granted under the 1994 Stock Option Plan. As of July 23, 2001, 28,000
shares may be repurchased by the Company at the exercise price per share in
the event the named individual leaves the employ of the Company before
vesting. In addition, the shares were acquired pursuant to a 6.62% simple
interest only, full recourse loan against all assets of Dr. Massey in the
principal amount of $1,649,000 maturing in July 2008. The loan is
collateralized by the pledge of 80,000 shares of the Company's Common
Stock.
Report Of The Board Of Directors On Executive Compensation/1/
-------------------------------------------------------------
From April 1 to July 14, 2000, the Compensation Committee of the Board of
Directors, (the "Committee") was composed of two former directors, Messrs.
Lurier and O'Neill, neither of whom has been an officer or employee of the
Company. The Compensation Committee did not hold any meetings during that
period. Effective July 14, 2000, the Compensation Committee is composed of
Messrs. Salsmans and Sistermans, both of whom are "non-employee directors" and
"outside directors" as defined in the rules promulgated by the Securities and
Exchange Commission and Section 162(m) of the Internal Revenue Code,
respectively. The Committee is responsible for establishing the Company's
compensation programs for executive officers.
Compensation Philosophy
The goals of the compensation program are to align compensation with business
objectives and performance and to enable the Company to attract, retain and
reward executive officers and other key employees who contribute to the long-
term success of the Company and to establish an appropriate relationship between
executive compensation and the creation of long-term stockholder value. To meet
these goals, the Committee has adopted a mix among the compensation elements of
salary, bonus and stock options.
Base Salary. The Committee periodically reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual
performance, levels of responsibility, prior experience, breadth of knowledge
and competitive pay practices, with emphasis on the latter. In general, the
salaries and stock option awards of executive officers are not determined by the
Company's achievement of specific corporate performance criteria. Instead the
Committee determines the salaries for executive officers based upon a review of
salary surveys of other emerging health care companies subjectively selected by
the Committee. To provide the Compensation Committee with more information for
making compensation comparisons, IGEN utilizes published salary surveys for the
life science industry and surveys a relevant group of health care companies that
are publicly traded. This group includes diagnostic, biotechnology and medical
technology companies with size and market capitalizations similar to that of the
Company. Based upon such surveys, the executive officers' salaries
-------------------
/1/ The material in this report is not "soliciting material", is not deemed
filed with the SEC, and is not to be incorporated by reference into any filing
of the Company under the 1933 Act or 1934 Act, whether made before or after the
date hereof and irrespective of any general incorporation language contained in
any such filing.
16
are set in a range similar to other comparable health care companies.
Bonus. The bonus program is a variable pay program for executive officers of
the Company to earn additional annual compensation. The bonus award earned
depends on the extent to which Company and individual performance objectives are
achieved. The Company's objectives consist of operating, strategic and financial
goals that are considered to be critical to the Company's fundamental long-term
goal of building shareholder value. For fiscal 2001, these objectives were: (i)
effective implementation of the planned growth of the Company; (ii) continued
advances toward project goals in research and development programs; (iii)
expansion of technological capabilities; (iv) progress toward commercial goals
in development programs; (v) progress in connection with attainment of
collaborative relationships; and (vi) progress in certain financial and
administrative activities.
The Committee did not meet to review salary and bonus compensation during
fiscal 2001. However, after March 31, 2001, the Compensation Committee met to
discuss salary and bonuses for executive officers. Based on the factors
described above, the Compensation Committee awarded bonuses to Mr. Wohlstadter,
Dr. Massey and Mr. Migausky in the amounts of $170,400, $136,200 and $60,000,
respectively.
Option Plans. The Option Plans offered by the Company have been established to
provide all employees of the Company with an opportunity to share, along with
stockholders of the Company, in the long-term performance of the Company.
Periodic grants of stock options are generally made to all eligible employees,
with additional grants being made to certain employees upon commencement of
employment and occasionally following a significant change in job
responsibilities, scope or title. Stock options granted generally have a five-
year vesting schedule and expire 10 years from the date of grant. The exercise
price of options granted under the stock option plans is usually 100% of fair
market value of the underlying stock on the date of grant.
Guidelines for the number of stock options for each participant in the
periodic grant program generally are determined by a formula established by the
Compensation Committee whereby several factors are applied to the salary and
performance level of each participant and then related to the approximate market
price of the stock at the time of grant. In awarding stock options, the
Committee considers individual performance, overall contribution to the Company,
officer retention, the number of unvested stock options and the total number of
stock options to be awarded.
During fiscal 2001, the Committee met to review stock option compensation,
and in connection with its review and based on the foregoing factors decided to
grant stock options to the Chief Executive Officer, President and Vice
President-Finance. Each of the options granted provides that the consideration
to be paid by the option holder to the Company can consist of an interest
bearing recourse loan for a period of up to 10 years, with the interest rate set
at fair market value at the time of exercise.
In addition, the full Board of Directors met to discuss granting a loan to
each of Messrs. Wohlstadter and Massey in connection with each of their exercise
of a stock option previously granted. In establishing the terms of the loan,
the Board of Directors evaluated such matters as amount, collateral, interest
rate, terms, collectibility and such other factors as the Board determined to be
relevant or appropriate.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee believes that stock options granted under the
Company's 1994 Stock Option Plan with an exercise price at least equal to the
fair market value of the Company's Common Stock on the date of grant should be
treated as "performance-based compensation"
17
and any compensation recognized by a Named Executive Officer as a result of the
grant of such a stock option is deductible by the Company.
CEO Compensation
The Compensation Committee uses the same procedures described above in setting
the annual salary, bonus and stock option awards for the CEO. The CEO's salary
is determined based on comparisons with other public health care companies as
described above. In awarding stock options and bonuses, the Compensation
Committee considered the CEO's performance, overall contribution to the Company,
retention, the number of unvested options and the total number of options to be
granted and the Committee's subjective evaluation of the CEO's performance. As
described above, in determining where the CEO's total compensation is set within
the ranges and in light of the considerations described above, the Committee by
necessity makes certain subjective evaluations. Compared to other health care
companies surveyed by the Company, the CEO's salary is in the mid range and his
bonus and stock options are in the low range. The Committee recognizes, however,
that the CEO's overall equity ownership of the Company accumulated over an
approximate twenty-year period is in the high range. On the basis of the
foregoing factors the Committee determined to grant Mr. Wohlstadter a bonus in
the amount of $170,400 and an option for 200,000 shares for fiscal 2001.
Conclusion
Through the plans described above, a significant portion of the Company's
compensation program and the CEO's and the other executive officers'
compensation are contingent on Company performance, and realization of benefits
by the CEO and the other executive officers is closely linked to increases in
long-term stockholder value. The Company remains committed to this philosophy of
pay for performance, recognizing that the competitive market for talented
executives and the volatility of the Company's business may result in highly
variable compensation.
Compensation Committee
of the Board of Directors
Robert R. Salsmans
Joop Sistermans
18
CERTAIN TRANSACTIONS
The Company's Bylaws provide that the Company will indemnify its directors and
its officers, to the fullest extent permitted by Delaware law. The Company is
also empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to these provisions, the Company
has entered into indemnity agreements with each of its directors and executive
officers and has obtained director and officer liability insurance in the amount
of $30 million.
In addition, the Company's Certificate of Incorporation provides that the
Company's directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty of care as a director, except liability for (i) any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) any transaction from which a director derived an
improper personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting personal liability of
directors, then the liability of a director shall be eliminated or limited to
the fullest extent permitted by the Delaware law.
In 1993, the Company entered into a license agreement with Organon Teknika.
Robert Salsmans, the President and Chief Executive Officer of Organon Teknika,
is one of the Company's directors. Under the terms of the license agreement,
the Company receives royalty payments from Organon Teknika from its product
sales that utilize the Company's intellectual property. During the year ended
March 31, 2001 these royalty payments aggregated $276,000. In addition, the
Company and Organon Teknika have an ongoing supply agreement under which each
party has agreed to supply to the other certain instruments and components.
During the year ended March 31, 2001, the Company paid $83,200 to Organon
Teknika and Organon Teknika paid $192,000 to the Company under this supply
agreement.
During fiscal year 1995 the Company entered into agreements to develop and
commercialize biomedical products utilizing advanced materials and a supply
agreement with Hyperion Catalysis International ("Hyperion"). Messrs. Massey and
Wohlstadter are directors of Hyperion. In addition, Mr. Wohlstadter beneficially
owns more than 50% of the outstanding common stock of Hyperion. During the
fiscal year ended March 31, 2001 the Company did not pay to, or receive from,
Hyperion any amounts under these agreements. In addition, Hyperion has a
service arrangement with the Company under which the Company provides certain
administrative and other services at cost to Hyperion. The total amount billed
by, and reimbursed to, the Company under this arrangement for the year-ended
March 31, 2001 was $377,000
Mr. Wohlstadter is the principal stockholder and Chief Executive Officer of
Pro-Virus, Inc. ("Pro-Virus"), Proteinix Corporation ("Proteinix"), and Pro-
Neuron, Inc. ("Pro-Neuron") and Dr. Massey is a shareholder in Proteinix. Pro-
Virus, Proteinix and Pro-Neuron each has had a services arrangement with the
Company since 1994, 1992 and 1986, respectively, under which the Company
provides certain services. These services include accounting, human resources
and other administrative services, as well as facility related costs and
services. The total amount billed by, and reimbursed to, the Company under this
arrangement for the year ended March 31, 2001 was $1.9 million.
During 1995, the Company established Meso Scale Diagnostics, LLC ("MSD"), a
joint venture company formed for the development and commercialization of
products utilizing a proprietary combination of multi-array technology together
with ORIGEN and other technologies owned by IGEN. Since inception, MSD has been
engaged in a research and development program based on multi-array diagnostic
techniques and the ability to control and adapt surface chemistry reactions on a
microscopic
19
level. The process may generate thousands of reactions on a single surface with
results presented on an array and read using electrochemiluminescence. Products
based on these technologies would be used for multiparameter analysis for novel
life science and clinical diagnostic applications. The multiple results would
represent an advance in testing, enabling researchers and clinicians to analyze
biological information rapidly and cost-effectively.
The MSD joint venture was formed by the Company and Meso Scale Technologies,
LLC ("MST"), a technology-based company established by Jacob Wohlstadter, the
son of Samuel J. Wohlstadter, IGEN's Chief Executive Officer. The joint venture
was initially scheduled to expire in November 2000 with extensions through April
20, 2001 at which time MST extended the term of the joint venture for up to 180
days under an automatic extension provision in the joint venture agreement.
For the years ended March 31, 2001, 2000 and 1999, the Company made total
contributions to MSD of $8.3 million, $4.5 million and $3.6 million,
respectively. In addition, in the formation of the joint venture, the Company
granted MSD a worldwide, perpetual license to ECL technology for use in its
research program and related technologies. The license is royalty free as long
as the Company holds voting equity in MSD and is exclusive subject to limited
exceptions. In connection with the formation of the joint venture, MSD
transferred all non-diagnostic applications of the ECL technology to MST. In
addition, the Company agreed to fund the organizational and certain ongoing
(non-research) expenses of MSD, as well as the patent and organizational costs
of MST. Further, the Company has contributed the personnel, facilities,
equipment and other resources necessary to permit MSD to conduct its research.
In exchange for these contributions and resources, the Company receives voting
ownership and non-voting ownership interests in MSD. The non-voting ownership
interests provide the Company with a preferred return of 5% per annum, repaid
out of a portion of future MSD profits.
The Company, through an independent committee of its Board of Directors is
currently negotiating with MST the terms under which the MSD joint venture may
be continued, including the Company's ownership percentage of voting and non-
voting interests in MSD. Although the Company has not committed to any specific
level of or term for further funding of the joint venture, the Company is
presently funding MSD's ongoing research, development and capital equipment
costs, as well as certain patent costs of MST while the independent committee is
negotiating with MST the terms under which the joint venture may be continued.
A new agreement may require the Company to make future capital contributions to
the joint venture, in amounts that could be substantial. Due to the
complexities of the issues, negotiations and agreements involved, there can be
no assurance that a definitive agreement to continue the joint venture will be
reached. In the event that the independent committee and MST reach agreement on
the terms under which the MSD joint venture would be continued, the Company
intends to publicly disclose such event, including the principal terms governing
the arrangement, in a press release or a current report on Form 8-K.
During the fiscal year ended March 31, 2001, Jacob Wohlstadter received
$222,000 from his employment at MSD, which includes $25,600 paid by the Company
for annual lease of automobile and apartment. Jacob Wohlstadter also has a
consulting arrangement with IGEN under which he was granted, in May 1997, an
option for 180,000 shares of IGEN Common Stock, at $6.00 per share, which was
the fair market value on the date of grant. The option will expire on May 8,
2007 and is fully vested. On August 1, 2000, Mr. Wohlstadter was granted an
option for 75,000 shares of the Company's Common Stock, at an exercise price of
$18.75 per share, which was the fair market value on the date of grant. The
option will expire on August 1, 2011 and 15,000 shares are exercisable within 60
days of July 23. The Company has also agreed to indemnify Jacob Wohlstadter
against certain liabilities, including liability from the joint venture.
20
In connection with the exercise of employee stock options in July 2000, Samuel
Wohlstadter, Chairman and CEO, received a loan from the Company. The loan is a
6.62% simple interest only, full recourse loan against all assets of Mr.
Wohlstadter in the principal amount of $2,060,500 maturing in July 2007. The
loan is collateralized by the pledge of 100,000 shares of the Company's Common
Stock.
In connection with the exercise of an employee stock option in July 2000,
Richard Massey, President and COO, received a loan from the Company. The loan
is a 6.62% simple interest only, full recourse loan against all assets of Mr.
Massey in the principal amount of $1,649,000, maturing in July 2007. The loan is
collateralized by the pledge of 80,000 shares of the Company's common stock
owned by Dr. Massey.
The Board also authorized the Company to provide additional loans to Mr.
Wohlstadter and Dr. Massey in the principal amounts of up to $2,962,275 and
$1,937,500 respectively, to be used in connection with the exercise of options
granted to each of them. The loans, if utilized by these individuals, would
bear interest at fair market value rates, be full recourse and be collateralized
by the pledge of shares of the Company's common stock.
Richard Cass, a director of the Company, is a partner with the law firm of
Wilmer, Cutler & Pickering and is a member of that firm's Management Committee
and co-chairman of its Corporate Practices Group. The Company has retained
Wilmer Cutler & Pickering to perform legal services for each of the three prior
fiscal years.
During the fiscal year ended March 31, 2001, the Company paid Anthony Rees
$6,000 for consulting services. Compensation to Dr. Rees in that capacity ceased
in June 2000 prior to his appointment as a director of the Company.
During fiscal year ended March 31, 2001, the Company received notice that
Brown Simpson Strategic Growth Fund L.P. initiated a shareholder derivative
lawsuit for and on behalf of the shareholders of the Company in the Circuit
Court of Montgomery County, Maryland against four of the Company's current
directors, two former directors, three executive officers and the Company as a
nominal defendant. In the complaint, Brown Simpson, stating that it holds 100
shares of the Company's Common Stock, alleges breach of fiduciary duties by the
named individual defendants in connection with transactions between the Company
and other entities in which certain directors and officers are alleged to have
an interest, including its Meso Scale Diagnostics, LLC joint venture.
A second shareholder derivative lawsuit was filed during fiscal year ended
March 31, 2001 by Laurence Paskowitz in Circuit Court for Montgomery County,
Maryland, for and on behalf of the shareholders of the Company. In the lawsuit,
Mr. Paskowitz, purporting to own 600 shares of the Company's Common Stock, names
as defendants all of the Company's existing directors, all of the current
officers, two former directors and the Company as a nominal defendant. The
allegations and the relief sought in this complaint are substantially the same
as those set forth in the complaint filed by Brown Simpson.
21
PERFORMANCE MEASUREMENT COMPARISON(1)
The following chart shows the comparison of total cumulative return on an
investment of $100 invested on March 31, 1996 in cash of (i) the Company's
Common Stock, (ii) the Russell 2000 Index, (iii) the JP Morgan H&Q HealthCare
Index. All values assume reinvestment of the full amount of all dividends and
are calculated as of March 31, 2001:
Comparison of Total Cumulative Return on Investment*
[GRAPH]
IGEN INC
CUMULATIVE TOTAL RETURN
----------------------------------------------
3/96 3/97 3/98 3/99 3/00 3/01
IGEN INTERNATIONAL, INC. 100.00 100.00 807.14 457.14 476.19 360.72
RUSSELL 2000 100.00 105.11 149.27 125.00 171.62 145.32
JP MORGAN H & HEALTHCA 100.00 96.83 133.36 147.22 185.03 204.01
$100 INVESTED ON 3/31/96 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDED MARCH 31.
(1) The material in this report is not "soliciting material", is not deemed
filed with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before
or after the date hereof and irrespective of any general incorporation
language contained in any such filing.
22
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any other matters to present for action by the Stockholders at the Annual
Meeting. If, however, any other matters not now known are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Any proposals intended to be presented by any stockholder for action at the
Company's 2002 Annual Meeting of Stockholders must be received by the Secretary
of the Company at 16020 Industrial Drive, Gaithersburg, Maryland 20877 not later
than April 1, 2002 to be included in the proxy statement and proxy relating to
the 2002 Annual Meeting or to be properly brought before the Company's 2002
Annual Meeting.
FORM 10-K AVAILABILITY
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended March 31, 2001 accompanies this Proxy Statement. The Company has filed an
Annual Report for its fiscal year ended March 31, 2001 on Form 10-K with the
Securities and Exchange Commission. Stockholders may obtain, free of charge, a
copy of the Form 10-K by writing to Director, Corporate Communications, IGEN
International, Inc., 16020 Industrial Drive, Gaithersburg, Maryland 20877.
By Order of the Board of Directors
George V. Migausky
Secretary
July 30, 2001
23
EXHIBIT A
IGEN INTERNATIONAL, INC.
1994 STOCK OPTION PLAN
As Amended June 6, 2001
1. Purposes.
(a) The purpose of the Plan is to provide a means by which selected Employees
of and Consultants to the Company, and its Affiliates, may be given an
opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of persons
who are now Employees of or Consultants to the Company or its Affiliates, to
secure and retain the services of new Employees and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall, in the
discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "Company" means IGEN International, Inc., a Delaware corporation.
(f) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "Continuous Status as an Employee or Consultant" means the employment or
relationship as a Consultant is not interrupted or terminated. The Board, in
its sole discretion, may determine whether Continuous Status as an Employee or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; or (ii) transfers between locations of the Company or
between the Company, Affiliates or their successors.
(h) "Covered Employee" means the Chief Executive Officer and the four (4)
other highest compensated officers of the Company.
(i) "Director" means a member of the Board.
(j) "Disinterested Person" means a Director who either (i) was not during the
one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of
the Company or any of its affiliates entitling the participants therein to
acquire equity securities of the Company or any of its affiliates except as
permitted by Rule 16b-3(c)(2)(i); or (ii) is otherwise considered to be a
"disinterested person" in accordance with Rule 16b-3(c)(2)(i), or any other
applicable rules, regulations or interpretations of the Securities and Exchange
Commission.
(k) "Employee" means any person, including Officers and Directors, employed by
the Company or any Affiliate of the Company. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of the common stock
of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange or a
national market system, including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, the Fair Market Value of a share of common stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(2) If the common stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of common stock shall be the mean between the bid and asked prices for
the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(3) In the absence of an established market for the common stock, the Fair
Market Value shall be determined in good faith by the Board.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify as an
Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "Optionee" means an Employee or Consultant who holds an outstanding
Option.
(t) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (as defined in the
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an affiliated corporation receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an affiliated corporation at
any time, and is not currently receiving compensation for personal services in
any capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.
(u) "Plan" means this 1994 Stock Option Plan.
(v) "Rule l6b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule
l6b-3, as in effect when discretion is being exercised with respect to the Plan.
3. Administration.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; whether an Option will be an Incentive Stock Option or a Nonstatutory
Stock Option; the provisions of each Option granted (which need not be
identical), including the time or times such Option may be exercised in whole or
in part; and the number of shares for which an Option shall be granted to each
such person.
(2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in Section 11.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons and may also be, in the
discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
Notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Options to eligible persons who (1) are not then subject to
Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Option, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code.
(d) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply if the Board or the Committee expressly declares that
such requirement shall not apply. Any Disinterested Person shall otherwise
comply with the requirements of Rule 16b-3.
4. Shares Subject To The Plan.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate two million five hundred thousand (2,500,000) shares of
the Company's common stock. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not purchased under such Option shall revert to and again become
available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. Eligibility.
(a) Incentive Stock Options may be granted only to Employees. Nonstatutory
Stock Options may be granted only to Employees or Consultants.
(b) A Director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of the Director as a
person to whom Options may be granted, or in the determination of the number of
shares which may be covered by Options granted to the Director: (i) the Board
has delegated its discretionary authority over the Plan to a Committee which
consists solely of Disinterested Persons; or (ii) the Plan otherwise complies
with the requirements of Rule 16b-3. The Board shall otherwise comply with the
requirements of Rule 16b-3. This subsection 5(b) shall not apply if the Board
or Committee expressly declares that it shall not apply.
(c) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Option is not exercisable after the expiration of five
(5) years from the date of grant.
(d) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than two hundred thousand (200,000) shares of the Company's common stock in
any twelve (12) month period.
(e) Notwithstanding any other provision, Outside Directors are not eligible
to be granted Options under the Plan.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The provisions of separate Options need not
be identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant or
exercise of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.
(d) Transferability. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order satisfying the requirements of
Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a QDRO. The person to whom the Option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(e) Vesting. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under subsection 6(d), as a condition of
exercising any such Option, (1) to give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(g) Termination of Employment or Relationship as a Consultant. In the event
an Optionee's Continuous Status as an Employee or Consultant terminates (other
than upon the Optionee's death or disability), the Optionee may exercise his or
her Option (to the extent that the Optionee was entitled to exercise it at the
date of termination) but only within such period of time ending on the earlier
of (i) the date three (3) months after the termination of the Optionee's
Continuous Status as an Employee or Consultant (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(h) Disability of Optionee. In the event an Optionee's Continuous Status as
an Employee or Consultant terminates as a result of the Optionee's disability,
the Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination), but only within such period
of time ending on the earlier of (i) the date twelve (12) months following such
termination (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(i) Death of Optionee. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee or Consultant, the Option may be exercised (to
the extent the Optionee was entitled to exercise the Option at the date of
death) by the Optionee's estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionee's death pursuant to subsection 6(d), but only within
the period ending on the earlier of (i) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth in
the Option Agreement. If, at the time of death, the Optionee was not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(j) Early Exercise. The Option may, but need not, include a provision whereby
the Optionee may elect at any time while an Employee or Consultant to exercise
the Option as to any part or all of the shares subject to the Option prior to
the full vesting of the Option. Any unvested shares so purchased may be subject
to a repurchase right in favor of the Company or to any other restriction the
Board determines to be appropriate.
(k) Withholding. To the extent provided by the terms of an Option Agreement,
the Optionee may satisfy any federal, state or local tax withholding obligation
relating to the exercise of such Option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
7. Covenants Of The Company.
(a) During the terms of the Options, the Company shall keep available at all
times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
either the Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
8. Use Of Proceeds From Stock.
Proceeds from the sale of stock pursuant to Options shall constitute general
funds of the Company.
9. Miscellaneous.
(a) The Board shall have the power to accelerate the time at which an Option
may first be exercised or the time during which an Option or any part thereof
will vest pursuant to subsection 6(e), notwithstanding the provisions in the
Option stating the time at which it may first be exercised or the time during
which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred under
subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(c) Throughout the term of any Option, the Company shall deliver to the holder
of such Option, not later than one hundred twenty (120) days after the close of
each of the Company's fiscal years during the Option term, a balance sheet and
an income statement. This section shall not apply when issuance is limited to
key employees whose duties in connection with the Company assure them access to
equivalent information.
(d) Nothing in the Plan or any instrument executed or Option granted pursuant
thereto shall confer upon any Employee, Consultant or Optionee any right to
continue in the employ of the Company or any Affiliate (or to continue acting as
a Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment or relationship as a Director or Consultant of any
Employee, Consultant or Optionee with or without cause.
(e) To the extent that the aggregate Fair Market Value (determined at the time
of grant) of stock with respect to which Incentive Stock Options granted after
1986 are exercisable for the first time by any Optionee during any calendar year
under all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
10. Adjustments Upon Changes In Stock.
(a) If any change is made in the stock subject to the Plan, or subject to any
Option (through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the maximum number of shares subject to award to any person
during any twelve (12) month period pursuant to subsection 5(d), and the
outstanding Options will be appropriately adjusted in the class(es) and number
of shares and price per share of stock subject to such outstanding Options.
(b) In the event of: (1) a dissolution, liquidation or sale of substantially
all of the assets of the Company; (2) a merger or consolidation in which the
Company is not the surviving corporation; or (3) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then to the extent permitted by applicable law: (i) any surviving
corporation shall assume any Options outstanding under the Plan or shall
substitute similar Options for those outstanding under the Plan, or (ii) such
Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute similar
options for those outstanding under the Plan, then, with respect to Options held
by persons then performing services as Employees, Directors or Consultants, the
time during which such Options may be exercised shall be accelerated and the
Options terminated if not exercised prior to such event.
11. Amendment Of The Plan.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under the Plan;
(2) Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order for
the Plan to satisfy the requirements of Section 422 of the Code); or
(3) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(d) Rights and obligations under any Option granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan unless (i)
the Company requests the consent of the person to whom the Option was granted
and (ii) such person consents in writing.
12. Termination Or Suspension Of The Plan.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on July 10, 2004, which shall be within ten
(10) years from the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
13. Effective Date Of Plan.
The amendment to the Plan to increase the authorized number of shares
available for grant under this Plan shall become effective immediately upon
approval by the stockholders of the Company, which approval shall be within
twelve (12) months after the date the Plan was amended by the Board.
DETACH HERE
PROXY
p IGEN INTERNATIONAL, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
R TO BE HELD ON SEPTEMBER 13, 2001
The undersigned hereby appoints Samuel J. Wohlstadter, Richard J. Massey
q and George V. Migausky, or any of them, as proxies of the undersigned, with
full power of substitution, to vote all shares of stock of IGEN
O International, Inc. which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of IGEN International, Inc. to be held at
The Four Seasons Hotel, 2800 Pennsylvania Avenue, N.W., Washington, D.C.
20007 on September 13, 2001 at 10:00 a.m., local time, and at any and all
postponements, continuations and adjournments thereof, with all powers that
X the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions,
with discretionary authority as to any and all other matters that may
properly come before the meeting.
Y UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR EACH
OF THE LISTED PROPOSALS AS MORE SPECIFICALLY DESCRIBED IN THE PROXY
STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED
IN ACCORDANCE THEREWITH.
DETACH HERE
[X] Please mark votes as in this example.
MANAGEMENT RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS LISTED BELOW.
1. To elect two Class II directors for a three-year term and until their
successors are elected, or until their prior resignation or removal.
Nominee: (01) Richard J. Massey, Ph.D., (02) Joop Sistermana
FOR [_] WITHHELD [_]
[_] _______________________________________
FOR, EXCEPT WITHHELD FROM THE ABOVE NOMINEE
2. Proposal to approve an increase in the number of shares available for
issuance under the Company's 1994 Stock Option Plan from 1,750,000 to
2,500,000.
FOR [_] AGAINST [_] ABSTAIN [_]
3. The proxies are authorized to vote in their discretion on any other matters
which may properly come before the Annual Meeting to the extent set forth in
the proxy statement.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title, if signer is a partnership. Please sign in
partnership name by Authorized person.