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
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Check the appropriate box:
/_/ Preliminary Proxy Statement /_/ Confidential, For Use of the
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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)
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ENZO BIOCHEM, INC.
60 Executive Boulevard
Farmingdale, New York 11735
(631) 755-5500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 23, 2002
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 Yale
Club of New York, 50 Vanderbilt Avenue, Grand Ballroom, 20th Floor, New York,
New York, on Wednesday, January 23, 2002, 9:00 a.m. local time (the "Annual
Meeting"), for the following purposes:
1. To elect Barry W. Weiner and John J. Delucca as Class II Directors
for a term of three (3) years or until their respective successors are
elected and qualified;
2. To approve an amendment to the Company's 1999 Stock Option Plan
increasing the number of options available for grant by 1,000,000, from
997,500 to 1,997,500 options, and the number shares of common stock,
$.01 par value per share (the "Common Stock"), of the Company reserved
for issuance thereunder by 1,000,000, from 997,500 to 1,997,500 shares
of Common Stock;
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, 2002; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on Monday, November 26, 2001 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.
Please note that you will be asked to present valid picture identification, such
as a driver's license or passport, in order to attend the Annual Meeting. The
use of cameras, recording devices and other electronic devices will be
prohibited at 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 28, 2001
ENZO BIOCHEM, INC.
60 Executive Boulevard
Farmingdale, New York 11735
(631) 755-5500
-----------
PROXY STATEMENT
-----------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 23, 2002
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 Yale Club of New York, 50 Vanderbilt Avenue,
Grand Ballroom, 20th Floor, New York, New York, on Wednesday, January 23, 2002
at 9:00 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 Wednesday, November 28, 2001.
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 Monday,
November 26, 2001 are entitled to vote at the Annual Meeting (the "Record
Date"). On the Record Date there were issued and outstanding 27,065,910 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) 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 Proposal 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.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (1) of Class (2)
- ---------------- ------------------------ ------------
Elazar Rabbani, Ph.D. 1,805,021(3) 6.56%
Shahram K. Rabbani 1,807,412(4) 6.57%
Barry W. Weiner 1,045,159(5) 3.81%
J. Morton Davis 1,869,450(6) 6.91%
John B. Sias 148,223(7) *
John J. Delucca 25,331(8) *
Dean Engelhardt, Ph.D. 211,192(9) *
Irwin C. Gerson 0(10) *
Norman E. Kelker, Ph.D. 127,070(11) *
All directors and executive officers
as a group (11 persons) (12) 5,403,440(13) 18.91%
- --------------
* 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 27,065,910 shares of Common Stock of the Company outstanding
as of the close of business on the Record Date.
(3) Includes (i) 441,603 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof,
(ii) 3,147 shares of Common Stock held in the name of Dr. Rabbani as
custodian for certain of his children and (iii) 1,873 shares of Common
Stock held in the name of Dr. Rabbani's wife as custodian for certain
of their children. Does not include 119,625 shares of Common Stock
issuable upon the exercise of options which are not exercisable within
60 days from the date hereof.
(4) Includes (i) 441,603 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof,
(ii) 817 shares of Common Stock held in the name of Mr. Rabbani's son
and (iii) 1,516 shares of Common Stock that Mr. Rabbani holds as
custodian for certain of his nephews. Does not include 119,625 shares
of Common Stock issuable upon the exercise of options which are not
exercisable within 60 days from the date hereof.
2
(5) Includes (i) 366,207 shares of Common Stock issuable upon the exercise
of options which are exercisable within 60 days from the date hereof
and (ii) 3,147 shares of Common Stock which Mr. Weiner holds as
custodian for certain of his children. Does not include 119,625 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) 1,296,295 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) 573,155 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.
(7) Includes 69,631 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does
not include 11,813 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days from the date hereof.
(8) Includes 25,331 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does
not include 11,813 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days from the date hereof.
(9) Includes 48,722 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does
not include 12,875 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days from the date hereof.
(10) Does not include 15,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days from the
date hereof.
(11) Includes 15,528 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does
not include 9,200 shares of Common Stock issuable upon the exercise of
options 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 of
Directors and Executive Officers."
(13) Includes 1,508,808 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days from the date hereof. Does
not include 443,405 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.
3
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 all of whom currently serve as Class II Directors, to
continue such service as Class II Directors. Management has no reason to believe
that either of the nominees will not be a candidate or will be unable to serve
as a director. However, in the event that 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 2005 ANNUAL MEETING, IF ELECTED:
Class II: New Term To Expire In 2005
Name Age Year First Became A Director
- ---- --- ----------------------------
Barry W. Weiner 51 1977
John J. Delucca 58 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.
DIRECTORS WHO ARE CONTINUING IN OFFICE:
Class I: Term To Expire In 2004
Name Age Year First Became A Director
- ---- --- ----------------------------
Shahram Rabbani 49 1976
Irwin C. Gerson 72 2001
Class III: Term To Expire In 2003
Name Age Year First Became A Director
- ---- --- ----------------------------
Elazar Rabbani, Ph.D. 57 1976
John B. Sias 74 1982
4
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 a
Name Age Director or Position
- ---- --- Executive Officer --------
-----------------
Elazar Rabbani, Ph.D................... 57 1976 Chairman of the Board of Directors
and Chief Executive Officer
Shahram K. Rabbani..................... 49 1976 Chief Operating Officer, Treasurer,
Secretary and Director
Barry W. Weiner........................ 51 1977 President and Director
Dean Engelhardt, Ph.D.................. 61 1981 Executive Vice President
Norman E. Kelker, Ph.D................. 62 1981 Senior Vice President
Herbert B. Bass........................ 53 1995 Vice President of Finance
Barbara E. Thalenfeld, Ph.D............ 61 1995 Vice President, Corporate Development
David C. Goldberg...................... 44 1995 Vice President, Business Development
John J. Delucca........................ 58 1982 Director
John B. Sias........................... 74 1982 Director
Irwin C. Gerson........................ 72 2001 Director
Biographical Information Regarding Directors and Executive Officers
ELAZAR RABBANI, PH.D., 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 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, 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 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, 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 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. Mr. Barry W. Weiner
currently serves as a Class II Director whose term expires in 2002. Barry W.
Weiner is the brother-in-law of Elazar Rabbani and Shahram K. Rabbani, both of
whom are brothers.
DEAN ENGELHARDT, PH.D., has served as Executive Vice President since
July 13, 2000, as Senior Vice President since January 1989, and as Vice
President since September 1981. 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.
5
NORMAN E. KELKER, PH.D., 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.
HERBERT B. BASS 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., 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 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, a Class II Director nominee, has been a Director of
the Company since January 1982. Since January 1999, Mr. Delucca has been Chief
Financial Officer and Executive Vice President-Finance and Administration of
Coty, Inc. From October 1993 until January 1999, he was 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. Mr. John J. Delucca currently serves as a Class II Director whose
term expires in 2002.
JOHN B. SIAS has been a Director of the Company since January 1982. Mr.
Sias had been President and Chief Executive Officer of Chronicle Publishing
Company from April 1993 to September 2000. From January 1986 until December
1992, Mr. Sias served as President of ABC Television Network Group and Executive
Vice President, Capital Cities/ABC, Inc. Since 1991, he has been a director of
California Investors Trust. From 1977 until April 1993 he was a director and the
Executive Vice President, President of the Publishing Division (which includes
Fairchild Publications) of Capital Cities Communications, Inc.
IRWIN C. GERSON has been a director of the Company since May 23, 2001.
From 1995 until December 1998, Mr. Gerson served as Chairman of Lowe McAdams
Healthcare and prior thereto had been, since 1986, Chairman and Chief Executive
Officer of William Douglas McAdams, Inc., one of the largest advertising
agencies in the U.S. specializing in pharmaceutical marketing and communications
to healthcare professionals. In February 2000, he was inducted into the Medical
Advertising Hall of Fame. Mr. Gerson has a B.S. in Pharmacy from Fordham
University and an MBA from the NYU Graduate School of Business Administration.
He is a director of Andrx Corporation which specializes in proprietary drug
delivery technologies, and Cytoclonal Pharmaceutics, Inc., a biopharmaceutical
drug development company, both Nasdaq listed public companies, and Bio Sample
Inc., a privately held corporation. In 1992, Mr. Gerson received an honorary
Doctor of Humane Letters from the Albany College of Pharmacy. Mr. Gerson served
as a Trustee of Long Island University, Chairman of The Council of Overseers --
Arnold and Marie Schwartz College of Pharmacy, member of the Board of Trustees
of the Albany College of Pharmacy and, from 1967 through 1974, was a lecturer on
sales management and pharmaceutical marketing at the Columbia College of
Pharmacy. He is currently a director of the Lifetime Learning Society of Florida
Atlantic University. Mr. Gerson also has served as a Member of the Board of
Governors, American Association of Advertising Agencies, a Director and Chairman
of Business Publications Audit, a Director of the Connecticut Grand Opera, and a
Director of the Stamford Chamber Orchestra. Mr. Gerson previously served as a
director of the foundation of Pharmacists and Corporate Americans for AIDS
Education, the Pharmaceutical Advertising Council, the Nutrition Research
Foundation and as a Trustee of the Chemotherapy Foundation. He was also on the
boards of Penn Dixie Industries and Continental Steel Corporation.
6
Meetings of The Board of Directors
During the fiscal year ended July 31, 2001, 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, 2001, there was one (1) formal meeting of the Audit
Committee and the Stock Option Committee had two (2) formal meetings. Each
director of the Company attended at least 75% of all Board meetings during the
fiscal year ended July 31, 2001.
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 Irwin C. Gerson, 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.
Audit Committee Report
In connection with the preparation and filing of the Company's Annual
Report on Form 10-K for the year ended July 31, 2001:
(1) The Audit Committee reviewed and discussed the audited financial
statements with management.
(2) The Audit Committee reviewed with the independent auditors, who
are responsible for expressing an opinion on the conformity of
those audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not
just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with
the Audit Committee under generally accepted auditing
standards.
(3) The Audit Committee reviewed the written disclosures and the
letter from the independent auditors required by the
Independence Standards Board Standard No. 1, as may be
modified or supplemented, and discussed with the auditors any
relationships that may impact their objectivity and
independence and satisfied itself as to the auditors'
independence.
(4) The Audit Committee discussed with the Company's independent
auditors the overall scope and plans for their audits. The Audit
Committee meets with the independent auditors, with and without
management present, to discuss the results of their examinations,
their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Audit
Committee held one (1) formal meeting during the fiscal year
ended July 31, 2001.
7
(5) Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial
statements be included in the 2001 Annual Report on Form 10-K.
Independence of Audit Committee Members
All three Audit Committee members are independent, as defined in the
NYSE's listing standards.
Members of Audit Committee
John J. Delucca
Irwin C. Gerson
John B. Sias
Section 16(a) Beneficial Ownership Reporting Compliance
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 2001, Enzolabs paid $1,055,000 (including
$118,300 in real estate taxes) to Pari with respect to such facility. An
amendment to the foregoing lease was effected on January 1, 2000, to provide for
the lease of an additional 3,000 square feet by Enzolabs. As a result thereof,
the minimum net annual rent for the period beginning January 1, 2000, subject to
annual cost of living adjustments, is $95,140. 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.
8
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 $100,000 for the fiscal year ended July 31, 2001 (each, a
"Named Executive Officer") for services during the fiscal years ended July 31,
2001, 2000 and 1999:
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
Name and Securities Underlying
Principal Position Year Salary ($) Bonus ($) Options/SARs (#)
------------------ ---- ---------- --------- ----------------
Elazar Rabbani, Ph.D.,
Chairman of the Board of Directors 2001 $344,307 $245,000 75,000
and CEO 2000 $301,091 $195,000 -0-
1999 $282,237 $145,000 110,000
Shahram K. Rabbani,
Chief Operating Officer, Treasurer, 2001 $310,191 $230,000 75,000
Secretary and Director 2000 $269,708 $170,000 -0-
1999 $251,996 $120,000 110,000
Barry W. Weiner,
President and Director 2001 $310,191 $230,000 75,000
2000 $269,708 $170,000 -0-
1999 $251,996 $120,000 110,000
Dean Engelhardt, Ph.D.,
Executive Vice President 2001 $199,843 $50,000 5,000
2000 $176,150 $40,000 5,000
1999 $166,154 $30,000 15,000
Norman E. Kelker, Ph.D.,
Senior Vice President 2001 $160,498 $30,000 5,000
2000 $148,075 $20,000 -0-
1999 $143,078 $15,000 -0-
The Company does not have a Compensation Committee or other board
committee performing equivalent functions. During the fiscal year ended July 31,
2001, deliberations concerning executive officer compensation were made by the
Company's Board of Directors, which board includes Elazar Rabbani, Ph.D.
(Chairman of the Board and Chief Executive Officer of the Company), Shahram K.
Rabbani (Chief Operating Officer, Secretary and Treasurer of the Company), Barry
W. Weiner (President of the Company and a Class II Director nominee), John J.
Delucca (a Class II Director nominee), Irwin C. Gerson and John B. Sias.
9
Option/SAR Grants in Last Fiscal Year
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term
- -------------------------------------------------------------------------------- ----------------------------
Percent of
Total
Number of Options/SARs
Securities Granted to Exercise
Underlying Employees of Base
Option/SARs in Fiscal Price Expiration
Name Granted (#) Year ($ / Sh) Date 5% ($) 10% ($)
- ---- ----------- ------------ -------- ---------- ------ -------
Elazar Rabbani, Ph.D.,
Chairman of the Board of
Directors and Chief
Executive Officer 75,000 19.67% $13.95 3/21/11 $657,981 $1,667,453
Shahram K. Rabbani,
Chief Operating Officer,
Treasurer, Secretary and
Director 75,000 19.67% $13.95 3/21/11 $657,981 $1,667,453
Barry W. Weiner,
President and Director 75,000 19.67% $13.95 3/21/11 $657,981 $1,667,453
Dean Engelhardt, Ph.D.,
Executive Vice President 5,000 1.31% $13.95 3/21/11 $43,865 $111,164
Norman E. Kelker, Ph.D.,
Senior Vice President 5,000 1.31% $13.95 3/21/11 $43,865 $111,164
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information with respect to stock
option exercises by the Named Executive Officers and the Outside Directors of
the Company's Board of Directors during the fiscal year ended July 31, 2001 and
the value of unexercised options held by them at fiscal year-end.
Number of Unexercised Value of Unexercised
Shares of Options at In-the-Money Options at
Common Stock Fiscal Year End Fiscal Year End (1)
Acquired on Value --------------- -------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
Elazar Rabbani, Ph.D. -0- $ 0 441,603 119,625 $ 6,827,500 $ 3,635,144
Shahram K. Rabbani -0- $ 0 441,603 119,625 $ 6,827,500 $ 3,635,144
Barry W. Weiner -0- $ 0 366,207 119,625 $ 5,572,951 $ 3,635,144
Dean Engelhardt, Ph.D. -0- $ 0 48,722 12,875 $ 761,051 $ 154,249
Norman E. Kelker, Ph.D. -0- $ 0 15,528 9,200 $ 272,178 $ 128,477
John B. Sias -0- $ 0 69,631 11,813 $ 798,210 $ 3,788
John J. Delucca -0- $ 0 25,331 11,813 $ 538,481 $ 3,788
Irwin C. Gerson -0- $ 0 0 15,000 $ 0 $ 0
10
- --------------
(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, as amended, Messrs. Weiner and Rabbani and Dr.
Rabbani are currently compensated at a base annual salary of $312,000, $280,000
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 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, as amended,
provides for a term expiring on May 4, 2002 and a renewal period of two (2)
years, such renewal to occur automatically unless either the Company or the
Executive terminates the Employment Agreement upon 180 days prior 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, other than
Irwin C. Gerson, received $18,000 in compensation for the fiscal year ended July
31, 2001. Under the Company's 1999 Stock Option Plan (the "1999 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 2001, two Outside Directors, John B. Sias and John J. Delucca, each
received an option to purchase 7,875 shares of Common Stock. Upon the
appointment of Irwin C. Gerson as an Outside Director on May 23, 2001, Mr.
Gerson received Initial Director Options to purchase 15,000 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.
11
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 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, 2001, the Company paid Dr. Rabbani an annual salary of
$344,307 and a bonus of $245,000 and granted Dr. Rabbani stock options to
purchase 75,000 shares of the Company's Common Stock. Such compensation was
determined pursuant to the Company's employment agreement 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 17% of annual earnings (not to exceed the maximum allowable in any
calendar year which is $10,500 for 2001). 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 three (3) 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 holds more than 10% of all combined voting stock
of the Company, the exercise prices of 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. During the fiscal
year ended July 31, 2001, no options were granted to officer-directors of the
Company. As of the Record Date, of the 1,823,000 shares reserved for issuance
upon the exercise of options authorized for grant under the 1993 Plan, 52,042
shares of the Company's Common Stock remain available for issuance upon the
exercise of options authorized for grant under the 1993 Plan.
12
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 of 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, 2001, no options to purchase shares of the Company's
Common Stock were awarded under the 1994 Plan. As of the Record Date, of the
1,154,730 shares of the Company's Common Stock reserved for issuance upon the
exercise of options authorized for grant under the 1994 Plan, no shares of the
Company's Common Stock remain available for issuance upon the exercise of
options authorized for grant under the 1994 Plan.
1999 Stock Option Plan
Under the Company's 1999 Stock Option Plan (the "1999 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 1999 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 1999 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 1999 Plan are set by the Board of Directors of the
Company, or designated committee. In any event, however, ISOs granted under the
1999 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 of 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 1999 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 1999 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, 2001, options to purchase up to 381,250 shares of the
Company's Common Stock were awarded under the 1999 Plan. As of the Record Date,
of the 964,399 shares of the Company's Common Stock reserved for issuance upon
the exercise of options authorized for grant under the 1999 Plan, 137,423 shares
of the Company's Common Stock remain available for issuance upon the exercise of
options authorized for grant under the 1999 Plan.
13
Insurance for Indemnification of Directors and Officers
The Company has in effect, with American International Companies
("AIG") under a policy effective January 22, 2001, and expiring on January 22,
2002, 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 $215,500.
This report has been provided by the Board of Directors of the Company.
Elazar Rabbani, Ph.D.
Shahram K. Rabbani
Barry W. Weiner
John J. Delucca
Irwin C. Gerson
John B. Sias
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 New York Stock Exchange Market Value Index and two peer issuer
indices selected on an industry basis. The two peer group indices include: (i)
64 biotechnology companies engaged in the research and development of diagnostic
substances and (ii) 22 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.
Comparison of 5-Year Cumulative Total Return of the
Company, Two Peer Group Indices and the NYSE Market Index
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
ENZO BIOCHEM, INC. 100.00 108.62 85.12 143.07 386.21 191.53
MEDICAL LABORATORIES 100.00 84.72 70.77 70.70 149.91 162.05
NYSE MARKET INDEX 100.00 146.28 169.56 191.84 198.59 193.87
BIOTECHNOLOGY PEERS 100.00 106.03 89.25 110.88 219.89 182.59
14
PROPOSAL 2
AMENDMENT TO THE COMPANY'S 1999 STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders will be asked to
approve an amendment to the 1999 Plan to increase the number of shares of Common
Stock reserved for issuance from 997,500 to 1,997,500. The Board of Directors
believes that the proposed amendment to the 1999 Plan will help the Company
attract and retain qualified officers, directors and key employees.
Description of the Proposed Amendment
The Board of Directors believes that in order to attract and retain
highly qualified officers, directors and key employees to the Company in the
future, and to provide such officers, directors and employees with adequate
incentives through their proprietary interest in the Company, it will be
necessary to have a recognized means of offering them a potential equity stake
in the Company. Until very recently, such incentives were given by offering
stock options through the 1999 Plan. Now, however, almost all of the 997,500
shares which have been reserved for issuance in the form of options granted
under the 1999 Plan have been used up. In order to continue to have this form of
incentive compensation available, it is therefore necessary to either adopt a
new option plan, or some other comparable plan, or to amend the 1999 Plan in
order to make available more shares for future option grants. After considering
a number of suggestions, the Board of Directors has approved this Proposal to
amend the 1999 Plan to reserve an additional 1,000,000 shares of Common Stock
for issuance in the form of options, thereby increasing the number of options
available for grant from the current 997,500 to an aggregate of 1,997,500. The
proposed amendment will not make any other changes to the current terms or
conditions of the 1999 Plan, or of any options which have been or may be granted
under the 1999 Plan. By means of this Proposal 2 the shareholders are being
asked to approve this amendment to the 1999 Plan.
Amended 1999 Plan Benefits
Option awards under the 1999 Plan may be granted at the discretion of
the Board of Directors. Accordingly, it is not possible to determine in advance
when or whether future option grants may be made under the 1999 Plan, or to whom
such grants may be made. The following table sets forth information concerning
awards made to certain individuals and groups during the fiscal year ended July
31, 2001 under the 1999 Plan. This information, however, may not be indicative
of awards that will be granted under the 1999 Plan in the future.
Amended 1999 Plan Benefits(1)
Number of Shares
Name and Position Underlying Stock Options Dollar Value (2)
- ----------------- ------------------------ ----------------
Elazar Rabbani, Ph.D.,
Chairman of the Board of Directors and CEO 75,000 $ 841,500
Shahram K. Rabbani,
Chief Operating Officer, Treasurer, Secretary and
Director 75,000 $ 841,500
Barry W. Weiner,
President and Director 75,000 $ 841,500
Dean Engelhardt, Ph.D.,
Executive Vice President 5,000 $ 56,100
Norman E. Kelker, Ph.D.,
Senior Vice President 5,000 $ 56,100
All Executive Officers as a Group 248,000 $ 2,782,560
All Non-Executive Directors as a Group 30,750 ($20,355)
15
Amended 1999 Plan Benefits
1999 Plan (1)
Number of Shares
Name and Position Underlying Stock Options Dollar Value (2)
- ----------------- ------------------------ ----------------
All Other Employees as a Group 102,500 $ 1,150,050
(1) Options vest twenty-five percent (25%) one (1) year after the date of
grant and in 25% increments on the second, third and fourth
anniversary of the date of grant.
(2) Market value of the underlying securities at fiscal year end minus the
exercise price.
Summary of the 1999 Plan
At the 1999 annual stockholder meeting, the stockholders of the Company
approved the 1999 Plan, as adopted by the Board of Directors. In September 1998,
the Company registered 950,000 shares of Common Stock issuable under the 1999
Plan with the Commission on a Registration Statement on Form S-8 pursuant to the
Act. Due to the Company's issuance of a 5% stock dividend during the fiscal year
ending July 31, 2001, the number of shares issuable under the 1999 Plan
increased by 5% to 997,500. Under the Company's 1999 Stock Option Plan (the
"1999 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 1999 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 1999 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 1999 Plan are set by the Board
of Directors of the Company, or designated committee. In any event, however,
ISOs granted under the 1999 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 of 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 1999 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
1999 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, 2001, options to purchase up to 381,250
shares of the Company's Common Stock were awarded under the 1999 Plan. As of the
Record Date, of the 964,399 shares of the Company's Common Stock reserved for
issuance upon the exercise of options authorized for grant under the 1999 Plan,
137,423 shares of the Company's Common Stock remain available for issuance upon
the exercise of options authorized for grant under the 1999 Plan.
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 compensation 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
because the difference between the exercise price and the fair market value of
the stock on the date of exercise is alternative minimum taxable income.
16
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 compensation income in the year of
the sale if the optionee sells the Common Stock issuable upon the exercise of an
ISO prior to having owned it for less than (i) two (2) years from the Grant Date
or (ii) one (1) year from the Exercise Date. Such a transfer is referred to as a
"Disqualifying Disposition." The amount of the compensation income equals the
difference between the option's exercise price and the stock's fair market value
at the time of exercise (i.e., the bargain purchase element). This compensation
income is added to the basis of the stock for purposes of determining the gain
on the sale of the ISO stock. If the ISO stock is sold in a transaction in which
a loss (if sustained) would be recognized, compensation income is limited to the
excess, if any, of the amount realized on the sale over the adjusted basis of
the ISO stock (i.e., the exercise price with adjustments, if any).
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 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,
an 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 of the Common Stock and the amount
realized upon disposition. If the optionee has held the stock for more than one
(1) year, the gain or loss will be long-term capital gain or loss.
Tax Consequences to the Company
The grant of ISOs and NQSOs under the 1999 Plan will have no tax
consequences to the Company. 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 OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE AMENDMENT OF THE 1999 PLAN AND THE RESERVATION OF 1,997,500 SHARES OF
COMMON STOCK FOR ISSUANCE THEREUNDER. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS OTHERWISE SPECIFY IN THEIR
PROXIES.
17
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, 2002. 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.
Audit Fees
Ernst & Young LLP has billed the Company $125,000, in the aggregate,
for professional services rendered by Ernst & Young LLP for the audit of the
Company's annual financial statements for the Company's 2001 fiscal year and the
reviews of the interim financial statements included in the Company's Quarterly
Reports on Form 10-Q for the Company's 2001 fiscal year.
All Other Fees
Ernst & Young LLP has billed the Company $41,800, in the aggregate, for
professional services rendered by Ernst & Young LLP for all services other than
those services covered in the section captioned "Audit Fees" for the Company's
2001 fiscal year. These other services include (i) tax planning and assistance
with the preparation of returns and (ii) consultations on the effects of various
accounting issues and changes in professional standards.
In making its recommendations to ratify the appointment of Ernst &
Young LLP as the Company's independent accountants for the fiscal year ending
July 31, 2002, the Audit Committee has considered whether the non-audit services
provided by Ernst & Young LLP are compatible with maintaining the independence
of Ernst & Young LLP.
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.
18
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 & 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 $5,000. 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, 2001
(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.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
Shareholder Proposals. Proposals of shareholders intended to be
presented at the Company's 2002 Annual Shareholder Meeting (i) must be received
by the Company at its offices no later than Thursday, August 29, 2002 (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. Shareholders intending to commence their own
proxy solicitations and present proposals from the floor of the 2002 Annual
Shareholder Meeting in compliance with Rule 14a-4 promulgated under the Exchange
Act of 1934, as amended, must notify the Company of such intentions before
Monday October 14, 2002 (45 days preceding the one year anniversary of the
Mailing Date). After such date, the Company's proxy in connection with the 2002
Annual Shareholder Meeting may confer discretionary authority on the Board to
vote.
By Order of the Board of Directors
Shahram K. Rabbani, Secretary
Dated: November 28, 2001
19
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 Shahram K. Rabbani and Barry W. Weiner 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 26,
2001, at the Annual Meeting of Shareholders to be held on January 23, 2002 or
any adjournment thereof.
PROPOSAL 1. Election of Barry Weiner and John J. Delucca as Class II Directors.
/_/ FOR all nominees /_/ WITHHOLDING AUTHORITY
(except as marked to the as to all nominees
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print that nominee's name on the line provided below.)
Withheld for: ___________________________________________
PROPOSAL 2. To approve an amendment to the Company's 1999 Stock Option
Plan increasing the number of options available for grant by
1,000,000, from 997,500 to 1,997,500 options, and the number
shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company reserved for issuance thereunder by
1,000,000 from 997,500 to 1,997,500 shares of Common Stock.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
PROPOSAL 3. Ratification of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending July 31, 2002.
/_/ 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
and 2.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES OF COMMON STOCK
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
Dated:_____________________________, 2001 / 2002 (circle one)
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.)