SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Rule 14a-11(c) or Rule 14a-12
ENZO BIOCHEM, INC.
(Name of Registrant as Specified in Its Charter)
------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
- - --------------------------------------------------------------------------------
ENZO BIOCHEM, INC.
60 EXECUTIVE BOULEVARD
FARMINGDALE, NEW YORK 11735
(516) 755-5500
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 13, 1999
------------------------
To the Shareholders of Enzo Biochem, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Enzo
Biochem, Inc., a New York corporation (the "Company"), will be held at The
American Stock Exchange, 86 Trinity Place, 13th Floor Board Room, New York, New
York 10006-1881, on Wednesday, January 13, 1999, 10:00 a.m. local time (the
"Annual Meeting"), for the following purposes:
1. To elect Barry W. Weiner and John J. Delucca each as Class II Directors
for a term of three (3) years or until their respective successors are
elected and qualified;
2. To approve the Company's 1999 Stock Option Plan under which the
Company's Board of Directors (or appointed committee) may grant incentive
stock options and nonqualified stock options to purchase up to 950,000
shares of common stock, par value $.01 per share (the "Common Stock"), of
the Company to employees, executive officers, directors, consultants and
advisors;
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors for the Company for the Company's fiscal year ending July 31,
1999; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on Tuesday, November 24, 1998 has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. The transfer books of the Company will not be
closed.
All shareholders are cordially invited to attend the Annual Meeting. Whether
or not you expect to attend, you are requested to sign, date and return the
enclosed proxy promptly. Shareholders who execute proxies retain the right to
revoke them at any time prior to the voting thereof by filing written notice of
such revocation with the Secretary of the Company, by submission of a duly
executed proxy bearing a later date or by voting in person at the Annual Meeting
of Shareholders. Attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy. Any written notice revoking a proxy should be
sent to Enzo Biochem, Inc., 60 Executive Boulevard, Farmingdale, New York 11735,
Attention: Shahram K. Rabbani, Secretary. A return envelope which requires no
postage if mailed in the United States is enclosed for your convenience.
By Order of the Board of Directors
Shahram K. Rabbani, SECRETARY
Farmingdale, New York
November 27, 1998
ENZO BIOCHEM, INC.
60 EXECUTIVE BOULEVARD
FARMINGDALE, NEW YORK 11735
(516) 755-5500
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 13, 1999
This Proxy Statement is furnished in connection with the solicitation, by
the Board of Directors of Enzo Biochem, Inc., a New York corporation (the
"Company"), of proxies in the enclosed form for the Annual Meeting of
Shareholders to be held at The American Stock Exchange, 86 Trinity Place, 13th
Floor Board Room, New York, New York 10006-1881, on Wednesday, January 13, 1999,
at 10:00 a.m. local time (the "Annual Meeting"), and for any adjournment or
adjournments thereof, for the purposes set forth in the preceding Notice of
Annual Meeting of Shareholders. The persons named in the enclosed proxy form
will vote the shares for which they are appointed in accordance with the
directions of the shareholders appointing them. In the absence of such
directions, such shares will be voted FOR Proposals 1, 2 and 3 listed below and,
in their best judgment, will be voted on any other matters as may come before
the Annual Meeting. Any shareholder giving a proxy has the power to revoke the
same at any time before it is voted by filing written notice of such revocation
with the Secretary of the Company, by submission of a duly executed proxy
bearing a later date or by voting in person at the Annual Meeting. Attendance at
the Annual Meeting will not in and of itself constitute revocation of a proxy.
Any written notice revoking a proxy should be sent to Enzo Biochem, Inc., 60
Executive Boulevard, Farmingdale, New York 11735, Attn.: Shahram K. Rabbani,
Secretary. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
The principal executive offices of the Company are located at 60 Executive
Boulevard, Farmingdale, New York 11735. The approximate date on which this Proxy
Statement and the accompanying form of proxy will first be sent or given to the
Company's shareholders is Friday, November 27, 1998.
VOTING SECURITIES
Only holders of shares of common stock, par value $.01 per share (the
"Common Stock"), of the Company of record as of the close of business on
Tuesday, November 24, 1998 are entitled to vote at the Annual Meeting (the
"Record Date"). On the Record Date there were issued and outstanding 24,899,391
shares of Common Stock. Each outstanding share of Common Stock is entitled to
one (1) vote upon all matters to be acted upon at the Annual Meeting. The
holders of a majority of the outstanding shares of Common Stock as of the Record
Date shall constitute a quorum.
The election of a nominee for director requires a plurality (i.e., an excess
of votes over those cast for an opposing candidate) if in the event that more
than one candidate is running for a vacancy. An affirmative vote of the majority
of the votes cast is required for approval of Proposals 2 and 3 and all other
matters submitted to the shareholders at the Annual Meeting. Abstentions and
broker non-votes are not counted as votes cast on any matter to which they
relate and will have no effect on the outcome of the vote. A broker non-vote
occurs when a broker or other nominee does not have discretionary authority and
has not received instructions with respect to a particular proposal. Proxy
ballots are received and tabulated by the Company's transfer agent and certified
by the inspector of election.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Set forth below is information concerning stock ownership of all persons
known by the Company to own beneficially 5% or more of the shares of Common
Stock of the Company, the executive officers named under "Executive Compensation
of Directors and Executive Officers," all directors, and all directors and
executive officers of the Company as a group based upon the number of
outstanding shares of Common Stock as of the close of business on the Record
Date. Except as otherwise indicated, each of the persons named has sole voting
and investment power with respect to the shares shown.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP PERCENT
BENEFICIAL OWNER (1) OF CLASS (2)
- - --------------------------------------------------------------- ---------------------- -------------
Elazar Rabbani, Ph.D........................................... 1,785,286(3) 7.1%
Shahram K. Rabbani............................................. 1,787,564(4) 7.1%
Barry W. Weiner................................................ 1,061,608(5) 4.2%
J. Morton Davis................................................ 1,721,140(6) 6.9%
John B. Sias................................................... 113,063(7) *
John J. Delucca................................................ 20,888(8) *
Dean Engelhardt, Ph.D.......................................... 188,054(9) *
Norman Kelker, Ph.D............................................ 122,122(10) *
All directors and executive officers as
a group (10 persons)......................................... 5,241,846(11)(12) 20.1%
- - ------------------------
* Less than 1%.
(1) Except as otherwise noted, all shares of Common Stock are beneficially owned
and the sole investment and voting power is held by the persons named, and
such persons' address is c/o Enzo Biochem, Inc., 60 Executive Boulevard,
Farmingdale, New York 11735.
(2) Based upon 24,899,391 shares of Common Stock of the Company outstanding as
of the close of business on the Record Date.
(3) Includes (i) 286,793 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof, (ii)
2,998 shares of Common Stock held in the name of Dr. Rabbani as custodian
for certain of his children and (iii) 1,784 shares of Common Stock held in
the name of Dr. Rabbani's wife as custodian for certain of their children.
Does not include 116,282 shares of Common Stock issuable upon the exercise
of options which are not exercisable within 60 days from the date hereof.
(4) Includes (i) 286,793 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof, (ii) 779
shares of Common Stock held in the name of Mr. Rabbani's son and (iii) 1,444
shares of Common Stock that Mr. Rabbani holds as custodian for certain of
his nephews. Does not include 116,282 shares of Common Stock issuable upon
the exercise of options which are not exercisable within 60 days from the
date hereof.
(5) Includes (i) 249,716 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof and (ii)
2,998 shares of Common Stock which Mr. Weiner holds as custodian for certain
of his children. Does not include 116,282 shares of Common Stock issuable
upon the exercise of options which are not exercisable within 60 days from
the date hereof.
(6) Mr. Davis' address is c/o D.H. Blair Investment Banking Corp., 44 Wall
Street, New York, New York 10005. Includes (i) 1,233,178 shares of Common
Stock owned by D.H. Blair Investment Banking Corp. of which Mr. Davis is the
Chairman of the Board of Directors and sole shareholder and (ii) 487,962
shares of Common Stock owned by Engex, Inc., a close-end registered
investment company of which Mr. Davis is the Chairman of the Board of
Directors.
2
(7) Includes 54,852 shares of Common Stock issuable upon the exercise of options
which are exercisable within 60 days from the date hereof. Does not include
16,851 shares of Common Stock issuable upon the exercise of options which
are not exercisable within 60 days from the date hereof.
(8) Includes 20,888 shares of Common Stock issuable upon the exercise of options
which are exercisable within 60 days from the date hereof. Does not include
16,813 shares of Common Stock issuable upon the exercise of options which
are not exercisable within 60 days from the date hereof.
(9) Includes 109,354 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does not
include 15,582 shares of Common Stock issuable upon the exercise of options
which are not exercisable within 60 days from the date hereof.
(10) Includes 85,375 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does not
include 11,447 shares of Common Stock issuable upon the exercise of options
which are not exercisable within 60 days from the date hereof.
(11) Includes 1,175,805 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does not
include 469,826 shares of Common Stock issuable upon the exercise of options
held by such individuals which are not exercisable within 60 days from the
date hereof.
(12) The total number of directors and executive officers includes three (3)
executive officers who were not named under "Executive Compensation."
PROPOSAL 1
ELECTION OF DIRECTORS
The Company has three (3) staggered classes of Directors, each of which
serves for a term of three (3) years. At the Annual Meeting, the Company's Class
II Directors will be elected to hold office for a term of three (3) years or
until their respective successors are elected and qualified. Unless otherwise
instructed, the accompanying form of proxy will be voted for the election of the
below-listed nominees, who currently serve as Class II Directors, to continue
such service as Class II Directors. Management has no reason to believe that the
nominees will not be candidates or will be unable to serve as directors.
However, in the event that any of the nominees should become unable or unwilling
to serve as directors, the form of proxy will be voted for the election of such
persons as shall be designated by the Class I and Class III Directors.
CLASS II DIRECTOR NOMINEES TO SERVE UNTIL
THE 2001 ANNUAL MEETING, IF ELECTED:
NOMINEES
CLASS II: NEW TERM TO EXPIRE IN 2002
NAME AGE YEAR FIRST BECAME A DIRECTOR
- - ------------------------------------------------ --- -----------------------------
Barry W. Weiner................................. 48 1976
John J. Delucca................................. 55 1982
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE ABOVE-NAMED NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
3
DIRECTORS WHO ARE CONTINUING IN OFFICE:
CLASS I: TERM TO EXPIRE IN 2001
NAME AGE YEAR FIRST BECAME A DIRECTOR
- - ------------------------------------------------ --- -----------------------------
Shahram K. Rabbani.............................. 46 1976
CLASS III: TERM TO EXPIRE IN 2000
NAME AGE YEAR FIRST BECAME A DIRECTOR
- - ------------------------------------------------ --- -----------------------------
Elazar Rabbani, Ph.D............................ 54 1976
John B. Sias.................................... 71 1982
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are identified in the
table below. Each executive officer of the Company serves at the pleasure of the
Board of Directors.
YEAR BECAME AN
NAME AGE EXECUTIVE OFFICER POSITION
- - --------------------------------------------- --- ----------------- ---------------------------------------------
Elazar Rabbani, Ph.D......................... 54 1976 Chairman of the Board of Directors and Chief
Executive Officer
Shahram K. Rabbani........................... 46 1976 Chief Operating Officer, Treasurer, Secretary
and Director
Barry W. Weiner.............................. 48 1977 President and Director
Norman E. Kelker, Ph.D....................... 59 1981 Senior Vice President
Dean Engelhardt, Ph.D........................ 58 1981 Senior Vice President
Herbert B. Bass.............................. 50 1995 Vice President of Finance
Barbara E. Thalenfeld, Ph.D.................. 58 1995 Vice President, Corporate Development
David C. Goldberg............................ 41 1995 Vice President, Business Development
John J. Delucca.............................. 55 1982 Director
John B. Sias................................. 71 1982 Director
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
ELAZAR RABBANI, PH.D. (age 54) has served as Chairman of the Board of
Directors and Chief Executive Officer of the Company since the Company's
inception in 1976 and has served as the Company's President from its inception
to November 1996. Dr. Rabbani currently serves as a Class III Director whose
term expires in 2000. Dr. Rabbani received his B.A. degree from New York
University in Chemistry and his Ph.D. degree in Biochemistry from Columbia
University. He is a member of the American Society for Microbiology. Elazar
Rabbani is Shahram K. Rabbani's brother and Barry W. Weiner's brother-in-law.
SHAHRAM K. RABBANI (age 46) has served as Chief Operating Officer and
Secretary of the Company since November 1996, as Executive Vice President from
September 1981 to November 1996 and as Vice President, Treasurer and a Director
since the Company's inception in 1976. Mr. Shahram K. Rabbani currently serves
as a Class I Director whose term expires in 2001. Mr. Shahram K. Rabbani
received a B.A. degree in Chemistry from Adelphi University. Shahram Rabbani is
Elazar Rabbani's brother and Barry W. Weiner's brother-in-law.
BARRY W. WEINER (age 48), a Class II Director nominee, has served as
President of the Company since November 1996 and as a Director of the Company
since its inception in 1976. Mr. Weiner has served as Executive Vice President
of the Company from September 1981 to November 1996, as a Vice President of the
Company from the Company's inception to November 1996 and as Secretary of the
Company from
4
March 1980 to November 1996. He was employed by Colgate-Palmolive Company, New
York, New York from August 1974 until March 1980, when he joined the Company on
a full-time basis. Mr. Weiner received his B.A. degree in Economics from New
York University and an M.B.A. from Boston University. Barry W. Weiner is the
brother-in-law of Elazar Rabbani and Shahram K. Rabbani, both of whom are
brothers.
NORMAN E. KELKER, PH.D. (age 59) has been a Vice President of the Company
since September 1981. Effective January 1, 1989, he was promoted to Senior Vice
President. From 1975 until he joined the Company, Dr. Kelker was an Associate
Professor in the Department of Microbiology of the New York University School of
Medicine. He holds a Ph.D. from Michigan State University.
DEAN ENGELHARDT, PH.D. (age 58) has been Vice President since September
1981. Effective January 1, 1989, he was promoted to Senior Vice President. Prior
to joining the Company, he was an Associate Professor of Microbiology at
Columbia University College of Physicians and Surgeons. He obtained his Ph.D.
from Rockefeller University.
HERBERT B. BASS (age 50) is Vice President of Finance and has been with the
Company since 1986. Prior to his position as Vice President of Finance, Mr. Bass
was the Corporate Controller of the Company. From 1979 to 1986, Mr. Bass held
various positions at Danziger & Friedman, Certified Public Accountants, the most
recent of which was audit manager. For the preceding seven (7) years, he held
various positions at Berenson & Berenson, C.P.A. Mr. Bass holds a Bachelor
degree in Business Administration from Baruch College.
BARBARA E. THALENFELD, PH.D. (age 58) is Vice President of Corporate
Development and has been with the Company since 1982. Prior to joining the
Company, she held an NIH research fellowship at Columbia University. She
received a Ph.D. from Hebrew University-Hadassah Medical Center and an M.S. from
Yale University.
DAVID C. GOLDBERG (age 41) is Vice President of Business Development. Prior
to joining the Company in 1985, he was employed at DuPont NEN Products. He
received an M.S. from Rutgers University and an M.B.A. from New York University.
JOHN J. DELUCCA (age 55), a Class II Director Nominee, has been a Director
of the Company since January 1982. Since October 1993, Mr. Delucca has been
Senior Vice President and Treasurer of RJR Nabisco, Inc. From January 1992 until
October 1993, he was the Chief Financial Officer and Managing Director of Hascoe
Associates, Inc. From October 1, 1990 until January 1992, he served as President
and Chief Financial Officer of The Lexington Group, Ltd. From September 1988
until September 1990, he has served as Senior Vice President-Finance of The
Trump Group. From May 1986 until August 1988, he served as Senior Vice
President-Finance at International Controls Corp. From February 1985 until May
1986, he was a Vice President and Treasurer of Textron, Inc. Prior to that he
was a Vice President and Treasurer of the Avco Corporation, which was acquired
by Textron.
JOHN B. SIAS (age 71) is currently a Class III Director whose term expires
in 2000 and has been a Director of the Company since January 1982. Since April
1993, Mr. Sias has been President and Chief Executive Officer of Chronicle
Publishing Company. From January 1986 until December 1992, Mr. Sias served as
President of ABC Television Network Division and Executive Vice President,
Capital Cities/ ABC, Inc. From 1977 until January 1986 he was the Executive Vice
President, President of the Publishing Division (which includes Fairchild
Publications) of Capital Cities Communications, Inc.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended July 31, 1998, there were four (4) formal
meetings of the Board of Directors, several actions by unanimous consent and
several informal meetings. The Board of Directors has an Audit Committee and
Stock Option Committee, each of which was organized in November 1982. During the
fiscal year ended July 31, 1998, there were several informal meetings of the
Audit Committee
5
and the Stock Option Committee. Each director of the Company attended at least
75% of all Board meetings during the fiscal year ended July 31, 1998.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee is authorized to review proposals of the Company's
auditors regarding annual audits, recommend the engagement or discharge of the
auditors, review recommendations of such auditors concerning accounting
principles and the adequacy of internal controls and accounting procedures and
practices, to review the scope of the annual audit, to approve or disapprove
each professional service or type of service other than standard auditing
services to be provided by the auditors, and to review and discuss the audited
financial statements with the auditors. Its members are Shahram K. Rabbani, John
B. Sias and John J. Delucca (a Class II Director nominee).
The Stock Option Committee has the plenary authority in its discretion to
determine the purchase price of the Common Stock issuable upon the exercise of
each option, to determine the employees to whom, and the time or times at which
options shall be granted and the number of shares to be issuable upon the
exercise of each option, to interpret the plans, to prescribe, amend and rescind
rules and regulations relating to them, to determine the term and provisions of
the respective option agreements and to make all other determinations deemed
necessary or advisable for the administration of the plans. Its members are John
B. Sias and John J. Delucca (a Class II Director Nominee).
The Company does not have a formal Compensation Committee, Nominating
Committee or Executive Committee of the Board of Directors.
SECTION 16(A) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities
(collectively, "Reporting Persons") to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Such executive
officers, directors and greater than 10% beneficial owners are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms filed by such reporting persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that the Reporting Persons have complied with all applicable filing
requirements.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
Enzo Clinical Labs, Inc. ("Enzolabs"), a subsidiary of the Company, leases a
facility located in Farmingdale, New York from Pari Management Corporation
("Pari"). Pari is owned equally by Elazar Rabbani, Ph.D., Shahram Rabbani and
Barry Weiner and his wife, the officers and directors of Pari. The lease which
commenced on December 20, 1989 and terminates on November 30, 2004 provides for
a minimum net annual rent of $515,000 through December 31, 1996 and $818,250 for
the period beginning January 1, 1997, subject to annual cost of living
adjustments. During fiscal 1998, Enzolabs paid $924,000 (including $127,100 in
real estate taxes) to Pari with respect to such facility. The Company, which has
guaranteed Enzolabs' obligations to Pari under the lease, believes that the
lease terms are as favorable to the Company as would be available from an
unaffiliated party.
6
EXECUTIVE COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following summary compensation table sets forth the aggregate
compensation paid by the Company to its chief executive officer and to the
Company's four other most highly compensated executive officers whose annual
compensation exceeded $100,000 for the fiscal year ended July 31, 1998 (each, a
"Named Executive Officer") for services during the fiscal years ended July 31,
1998, 1997 and 1996:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS($) OPTIONS/SARS(#)
- - --------------------------------------------- --------- ----------- --------- -------------------
Elazar Rabbani, Ph.D., 1998 271,043 145,000 52,500
CHAIRMAN OF THE BOARD 1997 256,088 120,000 -- 55,125
OF DIRECTORS AND CEO 1996 250,228 120,000
Shahram K. Rabbani, 1998 235,783 120,000 52,500
CHIEF OPERATING OFFICER, 1997 211,156 100,000 -- 55,125
TREASURER, SECRETARY AND DIRECTOR 1996 207,636 100,000
Barry W. Weiner, 1998 235,783 120,000 52,500
PRESIDENT AND DIRECTOR 1997 211,156 100,000 -- 55,125
1996 207,636 100,000
Dean Engelhardt, Ph.D., 1998 156,731 25,000 --
SENIOR VICE PRESIDENT 1997 152,306 20,000 -- 15,750
1996 145,949 20,000
Norman Kelker, Ph.D., 1998 140,540 15,000 --
SENIOR VICE PRESIDENT 1997 142,155 15,000 --
1996 139,996 15,000 --
The Company does not have a Compensation Committee or other board committee
performing equivalent functions. During the fiscal year ended July 31, 1998,
deliberations concerning executive officer compensation were made by the
Company's Board of Directors, which board includes Elazar Rabbani, Ph.D.
(Chairman of the Board and Chief Executive Officer of the Company), Shahram K.
Rabbani (Chief Operating Officer, Secretary and Treasurer of the Company), Barry
W. Weiner (President of the Company and Class II Director nominee), John J.
Delucca (a Class II Director nominee) and John B. Sias.
7
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
INDIVIDUAL GRANTS ANNUAL
----------------------------------------------------- RATES OF
PERCENT OF STOCK PRICE
NUMBER OF TOTAL APPRECIATION
SECURITIES OPTIONS/SARS FOR OPTION
UNDERLYING GRANTED TO EXERCISE OF TERM
OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------
NAME GRANTED (#) FISCAL YEAR ($ / SH) DATE 5% ($)
- - ---------------------------------------------------- ------------ ------------- ----------- ----------- -----------
Elazar Rabbani, Ph.D.,.............................. 52,500 19.23% $ 13.33 12/29/07 $ 440,116
CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF
EXECUTIVE OFFICER
Shahram K. Rabbani,................................. 52,500 19.23% $ 13.33 12/29/07 $ 440,116
CHIEF OPERATING OFFICER, TREASURER, SECRETARY AND
DIRECTOR
Barry W. Weiner,.................................... 52,500 19.23% $ 13.33 12/29/07 $ 440,116
PRESIDENT AND DIRECTOR
NAME 10% ($)
- - ---------------------------------------------------- -------------
Elazar Rabbani, Ph.D.,.............................. $ 1,115,341
CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF
EXECUTIVE OFFICER
Shahram K. Rabbani,................................. $ 1,115,341
CHIEF OPERATING OFFICER, TREASURER, SECRETARY AND
DIRECTOR
Barry W. Weiner,.................................... $ 1,115,341
PRESIDENT AND DIRECTOR
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to stock
option exercises by the Named Executive Officers and Messrs. John B. Sias and
John J. Delucca (both of whom serve as Outside Directors of the Company's Board
of Directors) during the fiscal year ended July 31, 1998 and the value of
unexercised options held by them at fiscal year-end.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END# FISCAL YEAR END ($)(1)
-------------------------- ----------------------------
SHARES OF
COMMON STOCK
ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------------------------- --------------- ----------- ----------- ------------- ----------- ---------------
Elazar Rabbani, Ph.D.................. -- -- 286,793 66,281 790,248 --
Shahram K. Rabbani.................... -- -- 286,793 66,281 790,248 --
Barry W. Weiner....................... 68,386 209,945 249,716 66,281 873,377 --
Dean Engelhardt, Ph.D................. 49,833 152,987 109,354 5,581 866,832 4,971
Norman Kelker, Ph.D................... 33,847 103,910 85,375 1,447 829,561 4,971
John B. Sias.......................... -- -- 50,616 11,852 115,952 --
John J. Delucca....................... -- -- 20,888 11,813 16,703 --
- - ------------------------
(1) Market value of the underlying securities at fiscal year end minus the
exercise price.
EMPLOYMENT AGREEMENTS
Each of Mr. Barry Weiner, Mr. Shahram Rabbani and Dr. Elazar Rabbani (the
"Executives") are parties to an employment agreement effective May 4, 1994 (the
"Employment Agreement(s)") with the Company. Pursuant to the terms of their
respective Employment Agreements, Messrs. Weiner and Rabbani and Dr. Rabbani are
currently compensated at a base annual salary of $250,000, $250,000 and
$280,000, respectively. Each Executive will also receive an annual bonus, the
amount of which shall be determined by the Board of Directors in their
discretion. Each Employment Agreement provides that, in
8
the event of termination of the Executive for good reason or without cause (or,
additionally, in the case of Dr. Rabbani, a nonrenewal), as such terms are
defined therein, each Executive shall be entitled to receive: (a) a lump sum in
an amount equal to three (3) years of the Executive's base annual salary; (b) a
lump sum in an amount equal to the annual bonus paid by the Company to the
Executive for the last fiscal year of the Company ending prior to the date of
termination multiplied by three (3); (c) insurance coverage for the Executive
and his dependents, at the same level and at the same charges to the Executive
as immediately prior to his termination, for a period of three (3) years
following his termination from the Company; (d) all accrued obligations, as
defined therein; and (e) with respect to each incentive pay plan (other than
stock option or other equity plans) of the Company in which the Executive
participated at the time of termination, an amount equal to the amount the
Executive would have earned if he had continued employment for three (3)
additional years. If the Executive is terminated by reason of his disability, he
shall be entitled to receive, for three (3) years after such termination, his
base annual salary less any amounts received under a long term disability plan.
If the Executive is terminated by reason of his death, his legal representatives
shall receive the balance of any remuneration due him. The term of each of the
Executive's Employment Agreement is three (3) years from the date of execution
of the Employment Agreement with a renewal period of two (2) years, such renewal
to occur automatically unless either the Company or the Executive terminates the
Employment Agreement upon six (6) months written notice.
COMPENSATION OF DIRECTORS
Each director who is not otherwise an officer or an employee (such director
being classified as an "Outside Director") of the Company received $18,000 in
compensation for the fiscal year ended July 31, 1998. Under the Company's 1994
Plan, on the date persons are first elected to serve as Outside Directors of the
Company's Board of Directors, such persons shall receive options ("Initial
Director Options") to purchase 15,000 shares of Common Stock of the Company, and
will automatically receive options ("Automatic Director Options" and together
with the Initial Director Options, the "Director Options") to purchase 7,500
shares of the Company's Common Stock immediately following the date of each
annual meeting of the Company's shareholders, provided, however, that such
persons did not receive Initial Director Options since the most recent grant of
Automatic Director Options and continue to serve as directors of the Company's
Board of Directors. The exercise price for each share subject to a Director
Option shall be equal to the fair market value of the Company's Common Stock on
the date of grant. Director Options shall become exercisable at the discretion
of the Board of Directors, subject to acceleration in certain circumstances, and
shall expire the earlier of ten (10) years after the date of grant or ninety
(90) days after the termination of the director's service on the Board of
Directors. During fiscal year 1998, each Outside Director received an option to
purchase 7,500 shares of Common Stock.
BOARD OF DIRECTORS COMPENSATION REPORT
The Company strives to apply a uniform philosophy to compensation for all of
its employees, including the members of its senior management. This philosophy
is based on the premise that the achievements of the Company result from the
combined and coordinated efforts of all employees working toward common goals
and objectives.
The goals of the Company's compensation program are to align remuneration
with business objectives and performance, and to enable the Company to retain
and competitively reward executive officers who contribute to the long-term
success of the Company. The Company's compensation program for executive
officers is based on the following principles, which are applicable to
compensation decisions for all employees of the Company. The Company attempts to
pay its executive officers competitively in order that it will be able to retain
the most capable people in the industry. Information with respect to levels of
compensation being paid by comparable companies is obtained from various
publications and surveys.
During the last fiscal year, the compensation of executive officers
consisted principally of salary and bonus and the Company granted stock options
to its executive officers, additional grants of which may be
9
made in the future. The cash portion of such program includes base salary and
annual bonuses, which are awarded in the discretion of the Board of Directors.
Salary levels have been set based upon historical levels, amounts being paid by
comparable companies and performance. The Company's equity-based compensation
consists of the award of discretionary stock options, which are designed to
provide additional incentives to executive officers to maximize shareholder
value. Through the use of extended vesting periods, the option program is
designed to encourage executive officers to remain in the employ of the Company.
In addition, because the exercise prices of such options are typically set at or
above the fair market value of the stock on the date the option is granted,
executive officers can only benefit from such options if the trading price of
the Company's shares of Common Stock increases, thus aligning their financial
interests directly with those of the shareholders.
In consideration for Dr. Elazar Rabbani's services as Chairman of the Board
of Directors and Chief Executive Officer of the Company for the fiscal year
ended July 31, 1998, the Company paid Dr. Rabbani an annual salary of $271,043
and a bonus of $145,000 and granted Dr. Rabbani stock options to purchase 52,500
shares of the Company's Common Stock. Such compensation was determined pursuant
to the Company's employment agreement, dated May 4, 1994, with Dr. Rabbani and
was based on the Board's view of Dr. Rabbani's successful performance as Chief
Executive Officer. See "Employment Agreements."
401(K) PLAN
The Company has adopted a salary reduction profit sharing plan which is
generally available to employees of the Company and any subsidiary of the
Company. Officers and directors who are employees of the Company participate in
the Plan on the same basis as other employees.
The Plan permits voluntary contributions by employees in varying amounts up
to 15% of annual earnings (not to exceed the maximum allowable in any calendar
year which is $10,000 for 1998). Employee contributions are made by salary
reduction under Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"), and are excluded from taxable income of the employee. The Company
may also contribute additional discretionary amounts as it may determine.
All employees of the Company who are twenty-one (21) years or older and have
been employed by the Company for a minimum of six (6) months are eligible to
participate in the Plan. Employees who have more than 500 hours of service per
service year, but less than 1,000 hours per service year, are still considered
members of the Plan, but contribution allocations and vesting will not increase
during such time.
A participant's account is distributed to him upon retirement or termination
of employment for any reason and in certain other limited situations. The amount
of the Plan allocation attributable to the Company's discretionary contributions
will vest in accordance with a schedule. To date, the Company has made no
discretionary contributions to the Plan.
1993 STOCK OPTION PLAN
Under the Company's 1993 Stock Option Plan (the "1993 Plan"), the Company's
Board of Directors may grant incentive stock options ("ISOs") and non-qualified
stock options ("NQSOs"), as those terms are defined by Section 422 of the Code,
to selected key employees, directors, officers, consultants and advisors of the
Company to purchase the Company's Common Stock. Options granted under the 1993
Plan generally vest no earlier than six (6) months after the date of grant and
cannot be exercised later than the tenth (10th) anniversary date of the date of
grant. When the optionee, however, holds more than 10% of all combined voting
stock of the Company, ISOs granted under the 1993 Plan cannot be exercised later
than the fifth (5th) anniversary date of the date of grant. The exercise prices
of options granted under the 1993 Plan are set by the Board of Directors of the
Company, or designated committee. In any event, however, ISOs granted under the
1993 Plan may not be exercisable at a price lower than the fair market value of
the Company's Common Stock on the date such options are granted, and, when the
optionee
10
holds more than 10% of all combined voting stock of the Company, the exercise
prices such options may not be less than 110% of the fair market value of the
Common Stock of the Company on the date of grant. ISOs granted under the 1993
Plan to any optionee which become exercisable for the first time in any one
calendar year for shares of Common Stock of the Company with an aggregate fair
market value, as of the respective date or dates of grant, of more than $100,000
shall be treated as NQSOs. In October 1998, the Company granted options to
certain officer-directors of the Company to purchase up to an aggregate of
150,000 shares of Common Stock. As of the Record Date, of the 1,736,438 shares
reserved for issuance upon the exercise of options authorized for grant under
the 1993 Plan, 33,000 shares of the Company's Common Stock remain available for
issuance upon the exercise of options authorized for grant under the 1993 Plan.
1994 STOCK OPTION PLAN
Under the Company's 1994 Stock Option Plan (the "1994 Plan"), the Company's
Board of Directors may grant ISOs and NQSOs to selected key employees,
directors, executive officers, consultants and advisors of the Company to
purchase the Company's Common Stock. ISOs and NQSOs granted under the 1994 Plan
generally vest no earlier than six (6) months after the date of grant and can be
exercised no later than the tenth (10th) anniversary date of the date of grant.
When the optionee, however, holds more than 10% of all combined voting stock of
the Company, ISOs granted under the 1994 Plan can not be exercised later than
the fifth (5th) anniversary date of the date of grant. The exercise prices of
options granted under the 1994 Plan are set by the Board of Directors of the
Company, or designated committee. In any event, however, ISOs granted under the
1994 Plan may not be exercisable at a price lower than the fair market value of
the Company's Common Stock on the date such options are granted, and, when the
optionee holds more than 10% of all combined voting stock of the Company, the
exercise prices such options may not be less than 110% of the fair market value
of the Common Stock of the Company on the date of grant. ISOs granted under the
1994 Plan to any optionee which become exercisable for the first time in any one
calendar year for shares of Common Stock of the Company with an aggregate fair
market value, as of the respective date or dates of grant, of more than $100,000
shall be treated as NQSOs. The awards under the 1994 Plan are subject to
restrictions on transferability, are forfeitable in certain circumstances and
are exercisable at such time or times and during such period as shall be set
forth in the option agreement evidencing such option. During the fiscal year
ended July 31, 1998, options to purchase up to 273,000 shares of the Company's
Common Stock were awarded under the 1994 Plan. In October 1998, the Company
granted options to certain directors, officers and employees of the Company to
purchase up to an aggregate of 113,000 shares of Common Stock of the Company. As
of the Record Date, of the 1,099,744 shares of the Company's Common Stock
reserved for issuance upon the exercise of options authorized for grant under
the 1994 Plan, 87,000 shares of the Company's Common Stock remain available for
issuance upon the exercise of options authorized for grant under the 1994 Plan.
INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has in effect, with Zurich Insurance Group under a policy
effective January 20, 1998, and expiring on January 21, 1999, insurance covering
all of its directors and officers and certain other employees of the Company
against certain liabilities and reimbursing the Company for obligations which it
incurs as a result of its indemnification of such directors, officers and
employees. Such insurance has been obtained in accordance with the provisions of
Section 726 of the Business Corporation Law of the State of New York. The annual
premium is $64,260.
This report has been provided by the Board of Directors of the Company.
Elazar Rabbani, Ph.D.
Shahram K. Rabbani John J. Delucca
Barry W. Weiner John B. Sias
11
The compensation report shall not be deemed to be incorporated by reference
in any filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
such report.
PERFORMANCE GRAPH
The graph below compares the five-year cumulative shareholder total return
based upon an initial $100 investment (assuming the reinvestment of dividends)
for Enzo Biochem, Inc. shares of Common Stock with the comparable return for the
American Stock Exchange Market Value Index and two peer issuer indices selected
on an industry basis. The two peer group indices include: (i) 67 biotechnology
companies engaged in the research and development of diagnostic substances and
(ii) 26 companies engaged in the medical laboratories business. All of the
indices include only companies whose common stock has been registered under
Section 12 of the Securities Exchange Act of 1934 for at least the time frame
set forth in the graph.
The total shareholder returns depicted in the graph are not necessarily
indicative of future performance. The Performance Graph and related disclosure
shall not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates the graph and such
disclosure by reference.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG ENZO BIOCHEM, INC.,
AMEX MARKET INDEX AND SIC CODE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS
ENZO BIOCHEM INC MEDICAL LABORATORIES AMEX MARKET INDEX BIOTECHNOLOGY PEERS
1993 $100.00 $100.00 $100.00 $100.00
1994 $97.44 $105.99 $102.49 $87.04
1995 $181.80 $110.62 $124.30 $128.26
1996 $156.22 $82.44 $127.22 $151.67
1997 $169.68 $69.84 $151.19 $160.82
1998 $132.97 $58.34 $165.02 $135.37
ASSUMES $100 INVESTED ON AUG. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JULY 31, 1998
12
PROPOSAL 2
TO APPROVE THE COMPANY'S 1999 STOCK OPTION PLAN
As described under "Executive Compensation-Board of Directors Compensation
Report," the Company maintains the 1993 Plan and 1994 Plan. The Board of
Directors believes that the availability of stock incentives is an important
factor in the Company's ability to not only attract and maintain key employees,
directors, executive officers and consultants but also to give them an added
incentive to exert their best efforts on behalf of the Company. As of the Record
Date, options to purchase 33,000 and 87,000 shares of the Company's Common Stock
remained available for grant under the Company's 1993 Plan and 1994 Plan,
respectively. The Board of Directors believes that additional shares are needed
to provide option grants to key persons during the next two to three years.
Accordingly, the Board of Directors adopted the Company's 1999 Stock Option Plan
(the "1999 Plan"), subject to stockholder approval, and reserved 950,000 shares
of the Company's Common Stock for issuance pursuant to the exercise of options
granted under such 1999 Plan.
DESCRIPTION OF THE 1999 PLAN
At the Annual Meeting, the shareholders entitled to vote will be asked to
approve the 1999 Plan, as adopted by the Board of Directors. The 1999 Plan will
provide for the grant of ISOs and NQSOs in compliance with the Code to employees
(approximately 190 as of the Record Date), officers (8 as of the Record Date)
and directors (5 as of the Record Date) of, and consultants and advisors
(approximately 10 as of the Record Date) to, the Company who are expected to
contribute to the Company's future growth and success. As of the date of this
Proxy Statement, of the 950,000 shares of Common Stock to be reserved for
issuance upon the exercise of options under the 1999 Plan, the Company has not
yet determined the number of options allocated to any of the foregoing intended
recipients under the 1999 Plan nor is such number yet determinable.
The 1999 Plan shall provide that options granted under such plan generally
shall vest no earlier than six (6) months after the date of grant and that the
exercise prices of such options shall be determined by the Board of Directors
(or authorized committee) at the time of grant. However, in the case of ISOs,
the exercise price shall be no less than the fair market value of the Company's
Common Stock on the date of grant (110% in the case of stockholders owning more
than 10% of the Company's voting securities), and shall expire no later than the
tenth (10th) anniversary of the date of grant (the fifth (5th) anniversary in
the case of stockholders owning more than 10% of the Company's voting
securities). Generally, ISOs, to the extent such options are vested, may be
exercised within a period of (i) sixty (60) days in the event an optionee ceases
to be an employee of the Company, (ii) three (3) months if the optionee dies
while in the employ of the Company and (iii) one (1) year if the optionee
becomes disabled within the meaning of Section 22(e)(3) of the Code. Generally,
NQSOs, to the extent such options are vested, will expire immediately upon the
termination of the optionee's employment with the Company; provided, however,
such termination is for cause or is otherwise attributable to a breach by the
optionee of an employment or confidentiality or not-disclosure agreement.
Notwithstanding, an NQSO, to the extent such options are vested, will be
exercisable within a period of (i) three (3) months if the optionee dies while
in the employ of the Company and (ii) one (1) year if the optionee becomes
disabled within the meaning of Section 22(e)(3) of the Code. Pursuant to the
1999 Plan and in compliance with the Code, to the extent that the aggregate fair
market value, determined by the date or dates of grant, for which ISOs are first
exercisable by an optionee during any calendar year exceeds $100,000, such
options shall be treated as NQSOs.
Under the Company's 1999 Plan, on the date persons, who are not otherwise
employees or executive officers of the Company, are first elected as directors
(each director being classified as an "Outside Director") of the Company's Board
of Directors, such persons shall receive options ("Initial Director Options") to
purchase 15,000 shares of Common Stock of the Company and will automatically
receive options ("Automatic Director Options" and together with the Initial
Director Options, the "Director Options") to purchase 7,500 shares of the
Company's Common Stock immediately following the date of
13
each annual meeting of the Company's shareholders, provided, however, that such
persons did not receive Initial Director Options since the most recent grant of
Automatic Director Options and continue to serve as directors of the Company's
Board of Directors. The exercise price for each share of Common Stock issuable
upon the exercise of a Director Option shall be equal to the fair market value
of the Company's Common Stock on the date of grant. Director Options granted
under the 1999 Plan shall be exercisable either in full or installments as shall
be set forth at the discretion of the Board of Directors, subject to
acceleration in certain circumstances, and shall expire the earlier of ten (10)
years after the date of grant or ninety (90) days after the termination of the
director's service on the Board of Directors. No Director Option granted to a
Reporting Person for purposes of the Securities Exchange Act of 1934, however,
shall be exercisable during the first six (6) months after the date of grant. To
the extent that any shares of Common Stock issuable upon the exercise of
Director Options granted under the 1994 Plan exceed the number which remain
available for grant under the 1994 Plan, such grant shall be deemed to be under
the 1999 Plan. See "Executive Compensation of Directors and Executive
Officers-Compensation of Directors."
CERTAIN FEDERAL TAX INFORMATION
The following is a summary of the U.S. federal income tax consequences that
generally will arise with respect to options granted pursuant to the 1999 Plan
and with respect to the shares of Common Stock of the Company issuable upon the
exercise thereof.
ISOS.
In general, an optionee will not recognize regular income upon the grant or
exercise of an ISO. The basis of shares transferred to an optionee pursuant to
the exercise of an ISO is the price paid for such shares (i.e., the exercise
price). Instead, an optionee will recognize taxable income upon the sale of
Common Stock issuable upon the exercise of an ISO. Notwithstanding, the exercise
of an ISO may subject the optionee to the alternative minimum tax.
In general, the tax consequences of selling Common Stock issuable upon the
exercise of an ISO will vary with the length of time that the optionee holds
such Common Stock prior to such sale. An optionee will recognize long-term
capital gain or loss equal to the difference between the sale price of the
Common Stock and the exercise price if the optionee sells the Common Stock after
having had owned it for at least (i) two (2) years from the date the option was
granted (the "Grant Date") and (ii) one (1) year from the date the option was
exercised (the "Exercise Date").
However, an optionee will recognize ordinary compensation income and capital
gain (if the sale price is greater than exercise price) or loss (if the sale
price is less than the exercise price), if the optionee sells the Common Stock
issuable upon the exercise of an ISO prior to having had owned it for less than
(i) two (2) years from the Grant Date and (ii) one (1) year from the Exercise
Date. The capital gain or loss will be treated as long-term capital gain or loss
if the optionee has held the Common Stock for more than one (1) year prior to
the date of sale.
NQSOS.
As in the case of ISOs, an optionee will recognize no income tax upon the
grant of an NQSO. Unlike an ISO, however, an optionee exercising an NQSO will
recognize ordinary income tax equal to the excess of the fair market value of
the Company's Common Stock on the Exercise Date over the exercise price.
With respect to the Common Stock issuable upon the exercise of an NQSO, a
optionee generally will have a tax basis equal to the fair market value of the
stock on the Exercise Date. Upon the subsequent sale of Common Stock issuable
upon the exercise of an NQSO, an optionee will recognize a capital gain or loss,
assuming the stock was a capital asset in the optionee's hands, equal to the
difference between the tax basis
14
of the Common Stock and the amount realized upon disposition; provided, however,
that the optionee has owned the Common Stock for a period of one (1) year.
TAX CONSEQUENCES TO THE COMPANY.
The grant of ISOs and NQSOs under the 1999 Plan will have no tax
consequences to the Company. Furthermore, in the case of ISOs, the Company will
not experience any tax consequences relating to the exercise of ISOs granted
under the 1999 Plan nor the exercise thereof. Notwithstanding, the Company
generally will be entitled to a business-expense deduction with respect to any
ordinary compensation income, including a Disqualifying Disposition or a Section
83(b) Election, upon the exercise of an NQSO; provided, however, that such
deduction will be subject to the limitation of Section 162(m) promulgated under
the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2 ADOPTING THE
COMPANY'S 1999 PLAN TO GRANT UP TO AN AGGREGATE OF 950,000 INCENTIVE STOCK
OPTIONS AND NON-QUALIFIED STOCK OPTIONS TO PURCHASE SHARES OF THE COMPANY'S
COMMON STOCK TO KEY EMPLOYEES, DIRECTORS, EXECUTIVE OFFICERS AND CONSULTANTS.
PROPOSAL 3
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, as independent
auditors, to audit the accounts of the Company for the fiscal year ending July
31, 1999. The Board of Directors approved the reappointment of Ernst & Young LLP
(the firm resulting from the merger of Ernst & Whinney and Arthur Young &
Company, which has been engaged as the Company's independent auditors since
1983). Ernst & Young LLP has advised the Company that neither the firm nor any
of its members or associates has any direct financial interest in the Company or
any of its affiliates other than as auditors. Although the selection and
appointment of independent auditors is not required to be submitted to a vote of
shareholders, the Directors deem it desirable to obtain the shareholders'
ratification and approval of this appointment.
Representatives of Ernst & Young LLP are expected to be present at the
Annual 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 RECOMMENDS A VOTE "FOR" PROPOSAL 3 RELATING TO THE
RATIFICATION OF THE APPOINTMENT OF THE AUDITORS. PROXIES SOLICITED BY THE BOARD
OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
GENERAL
The Management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such matters
in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies
upon the persons voting them.
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the shareholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mails, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expense in sending proxies and proxy
material to principals. In addition, Continental Stock Transfer
15
& Trust Company, 2 Broadway, New York, New York 10004, the Company's transfer
agent, has been engaged to solicit proxies on behalf of the Company for a fee,
excluding expenses, of approximately $3,500. Proxies may be solicited by mail,
personal interview, telephone and telegraph.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED BY
THIS PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE YEAR ENDED JULY 31, 1998 (AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION) INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO. ALL SUCH REQUESTS SHOULD BE DIRECTED TO
SHAHRAM K. RABBANI, SECRETARY, ENZO BIOCHEM, INC., 60 EXECUTIVE BOULEVARD,
FARMINGDALE, NEW YORK 11735.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
STOCKHOLDER PROPOSALS. Proposals of stockholders intended to be presented
at the Company's 2000 Annual Stockholder Meeting (i) must be received by the
Company at its offices no later than August 30, 1999 (91 days preceding the one
year anniversary of the Mailing Date), (ii) may not exceed 500 words and (iii)
must otherwise satisfy the conditions established by the Securities and Exchange
Commission for stockholder proposals to be included in the Company's Proxy
Statement for that meeting.
DISCRETIONARY PROPOSALS. Stockholders intending to commence their own proxy
solicitations and present proposals from the floor of the 2000 Annual
Stockholder Meeting in compliance with Rule 14a-4 promulgated under the Exchange
Act of 1934, as amended, must notify the Company of such intentions before
October 13, 1999 (45 days preceding the one year anniversary of the Mailing
Date). After such date, the Company's proxy in connection with the 2000 Annual
Stockholder Meeting may confer discretionary authority on the Board to vote.
By Order of the Board of Directors
Shahram K. Rabbani, Secretary
Dated: November 27, 1998
16
ENZO BIOCHEM, INC.
1999 STOCK OPTION PLAN
1. PURPOSE.
The purpose of this plan (the "Plan") is to secure for Enzo Biochem,
Inc. (the "Company") and its shareholders the benefits arising from capital
stock ownership by employees, officers and directors of, and consultants or
advisors to, the Company and its subsidiary corporations who are expected to
contribute to the Company's future growth and success. Those provisions of the
Plan which make express reference to Section 422 shall apply only to Incentive
Stock Options (as that term is defined in the Plan).
2. TYPE OF OPTIONS AND ADMINISTRATION.
(a) TYPES OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code") or non-statutory options which are not intended to meet the requirements
of Section 422 of the Code.
(b) ADMINISTRATION. The Plan will be administered by a committee
(the "Committee") appointed by the Board of Directors of the Company, whose
construction and interpretation of the terms and provisions of the Plan shall be
final and conclusive. The Committee shall consist solely of two or more
persons, each of whom shall qualify as (i) a "Non-Employee Director," as that
term is defined in subparagraph (b)(3)(i) of Rule 16b-3 ("Rule 16b-3")
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), and
(ii) an "outside director," within the meaning of Section 162(m) of the Code.
The delegation of powers to the Committee shall be consistent with applicable
laws or regulations (including, without limitation, applicable state law and
Rule 16b-3). The Committee may in its sole discretion grant options to purchase
shares of the Company's Common Stock, $.01 par value per share ("Common Stock")
and issue shares upon exercise of such options as provided in the Plan. The
Committee shall have authority, subject to the express provisions of the Plan,
to construe the respective option agreements and the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, to determine the terms
and provisions of the respective option agreements, which need not be identical,
and to make all other determinations in the judgment of the Committee necessary
or desirable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency. No director or person acting pursuant to authority delegated by the
Board of Directors shall be liable for any action or determination under the
Plan made in good faith. Subject to adjustment as provided in Article 15 below,
the aggregate number of shares of Common Stock that may be subject to options
granted to any person in a calendar year shall not exceed 20% of the maximum
number of shares which may be issued and sold under the Plan, as set forth in
Article 4 hereof, as such Article may be amended from time to time.
(c) APPLICABILITY OF RULE 16B-3. Those provisions of the Plan which
make express reference to Rule 16b-3 shall apply to the Company only at such
time as the Company's Common Stock is registered under the Exchange Act, subject
to the last sentence of Section 3(b), and then only to such persons as are
required to file reports under Section 16(a) of the Exchange Act (a "Reporting
Person").
3. ELIGIBILITY.
(a) GENERAL. Options may be granted to persons who are, at the time
of grant, employees, officers or directors of, or consultants or advisors to,
the Company or any subsidiaries of the Company as defined in Sections 424(e) and
424(f) of the Code ("Participants") PROVIDED, that Incentive Stock Options may
only be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an
option may, if he or she is otherwise eligible, be granted additional options if
the Committee shall so determine.
(b) GRANT OF OPTIONS TO REPORTING PERSONS. The selection of a
director or an officer who is a Reporting Person (as the terms "director" and
"officer" are defined for purposes of Rule 16b-3) as a recipient of an option,
the timing of the option grant, the exercise price of the option and the number
of shares subject to the option shall be determined either (i) by the Board of
Directors,(ii) by the Committee or (iii) pursuant to provisions for automatic
grants set forth in Article 3(c) below.
(c) DIRECTORS OPTIONS. Persons, who are not otherwise employees or
executive officers of the Company ("Eligible Directors"), are first elected or
appointed to serve as directors on the Company's Board of Directors, such
persons shall receive options to purchase 15,000 shares of the Company's Common
Stock on the date such persons are first elected or appointed, and will
automatically receive options ("Automatic Director Options" and together with
the Initial Director Options, the "Director Options") to purchase 7,500 shares
of the Company's Common Stock immediately following the date of each annual
meeting of the Company's shareholders, PROVIDED, HOWEVER, that such persons did
not receive Initial Director Options since the most recent grant of Automatic
Director Options and continue to serve as directors of the Company's Board of
Directors. The exercise price for each share subject to a Director Option shall
be equal to the fair market value of the Company's Common Stock on the date of
grant. Each Director Option granted under the Plan shall be exercisable either
in full or in installments at such time or times and during such period as shall
be set forth in the option agreement evidencing such Director Option, subject
to the provisions of the Plan. No Director Option granted to a Reporting Person
for purposes of the Exchange Act, however, shall be exercisable during the first
six (6) months after the date of grant. Directors Options shall expire the
earlier of ten (10) years after the date of grant or ninety (90) days after
the termination of the director's service on the Board of Directors unless such
Director Options are Incentive Stock Options in which case such Director Options
shall be subject to the additional terms and conditions set forth in Articles 6
and 11 hereof.
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4. STOCK SUBJECT TO PLAN.
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Article 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 950,000 shares of
Common Stock. If an option granted under the Plan shall expire, terminate or is
canceled for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent option
grants under the Plan.
5. FORMS OF OPTION AGREEMENTS.
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form not
inconsistent with the Plan as may be approved by the Board of Directors. Such
option agreements may differ among recipients.
6. PURCHASE PRICE.
(a) GENERAL. The purchase price per share of stock deliverable upon
the exercise of an option shall be determined by the Board of Directors at the
time of grant of such option; PROVIDED, HOWEVER, that in the case of an
Incentive Stock Option, the exercise price shall not be less than 100% of the
Fair Market Value (as hereinafter defined) of such stock, at the time of grant
of such option, or less than 110 % of such Fair Market Value in the case of
options described in Article 11 (b). "Fair Market Value" of a share of Common
Stock of the Company as of a specified date for the purposes of the Plan shall
mean the closing price of a share of the Common Stock on the principal
securities exchange (including the Nasdaq National Market) on which such shares
are traded on the day immediately preceding the date as of which Fair Market
Value is being determined, or on the next preceding date on which such shares
are traded if no shares were traded on such immediately preceding day, or if the
shares are not traded on a securities exchange, Fair Market Value shall be
deemed to be the average of the high bid and low asked prices of the shares in
the over-the-counter market on the day immediately preceding the date as of
which Fair Market Value is being determined or on the next preceding date on
which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of shares, any distributions with respect thereto which
would be repurchased with the shares) shall be determined in good faith by the
Board of Directors. In no case shall Fair Market Value be determined with
regard to restrictions other than restrictions which, by their terms, will never
lapse.
(b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board of Directors determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board).
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7. OPTION PERIOD.
Subject to earlier termination as provided in the Plan, each option
and all rights thereunder shall expire on such date as determined by the Board
of Directors and set forth in the applicable option agreement, provided, that
such date shall not be later than (10) ten years after the date on which the
option is granted.
8. EXERCISE OF OPTIONS.
Each option granted under the Plan shall be exercisable either in full
or in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. No option granted to a Reporting Person for purposes of the
Exchange Act, however, shall be exercisable during the first six months after
the date of grant. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option, provide for
the acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.
9. NONTRANSFERABILITY OF OPTIONS.
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. An option may be exercised during the lifetime of the optionee only
by the optionee. In the event an optionee dies during his employment by the
Company or any of its subsidiaries, or during the three-month period following
the date of termination of such employment, his option shall thereafter be
exercisable, during the period specified in the option agreement, by his
executors or administrators to the full extent to which such option was
exercisable by the optionee at the time of his death during the periods set
forth in Article 10 or 11(d).
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.
Except as provided in Article 11(d) with respect to Incentive Stock
Options and except as otherwise determined by the Committee at the date of grant
of an option, and subject to the provisions of the Plan, an optionee may
exercise an option at any time within three (3) months following the termination
of the optionee's employment or other relationship with the Company or within
three (3) months if such termination was due to the death or disability of the
optionee or within one (1) year if such termination was due to the disability of
the optionee but, except in the case of the optionee's death, in no event later
than the expiration date of the option. If the termination of the optionee's
employment is for cause or is otherwise attributable to a breach by the optionee
of an employment or confidentiality or non-disclosure agreement, the option
shall expire immediately upon such termination. The Board of Directors shall
have the power to determine what constitutes a termination for cause or a breach
of an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement,
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and the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
11. INCENTIVE STOCK OPTIONS.
Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and conditions:
(a) EXPRESS DESIGNATION. All Incentive Stock Options granted under
the Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock
Option is to be granted under the Plan is, at the time of the grant of such
option, the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:
(i) The purchase price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110 % of the Fair
Market Value of one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five years from
the date of grant.
(c) DOLLAR LIMITATION. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.
(d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive
Stock Option may be exercised unless, at the time of such exercise, the optionee
is, and has been continuously since the date of grant of his or her option,
employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period
of ninety (90) days after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), PROVIDED, that the
agreement with respect to such option may designate a longer exercise
period and that the exercise after such ninety (90) day period shall
be treated as the exercise of a non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company, or
within three months after the optionee ceases to be such an employee,
the Incentive Stock
5
Option may be exercised by the person to whom it is transferred by
will or the laws of descent and distribution within the period of
three (3) months after the date of death (or within such lesser period
as may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provisions thereto)
while in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one (1) year after the date the
optionee ceases to be such an employee because of such disability (or
within such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no incentive Stock Option may be exercised after its
expiration date.
12. ADDITIONAL PROVISIONS.
(a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its
sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of options, or such other provisions as shall be
determined by the Board of Directors; provided, that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code.
(b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its
sole discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable).
13. GENERAL RESTRICTIONS.
(a) INVESTMENT REPRESENTATIONS. The Company may require any person
to whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option, for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws, or with
6
covenants or representations made by the Company in connection with any public
offering of its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) COMPLIANCE WITH SECURITIES LAW. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or automated quotation system or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification, or to satisfy such condition.
14. RIGHTS AS A SHAREHOLDER.
The holder of an option shall have no rights as a shareholder with
respect to any shares covered by the option (including, without limitation, any
rights to receive dividends or non-cash distributions with respect to such
shares) until the date of issue of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS, REORGANIZATIONS AND
RELATED TRANSACTIONS.
(a) RECAPITALIZATIONS AND RELATED TRANSACTIONS. If, through or as a
result of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional shares or
new or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Article 15 if such
adjustment (i) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.
(b) REORGANIZATION, MERGER AND RELATED TRANSACTIONS. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event, whether or not such options
are then exercisable under the provisions of the applicable agreements relating
thereto. For purposes of the Plan, a "Trigger Event" is any one of the
following events:
7
(i) the date on which shares of Common Stock are first
purchased pursuant to a tender offer or exchange offer (other than
such an offer by the Company, any Subsidiary, any employee benefit
plan of the Company or of any Subsidiary or any entity holding shares
or other securities of the Company for or pursuant to the terms of
such plan), whether or not such offer is approved or opposed by the
Company and regardless of the number of shares purchased pursuant to
such offer;
(ii) the date the Company acquires knowledge that any person
or group deemed a person under Section 13(d)-3 of the Exchange Act
(other than the Company, any Subsidiary, any employee benefit plan of
the Company or of any Subsidiary or any entity holding shares of
Common Stock or other securities of the Company for or pursuant to the
terms of any such plan or any individual or entity or group or
affiliate thereof which acquired its beneficial ownership interest
prior to the date the Plan was adopted by the Board), in a transaction
or series of transactions, has become the beneficial owner, directly
or indirectly (with beneficial ownership determined as provided in
Rule 13d-3, or any successor rule, under the Exchange Act), of
securities of the Company entitling the person or group to 30% or more
of all votes (without consideration of the rights of any class or
stock to elect directors by a separate class vote) to which all
shareholders of the Company would be entitled in the election of the
Board of Directors were an election held on such date;
(iii) the date, during any period of two consecutive years,
when individuals who at the beginning of such period constitute the
Board of Directors of the Company cease for any reason to constitute
at least a majority thereof, unless the election, or the nomination
for election by the shareholders of the Company, of each new director
was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period;
and
(iv) the date of approval by the shareholders of the Company
of an agreement (a "reorganization agreement") providing for:
(A) The merger or consolidation of the Company with
another corporation where the shareholders of the Company,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or consolidation,
shares of the corporation issuing cash or securities in the
merger or consolidation entitling such shareholders to 80% or
more of all votes (without consideration of the rights of any
class of stock to elect directors by a separate class vote) to
which all shareholders of such corporation would be entitled in
the election of directors or where the members of the Board of
Directors of the Company, immediately prior to the merger or
consolidation, do not, immediately after the merger or
consolidation, constitute a majority of the Board of Directors of
the corporation issuing cash or securities in the merger or
consolidation; or
8
(B) The sale or other disposition of all or
substantially all the assets of the Company.
(c) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this
Article 15 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
16. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.
(a) GENERAL. In the event of any sale, merger, transfer or
acquisition of the Company or substantially all of the assets of the Company in
which the Company is not the surviving corporation, and provided that after the
Company shall have requested the acquiring or succeeding corporation (or an
affiliate thereof), that equivalent options shall be substituted and such
successor corporation shall have refused or failed to assume all options
outstanding under the Plan or issue substantially equivalent options, then any
or all outstanding options under the Plan shall accelerate and become
exercisable in full immediately prior to such event. The Committee will notify
holders of options under the Plan that any such options shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the options will terminate upon expiration of such notice.
(b) SUBSTITUTE OPTIONS. The Company may grant options under the Plan
in substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
17. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. OTHER EMPLOYEE BENEFITS.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
19. AMENDMENT OF THE PLAN.
9
(a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect; PROVIDED, HOWEVER, that if at any time
the approval of the shareholders of the Company is required under Section 422 of
the Code or any successor provision with respect to Incentive Stock Options, or
under Rule 16b-3, the Board of Directors may not effect such modification or
amendment without such approval; and provided, further, that the provisions of
Article 3(c) hereof shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employer Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
(b) The modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option previously
granted to him or her. With the consent of the optionee affected, the Board of
Directors may amend outstanding option agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to amend or modify
(i) the terms and provisions of the Plan and of any outstanding Incentive Stock
Options granted under the Plan to the extent necessary to qualify any or all
such options for such favorable federal income tax treatment (including deferral
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code and (ii) the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3.
20. WITHHOLDING.
(a) The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a Fair
Market Value equal to such withholding obligation as of the date that the amount
of tax to be withheld is to be determined. An optionee who has made an election
pursuant to this Article 20(a) may only satisfy his or her withholding
obligation with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an
Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two years from the date the option was granted or within one year from
the date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.
10
(c) Notwithstanding the foregoing, in the case of a Reporting Person
whose options have been granted in accordance with the provisions of Article
3(b) herein, no election to use shares for the payment of withholding taxes
shall be effective unless made in compliance with any applicable requirements of
Rule 16b-3.
21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
The Board of Directors shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
canceled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such
outstanding options.
22. EFFECTIVE DATE AND DURATION OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by
the Board of Directors, but no Incentive Stock Option granted under the Plan
shall become exercisable unless and until the Plan shall have been approved by
the Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no options
previously granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter. Amendments to the
Plan not requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as provided
in Article 21) shall become effective when adopted by the Board of Directors,
but no Incentive Stock Option granted after the date of such amendment shall
become exercisable (to the extent that such amendment to the Plan was required
to enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) TERMINATION. Unless sooner terminated in accordance with Article
16, the Plan shall terminate upon the earlier of (i) the close of business on
the day next preceding the tenth anniversary of the date of its adoption by the
Board of Directors, or (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise or cancellation
of options granted under the Plan. If the date of termination is determined
under (i) above, then options outstanding on such date shall continue to have
force and effect in accordance with the provisions of the instruments evidencing
such options.
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23. PROVISION FOR FOREIGN PARTICIPANTS.
The Board of Directors may, without amending the Plan, modify awards
or options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
24. GOVERNING LAW.
The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of laws.
Adopted by the Board of Directors on November 20, 1998.
PROXY
ENZO BIOCHEM, INC.
60 EXECUTIVE BOULEVARD
FARMINGDALE, NEW YORK 11735
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Elazar Rabbani, Ph.D. and Shahram K. Rabbani
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of the Common
Stock of Enzo Biochem, Inc. held of record by the undersigned on November 24,
1998, at the Annual Meeting of Shareholders to be held on January 13, 1999 or
any adjournment thereof.
PROPOSAL 1. ELECTION OF BARRY W. WEINER AND JOHN J. DELUCCA AS CLASS II DIRECTORS.
/ / FOR all nominees / / WITHHOLDING AUTHORITY
(except as marked to the contrary below) as to all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
Withheld for:
(CONTINUED ON BACK)
(CONTINUED FROM FRONT)
PROPOSAL 2. APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3. RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING JULY 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting. This proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made, this proxy will be voted FOR
Proposals 1, 2 and 3.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES OF COMMON STOCK ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
DATED: ________________________, 199_
_____________________________________
Signature
_____________________________________
Signature if held jointly
(WHEN SIGNING AS ATTORNEY, AS
EXECUTOR, AS ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.)