UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [X]
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 Under Rule 14a-12
IMMTECH INTERNATIONAL, INC.
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(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: N/A
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES: N/A
(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): N/A
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION: N/A
(5) TOTAL FEE PAID: N/A
[_] 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: N/A
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.: N/A
(3) FILING PARTY: N/A
(4) DATE FILED: N/A
IMMTECH INTERNATIONAL, INC.
150 Fairway Drive, Suite 150
Vernon Hills, Illinois 60061
DEAR FELLOW STOCKHOLDER:
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders on November 15, 2002, at 10:00 A.M. at the Westin O'Hare, 6100
River Road, Rosemont, Illinois 60018. A Notice of the Annual Meeting, Proxy
Statement and Proxy Card are enclosed with this letter.
We encourage you to read the Notice of Annual Meeting and Proxy
Statement so that you may be informed about the business to come before the
meeting. We hope that you will find it convenient to attend the Annual Meeting
in person.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE PROMPTLY SIGN, DATE AND
MAIL THE ENCLOSED PROXY CARD IN THE RETURN ENVELOPE PROVIDED TO ENSURE YOUR
REPRESENTATION AT THE ANNUAL MEETING AND THE PRESENCE OF A QUORUM. IF YOU DO
ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY SHOULD YOU WISH TO VOTE
IN PERSON.
Also enclosed with this Proxy Statement is a copy of our Annual
Report to Stockholders. Additional copies may be obtained by writing to Immtech
International, Inc., 150 Fairway Drive, Suite 150, Vernon Hills, Illinois 60061,
Attention: Mr. Gary C. Parks.
On behalf of the Board of Directors, I would like to express
Immtech's appreciation for your continued support.
Sincerely,
/s/ T. Stephen Thompson
----------------------------------------
T. Stephen Thompson
President and Chief Executive Officer
October 21, 2002
IMMTECH INTERNATIONAL, INC.
150 Fairway Drive, Suite 150
Vernon Hills, Illinois 60061
================================================================================
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2002
================================================================================
To the Stockholders of Immtech International, Inc.:
The Board of Directors cordially invites you to attend our Annual
Meeting of Stockholders ("Annual Meeting") on November 15, 2002 at 10:00 A.M.,
at the Westin O'Hare, 6100 River Road, Rosemont, Illinois 60018, for the
following purposes:
o Election of Directors - to elect five directors to serve until the next
annual meeting of the stockholders and until their successors are elected
and qualified or their earlier resignation, removal, disqualification or
death,
o Proposal No. 1 - to approve an amendment to our 2000 Stock Incentive Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder from 350,000 shares to 1,100,000 shares (a copy of the First
Amended and Restated 2000 Stock Incentive Plan is attached hereto as
Appendix A),
o Proposal No. 2 - to approve the issuance of Common Stock issuable upon
conversion of Series A Convertible Preferred Stock, $0.01 par value, held
by certain officers and directors of the Company,
o Proposal No. 3 - to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending March 31, 2003,
and
o to transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on October 2,
2002 will be entitled to notice of the Annual Meeting and to vote on any matters
which come before the meeting or any adjournment or postponement thereof.
Whether or not you plan to attend the Annual Meeting, your stock should be
represented. To insure that your vote is counted, please complete, sign, date
and mail the enclosed Proxy Card in the accompanying envelope even if you plan
to attend the Annual Meeting. Returning the Proxy Card will not limit your right
to vote in person or to attend the Annual Meeting, but will insure your
representation if you cannot attend. Your proxy is revocable at any time prior
to its use.
By order of the Board of Directors,
/s/ Gary C. Parks
----------------------------------------
Gary C. Parks
Secretary, Immtech International, Inc.
October 21, 2002
Vernon Hills, Illinois
IMMTECH INTERNATIONAL, INC.
================================================================================
PROXY STATEMENT
================================================================================
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2002
The Board of Directors (the "Board") of Immtech International, Inc.,
a Delaware corporation ("Immtech," "we," "us," "our" or the "Company"), hereby
solicits your proxy for use at the 2002 Annual Meeting of Stockholders to be
held on Friday, November 15, 2002, at 10:00 A.M. at the Westin O'Hare, 6100
River Road, Rosemont, Illinois 60018, and at any adjournment or postponement
thereof (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders ("Notice"). This Proxy Statement,
Notice and Proxy Card are first being mailed to stockholders of record as of
October 2, 2002 on or about October 21, 2002.
By completing the attached Proxy Card you appoint T. Stephen
Thompson as your representative at the Annual Meeting. If you sign and return
your Proxy Card, Mr. Thompson will vote your shares as you instruct on the Proxy
Card. If you sign and return your Proxy Card, but fail to instruct how to vote
your shares, Mr. Thompson will vote your shares in favor of the slate of
directors nominated by the Board and "for" the proposals set forth on the Proxy
Card. This way your shares will be voted whether or not you attend. We recommend
you vote by proxy in advance of the Annual Meeting even if you plan to attend
just in case your plans change and you are then unable to attend.
The Board does not know of any matters to be presented at the Annual
Meeting other than those listed on the Notice and described in this Proxy
Statement. If a matter comes up for vote that is not covered by your proxy,
Mr. Thompson will vote your shares in accordance with his judgment if you have
signed and returned your Proxy Card, and authorized him to do so.
The Board encourages you to attend the Annual Meeting in person. If
you decide to change your vote, you may revoke your proxy any time before the
voting begins at the Annual Meeting by (i) giving notice of revocation to the
Secretary of Immtech, (ii) submitting a signed proxy bearing a date later than
the date of the Proxy Card or (iii) attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not, in itself, constitute
revocation of a proxy. Our principal executive offices are located at 150
Fairway Drive, Suite 150, Vernon Hills, Illinois 60061 and our telephone number
is (847) 573-0033.
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PURPOSE OF THE MEETING
At our Annual Meeting the stockholders will be asked to consider and
vote upon the following matters:
o Election of Directors - to elect five directors to serve until the next
annual meeting of the stockholders and until their successors are elected
and qualified or their earlier resignation, removal, disqualification or
death,
o Proposal No. 1 - to approve an amendment to our 2000 Stock Incentive Plan
("2000 Plan") to increase the number of shares of Common Stock reserved
for issuance thereunder from 350,000 shares to 1,100,000 shares (a copy of
the First Amended and Restated 2000 Stock Incentive Plan is attached
hereto as Appendix A),
o Proposal No. 2 - to approve the issuance of Common Stock issuable upon
conversion of Series A Convertible Preferred Stock, $0.01 par value
("Series A Stock"), held by certain officers and directors of the Company,
o Proposal No. 3 - to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending March 31, 2003,
and
o to transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
VOTING RIGHTS
The Board has fixed the close of business on October 2, 2002, as the
record date (the "Record Date") for determination of stockholders entitled to
notice of and to vote at the Annual Meeting. Holders of record of our Common
Stock, Series A Stock and Series B Stock at the close of business on the Record
Date will be entitled to vote together as a single class on all matters that
come before the meeting. At the close of business on the Record Date, there were
6,318,052 shares of Common Stock, 150,800 shares of Series A Stock and 75,725
shares of Series B Convertible Preferred Stock, $0.01 par value ("Series B
Stock"), outstanding. Each share of Common Stock is entitled to one vote, each
share of Series A Stock is entitled to 5.6561 votes and each share of Series B
Stock is entitled to 6.25 votes. Each share of Series A Stock and Series B Stock
is entitled to the number of votes equal to the number of shares of Common Stock
into which such stock is convertible on the Record Date. The Series A Stock
conversion rate is determined by dividing the Series A Stock stated value
($25.00) plus accrued but unpaid dividends ($0) as of the Record Date by the
$4.42 conversion rate set forth in the Company's Certificate of Designation of
Series A Convertible Preferred Stock ("Series A Stock Certificate of
Designation"). Under this formula, each share of Series A Stock is entitled to
5.6561 votes for a total number of votes of 852,940 for the Series A Stock.
Holders of Series A Stock are entitled to the number of votes determined by
multiplying the aggregate number of shares of Series A Stock held by 5.6561,
rounded to the nearest whole number. The Series B Stock conversion rate is
determined by dividing the Series B Stock stated value ($25.00) plus accrued but
unpaid dividends ($0) as of the Record Date by the $4.00 conversion rate set
forth in the Company's Certificate of Designation of Series B Convertible
Preferred Stock. Under this formula, each share of Series B Stock is entitled to
6.25 votes for a total number of votes of 473,281 for the
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Series B Stock. Holders of Series B Stock are entitled to the number of votes
determined by multiplying the aggregate number of shares of Series B Stock held
by 6.25, rounded to the nearest whole number. A total of 7,644,273 votes
representing Common Stock, Series A Stock and Series B Stock are entitled to
vote at the Annual Meeting. The presence of holders of a majority of the
outstanding shares of Common Stock, Series A Stock and Series B Stock entitled
to vote, voting as a single class, represented in person or by proxy, constitute
a quorum for the transaction of business at the Annual Meeting.
Assuming the presence of a quorum at the Annual Meeting, (i) those
director nominees receiving the most votes (a "plurality") will be elected and
(ii) the affirmative vote of the holders of at least a majority of the shares of
Common Stock, Series A Stock and Series B Stock (each of the Series A Stock and
Series B Stock voting on an as-if-converted basis as determined above) voting as
a single class represented at the meeting is required to (a) approve Proposal
No. 1, the adoption of the First Amended and Restated 2000 Stock Incentive Plan
(a copy of the First Amended and Restated 2000 Stock Incentive Plan is attached
hereto as Appendix A) which increases the number of shares reserved for issuance
from 350,000 under the 2000 Plan to 1,100,000 shares of Common Stock, (b)
approve Proposal No. 2, the convertibility into Common Stock of Series A Stock
held by certain officers and directors of the Company, (c) approve Proposal No.
3, the ratification of the Board's selection of Deloitte & Touche LLP as our
independent auditors and (d) approve any other matters that may properly come
before the Annual Meeting.
All properly completed Proxy Cards that are received by us, and not
revoked, prior to the voting will be voted at the Annual Meeting in accordance
with the instructions indicated on those proxies. If you sign your Proxy Card
but fail to direct how to vote your shares, then your shares will be voted in
favor of the slate of directors proposed by the Board listed herein, in favor of
the proposals recommended by the Board, and any other matters properly brought
before the Annual Meeting will be voted in accordance with the judgment of your
proxy representative, Mr. T. Stephen Thompson. If you mark the appropriate box
on the attached Proxy Card to abstain from voting, then your shares will be
counted for purposes of obtaining a quorum but will not be voted in favor of any
matter; abstentions therefor have the effect of a vote against any proposal
other than the election of directors.
The term "broker non-votes" refers to shares held by a broker in
street name that are present by proxy but are not voted on a matter pursuant to
the rules prohibiting brokers from voting on non-routine matters without
instruction from the beneficial owner of the shares. If a broker returns a
"non-vote" proxy, then the shares represented by such proxy will be counted for
the purpose of determining the presence of a quorum. Brokers who do not receive
a stockholder's instructions are entitled to vote such stockholder's shares for
the election of directors and for Proposal No. 3, ratification of the Board's
selection of Deloitte & Touche LLP as the Company's independent auditors for the
fiscal year ending March 31, 2003. Broker "non-votes" will have no effect on the
outcome of the election of directors because the five directors receiving the
most "for" votes will be elected.
ELECTION OF DIRECTORS
Your vote is requested in favor of five directors to serve until the
next annual meeting of stockholders and until their successors are elected and
qualified or their earlier
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resignation, removal, disqualification or death. The Board has selected the
following five persons as nominees: T. Stephen Thompson, Harvey R. Colten, M.D.,
Eric L. Sorkin, Cecilia Chan and Frederick W. Wackerle. If you sign and return
your Proxy Card, your shares shall be voted for the director slate nominated by
our Board except to the extent that you list the name or names of those nominees
for whom you withhold authority.
Each of the nominees has indicated a willingness to serve. Should
any of the nominees become unavailable prior to the Annual Meeting, your proxy
representative will vote your shares for the person or persons recommended by
the Board.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
BOARD'S NOMINEES FOR DIRECTOR.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth, as of September 27, 2002, certain
information regarding the beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of our
Common Stock based upon the most recent information available to us for (i) each
person known by us to own beneficially more than five (5%) percent of the
outstanding Common Stock, (ii) each director, (iii) each of our executive
officers whose total annual salary and bonus compensation exceeded $100,000 for
the fiscal year ended March 31, 2002 and (iv) all executive officers and
directors as a group. Except as otherwise indicated, each listed stockholder
directly owned his or its shares and had sole voting and investment power.
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK OUTSTANDING SHARES
NAME AND ADDRESS BENEFICIALLY OWNED (1) OF COMMON STOCK
---------------------------------- ---------------------- ------------------
T. Stephen Thompson (2) 387,757 shares 5.04%
c/o Immtech International, Inc.
150 Fairway Drive, Ste. 150
Vernon Hills, IL 60061
Cecilia Chan (3) 235,093 shares 2.99%
c/o Immtech International, Inc.
One North End Ave.
New York, NY 10282
Gary C. Parks (4) 43,504 shares 0.57%
c/o Immtech International, Inc.
150 Fairway Drive, Ste. 150
Vernon Hills, IL 60061
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NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK OUTSTANDING SHARES
NAME AND ADDRESS BENEFICIALLY OWNED (1) OF COMMON STOCK
---------------------------------- ---------------------- ------------------
Harvey Colten, MD (5) 16,006 shares 0.21%
c/o Office of the Dean
Columbia University
College of Physicians and Surgeons
630 West 168th Street
New York, NY 10032
Eric L. Sorkin (6) 285,049 shares 3.62%
c/o Immtech International, Inc.
One North End Ave.
New York, NY 10282
Frederick W. Wackerle(7) 71,422 shares 0.93%
3750 N. Lake Shore Drive
Chicago IL 60613
All executive officers and 1,038,831 shares 12.63%
directors as a group (6 persons)
James Ng (8) 452,800 shares 5.59%
c/o RADE Management Corporation
New York Mercantile Exchange
Box 415
New York, NY 10282
Criticare Systems, Inc. (9) 456,374 shares 5.97%
20925 Crossroads Circle
Waukesha, WI 53186
Johnson Matthey Public Limited 423,750 shares 5.54%
Company (10)
2-4 Cockspur Street
Trafalgar Square
London SW1Y 5BQ
United Kingdom
Matthey Holdings Limited (10) 423,750 shares 5.54%
2-4 Cockspur Street
Trafalgar Square
London SW1Y 5BQ
United Kingdom
5
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK OUTSTANDING SHARES
NAME AND ADDRESS BENEFICIALLY OWNED (1) OF COMMON STOCK
---------------------------------- ---------------------- ------------------
Matthey Finance Ltd. (10) 423,750 shares 5.54%
2-4 Cockspur Street
Trafalgar Square
London SW1Y 5BQ
United Kingdom
Johnson Matthey Investments, 423,750 shares 5.54%
Ltd. (10)
2-4 Cockspur Street
Trafalgar Square
London SW1Y 5BQ
United Kingdom
Johnson Matthey America Holdings 423,750 shares 5.54%
Limited (10)
2-4 Cockspur Street
Trafalgar Square
London SW1Y 5BQ
United Kingdom
Johnson Matthey Holdings, 423,750 shares 5.54%
Inc. (10)
c/o Organization Service Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Johnson Matthey Investments, 423,750 shares 5.54%
Inc. (10)
c/o Organization Service Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Johnson Matthey Pharmaceutical 423,750 shares 5.54%
Materials, Inc. (10)
c/o Organization Service Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Pharm-Eco Laboratories, Inc. (10) 423,750 shares 5.54%
460 East Swedesford Road
Suite 2000
Wayne, PA 19087
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(1) Unless otherwise indicated below, the persons in the above table have sole
voting and investment power with respect to all shares beneficially owned by
them, subject to applicable community property laws.
(2) Includes 281,941 shares of Common Stock; 45,249 shares of Common Stock upon
the conversion of Series A Stock (Series A Stock may not be converted to Common
Stock without shareholder approval but is included herein because Series A Stock
may be voted on all matters as if converted), and 12,500 shares of Common Stock
upon the conversion of Series B Stock; 25,000 shares of Common Stock issuable
upon the exercise of warrants as follows: warrant to purchase 20,000 shares of
Common Stock at $6.00 per share by February 14, 2007 only after the Series A
Stock has been converted, and warrant to purchase 5,000 shares of Common stock
at $6.125 per share by September 25, 2007; and 23,067 shares of Common Stock
issuable upon the exercise of options as follows: option to purchase 8,872
shares of Common Stock at $0.46 per share by March 21, 2006, and option to
purchase 14,195 shares of Common Stock at $1.74 per share by April 16, 2008.
(3) Includes 2,000 shares of Common Stock; 5,781 shares of Common Stock upon the
conversion of Series B Stock, and 227,312 shares of Common Stock issuable upon
the exercise of warrants as follows: warrant to purchase 51,923 shares of Common
Stock at $6.47 per share by July 24, 2004, warrant to purchase 173,077 shares of
Common Stock at $6.47 per share by October 12, 2004, and warrant to purchase
2,312 shares of Common Stock at $6.125 per share by September 25, 2007.
(4) Includes 21,602 shares of Common Stock; 2,262 shares of Common Stock upon
the conversion of Series A Stock (Series A Stock may not be converted to Common
Stock without shareholder approval but is included herein because Series A Stock
may be voted on all matters as if converted); 1,000 shares of Common Stock
issuable upon the exercise of warrants as follows: warrant to purchase 1,000
shares of Common Stock at $6.00 per share by February 14, 2007 only after the
Series A Stock has been converted; and 18,640 shares of Common Stock issuable
upon the exercise of options as follows: vested options to purchase 14,195
shares of Common Stock at $1.74 per share by April 16, 2008, and 4,445 vested
options to purchase 10,000 shares of Common Stock at $10.00 per share by July
19, 2011.
(5) Includes 1,088 shares of Common Stock and 14,918 shares of Common Stock
issuable upon the exercise of options as follows: 2,139 vested options to
purchase 7,000 shares of Common Stock at $4.75 per share by December 18, 2006,
and 12,779 vested options to purchase 20,000 shares of Common Stock at $10.50
per share by December 28, 2005.
(6) Includes 24,687 shares of Common Stock; 20,362 shares of Common Stock upon
the conversion of Series A Stock (Series A Stock may not be converted to Common
Stock without shareholder approval but is included herein because Series A Stock
may be voted on all matters as if converted); 234,000 shares of Common Stock
issuable upon the exercise of warrants as follows: warrant to purchase 51,923
shares of Common Stock at $6.47 per share by July 24, 2004, warrant to purchase
173,077 shares of Common Stock at $6.47 per share by October 12, 2004, and
warrant to purchase 9,000 shares of Common Stock at $6.00 per share by February
14, 2007 only after the Series A Stock has been converted; and 6,000 vested
options to purchase 27,000 shares of Common Stock at $4.75 per share by December
18, 2006.
(7) Includes 30,124 shares of Common Stock; 13,575 shares of Common Stock upon
the conversion of Series A Stock (Series A Stock may not be converted to Common
Stock without shareholder approval but is included herein because Series A Stock
may be voted on all matters as if converted); 6,000 shares of Common Stock
issuable upon the exercise of warrants as follows: warrant to purchase 6,000
shares of Common Stock at $6.00 per share by February 14, 2007 only after the
Series A Stock has been converted; and 21,723 shares of Common Stock issuable
upon the exercise of options as follows: option to purchase 15,000 shares of
Common Stock at $10.50 per share by December 28, 2005, and 6,723 vested options
to purchase 22,000 shares of Common Stock at $4.75 per share by December 18,
2006.
(8) Includes 2,800 shares of Common Stock and 320,000 shares of Common Stock
issuable upon the exercise of warrants as follows: warrant to purchase 73,845
shares of Common Stock at $6.47 per share by July 24, 2004, and warrant to
purchase 246,155 shares of Common Stock at $6.47 per share by October 12, 2004.
As beneficial owner of RADE Management Corporation ("RADE"), includes 130,000
shares of Common Stock issuable upon the exercise of warrants as follows:
warrant to purchase 30,000 shares of Common Stock at $6.47 per share by July 24,
2004, and warrant to purchase 100,000 shares of Common Stock at $6.47 per share
by October 12, 2004.
(9) Includes 456,374 shares of Common Stock. Criticare Systems, Inc. (NASDAQ:
CXIM) designs, manufacturers and markets globally patient monitoring systems and
noninvasive sensors for a wide range of hospitals and alternate health care
environments.
7
(10) Pharm-Eco Laboratories is deemed to have acquired 423,750 shares of Common
Stock on April 20, 2001. Johnson Matthey Public Limited Company is the ultimate
parent company of Johnson Matthey Holdings Limited, Matthey Finance Ltd.,
Johnson Matthey Investments, Ltd., Johnson Matthey America Holdings Limited,
Johnson Matthey Holdings, Inc., Johnson Matthey Investments, Inc., Johnson
Matthey Pharmaceutical Materials, Inc., and Pharm-Eco Laboratories, Inc.
According to a Schedule 13G filed by Johnson Matthey Public Limited Company, the
aforementioned companies are members of a group, each of which has shared voting
power and may be deemed to be beneficial owners of the shares of Common Stock.
INFORMATION ABOUT THE NOMINEES, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The tables below set forth the names and ages of our directors,
executive officers and key employees, as well as the positions and offices held
by such persons. A summary of the background and experience of each of these
individuals is set forth after the table.
NAME AGE POSITION WITH IMMTECH
---------------------- --- ------------------------------------------------
T. Stephen Thompson 55 Director, President and Chief Executive Officer
Harvey R. Colten, M.D. 63 Director
Eric. L Sorkin 42 Director
Cecilia Chan 39 Director and Executive Vice President
Frederick W. Wackerle 63 Director
--------------------------------------------------------------------------------
NAME AGE POSITION WITH IMMTECH
---------------------- --- ------------------------------------------------
Gary C. Parks 52 Treasurer, Secretary and Chief Financial Officer
T. Stephen Thompson, President, Chief Executive Officer and
Director. Mr. Thompson has served as a Director since 1991. He joined Immtech in
April 1991 from Amersham Corporation, where he was President and Chief Executive
Officer. He was responsible for Amersham Corporation's four North American
divisions: Life Sciences, Radiopharmaceuticals, Diagnostics and Quality and
Safety Products. In addition, he had direct responsibility for the Clinical
Reagent (in vitro diagnostic) Division in the United Kingdom. He was employed by
Amersham Corporation from 1986 to 1991. Mr. Thompson has 20 years' experience in
healthcare with previous positions as president of a small diagnostic start-up,
General Manager of the Infectious Disease and Immunology Business Unit in the
Diagnostic Division of Abbott Laboratories from 1981 to 1986, and Group
Marketing Manager for the Hyland Division of Baxter International Inc. from 1978
to 1981. Mr. Thompson is a member of the Board of Directors of Matritech, Inc.
(Nasdaq: NMPS). Mr. Thompson holds a B.S. from the University of Cincinnati and
an M.B.A. from Harvard University.
Harvey R. Colten, M.D., Director. Dr. Colten is currently Vice
President and Senior Associate Dean for Translational Research at Columbia
University Health Sciences Division and College of Physicians and Surgeons. From
2000 until 2002, he served as Chief Medical Officer at iMetrikus, Inc., a
healthcare Internet company focused on improving the communication between the
patient, physician and the medical industry. From 1997 to 2000, he was the Dean
of the Medical School and Vice President for Medical Affairs at Northwestern
University. He previously served as the Harriet B. Spoehrer Professor and Chair
of the
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Department of Pediatrics and Professor of Molecular Microbiology at Washington
University School of Medicine in St. Louis, Missouri, whose faculty he joined in
1986. He earned a B.A. at Cornell in 1959, an M.D. from Western Reserve
University in 1963, and an M.A. (honorary) from Harvard in 1978. He is a member
of the American Society for Clinical Investigation, the Society for Pediatric
Research, the Association of American Physicians, the American Pediatric
Society, the American Association of Immunologists (former secretary and
treasurer) and the American Society for Biochemistry and Molecular Biology. He
is also a Fellow of the American Association for the Advancement of Science, the
American Academy of Allergy and Immunology and the American Academy of
Pediatrics. Dr. Colten is a Diplomat of the American Board of Pediatrics, served
on the American Board of Allergy and Immunology and was a member of the National
Heart, Lung, and Blood Institute Advisory Council and serves on the Board of
Directors of the Oasis Institute and the March of Dimes Scientific Advisory
Council, in addition to many other Federal and private health groups that advise
on scientific and policy issues. He also served as Vice Chairman of the Board of
Directors of Parents as Teachers National Center. Dr. Colten has been on
editorial boards and advisory committees of several leading scientific and
medical journals, including the New England Journal of Medicine, Journal of
Clinical Investigation, Journal of Pediatrics, Journal of Immunology, Annual
Review of Immunology, Proceedings of the Association of American Physicians and
American Journal of Respiratory Cell and Molecular Biology.
Eric L. Sorkin, Director. Mr. Sorkin is a private investor. Prior to
1994, Mr. Sorkin worked for eleven years at Dean Witter Realty Inc., a
wholly-owned subsidiary of Morgan Stanley, which grew to hold an investment
portfolio of real estate and other assets of over $3 billion. He became a
Managing Director of Dean Witter Realty in 1988 and was responsible for the
acquisition, structuring and debt placement of various investments, including
real estate, fund management and asset backed securities. Mr. Sorkin managed
Dean Witter Realty's retail (shopping center) portfolio of over 2 million square
feet, and participated in the development of office, residential, industrial and
retail property and in the acquisition of over 5 million square feet of
properties. He is a graduate of Yale University with a B.A. in Economics.
Cecilia Chan, Director and Executive Vice President. Ms. Chan worked
as a consultant to Immtech from 1997 to 1999, joined the Company as an employee
and officer in 1999 and was appointed to Immtech's Board in November of 2001. As
Executive Vice President, she is responsible for strategic and business
development, evaluating and creating joint venture opportunities and licensing
developments, in addition to directing Immtech's capital resources as Immtech
advances through its various stages of development. Prior to joining Immtech,
Ms. Chan was a Vice President at Dean Witter Realty Inc. until 1993. During her
eight years at that firm, Ms. Chan completed over $500 million in investments
and served as Vice President in publicly traded partnerships with assets
totaling over $800 million. She graduated from New York University in 1985 with
a B.S. in International Business.
Frederick W. Wackerle, Director. Mr. Wackerle is an author, private
investor and President of Fred Wackerle, Inc. He has been an advisor to CEOs and
boards of directors and an executive search consultant for the past thirty-five
years. Mr. Wackerle specializes in advising corporate boards on management
succession and the recruiting of Chief Executive Officer (CEO) positions. In the
past ten years, he devoted a significant amount of his time to investing in and
advising biotechnology companies on succession planning and recruited CEO
candidates and
9
board members for companies that include Biogen, Inc., ICOS Corp., Amylin
Pharmaceuticals, Inc., Enzon, Inc., Medtronic Inc. and Ventana Medical Systems.
Mr. Wackerle frequently writes management articles for Chicago Crain's Business,
recently completed a book on management succession entitled "The Right
CEO-Straight Talk About Making CEO Selection Decisions" (Jossey-Bass), and is a
graduate of Monmouth College where he has been active on its Board of Trustees.
He is also a board member of The Rehabilitation Institute of Chicago.
Gary C. Parks, Treasurer, Secretary and Chief Financial Officer.
Mr. Parks joined Immtech in January 1994, having previously served at Smallbone,
Inc. from 1989 until 1993, where he was Vice President, Finance. Mr. Parks
served as Division Controller with International Paper from 1986 to 1989 and
prior to that he was Vice President, Finance of SerckBaker, Inc., a subsidiary
of BTR plc and a board member of SerckBaker de Venezuela from 1982 to 1986.
Mr. Parks holds a B.A. from Principia College and an M.B.A. from the University
of Michigan.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held four meetings during the last fiscal year and took
action by unanimous written consent on one occasion. Each director attended 75%
or more of the aggregate number of Board meetings and Board committees on which
he or she served that were held during the period. There are no arrangements
between any director or executive officer and any other person pursuant to which
the director or officer is to be selected as such. There is no family
relationship between the directors, executive officers or persons nominated or
appointed by the Board to become directors or executive officers.
All of our directors will serve until the next annual meeting of
stockholders and until their successors have been duly elected and qualified or
their earlier resignation, removal, disqualification or death.
The Board currently has two standing committees: the Audit Committee
and the Compensation Committee. The Audit Committee met on four occasions and
the Compensation Committee met on one occasion during the fiscal year ended
March 31, 2002.
The principal functions of the Audit Committee are to make
recommendations to the Board concerning the engagement of independent public
auditors, to monitor and review the quality and activities of the internal audit
functions and those of our independent auditors and to monitor the adequacy of
the Company's operating and internal controls as reported by management and the
independent auditors. The Audit Committee is composed of three independent
directors and operates under a written charter adopted by the Board. The present
members of the Audit Committee are Eric L. Sorkin, Chairman, Harvey R. Colten,
M.D. and Frederick W. Wackerle, all of whom meet the independence requirements
of Rule 4200(a)(14) of the Nasdaq Stock Market, Inc. ("Nasdaq") listing
standards. The Audit Committee charter was filed as an exhibit to our year 2001
proxy statement.
10
--------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
The members of the Audit Committee have been appointed by the board
of directors. The Audit Committee is governed by a charter, which has been
approved and adopted by the board of directors and which will be reviewed and
reassessed annually by the Audit Committee. The Audit Committee is comprised of
three independent directors.
The following Audit Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this Audit Committee Report by reference therein.
The Audit Committee assists the board of directors in fulfilling its
oversight responsibilities by reviewing (i) the financial reports and other
financial information provided by the Company to any governmental body or to the
public, (ii) the Company's systems of internal controls regarding finance,
accounting, legal compliance and ethics and (iii) the Company's auditing,
accounting and financial reporting processes.
The Audit Committee discussed and reviewed with the independent
auditors all communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Audit Committee has received from and discussed
with the independent auditors their written disclosure and letter regarding
their independence from the Company as required by Independence Standards Board
Standard No. 1.
Management is responsible for the preparation and integrity of the
Company's financial statements and the independent auditors are responsible for
the examination of those statements. The Audit Committee reviewed the Company's
quarterly reports on Form 10-Q and audited financial statements for the year
ended March 31, 2002, and met with both management and the Company's independent
auditors to discuss those quarterly reports and financial statements.
Based upon these reviews and discussions, the Audit Committee has
recommended to the board of directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended March
31, 2002.
Respectfully submitted,
The Audit Committee October 21, 2002
Eric L. Sorkin, Chairman
Harvey R. Colten, M.D.
Frederick W. Wackerle
--------------------------------------------------------------------------------
11
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table. The following table sets forth certain
information regarding the compensation of our Chief Executive Officer, Executive
Vice President and Chief Financial Officer for the fiscal years ended March 31,
2000, 2001 and 2002.
Annual Long-Term
Compensation Compensation
------------ ----------------
Name & Principal Position Year Salary ($) Options/SARs (#)
------------------------------------- ---- ------------ ----------------
T. Stephen Thompson 2002 $150,000 0
President, Chief Executive Officer 2001 $150,000 0
and Director 2000 $143,750 0
Cecilia Chan 2002 $120,000 0
Executive Vice President and 2001 $ 75,000 0
Director 2000 $ 45,000 0
Gary C. Parks 2002 $125,000 10,000(1)
Secretary, Treasurer and Chief 2001 $125,000 0
Financial Officer 2000 $120,833 0
----------
(1) On July 20, 2001, Mr. Parks was issued options to purchase 10,000 shares of
Common Stock at an exercise price of $10.00 per share. Such options vest over
three years and expire ten years after date of grant.
Options/SAR Grants in Last Fiscal Year. The following table sets
forth certain information with respect to grants made by the Company of stock
options to the executive officers named above during the fiscal year ended March
31, 2002. No stock appreciation rights ("SARs") were granted to the named
executive officers during such year.
Individual Grants
Number of Percent of Total
Securities Options Granted Exercise of
Underlying To Employees In Base Price Grant Date Present
Name Options Granted Fiscal Year ($/Sh.) Expiration Date Value ($)
------------------- --------------- ---------------- ------------ --------------- ------------------
T. Stephen Thompson 0 N/A N/A N/A N/A
Cecilia Chan 0 N/A N/A N/A N/A
Gary C. Parks 10,000 28.8% $10.00 7/19/2011 0
Aggregate Option/Warrant Exercises in Year Ended March 31, 2002 and
Option/Warrant Values at March 31, 2002. The following table sets forth certain
information with respect to option and warrant exercises and values of the named
executive officers for the fiscal year ended March 31, 2002.
12
Value of Unexercised
Number of Unexercised In-the Money Options at
Options At March 31, 2002 March 31, 2002(1)
--------------------------- ------------------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------------------- ------------ -------- ----------- ------------- ----------- -------------
T. Stephen Thompson 13,066 $58,274(1) 23,067 20,000 $81,941(2) 0
Cecilia Chan 0 0 225,000 0 0 0
Gary C. Parks 14,195 61,536(3) 16,140 9,055 43,436(4) 0
(1) Based on the March 28, 2002, market value of $4.80 per share, minus the
average per share exercise price of $0.34, multiplied by the number of shares
underlying the option/warrant.
(2) Based on the March 28, 2002, market value of $4.80 per share, minus the
average per share exercise price of $1.25, multiplied by the number of shares
underlying the option/warrant.
(3) Based on the March 28, 2002, market value of $4.80 per share, minus the
average per share exercise price of $0.46, multiplied by the number of shares
underlying the option/warrant.
(4) Based on the March 28, 2002, market value of $4.80 per share, minus the
average per share exercise price of $1.74, multiplied by the number of shares
underlying the option/warrant.
EMPLOYMENT AGREEMENTS
Immtech entered into an employment agreement with Mr. Thompson in
1992 pursuant to which we retained Mr. Thompson as our President and Chief
Executive Officer for an annual base salary of $150,000 (subject to annual
adjustment by the Board), plus certain fringe benefits and reimbursement for
related business expenses. The agreement, which includes confidentiality and
non-disclosure provisions, also grants to Mr. Thompson the right to receive an
annual bonus to be established by the Board in an amount not to exceed 60% of
Mr. Thompson's annual base salary for the year, which Mr. Thompson has declined
for each year to date. Mr. Thompson may accept bonus awards in future years but
will not be paid a bonus for years previously declined. If the Company breaches
the agreement or Mr. Thompson is terminated without cause, he is entitled to all
payments which he would otherwise accrue over the greater of nine months from
the date of termination or the remaining term under the agreement. The original
term of Mr. Thompson's agreement expired on May 11, 1999, and is subject to
automatic successive one-year renewals unless terminated by either party upon 30
days' notice. In the event Mr. Thompson's employment with the Company is
terminated for any reason, he is restricted from competing with the Company in
any business in which the Company (i) is engaged at that time (ii) is planning
to become engaged and has made significant monetary investment in order to be
engaged or (iii) was engaged at any time during his employment. The non-compete
restriction period is 12 months from the date of Mr. Thompson's voluntary
termination or an involuntary termination for cause, or for a period of nine
months from the date of an involuntary termination, not for cause.
Except for $12,500 paid to Mr. Thompson during the fiscal year ended
March 31, 1998, Mr. Thompson waived any right to receive salary due under his
employment agreement prior to June 30, 1998. Beginning July 1, 1998, and
continuing until April 30, 1999, Mr. Thompson accepted one-half of his annual
salary as full satisfaction of the salary obligation under his employment
agreement. Effective May 1, 1999, Mr. Thompson resumed his full salary
13
rate of $150,000 per annum under his employment agreement, but will not be paid
amounts previously waived or declined.
DIRECTOR COMPENSATION FOR FISCAL YEAR ENDED MARCH 31, 2002
Each independent director is generally granted 15,000 options to
purchase shares of Common Stock upon joining the Board, 5,000 options for each
additional year of Board service and 1,000 options per year for each Board
committee appointment. Options are granted at fair market value on the date of
grant and generally have a five-year term and vest over three years. Directors
must remain on the Board for such options to continue to vest.
Mr. Frederick W. Wackerle was granted an aggregate of 22,000 options
to purchase shares of Common Stock during the fiscal year ended March 31, 2002.
He received (i) 15,000 options for joining our Board, (ii) 5,000 options for one
year's service on the Board and (iii) 2,000 options for Board committee
appointments, 1,000 each for one-year appointment to our Audit Committee and
Compensation Committee. All such options have an exercise price of $4.75, an
exercise period of five years and vest over three years.
Mr. Eric L. Sorkin was granted an aggregate of 22,000 options to
purchase shares of Common Stock during the fiscal year ended March 31, 2002. He
received (i) 15,000 options for joining our Board, (ii) 5,000 options for one
year's service on the Board and (iii) 2,000 options for Board committee
appointments, 1,000 each for one-year appointment to our Audit Committee and
Compensation Committee. All such options have an exercise price of $4.75, an
exercise period of five years and vest over three years.
Dr. Harvey R. Colten was granted an aggregate of 7,000 options to
purchase shares of Common Stock. He received (i) 5,000 options for one year's
service on the Board and (ii) 2,000 options for Board committee appointments,
1,000 each for one-year appointment to our Audit Committee and Compensation
Committee. All such options have an exercise price of $4.75, an exercise period
of five years and vest over three years.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is composed of three independent
directors of the Board. The members of the Compensation Committee are Frederick
W. Wackerle, Chairman, Harvey R. Colten, M.D., and Eric L. Sorkin.
14
--------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of three independent,
non-employee directors. It is the Compensation Committee's responsibility to:
o Make recommendations and report to the board of directors concerning
matters of executive compensation,
o Administer the Company's 2000 Plan, as amended,
o Review compensation plans, programs and policies, and
o Monitor the performance and compensation of executive officers.
The goal of the Company's executive compensation policy is to ensure
that an appropriate relationship exists between executive compensation and the
creation of stockholder value, while at the same time attracting, motivating and
retaining senior management. The Compensation Committee's informal executive
compensation philosophy (which applies generally to all Company management,
including the Chief Executive Officer) considers a number of factors, which may
include:
o Providing levels of compensation competitive with companies at a
comparable stage of development and in the Company's geographic
area,
o Integrating management's compensation with the achievement of
performance goals, and
o Recognizing and providing incentive for individual initiative and
achievement.
The compensation structure of the Company's executive officers,
including its Chief Executive Officer, is based on competitive, market-based pay
practices and performance evaluations, and generally includes a combination of
base salary, discretionary bonuses and stock options. In setting compensation
levels, the Compensation Committee considers data regarding compensation
practices from a group of biotechnology and pharmaceutical companies that are
believed to be generally comparable to the Company. The companies comprising
this group are not necessarily included within the peer group index reflected in
the performance graph illustrated in this Proxy Statement. In setting our Chief
Executive Officer's salary, we applied the same policy as applied in setting the
compensation of our other executive officers. Our Chief Executive Officer's base
salary for the most recent fiscal year was $150,000 and he received no bonuses
or stock option awards in this fiscal year.
Base salary is not targeted at any particular level within the group
of companies considered. Instead, total salary is determined based on a
subjective assessment of the executive's performance and the Company's needs.
Consistent with its belief that equity ownership by senior management is
beneficial in aligning the interests of senior management with those of the
stockholders, the Company provides potentially significant long-term incentive
opportunities to its senior management through discretionary grants of stock
options, thereby emphasizing the potential creation of long-term stockholder
value. The Compensation Committee considers stock options effective long-term
incentives because an executive can profit only if the value of the Common Stock
increases. In making these grants, the Compensation Committee considers its
subjective assessment of the Company's future prospects, an executive officer's
current level of ownership of the Common Stock, the period during which an
executive officer has been in a key position with the Company, individual
performance and competitive practices within the comparative group of companies.
--------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------
Section 162(m) of the Internal Revenue Code generally denies a
deduction to any publicly held corporation for compensation paid to its chief
executive officer and its four other highest-paid executive officers to the
extent that any such individual's compensation exceeds $1 million, subject to
certain exceptions. The Compensation Committee intends to take actions to
minimize the Company's exposure to nondeductible compensation expense under
Section 162(m). While keeping this goal in mind, the Compensation Committee also
will try to maintain the flexibility that the Committee believes to be an
important element of the Company's executive compensation program.
The Compensation Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this Compensation Committee Report by reference
therein.
Respectfully submitted,
The Compensation Committee October 21, 2002
Frederick W. Wackerle, Chairman
Harvey R. Colten, M.D.
Eric L. Sorkin
--------------------------------------------------------------------------------
PERFORMANCE GRAPH
-----------------
[GRAPHIC OMITTED]
16
TOTAL RETURN TO SHAREHOLDER'S
(DIVIDENDS REINVESTED MONTHLY)
ANNUAL RETURN PERCENTAGE
YEARS ENDING
COMPANY NAME / INDEX MAR 00 MAR 01 MAR 02
Immtech International, Inc. 182.50 -79.65 -16.52
S&P 500 Index 11.47 -21.68 0.24
Peer Group 160.06 -58.88 -22.00
INDEXED RETURNS
BASE YEARS ENDING
PERIOD
COMPANY NAME / INDEX 26-APR-99 MAR 00 MAR 01 MAR 02
Immtech International, Inc. 100 282.50 57.50 48.00
S&P 500 Index 100 111.47 87.31 87.52
Peer Group 100 260.06 106.95 83.42
PEER GROUP COMPANIES
Cubist Pharmaceuticals, Inc. (NASDAQ: CBST)
EntreMed, Inc. (NASDAQ: ENMD)
Texas Biotechnology Corporation (NASDAQ: TXBI)
Triangle Pharmaceuticals, Inc. (NASDAQ: VIRS)
PROPOSAL NO. 1 - AMENDMENT OF OUR 2000 STOCK INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES FOR WHICH AWARDS MAY BE GRANTED THEREUNDER FROM 350,000 TO
1,100,000 SHARES
In order to ensure that sufficient shares are available for options
over the next few years, the Board has voted to approve, and recommends the
stockholders ratify, an amendment to the Company's 2000 Stock Incentive Plan
(the "2000 Plan") which increases the number of shares of Common Stock reserved
for issuance from 350,000 under the 2000 Plan to 1,100,000 shares, subject to
adjustment for stock splits, stock dividends and certain other transactions
affecting our capital stock. A copy of the First Amended and Restated 2000 Stock
Incentive Plan is included as Appendix A to this Proxy Statement.
The 2000 Plan enables us to offer competitive compensation to
attract and retain top quality personnel, to provide an incentive to achieve
long-range performance goals and to enable participation in our long-term
growth. Stock options granted under the 2000 Plan are a significant element of
compensation for our Company, as they are in the pharmaceutical industry
generally. The Board believes that it is essential for our future strength to
continue to offer competitive equity compensation to eligible persons.
The 2000 Plan permits the grant of incentive and nonqualified stock
options and restricted stock award (collectively, "Awards") to our employees,
directors, consultants, advisors and other eligible persons. No Awards other
than stock options have been granted to date. The 2000 Plan is administered by
the Compensation Committee of the Board, which determines the
17
persons to whom, and the times at which, Awards are granted, the type of Award
to be granted and all other related terms, conditions and provisions of each
Award. The Compensation Committee may delegate to one or more officers the power
to make Awards to employees who are not executive officers subject to the
reporting requirements of Section 16 of the Exchange Act. The 2000 Plan may be
amended or terminated at any time by the Board, subject to approval by the
stockholders, when such approval is deemed to be necessary or advisable by the
Board.
Although the Compensation Committee has discretion in granting
Awards, the exercise price of any incentive stock option ("ISO") may not be less
than 100% of the fair market value of our Common Stock on the date of the grant.
No ISO granted under the 2000 Plan is transferable by the optionee other than by
will or the laws of descent and distribution. Other Awards are transferable to
the extent provided by the Compensation Committee. The term of any ISO granted
under the 2000 Plan may not exceed ten years, and no ISO may be granted under
the 2000 Plan more than ten years from the 2000 Plan's adoption.
Options are generally granted subject to forfeiture restrictions
that lapse over time during the optionee's employment. Vested options are
generally cancelled if not exercised within a specified time after termination
of the optionee's employment.
OPTIONS GRANTED TO DATE UNDER THE 2000 PLAN AND SHARES AVAILABLE FOR FUTURE
GRANTS
As of June 30, 2002, we have granted options to purchase an
aggregate of 318,250 shares of Common Stock, of which 42,000 grants were
subsequently terminated and are again available for issuance pursuant to the
terms of the 2000 Plan. As of June 30, 2002, options to purchase 276,250 shares
were outstanding under the 2000 Plan, no shares have been issued upon exercise
of options granted under the 2000 Plan and there remain 73,750 shares available
under the 2000 Plan. Awards and shares reserved under the 2000 Plan are subject
to appropriate adjustment in the event of a stock split or other
recapitalization.
The Board considers our ongoing program of granting stock options to
be very important to our ability to compete for talent and a significant
incentive to promote our success and, therefore, is in the best interests of our
stockholders. If this proposal is not approved, the Board will reconsider its
approval of the First Amended and Restated 2000 Stock Incentive Plan.
EQUITY COMPENSATION PLANS
The table below sets forth information regarding securities
currently authorized for issuance under the Company's equity compensation plans.
18
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE AVAILABLE FOR FUTURE ISSUANCE
ISSUED UPON EXERCISE OF EXERCISE PRICE OF UNDER EQUITY COMPENSATION
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------------------- -------------------------- -------------------- ------------------------------
(a) (b) (c)
Equity compensation plans 505,474 (1) (2) $5.36 73,750 (3)
approved by security
holders
Equity compensation plans 0 n/a 0
not approved by
security holders
Total 505,474 (1) (2) $5.36 73,750 (3)
(1) Includes options to purchase 229,224 shares of Common Stock under the
Company's 1992 Stock Option Plan ("1992 Plan") and options to purchase
276,250 Common Stock under the 2000 Plan.
(2) Excludes 42,000 options to purchase Common Stock issued under the 2000
Plan that have terminated pursuant to their terms.
(3) No options are available for issuance under the 1992 Plan and options to
purchase 73,750 shares of Common Stock are available under the 2000 Plan.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF
THIS PROPOSAL NO. 1, WHICH IS TO RATIFY THE AMENDMENT OF THE 2000 PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE THEREUNDER FROM 350,000
TO 1,100,000 SHARES.
PROPOSAL NO. 2 - CONVERSION OF SERIES A STOCK HELD BY CERTAIN
OFFICERS AND DIRECTORS
Nasdaq Rule 4350(i)(1)(A) generally prohibits us, as a Nasdaq-listed
company, from entering into transactions with our directors or officers (other
than pursuant to warrants or rights issued generally to security holders of the
issuer or broadly based plans or arrangements offered to all employees) that
would result in any officer or director receiving more than 25,000 shares of
Common Stock without obtaining stockholder approval.
In private placements occurring on February 14, 2002, certain
officers and directors of the Company assisted us to raise capital to continue
our operations and to comply with Nasdaq SmallCap Market maintenance standards
by purchasing shares of Series A Stock and warrants to purchase Common Stock.
Those officers and directors participated in the private placement offerings at
the same price and on the same terms as unaffiliated investors after such price
and terms were established in arms'-length negotiations with unaffiliated
investors. Pursuant to Nasdaq rules, the participating officers and directors
were required to waive their rights to convert their Series A Stock into Common
Stock until such time as a majority of the shareholders approve or until they no
longer hold such positions with the Company. The table below sets forth the
names of and offices held by the officers and directors who participated, the
19
number of shares of Series A Stock (and shares of Common Stock therefore
convertible into) and warrants purchased, and the amounts paid therefore.
Increase in
Shares of Shares of Beneficial Total
Series A Common Stock Aggregate Ownership Resulting Beneficial
Stockholder and Company Stock Issuable upon Warrants Purchase from Conversion of Ownership
Affiliation Purchased Conversion Purchased Price Series A Stock if Approved
------------------------ --------- ------------- --------- --------- ------------------- -----------
T. Stephen Thompson 8,000 45,249 20,000 $200,000 0.59% 5.04%
President, Chief
Executive Officer and
Director
Eric L. Sorkin 3,600 20,362 9,000 $90,000 0.27% 3.62%
Director
Frederick W. Wackerle 2,400 13,575 6,000 $60,000 0.18% 0.93%
Director
Gary C. Parks 400 2,262 1,000 $10,000 0.03% 0.57%
Secretary, Treasurer and
Chief Financial Officer
--------- ------------- --------- ---------
Totals 14,400 81,448 36,000 $360,000
Key provisions of our Series A Stock are (i) a stated value of
$25.00, (ii) a $25.00 (plus accrued but unpaid dividends) liquidation
preference, (iii) an initial conversion rate of $4.42, which initially equals
5.6561 shares of Common Stock per share and which is subject to adjustment for
dilution protection, (iv) optional conversion rights into Common Stock on
demand, (v) anti-dilution protection and (vi) rights of participation. The
Series A Stock earns a 6% per annum dividend payable, at our option, in cash or
shares of Common Stock on each of April 15th and October 15th so long as the
Series A Stock remains outstanding. We have the right (i) to redeem for cash
some or all of the Series A Stock any time after 30 days' notice at the stated
value plus accrued and unpaid dividends (holders of Series A Stock (other than
the listed officers and directors, unless Proposal No. 2 is approved by the
shareholders) have the right to convert their Series A Stock to Common Stock
during the above-mentioned 30-day notice periods) or (ii) to convert some or all
of the Series A Stock (other than shares held by the named officers and
directors unless Proposal No. 2 is approved) into Common Stock upon 30 days'
notice any time after February 13, 2003 (x) at the stated value plus accrued and
unpaid dividends if the closing bid price for our Common Stock exceeds $9.00 for
20 consecutive "trading days" (days the principal exchange on which the Common
Stock is listed or traded is open for business or, if the Common Stock is no
longer listed or traded on an exchange, business days) within 180 days prior to
notice of conversion or (y), if the requirements of (x) are not met, at 110% of
the stated value plus accrued and unpaid dividends. A complete description of
the Series A Stock can be found in the Series A Stock Certificate of Designation
and Form of Regulation D Subscription Agreement filed as exhibits to our Current
Report on Form 8-K filed with the SEC via its Electronic Data Gathering And
Retrieval service ("EDGAR") on February 14, 2002.
The warrants (i) have an exercise price of $6.00 per share,
(ii) expire five years from the date of grant, (iii) may not be exercised until
all Series A Stock held by the initial holder is converted to Common Stock,
(iv) may be redeemed by us for cash at the price of $0.10 per underlying share
under certain conditions and (v) contain certain anti-dilution protections. A
20
Form of Warrant containing the complete warrant terms is filed as an exhibit to
our Current Report on Form 8-K filed with the SEC via EDGAR on February 14,
2002.
If stockholder approval is not obtained, then those officers and
directors will continue to hold the Series A Stock and the Company will be
prohibited from converting such Series A Stock into Common Stock when otherwise
permitted under the Series A Stock Certificate of Designation, thereby
preventing the Company from, among other things, terminating payment of
dividends on those shares.
The Board believes that providing for the conversion of the
outstanding Series A Stock into Common Stock is in the Company's best interest
because, among other benefits listed above, it will permit us to terminate the
payment of the 6% dividend and the Series A Stock liquidation preference, which
could make it easier for us to raise additional capital from third parties.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The named directors and executive officers hold shares of Series A
Stock. Approval of this proposal will permit the Company or those directors and
executive officers to convert the Series A Stock into Common Stock.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF
THIS PROPOSAL NO. 2, WHICH IS TO APPROVE THE ISSUANCE OF COMMON STOCK ISSUABLE
UPON CONVERSION OF SERIES A STOCK HELD BY THE NAMED OFFICERS AND DIRECTORS.
PROPOSAL NO. 3 - RATIFICATION OF AUDITORS
The Board has appointed the firm of Deloitte & Touche LLP, as
independent accountants, to be our independent auditors for the fiscal year
ending March 31, 2003, and recommends the stockholders vote for ratification of
that appointment. Deloitte & Touche LLP served in this capacity for the fiscal
year ended March 31, 2002.
The Board appoints our independent auditors annually and
subsequently requests ratification of such appointment by the stockholders at
the Company's annual meeting. The decision of the Board is based on the
recommendation of the Audit Committee, which reviews and approves in advance the
scope of the audit, the types of non-audit services that we will need and the
estimated fees for the coming year. The Audit Committee also reviews and
approves any non-audit services provided by our independent auditors to ensure
that any such services will not impair the independence of the auditors.
Before making its recommendation to the Board for appointment of
Deloitte & Touche LLP, the Audit Committee carefully considered that firm's
qualifications as independent auditors, which included a review of Deloitte &
Touche LLP's performance in prior years, as well as its reputation for integrity
and competence in the fields of accounting and auditing. The Audit Committee
expressed its satisfaction with Deloitte & Touche LLP in these respects.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF
THIS PROPOSAL NO. 3, WHICH IS THE RATIFICATION OF
21
DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
MARCH 31, 2003.
INDEPENDENT AUDITORS
Deloitte & Touche LLP acted as our independent auditors for the
fiscal years ended March 31, 1999 through March 31, 2002, and is selected by the
Board to continue for the current fiscal year. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting, with the
opportunity to make a statement should they desire to do so, and be available to
respond to appropriate questions.
Audit Fees
The estimated aggregate fees billed by Deloitte & Touche LLP for
professional services rendered for the audit of our annual financial statements
for the fiscal year ended March 31, 2002 and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for that fiscal year
were $103,258.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche LLP did not provide to us any services related to
financial information systems design and implementation during the fiscal year
ended March 31, 2002.
All Other Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for services
rendered to us, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees," for the fiscal
year ended March 31, 2002, were $45,583.
The Audit Committee has determined that the provision of such
non-audit services is compatible with maintaining the independence of the
independent auditors and has determined there is no conflict of interest.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require directors, executive officers and
beneficial owners of more than 10% of our Common Stock to file with the SEC
reports of their initial ownership and subsequent acquisitions, dispositions or
other transfers. We must disclose whether any person required to file such a
report may have failed to do so in a timely manner. To our knowledge and except
as previously reported, all of our directors, executive officers and beneficial
owners of more than 10% of our Common Stock subject to such reporting
obligations satisfied their reporting obligations for the fiscal year ended
March 31, 2002.
22
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of our Annual Report on Form 10-K for the fiscal year ended
March 31, 2002, including audited financial statements, accompanies this Notice
of Annual Meeting and Proxy Statement. No portion of the Annual Report on Form
10-K is incorporated herein or is considered to be proxy-soliciting material.
We will provide without charge additional copies of our Annual
Report on Form 10-k for the fiscal year ended March 31, 2002, to any stockholder
upon written request. Requests should be directed to Immtech International,
Inc., 150 Fairway Drive, Suite 150, Vernon Hills, Illinois 60061, attn: Mr. Gary
C. Parks.
SOLICITATION OF PROXIES
Our officers, directors and employees may solicit proxies from
stockholders. We pay no additional compensation to our officers, directors or
employees for such solicitation. Solicitations may be made personally, or by
mail, facsimile, telephone, telegraph or messenger. We may reimburse brokers and
other persons holding shares in their names or in the names of nominees for
expenses in sending proxy materials to beneficial owners and obtaining proxies
from such owners. All of the costs of solicitation of proxies will be paid by
Immtech.
OTHER MATTERS
The Board does not intend to bring any other business before the
meeting, and the Board is not currently aware of any other matters to be voted
on at the Annual Meeting except as disclosed in the Notice of Annual Meeting of
Stockholders. However, if any other matters are properly presented at the Annual
Meeting, those proxies granting such authority will be voted in respect thereof
in accordance with the judgment of the stockholders' proxy representative.
STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of stockholders intended to be included in the Proxy
Statement for the 2003 annual meeting of the stockholders must be received by us
not later than July 1, 2003, and must otherwise comply with applicable
requirements and laws. All notices or proposals, whether or not to be included
in our proxy materials, must be sent to our principal executive offices at 150
Fairway Drive, Suite 150, Vernon Hills, Illinois 60061.
Stockholders are urged to mark, sign, date and mail the proxy in the
enclosed envelope, postage for which has been provided for mailing in the United
States. Your prompt response is appreciated.
By order of the Board of Directors,
/s/ T. Stephen Thompson
----------------------------------------
T. Stephen Thompson
Chairman of the Board
Dated: October 21, 2002
23
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PROXY - IMMTECH INTERNATIONAL, INC.
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 15, 2002
The undersigned hereby appoints T. Stephen Thompson as true and lawful agent and
proxy ("Proxy") to represent the undersigned at the Annual Meeting of
Stockholders of Immtech International, Inc. ("Immtech"), at the Westin O'Hare,
6100 River Road, Rosemont, Illinois 60018, November 15, 2002, at 10:00 A.M. and
at any adjournment or postponement thereof, and authorizes said Proxy to vote
all shares of Immtech shown on the other side of this card with all the powers
the undersigned would possess if personally present thereat.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NAMED NOMINEES FOR DIRECTOR, "FOR" THE AMENDMENT TO OUR 2000 STOCK INCENTIVE
PLAN, "FOR" THE ISSUANCE OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE
COMPANY'S SERIES A CONVERTIBLE PREFERRED STOCK, "FOR" THE RATIFICATION OF THE
INDEPENDENT AUDITORS AND, WITH RESPECT TO ANY OTHER MATTERS PROPERLY BROUGHT
BEFORE THE ANNUAL MEETING, IN ACCORDANCE WITH THE JUDGMENT OF YOUR PROXY. THE
UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF IMMTECH DATED
OCTOBER 21, 2002, SOLICITING PROXIES FOR THE ANNUAL MEETING.
All previous proxies given by the undersigned to vote at the Annual Meeting or
at any adjournment or postponement thereof are hereby revoked.
{Continued and to be signed and dated on reverse side.)
P-1
000000 0000000000 0 0000
IMMTECH INTERNATIONAL, INC.
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2 000000000.000 ext
ADD 3
ADD 4
ADD 5 HOLDER ACCOUNT NUMBER
ADD 6 C 1234567890 J N T
[BAR CODE] [BAR CODE]
Use a black pen. Mark with [X] [ ] Mark this box with an X if you have made
an X inside the grey areas changes to your name or address details
as shown in this example. above.
--------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
--------------------------------------------------------------------------------
A - ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - T. Stephen Thompson [_] [_]
02 - Harvey Colten [_] [_]
03 - Eric L. Sorkin [_] [_]
04 - Cecilia Chan [_] [_]
05 - Frederick W. Wackerle [_] [_]
B - ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Approve an amendment to Immtech's 2000 Stock Incentive [_] [_] [_]
Plan to increase the number of shares of Common
Stock reserved for issuance thereunder from 350,000
shares to 1,100,000 shares.
3. Approve the issuance of Common Stock issuable [_] [_] [_]
upon conversion of the Company's Series A
Convertible Preferred Stock, $0.01 par value held by
certain officers and directors of Immtech.
4. Ratification of Deloitte & Touche LLP as [_] [_] [_]
independent auditors.
5. Other Matters [_] [_] [_]
Discretionary authority is hereby granted with
respect to such other matters as may properly
come before the meeting or any adjournment or
postponement thereof.
C - AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign exactly as your name appears herein. When signing as
Attorney, Administrator, Executor, Guardian or Trustee, please give your full
title as such. If a Corporation, please sign by President or other authorized
officer and indicate title. If shares are registered in the names of joint
tenants or trustees, each tenant or trustee is required to sign.
Signature 1 - Please keep signature within the box
--------------------------------------------------
| |
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Signature 2 - Please keep signature within the box Date (mm/dd/yy)
-------------------------------------------------- ---------------------------
| | | |
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P-2
APPENDIX A
FIRST AMENDED AND RESTATED
IMMTECH INTERNATIONAL INC.
2000 STOCK INCENTIVE PLAN
ARTICLE I
GENERAL
Section 1.01 Purpose. The purpose of the Plan is to enable the
Company to attract, retain and reward employees, directors and other individuals
who are providing significant services to the Company, by offering such
individuals an opportunity to have a greater proprietary interest in and a
closer identity with the Company and its financial success through the award of
Incentive Stock Options, Nonqualified Stock Options and Stock Awards.
Section 1.02 Effective Date. The Plan is effective as of March 30,
2000 (the "Effective Date") and shall remain in effect until terminated in
accordance with Article VIII; provided, however, in no event may an Incentive
Stock Option be granted under the Plan on or after the tenth anniversary of the
Effective Date.
Section 1.03 Participation. Subject to the terms and conditions of
the Plan, the Committee shall determine and designate, from time to time, from
among the employees, directors and other individuals providing material services
to the Company, those persons who will be granted one or more Awards under the
Plan, and thereby become Participants in the Plan.
In the discretion of the Committee, and subject to the terms of the
Plan, a Participant may be granted any Award permitted under the provisions of
the Plan, and more than one Award may be granted to a Participant. Except as
otherwise agreed by the Company and the Participant, or except as otherwise
provided in the Plan, an Award under the Plan shall not affect any previous
Award under the Plan or an award under any other plan maintained by the Company.
Section 1.04 Operation and Administration. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Article VI (relating to operation and
administration).
ARTICLE II
DEFINITIONS
When used in the Plan and initially capitalized, the following words
and phrases shall have the meanings indicated:
Section 2.01 "Award" means any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of
Incentive Stock Options, Nonqualified Stock Options and Stock Awards.
Section 2.02 "Board" means the Board of Directors of the Company.
A-1
APPENDIX A
Section 2.03 "Cause" means, in the reasonable judgment of the
Committee, a Participant's habitual intoxication, drug addiction, material
theft, proven dishonesty, gross misconduct, embezzlement, fraud, conviction of a
felony (whether or not connected with the employment relationship), disclosure
of material trade secrets or business information of the Company or use of the
facilities or premises of the Company for the conduct of unlawful or
unauthorized activities or transactions. The Committee's determination as to
whether Cause exists will be final and binding.
Section 2.04 "Code" means the Internal Revenue Code of 1986, as
amended.
Section 2.05 "Committee" means the Compensation Committee of the
Board of Directors. At any time the Board has not appointed such a Committee,
the Board shall act as the Committee under the Plan.
Section 2.06 "Common Stock" means common stock, $0.01 par value, of
the Company or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 6.02 of this Plan.
Section 2.07 "Company" means Immtech International, Inc., a Delaware
corporation, and any successor thereto or subsidiary thereof.
Section 2.08 "Disabled" or "Disability" means a physical or mental
disability which, in the reasonable judgment of the Committee based upon a
written opinion of a licensed physician who has been approved by the Committee,
renders the Participant permanently incapable, after reasonable accommodation,
of performing the duties of his or her position. For purposes of determining the
post-termination exercise period applicable to an Incentive Stock Option, the
term "Disability" shall mean permanent disability within the meaning of Code
Section 22(e)(3). A Participant shall not be considered Disabled unless the
Committee determines that the Disability arose prior to such Participant's
Termination Date.
Section 2.09 "Eligible Individual" means an employee of the Company
and any other person providing material services to the Company including,
without limitation, a person serving as a director, consultant, advisor or
independent contractor.
Section 2.10 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
Section 2.11 "Fair Market Value" means, as of any date with respect
to a share of Common Stock, the mean between the closing high bid and low asked
prices as reported by the Nasdaq SmallCap Market (or, if not so reported, by the
system then regarded as the most reliable source of such quotations); provided
that if there are not reported quotations on the given date, the value
determined using the reported quotations on the last previous date on which so
reported or the value determined in good faith by the Committee.
Section 2.12 "Incentive Stock Option" means an Option that is
intended to satisfy the requirements of an "incentive stock option" within the
meaning of Code Section 422.
A-2
APPENDIX A
Section 2.13 "Nonqualified Stock Option" means an Option that is not
an Incentive Stock Option.
Section 2.14 "Option" means an option to purchase shares of Common
Stock which is either an Incentive Stock Option or Nonqualified Stock Option.
Section 2.15 "Participant" means an Eligible Individual who is
granted an Award under the Plan.
Section 2.16 "Plan" means the Immtech International, Inc. 2000 Stock
Incentive Plan, as amended from time to time.
Section 2.17 "Retirement" means, with respect to a Participant, a
Termination Date which occurs due to retirement, as described in the retirement
policies of the Company. In the case of a Participant who is not an employee of
the Company, whether a Termination Date is for Retirement shall be determined by
the Committee, in its sole discretion. Until the Company institutes a retirement
policy, this provision links retirement to termination of employment after age
60 with at least 5 years of service with the Company.
Section 2.18 "Stock Award" means an incentive award made under the
Plan to an Eligible Individual in accordance with Article IV of the Plan.
Section 2.19 "Termination Date" means the date the Participant both
ceases to be an employee of the Company and ceases to perform services for the
Company, including, but not limited to, advisory or consulting services or
services as a member of the Board.
ARTICLE III
OPTION AWARDS
Section 3.01 Eligibility. The Committee shall determine and
designate from among the Eligible Individuals, those persons who shall be
granted Options and become Participants under the Plan and the number of shares
of Common Stock that shall be subject to each such Option.
Section 3.02 Terms and Conditions of Options. Options granted under
the Plan may be Incentive Stock Options or Nonqualified Stock Options, as
determined by the Committee in its sole discretion; provided, however, that no
Incentive Stock Option shall be awarded to any individual who is not an employee
of the Company. To the extent that an Option designated as an Incentive Stock
Option does not satisfy the requirements of Section 422 of the Code, it shall be
treated as a Nonqualified Stock Option. Each Option granted under the Plan shall
be subject to the following terms and conditions, and such other terms and
conditions as the Committee deems appropriate.
(a) Exercise Price. The price of each share of Common Stock subject
to an Option shall be determined by the Committee at the time the Option is
granted and, in the case of an Incentive Stock Option, shall not be less than
the Fair Market Value of a share of Common Stock on the date the Option is
granted.
A-3
APPENDIX A
(b) Vesting of Options. The exercise of an Option is contingent on
satisfaction of the vesting conditions, if any, established by the Committee
with respect to such Option at the time of grant. Such conditions may include,
but are not limited to, completion of a specified period of service or
achievement of performance goals. If the Committee determines that a Participant
has disclosed without the written consent of an authorized officer of the
Company, to any person not employed by or engaged to render services to the
Company, any material confidential information of the Company, or that the
Participant has engaged in material competition with the Company or in any
activities otherwise contrary to the best interests of the Company, the
Committee may cancel such Participant's outstanding Options, whether or not
vested.
(c) Expiration Date. Unless the Committee determines otherwise,
Options awarded under the Plan shall expire and no longer be exercisable on the
earliest to occur of:
(i) The ten-year anniversary of the date the Option was granted;
(ii) If the Participant's Termination Date occurs by reason of
death, Disability or Retirement, the first anniversary of such Termination
Date;
(iii) If the Participant's Termination Date occurs for reasons of
Cause, such Termination Date; or
(iv) If the Participant's Termination Date occurs for any reason
other than death, Disability, Retirement or Cause, the three-month
anniversary of the Termination Date.
Unless the Committee determines otherwise, any portion of an Option which
is not exercisable on the Participant's Termination Date for any reason
shall expire on such Termination Date and may not thereafter be exercised.
(d) Other Terms. Options granted under the Plan may also be subject
to such other provisions (whether or not applicable to any other Options granted
under the Plan) as the Committee determines appropriate, including without
limitation, provisions to assist the Participant in financing the acquisition of
Common Stock, provisions for the forfeiture of, or restrictions on resale or
other disposition of Common Stock acquired under any Option, provisions for the
acceleration of exercisability or vesting of Options, provisions relating to
restrictions on competitive activity, or provisions to comply with Federal and
state securities laws, or understandings or conditions as to the Participant's
employment in addition to those specifically provided for under the Plan.
Section 3.03 Rules Applicable to Incentive Stock Options. In
addition to the terms and conditions specified elsewhere in the Plan, the
following rules shall be applicable to Incentive Stock Options.
(a) Grant Period. An Incentive Stock Option may not be granted more
than ten years after the date the Plan is adopted by the Board of Directors of
the Company or approved by stockholders of the Company, whichever is earlier.
A-4
APPENDIX A
(b) Ten Percent-Owner. If a Participant on the date that an
Incentive Stock Option is granted owns, directly or indirectly, within the
meaning of Section 424(d) of the Code, stock representing more than 10% of the
voting power of all classes of stock of the Company, then the exercise price per
share shall in no instance be less than 110% of the Fair Market Value per share
of Common Stock at the time the Incentive Stock Option is granted, and no
Incentive Stock Option shall be exercisable by such Participant after the
expiration of five years from the date it is granted.
(c) Employee Status. To retain favorable Incentive Stock Option tax
treatment, the Option holder must be an employee of the Company at all times
from the date the Option is granted through a date that is no more than three
months prior to the date such Option is exercised (or no more than one year
prior to the date such Option is exercised if the Option holder terminates
employment due to death or Disability). For this purpose, the first 90 days of
an authorized leave of absence (or, if longer, the period the Participant's
right to reemployment is guaranteed by statute or contract) shall not be deemed
to sever the employment relationship.
(d) Limitations on Dispositions. To retain favorable Incentive Stock
Option tax treatment, Common Stock received upon the exercise of an Incentive
Stock Option may not be disposed of prior to the later of two years from the
date the Incentive Stock Option is granted or one year from the date the shares
of Common Stock are transferred to the Participant upon exercise of the
Incentive Stock Option.
(e) Value of Shares. The aggregate Fair Market Value (determined at
the date or dates of grant) of the Incentive Stock Options exercisable for the
first time by a Participant during any calendar year shall not exceed $100,000
or any other limit imposed by the Code.
Section 3.04 Exercise of Options. An Option may be exercised in
whole or part, to the extent then exercisable, by filing a written notice with
the Secretary of the Company at its corporate headquarters. Such notice shall
specify the number of shares of Common Stock to be purchased and must be
accompanied by payment of the exercise price and applicable withholding taxes.
Such payment may be paid (1) in cash, (2) by check, (3) in the discretion of the
Committee, by the delivery (or certification of ownership) of Common Stock that
has been held by the Participant at least six months, or (4) in any other manner
then permitted by the Committee; provided, however, that payment of the exercise
price by delivery of Common Stock then owned by the Participant may be made, if
permitted by the Committee, only if such payment does not result in a charge to
earnings for financial accounting purposes as determined by the Committee.
Section 3.05 Conditional Exercise of Options Prior to Full Vesting.
The Committee, in its sole discretion, may provide that an Option under the Plan
shall be exercisable prior to the satisfaction of the vesting conditions. Any
shares received in connection with the exercise of an Option prior to the
satisfaction of the vesting conditions shall be subject to such restrictions and
limitations, including limitations on transfer, as determined by the Committee
in its sole discretion. The Participant shall be required to execute a
Restricted Stock Agreement agreeing to such terms as a condition of exercise.
Upon change in control, options shall be immediately, fully vested.
A-5
APPENDIX A
ARTICLE IV
STOCK AWARDS; RESTRICTED STOCK
Section 4.01 Definition. Subject to the terms of this Article IV, a
Stock Award under the Plan is a grant of shares of Common Stock to a
Participant, the earning, vesting or distribution of which is subject to one or
more conditions established by the Committee in its sole discretion. Such
conditions may relate to events (such as performance or continued employment)
occurring before or after the date the Stock Award is granted, or the date the
Common Stock is earned by, vested in or delivered to the Participant. If the
vesting of Stock Awards is subject to conditions occurring after the date of
grant, the period beginning on the date of grant of a Stock Award and ending on
the vesting or forfeiture of such Common Stock (as applicable) is referred to as
the "Restricted Period." Such Stock Award may be referred to as "Restricted
Stock" during the Restricted Period. Stock Awards may provide for delivery of
the shares of Common Stock at the time of grant, or may provide for a deferred
delivery date. A Stock Award may, but need not, be made in conjunction with a
cash-based incentive compensation program maintained by the Company, and may,
but need not, be in lieu of cash otherwise awardable under such program.
Section 4.02 Eligibility. The Committee, in its sole discretion,
shall designate the Participants to whom Stock Awards are to be granted, and the
number of shares of Common Stock that are subject to each such Award.
Section 4.03 Terms and Conditions of Awards. Stock Awards granted to
Participants under the Plan shall be subject to the following terms and
conditions:
(a) Beginning on the date of grant (or, if later, the date of
distribution) of shares of Common Stock comprising a Stock Award, and including
any applicable Restricted Period, the Participant shall be treated as owner of
such shares and shall have the right to vote such shares.
(b) Payment of dividends with respect to Stock Awards shall be
subject to the following:
(i) On and after the date that a Participant has a fully earned and
vested right to the shares comprising a Stock Award, and the shares have
been distributed to the Participant, the Participant shall have all
dividend rights and any other rights of a stockholder with respect to such
shares.
(ii) Prior to the date that a Participant has a fully earned and
vested right to the shares comprising a Stock Award, the Committee, in its
sole discretion, may award Dividend Rights (as defined in subparagraph
(iv) below) with respect to such shares.
(iii) On and after the date that a Participant has a fully earned
and vested right to the shares comprising a Stock Award, but before the
shares have been distributed to the Participant, the Participant shall be
entitled to Dividend Rights (as defined in subparagraph (iv) below) with
respect to such shares, at the time and in the form determined by the
Committee.
A-6
APPENDIX A
(iv) A "Dividend Right" with respect to shares comprising a Stock
Award shall entitle the Participant, as of each dividend payment date, to
an amount equal to the dividends payable with respect to a share of Common
Stock multiplied by the number of such shares. Dividend Rights shall be
settled in cash or in shares of Common Stock, as determined by the
Committee, shall be payable at the time and in the form determined by the
Committee, and shall be subject to such other terms and conditions as the
Committee may determine.
ARTICLE V
ADMINISTRATION
Section 5.01 Authority of Committee. The Committee shall have the
authority to approve Eligible Individuals for participation; to construe and
interpret the Plan; to establish, amend or waive rules and regulations for its
administration; and to accelerate the exercisability of any Option or the
termination of any restriction under any Award. Awards may be subject to such
provisions as the Committee shall deem advisable, and may be amended by the
Committee from time to time; provided that no such amendment may adversely
affect the rights of the holder of an Award without such Award holder's written
consent.
Section 5.02 Powers of the Committee. The Committee may employ such
legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or
agent.
Section 5.03 Indemnification. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award made under it. To the maximum extent permitted by applicable
law, each such member shall be indemnified and held harmless by the Company
against any cost or expense (including legal fees) or liability (including any
sum paid in settlement of a claim with the approval of the Company) arising out
of any act or omission to act in connection with the Plan, unless arising out of
such member's own fraud or bad faith. Such indemnification shall be in addition
to any rights of indemnification the members may have as employees of the
Company, as members of the Board or under the by-laws of the Company.
ARTICLE VI
COMMON STOCK SUBJECT TO THE PLAN
Section 6.01 Common Stock Subject to Plan. The aggregate number of
shares of Common Stock that may be issued under the Plan shall not exceed
1,100,000 shares, subject to adjustment in accordance with Section 6.02. In no
event shall the number of shares of Common Stock underlying Options awarded to
any one individual in any 12-month period exceed 75,000 shares. Shares issued
under the Plan may be authorized but unissued shares or shares that are
currently held or subsequently acquired by the Company as treasury shares. Any
shares subject to an Award which for any reason expires or terminates without
the issuance of Common Stock (including, if applicable, Common Stock that is not
issued because it is withheld to satisfy tax withholding) shall again be
available for issuance of Awards under the Plan.
A-7
APPENDIX A
Section 6.02 Adjustment to Shares. In the event of any merger,
consolidation, reorganization, recapitalization, spin-off, stock dividend, stock
split, reverse stock split, exchange or other distribution with respect to
shares of Common Stock or other change in corporate structure or capitalization
affecting the Common Stock, the type and number of shares of Common Stock which
are or may be subject to Awards under the Plan and the terms of any outstanding
Awards (including the number of shares subject to the Award and the price, if
applicable, at which they may be purchased) shall be equitably adjusted by the
Committee, in its sole discretion, to preserve the value of the benefits awarded
or to be awarded to Participants under the Plan.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01 No Contract of Employment. The Plan does not constitute
a contract of employment, and selection as a Participant will not give any
individual the right to be retained in the employ of the Company as an employee,
advisor or otherwise, nor any right or claim to any benefit under the Plan
unless such right or claim has specifically accrued under the terms of the Plan.
Section 7.02 Shareholder Status. No Award under the Plan shall
confer upon the holder thereof any right as a stockholder of the Company prior
to the date on which shares of Common Stock are registered in his or her name.
Section 7.03 Limitations on Distributions. Notwithstanding any other
provision of the Plan, the Company shall have no liability to deliver any shares
of Common Stock under the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply with all applicable
laws and the applicable requirements of any securities exchange or similar
entity. Prior to the issuance of any share of Common Stock under the Plan, the
Company may require a written statement that the recipient is acquiring the
shares for investment and not for the purpose or with the intention of
distributing the shares and will not dispose of them in violation of the
registration requirements of the Securities Act.
Section 7.04 Withholding of Taxes. All distributions and payments
under the Plan are subject to the withholding of all applicable taxes. To the
extent permitted by the Committee, payment of the minimum tax withholding
required by law on the exercise of a Nonqualified Stock Option may be made by
withholding shares of Common Stock otherwise issuable upon such exercise having
a Fair Market Value equal to such minimum withholding tax.
Section 7.05 Non-Transferability. Awards granted under the Plan are
not transferable except as designated by the Participant by will or by the laws
of descent and distribution. To the extent that a Participant who receives an
Option under the Plan has the right to exercise such Option the Option may be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative. Notwithstanding the foregoing, the
Committee, in its sole discretion, may permit a Participant to transfer Awards
(other than Incentive Stock Options) granted under the Plan to a member of the
Participant's immediate family or to a trust for the benefit of the Participant
or members of the Participant's immediate family.
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APPENDIX A
Section 7.06 Successors. All obligations of the Company under the
Plan, with respect to Awards granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company.
Section 7.07 Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the singular shall include
the plural and the plural shall include the singular.
Section 7.08 Agreement with Company. At the time an Award is granted
to a Participant under the Plan, the Committee may require a Participant to
enter into an agreement with the Company in a form specified by the Committee
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions not inconsistent with the Plan as the Committee, in its sole
discretion, may prescribe.
Section 7.09 Governing Law. The Plan, and all agreements under the
Plan, shall be construed in accordance with and governed by the laws of the
State of Delaware.
ARTICLE VIII
AMENDMENT AND TERMINATION
The Board may at any time amend or terminate the Plan, provided
that, subject to Section 6.02 (relating to adjustment of shares), no amendment
or termination may materially adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment or termination is adopted by the Board without such individual's
written consent.
Executed this __ day of September, 2002.
IMMTECH INTERNATIONAL, INC.
By: ___________________________________
Its: ___________________________________
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