SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
(Amendment
No.)
Filed
by
the Registrant x
Filed
by
a party other than the Registrant o
Check
the
appropriate box:
x Preliminary
Proxy
Statement
o Confidential
for
Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
o
Definitive Proxy Statement
o
Definitive Additional
Materials
o
Soliciting Material Pursuant
toss.240.14a-11(c) orss.240.14a-12
ADVAXIS,
INC.
(Name
of
Registrant as Specified In Its Charter)
N/A
(Name
of
Person(s) Filing Proxy Statement if other than Registrant)
Payment
Filing Fee (Check the appropriate box):
x
No fee required.
o
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 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
o
Fee paid previously with preliminary
materials.
o
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
 |
ADVAXIS,
INC
|
|
|
The
Technology Center of New
Jersey
|
||
|
675
US Highway One, Suite B 113
|
||
|
North
Brunswich, NJ 08902
|
||
|
T:
732-545-1590 F:
732-545-1084
|
||
_____,
2006
Dear
Stockholder:
You
are
cordially invited to attend the Annual Meeting of Stockholders of Advaxis,
Inc.
(the “Company”) to be held at 10:00 a.m. local time, on Thursday, May 25, 2006
at the Company’s
office at The Technology Center of New Jersey, 675 Route One, Suite 119,
North
Brunswick, New Jersey 08902.
This
year
you will be asked (i) to consider the election of directors and proposals
(ii)
to approve the Company’s 2005 Stock Option Plan, (iii) to reincorporate the
Company from the state of Colorado to the state of Delaware, and (iv) to
ratify
the appointment of Goldstein Golub Kessler LLP as the Company’s independent
auditor for the year ending October 31, 2006. The matters are explained more
fully in the attached proxy statement, which you are encouraged to
read.
The
Board
of Directors (the “Board”) recommends that you elect the directors nominated by
the Board and approve the foregoing proposals and urges you to return your
signed proxy card, or cards, at your earliest convenience, whether or not
you
plan to attend the annual meeting in the accompanying business reply envelope
so
that your shares will be represented at the annual meeting. This will not
limit
your right to vote in person or attend the meeting.
Thank
you
for your continued interest in and support of your Company.
| Very truly yours, | ||
| |
|
|
| Roni Appel | ||
| President and Chief Executive Officer | ||
2
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
OF
ADVAXIS,
INC.
TO
BE
HELD
May
25,
2006
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of
Advaxis, Inc. (the “Company”, “Advaxis”, “us” or “we”) will be held at the Company’s
office at The Technology Center of New Jersey, 675 Route One, Suite 119,
North Brunswick, New Jersey 08902, on Thursday, May 25, 2006 at 10:00
a.m. local time, to consider and act upon the following:
| 1. |
The
election of six directors to serve for a period of one year and
thereafter
until their successors shall have been duly elected and shall have
qualified.
|
| 2. |
A
proposal to approve the Company’s 2005 Stock Option
Plan.
|
| 3. |
A
proposal to approve reincorporating the Company from the state
of Colorado
to the state of Delaware by merging the Company into its wholly-owned
subsidiary.
|
| 4. |
A
proposal to ratify the appointment by the Board of Directors of
Goldstein
Golub Kessler LLP as auditor of the Company’s financial statements for the
year ending October 31, 2006.
|
| 5. |
The
transaction of such other business as may properly come before
the meeting
or any adjournment thereof that were not known a reasonable time
before
the solicitation.
|
The
Board
of Directors has fixed the close of business on March 31, 2006 as the date
for
determining the stockholders of record entitled to receive notice of, and
to
vote at, the Annual Meeting.
By
Order
of the Board of Directors,
/s/
Roni
Appel
Roni
Appel
President
and Chief Executive Officer
Princeton,
New Jersey
May __,
2006
3
ADVAXIS,
INC.
THE
TECHNOLOGY CENTER OF NEW JERSEY
675
ROUTE 1, SUITE 119
NORTH
BRUNSWICK, NEW JERSEY 08902
PROXY
STATEMENT
Annual
Meeting of Stockholders
To
Be
Held May 25, 2006
INTRODUCTION
This
proxy statement (this “Proxy Statement”) is being furnished to stockholders of
Advaxis, Inc. (the “Company”, “Advaxis”, “us” or “we”) in connection with a
solicitation by the Board of Directors of the Company (the “Board”) of proxies
to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) to be
held at the Company’s
office at The Technology Center of New Jersey, 675 Route One, Suite 119,
North
Brunswick, New Jersey 08902 on May 25, 2006, at 10:00 a.m. local time and
any adjournments or postponements thereof. At the Annual Meeting, the Board
will
propose that the Company’s stockholders elect six nominees, to the Board to
serve until the next annual meeting of stockholders to be held and until
their
successors are elected and qualified, and proposals (i) to approve the Company’s
2005 Stock Option Plan, (ii) to approve the reincorporation of the Company
from
a Colorado corporation to a Delaware corporation by merging the Company into
its
wholly-owned subsidiary, and (iii) to ratify the appointment by the Board
of
Goldstein Golub Kessler LLP as auditor of the Company’s financial statements for
the year ending October 31, 2006, and to vote on such other matters as may
lawfully come before the meeting.
STOCKHOLDERS
ENTITLED TO VOTE
Only
holders of record of the Company’s common stock, par value $.001 per share (the
“Common Stock”), at the close of business on March 31, 2006 (the “Record Date”)
will be entitled to receive notice of, and to vote at, the Annual Meeting
and at
any adjournments or postponements thereof. At the close of business on the
Record Date, there were 38,423,007 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting. Each share of Common Stock is entitled
to one vote.
VOTING;
REVOCATION OF PROXY; QUORUM AND VOTE REQUIRED
A
form of
proxy is enclosed for use at the Annual Meeting. Each proxy may be revoked
at
any time before it is exercised by giving written notice to the Secretary
of the
Annual Meeting, by submitting a duly executed, later-dated proxy, or by
attending the Annual Meeting and voting at the meeting. Attendance at the
Annual
Meeting is not by itself sufficient to revoke your proxy. All shares represented
by valid proxies pursuant to this solicitation (and not revoked before they
are
exercised) will be voted as specified in the form of proxy. If the proxy
is
signed but no specification is given otherwise the shares will be voted FOR
the
Board’s nominees for election to the Board and FOR each of the proposals
referred to above.
A
third
of the shares outstanding on the Record Date will constitute a quorum for
purposes of the Annual Meeting. For purposes of determining the votes cast
with
respect to any matter presented for consideration at the Annual Meeting,
only
those votes cast “for” or “against” are included. Abstentions and broker
non-votes are counted for the purpose of determining whether a quorum is
present
at the Annual Meeting. A broker “non-vote” occurs when a nominee holding shares
of Common Stock for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect
to
that item and has not received instructions from the beneficial owner.
Accordingly, since the election of directors will be effected by a plurality
vote, abstentions and broker non-votes will not affect the outcome of the
election of directors. Since approval of the proposal to reincorporate the
Company from a Colorado corporation to a Delaware corporation requires the
affirmative vote of a majority of the outstanding shares of Common Stock,
abstentions and broker non-votes will have the same effect as negative votes.
Since each of the proposals to approve the Company’s 2005 Stock Option Plan and
to ratify the appointment of the independent auditors requires the affirmative
vote of a majority of the shares cast in person or by proxy on the proposal,
abstentions on each of those proposals will have the same effect as negative
votes but broker non-votes will not affect the outcome.
4
Any
stockholder who executes and delivers a proxy may revoke it at any time before
it is voted by delivering a written notice of such revocation to the Secretary
of the Company at the address of the Company set forth in this Proxy Statement,
by submitting a properly executed proxy bearing a
later
date, by appearing at the Annual Meeting and requesting the return of the
proxy
or by voting in person. In accordance with applicable rules, boxes and
designated spaces are provided on the proxy card for stockholders to mark
if
they wish either to vote for or withhold authority on the election of any
of the
directors and to vote for, against or abstain on each of the other
proposals.
Stockholders
vote at the Annual Meeting by casting ballots (in person or by proxy) which
are
tabulated by a person who is appointed by the Board before the Annual Meeting
to
serve as inspector of election at the Annual Meeting and who has executed
and
verified an oath of office.
It
is
anticipated that this Proxy Statement, the enclosed proxy card and the Annual
Report to Stockholders for the year ended October 31, 2005 will be mailed
to the
Company's stockholders on or about May 8, 2006.
COSTS
AND
METHOD OF SOLICITATION
Solicitation
of proxies may be made by directors and officers of the Company by mail,
telephone, facsimile transmission or other electronic media and in person
for
which they will receive no additional compensation. We will not solicit proxies
via the Internet, such as Internet chat rooms and/or posting on websites.
The
entire cost of soliciting proxies will be borne by the Company. Upon request,
the Company will reimburse the reasonable fees and expenses of banks, brokers,
custodians, nominees and fiduciaries for forwarding proxy materials to, and
obtaining authority to execute proxies from, beneficial owners for whose
accounts they hold shares of Common Stock.
PRINCIPAL
OFFICE
The
Company’s principal office is located at The Technology Center of New Jersey,
675 Route 1, Suite 119, North Brunswick, New Jersey 08902, and its telephone
number is (732) 545-1590.
5
PRINCIPAL
STOCKHOLDERS
The
following
table sets forth
certain
information with respect to the beneficial ownership, as of March 31, 2006
of,
| · |
each
person
who is known by us to be the owner of record or beneficial owner
of more
than 5% of our
outstanding Common Stock;
|
| · |
each
of our current directors;
|
| · |
our
chief executive officer and each of our executive officers;
and
|
| · |
all
of
our current directors and executive officers as
a group.
|
As
used
in
the table below and
elsewhere in this Proxy
Statement, the term beneficial
ownership with
respect to a security consists of sole or shared voting power, including
the
power to vote or direct the vote and/or sole or shared investment power,
including the power to dispose or direct the disposition, with respect to
the
security through any contract, arrangement, understanding, relationship,
or
otherwise, including a right to acquire such power(s) during the next 60
days
following March 31, 2006 (the “60 Day Period”). Except as otherwise indicated,
the stockholders listed in the table have sole voting and investment powers
with
respect to the shares indicated.
Except
as
otherwise noted below, the address of each of the persons in the table is
The
Technology Center of New Jersey, 675 Route One, Suite 119, North Brunswick,
NJ
08902.
|
Name
and Address of Beneficial Owner
|
Number
of Shares of
Registrant
Common Stock
Beneficially
Owned as of
March
31, 2006
|
Percentage
of Class
Beneficially
Owned
|
|||||
|
J.
Todd Derbin(1)(2)
|
2,195,033
(3
|
)
|
5.47
|
%
|
|||
|
Roni
Appel(1)(2)
|
5,372,160
(4
|
)
|
13.16
|
%
|
|||
|
Richard
Berman(1)
|
440,000
(5
|
)
|
1.13
|
%
|
|||
|
Dr.
James Patton(1)
|
2,930,379
(6
|
)
|
7.60
|
%
|
|||
|
Dr.
Thomas McKearn(1)
|
524,876
(7
|
)
|
1.35
|
%
|
|||
|
Martin
Wade(1)
|
150,000
|
0.39
|
%
|
||||
|
Dr.
Vafa Shahabi(2)
|
230,000
|
0.60
|
%
|
||||
|
Dr.
John Rothman(2)
|
590,000
|
1.52
|
%
|
||||
|
Fredrick
Cobb(2)
|
150,000
|
0.39
|
%
|
||||
|
Estate
of Scott Flamm(1)
|
2,914,989
(8
|
)
|
7.53
|
%
|
|||
|
The
Trustees of the University of Pennsylvania
Center
for Technology
Transfer,
University of Pennsylvania
3160
Chestnut Street, Suite 200
Philadelphia,
PA 19104-6283
|
6,339,282
|
16.50
|
%
|
6
|
Name
and Address of Beneficial Owner
|
Number
of Shares of
Registrant
Common Stock
Beneficially
Owned as of
March
31, 2006
|
Percentage
of Class
Beneficially
Owned
|
|||||
|
Nathan
Low
c/o
Sunrise Securities Corp.
641
Lexington Ave-25fl
New
York, NY 10022
|
3,343,019
(9
|
)
|
8.70
|
%
|
|||
|
Amnon
Mandelbaum
c/o
Sunrise Securities Corp.
641
Lexington Ave-25fl
New
York, NY 10022
|
2,929,511
(10
|
)
|
7.62
|
%
|
|||
|
Harvest
Advaxis LLC
30052
Aventura, Suite C
Rancho
Santa Margarita, CA 92688
|
(11
|
)
|
--
|
||||
|
Cornell
Capital Partners LP
101
Hudson Street, Suite 3700
Jersey
City, New Jersey 07302
|
(12
|
)
|
(12
|
)
|
|||
|
All
Directors and Officers as a Group (9 people)
|
12,582,450(13
|
)
|
28.36
|
%
|
*
Based
on 38,423,007 shares of Common Stock outstanding as of March 31,
2006.
|
(1)
|
Director,
Mr. Flamm had been a Director until his death in January
2006
|
|
(2)
|
Officer
|
|
(3)
|
Represents
469,982 shares, 1,356,236 options and 368,815 warrants to purchase
shares.
|
|
(4)
|
Represents
2,620,760 shares, 14,449 warrants and 2,231,943 options owned
by Mr. Appel
and 355,528 shares and 149,480 options and warrants beneficially
owned by
Carmel Ventures, Inc. of which Mr. Appel is a controlling person;
but does
not include 58,580 warrants and 55,580 options owned by Mr. Appel
and
355,528 warrants held by Carmel Ventures, Inc., because such
warrants and
options are not under the current circumstances, exercisable
within the 60
Day Period.
|
|
(5)
|
Reflects
40,000 shares and 400,000 options.
|
|
(6)
|
Reflects
2,820,576 shares, 73,253 options and 36,551 warrants but does
not reflect
147,716 warrants because such warrants are not under the current
circumstances, exercisable within the 60 Day
Period.
|
|
(7)
|
Reflects
179,290 shares and 345,586 options and warrants.
|
|
(8)
|
Reflects
125,772 shares and 91,567 options and 31,184 warrants owned
by the estate
and 2,621,325 shares and 45,141 warrants beneficially owned
by Flamm
Family Partners LP, of which the estate is a partner, but does
not reflect
125,772 warrants because such warrants are not under the current
circumstances, exercisable within the 60 Day
Period.
|
7
|
(9)
|
Reflects
1,124,253 shares owned by Mr. Low, 1,742,160 shares and 93,331
warrants
held by SEP, but does not include 761,971 warrants held by Mr.
Low and
1,648,829 warrants held by Level Counter LLC ("LC") because such
warrants
are not, under current circumstances, exercisable within the
60 Day
Period. Also does not reflect the 37,725 shares issuable to Mr.
Low as a
penalty and 34,843 shares issuable to SEP as a penalty. However,
Mr. Low disclaims beneficial interest in securities owned by
SEP except to
the extent of his pecuniary interest therein. Also includes 383,275
shares
held by Sunrise Securities Corp., of which Mr. Low is sole stockholder
and
director, but does not include 672,539 warrants owned by Mr.
Mandelbaum
and 348,432 warrants held by Sunrise Securities Corp., because
such
warrants are not, under current circumstances, exercisable within
the 60
Day Period nor does it reflect 14,634 shares issuable to Sunrise
Securities Corp. as a penalty. Mr. Low’s beneficial ownership does not
also include shares held by Sunrise Foundation Trust, a charitable
trust
of which Mr. Low is a trustee. Mr. Low disclaims beneficial ownership
of
shares held by Sunrise Foundation Trust.
|
|
(10)
|
Reflects
1,094,020 shares owned by Mr. Mandelbaum and 1,742,160 shares
and 93,331
warrants held by SEP, but does not include 1,648,829 warrants
held by SEP
because such warrants are not, under the current circumstances,
exercisable within the 60 Day Period and the 34,843 shares issuable
to SEP
as a penalty. Mr.
Mandelbaum is a manager of LC, the general partner of SEP, and
as such, is
deemed to have beneficial ownership of the securities held by
SEP.
However, Mr. Mandelbaum disclaims beneficial interest in such
shares
except to the extent of his pecuniary interest therein.
|
|
(11)
|
Does
not reflect 3,832,753 warrants because such warrants are not
currently
exercisable within the 60 Day Period. Mr. Robert Harvey is the
manager of
Harvest Advaxis LLC.
|
|
(12)
|
Cornell
Capital Partners LP (“Cornell”) acquired in February and March 2006,
$3,000,000 principal amount of the Debentures along with 4,500,000
warrants. Cornell does not beneficially own any shares except
through its
ownership of the Debentures and warrants. The Debentures are
convertible
into 10,452,960 shares (assuming conversion at the Fixed Conversion
Price
of $0.287 per share or a larger number if converted at the “Market
Conversion Price”). Cornell has agreed that it will not exercise its
conversion and warrant exercise rights to the extent it would
result in
Cornell and its affiliates owning in the aggregate more than
4.9% of the
outstanding voting shares.
|
| (13) | Includes an aggregate of 5,936,314 options and warrants. |
8
ITEM
1. ELECTION OF DIRECTORS
BOARD
OF
DIRECTORS’ NOMINEES
The
Board
of Directors pursuant to the Company’s Bylaws has set the number of directors of
the Board as of the Annual Meeting at six. The holders of Common Stock will
elect six directors at the Annual Meeting, each of whom will be elected for
a
one-year term and until his successor is duly elected. The number of Directors
has been set by the Board of Directors at six, including its current directors
Messrs. J. Todd Derbin, Roni Appel, Richard Berman, Dr. James Patton and
Dr.
Thomas McKearn and Mr. Martin
Wade, who was elected on March 29, 2006 as successor
to Mr.
Scott Flamm who passed away in January 2006.
The
nominees of the Board were selected by a Nominating and Corporate Governance
Committee (the “Committee”) consisting of Messrs. Derbin and Appel. The Board
had not adopted a charter for the Committee. In selecting each of the nominees
for the Committee identified and evaluated the current directors and their
commitment to the policy of the Company and each individual’s qualifications and
availability. The Committee believes that a nominee for director of the Company
should have an appropriate level of sophistication, knowledge and understanding
of the Company and the industry, stockholder relations and finance and
accounting for publicly held companies. The Committee also considered the
need
to select as one of the nominees, a person who has the appropriate experience
and financial background who could qualify as an “audit committee financial
expert” within the meaning of the rules under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). The Company did not engage any third
party to assist in the process of identifying or evaluating candidates. The
Company currently does not have a process for considering candidates put
forward
by stockholders.
The
table
below sets forth the names and ages, as of March 31, 2006, of each of the
nominees, and the period during which each such person has served on the
Board.
Each of the nominees for director has agreed to serve if elected and has
consented to being named in this Proxy Statement.
Except
as
otherwise noted below, the address of each of the persons in the table is
The
Technology
Center of New Jersey, 675 Route 1, Suite 119, North Brunswick, New Jersey
08902.
|
Name
|
Age
|
Director
Since
|
|
J.
Todd Derbin
|
52
|
2004
|
|
Roni
Appel
|
38
|
2004
|
|
Dr.
James Patton
|
47
|
2004
|
|
Dr.
Thomas McKearn
|
55
|
2004
|
|
Richard
Berman
|
63
|
2005
|
|
Martin
Wade
|
56
|
2006
|
The
principal occupations and employment of each such person during the past
five
years is set forth below. In each instance in which dates are not provided
in
connection with a nominee’s business experience, such nominee has held the
position indicated for at least the past five years.
9
J.
Todd Derbin.
Since
January 1, 2006 Mr. Derbin has served as Chairman
of the Board of Directors. Prior thereto,
he
served as the President, Chief Executive Officer and a director of Advaxis
since
November 2002. From 1996 until June, 2001, Mr. Derbin was the founder, Chairman
of the Board of Directors, President, and Chief Executive Officer of Micrus
Corporation, a market leader in the design and development of highly
differentiated and proprietary interventional neuroradiology devices and
delivery systems. From 1992 until 1996, he served as Director of Corporate
Business Development, Commercial Director - Cardiovascular and Director of
Strategic Planning, Mergers & Share Exchanges with Biocompatibles
International, plc, a UK biotechnology/biomedical Company. Prior to 1992,
Mr.
Derbin served as Chief Executive Officer of Syncare Corporation, developers
of
synthetic wound care products and drug delivery systems. His 20 year tenure
in
life sciences includes senior management, strategic and operational positions
with CollaTec, Inc., a subsidiary of Marion Merrell Dow, and American Medical
Products Corporation’s domestic and international divisions. He began his career
at Procter & Gamble and American Hospital Supply Corporation (Baxter) where
he held marketing positions. Mr. Derbin is an alumnus of Wilkes College and
the
Wharton School of the University of Pennsylvania.
Roni
A. Appel.
Mr.
Appel has served since January 1, 2006 as our President and Chief Executive
Officer and since November 2004 as a member of our Board of Directors and
as our
Secretary and Chief Financial Officer. Prior thereto he served as Advaxis’
Secretary and Chief Financial Officer since it was formed in February 2002.
Since January 1999, Mr. Appel has been a partner and managing director in
LV
Equity Partners (fka LibertyView Equity Partners). From 1998 until 1999,
he was
a founder and the director of business development at Americana Financial
Services, Inc. From 1994 to 1998, he was an attorney and completed his MBA
at
Columbia University.
Dr.
James Patton. Dr.
Patton has served as Chairman of our Board since November 2004. Prior thereto,
he served as Chairman of Advaxis’ Board since February 2002 and as Advaxis’
Chief Executive Officer from February 2002 to November 2002. Additionally,
since
February 1999, Dr. Patton has served as the President of Comprehensive Oncology
Care, LLC, which owns and operates a cancer treatment facility in Exton,
Pennsylvania and as Vice President of Millennium Oncology Management, Inc.,
which provides technical services for oncology care to four sites. From February
1999 to September 2003, Dr. Patton served as a consultant to LibertyView
Equity
Partners SBIC, LP, a venture capital fund based in Jersey City, New Jersey
(“LibertyView”). From July 2000 to December 2002, Dr. Patton served as a
director of Pinpoint Data Corp. From February 2000 to November 2000, Dr.
Patton
served as a director of Healthware Solutions. From June 2000 to June 2003,
Dr.
Patton served as a director of LifeStar Response. He earned his B.S. from
the
University of Michigan, his Medical Doctorate from Medical College of
Pennsylvania, and his M.B.A. from the University of Pennsylvania’s Wharton
School. Dr. Patton was also a Robert Wood Johnson Foundation Clinical Scholar.
He has published papers regarding scientific research in human genetics,
diagnostic test performance and medical economic analysis.
Dr.
Thomas McKearn.
Dr.
McKearn has served as a member of our Board since November 2004. Prior thereto
he served
as
an Advaxis director since July 2002. He has 20 plus year experience in the
translation of biotechnology science into innovative products that address
unmet
medical needs in oncology. First as one of the founders of Cytogen Corporation,
then as an Executive Director of Strategic Science and Medicine at Bristol-Myers
Squibb and now as the VP. Medical Affairs at GPC-Biotech, McKearn has always
worked at bringing the most innovative scientific findings into the clinic
and
through the FDA regulatory process for the ultimate benefit of patients who
need
better ways to cope with their afflictions. Prior to entering the then-nascent
biotechnology industry in 1981, McKearn did his medical, graduate and
post-graduate training at the University of Chicago and served on the faculty
of
the Medical School at the University of Pennsylvania.
Richard
Berman. For
the
past five years, Mr. Berman, who was elected to the Board in September 1,
2005,
has been Chairman and CEO of Internet Commerce Corporation, an internet supply
chain company. He is also Chairman of a financial services company and Candidate
Resources, Inc., a company which delivers human resources services over the
web.
He is a Director of seven public companies, Dyadic International, Inc.,
International Microcomputer Software, Inc., Internet Commerce Corporation,
MediaBay, Inc., NexMed, Inc., GVI Security Solutions, Inc., and Financial
Services Co., which he serves as chairman. Previously, Mr. Berman worked
at
Goldman Sachs; was Senior Vice President of Bankers Trust Company, where
he
started the mergers and acquisitions and Leverage Buyout Departments. He
is a
past Director of the Stern School of Business of NYU where he earned a B.S.
and
an M.B.A. He also has law degrees from Boston College and The Hague Academy
of
International Law.
10
Martin
R. Wade III.
Mr. Wade
was appointed to the Board on March 29, 2006. From August 2001 to present,
Mr.
Wade has served as Chief Executive Officer of International Microcomputer
Software Inc., a software development and publishing firm. From May 2000
to
present, Mr. Wade has also served Bengal Capital Partners, LLC, a merger
and
acquisition firm, as Chief Executive Officer. Mr. Wade currently serves as
a
member of the Board of Directors of the following publicly traded companies:
International Microcomputer Software Inc. [OTC], Alliance One, Inc. [NYSE],
Nexmed [OTC] and Command Security Corp. [OTC]. In addition to his position
on
the Board of Directors of Command Security Corp., Mr. Wade also serves as
the
Chairman of the Audit Committee. From April 2000 until December 2001, Mr.
Wade
served as Chief Executive Officer, Executive Vice President and as a member
of
the Board of Directors of Digital Creative Development Corporation, an
acquisition and investment company. From June 1998 until April 2000, Mr.
Wade
served as Managing Director of Investment Banking for Prudential Securities,
Inc., which is the securities subdivision of Prudential Insurance. Prior
to
joining Prudential Securities, Inc. in 1998, Mr. Wade served in progressive
management roles with Bankers Trust Company, Lehman Brothers, CJ Lawrence,
Morgan Grenfell, Price Waterhouse Company and Salomon Brothers over a 23
year
period. Mr. Wade has been deeply involved in mergers and acquisitions, corporate
finance and investment banking throughout his career. Mr. Wade received a
Master
of Business Administration in Finance from the University of Wyoming in 1975
and
a Bachelor of Science in Business Administration from West Virginia University
in 1971. From 1971 through 1975, Mr. Wade also served as a Captain in the
United
States Air Force.
There
is
no family relationship between the persons nominated or chosen by the Company
to
become directors.
BOARD
MEETINGS
During
the year ended October 31, 2005, our Board held three meetings and took action
by written consent on three occasions. During the year ended October 31,
2004,
our Board held three meetings and took action by written consent on seven
occasions.
COMMITTEES
The
Board
has an Audit Committee consisting of Mr. Berman and Dr. Patton. Mr. Berman
qualifies as an audit committee financial expert.
The
Company deems the members of its Audit Committee to be independent as defined
in
the
rules
of the NASDAQ
Stock
Market
a person
other than an officer or employee of the Company or its subsidiaries or any
other individual having a relationship which in the opinion of the Board
would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
11
Audit
Committee Report:
The
Audit
Committee is authorized to review the
results of the audit engagement with the independent registered public
accounting firm; identify
irregularities
in the management of our
business in consultation with our independent accountants, and suggest an
appropriate course of action;
review
the
adequacy, scope, and results of the internal accounting controls and procedures;
review
the
degree of independence of the auditors, as well as the nature and scope of
our
relationship with our independent registered public accounting
firm;
review
the
auditors’ fees; and recommend
the
engagement of auditors to the full Board.
The
Compensation Committee which consists of Mr. Berman and Dr. McKearn determines
the salaries and incentive compensation of our officers and provides
recommendations for the salaries and incentive compensation of our other
employees and consultants.
The
Nominating and Corporate Governance Committee consisting of Messrs. Derbin
and
Appel are authorized to select the nominees of the Board for election as
directors. The nominees for election as directors were selected by the Committee
and approved by the Board.
COMPENSATION
OF DIRECTORS
Only
non-employee directors are compensated for serving as directors. Mr. Berman
will
receive a director’s fee of $2,000 per month in cash or company stock and was
granted options for the purchase of 400,000 shares of Common Stock vesting
over
four years on a quarterly basis in 2005. Dr. McKearn and Mr. Wade were
both
granted options for the purchase of 150,000 shares of Common Stock vesting
over
three years on a quarterly basis in March 2006. They are reimbursed for
related
expenses.
VOTING
FOR DIRECTORS
Unless
a
stockholder either indicates “withhold authority” on his proxy card or indicates
on his proxy that his shares should not be voted for certain nominees, it
is
intended that the persons named in the proxy will vote for the election of
the
persons nominated as directors to serve until the next annual meeting of
stockholders and thereafter until their successors shall have been duly elected
and shall have qualified. Discretionary authority is also solicited to vote
for
the election of a substitute for any of said nominees who, for any reason
presently unknown, cannot be or refuses to be a candidate for
election.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE NOMINEES
OF
THE BOARD OF DIRECTORS DESCRIBED ABOVE.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and each holder of 10% or more of our equity
securities to file reports of ownership and changes in ownership with the
SEC. SEC regulations require our executive officers, directors and
10%-or-greater shareholders to give us copies of all Section 16(a) forms
that
they file with the SEC.
Based
solely on our review of these forms, or written
representations from reporting persons, we understand that our executive
officers, dirctors and 10%-or-greater shareholders complied with all applicable
filing requirements through March 31, 2006 except for the following: Messrs.
Appel, Derbin, Patton and McKearn are late on Form 4. Dr. Rothman and Mr.
Wade are late on filing Form 3's.
12
Compensation
of our Officers and Directors.
We
entered into a consulting agreement with LVEP Management, LLC (“LVEP”) which is
controlled by the estate of Scott Flamm, a former director and a principal
shareholder. LVEP employs Mr. Roni Appel, President, Chief Executive Officer,
Chief Financial Officer, a director and a principal shareholder of the Company
and had employed Mr. Flamm. Pursuant to the consulting agreement, dated as
of
January 19, 2005, and amended on April 15, 2005, and further amended on October
31, 2005, LVEP is to provide various financial and strategic consulting services
to us.
Under
the
October 31, 2005 amendment the initial term of the consulting agreement was
extended until December 31, 2007 and thereafter the term of the
agreement is to be automatically extended for one year periods unless
we notify LVEP at least 60 days prior to the end of term of our intent not
to
extend. In addition, the consulting agreement may be terminated by us for
any
reason upon 60 days prior notice or by LVEP upon 45 days prior notice. Upon
such notice all compensation and bonuses payable under the consulting
agreement are to continue until the end of the term or twelve (12)
months from such termination. In consideration for providing the consulting
services, under the consulting agreement as amended, LVEP receives compensation
of $250,000 per year payable at the rate of $20,833.33 per month for the
term of
the agreement,
reimbursement of benefits which it provides to its most senior executives
(payroll tax, health care, vacation and 401 K plan participation)
and reimbursement of approved expenses in connection with providing
the consulting services. LVEP has paid and intends to continue to pay all
such
compensation to Mr. Appel. The consultant received a bonus payment at the
end of
2005 of $70,000.
In
subsequent years the bonus is to equal 40% of the base consulting
compensation. At the election of the Company or of LVEP up to 100% of the
bonus
may be paid in Common Stock of the Company. Additionally, LVEP is to receive
additional options to purchase shares of Common Stock of the Company bringing
options held by LVEP (including the 3% previously granted) to 5% of the
outstanding shares and options of the Company as of December 31, 2005. The
incremental options (1,173,179) vest monthly over four years commencing in
April, 2005. LVEP has assigned such options to Mr. Appel.
The
aggregate
compensation paid to our executive officers, including stock based compensation,
for
the
year ended December 31, 2003, the ten months ended October 31, 2004
and
the
twelve months ended October 31, 2005 was approximately $210,000, $235,000
and
$669,250, respectively, including the payment made by LVEP to Mr. Appel.
No
amount was set aside or accrued to provide pension, severance, retirement,
or
similar benefits or expenses.
There
were no interlocking relationships between us
and
other entities that might affect the determination of the compensation of
its
directors and executive officers
except
for the LVEP consulting agreement.
SUMMARY
COMPENSATION
The
following table sets forth the compensation earned during the year ended
December 31, 2003, the ten months ended October 31, 2004 and the twelve months
ended October 31, 2005 by our former and current chief executive officers
and
those other executive officers whose compensation in any one of those periods
was at least $100,000:
13
|
Annual
Compensation
|
Long
Term
Compensation
Awards
|
|||||||||||||||
|
Name
And Principal Position
|
Year
(1)
|
Salary($)
|
Bonus($)
|
Other*
|
Securities
Underlying
Options
|
|||||||||||
|
J.
Todd Derbin
President,
Chief Executive Officer
|
2005
2004
2003
|
$
$
$
|
225,000
125,000
150,000
|
$
$
|
45,000
60,000
|
(4)
(4)
|
684,473
--
1,172,727
|
(5)
(5)
|
||||||||
| Roni Appel | 2005 |
$
|
139,250 | (2) |
$
|
35,000 | 1,114,344 | (2) | ||||||||
|
Secretary,
Chief Financial Officer, and Director
|
2004 |
$
|
50,000 | (3) | 35,218 | |||||||||||
|
|
2003
|
$
|
60,000
|
(3)
|
|
|
42,262
|
|||||||||
|
Dr.
John Rothman
Vice
President - Clinical Development (6)
|
2005
2004
|
$
|
141,667
--
|
(6) |
360,000
|
|||||||||||
*
None of
the officers listed received prerequisites from us which exceed more
than the
lesser of $50,000 or 10% of the officer's total compensation.
(1)
Information for 2004 reflects the ten months ended October 31,
2004.
(2)
Mr.
Appel’s compensation in year 2005 was paid through our consulting agreement
with
LVEP Management, LLC. See “Compensation of Directors and Officers”.
(3)
Represents consulting fees of $60,000 in 2003 and fees of $50,000 in
the 10
months ended October 31, 2004 paid to Carmel Ventures, Inc., of which
he is a
principal stockholder. He assigned $35,000 of such fees to Mr. Scott
Flamm.
(4)
Mr.
Derbin’s stock option award was based in his employment contract. His 2003 bonus
of $60,000 was paid in 2004 by the issuance of 307,377 shares of Common
Stock of
the Company on the basis of a price of $0.1952 per share and
was
two-third’s of the maximum amount of $90,000 he could have been awarded. The
basis for this bonus was the successful conclusion of several matters
of great
importance to the Company including:
- extending
the patent portfolio and moving it to the care of competent patent
counsel;
- creating
grant opportunities for the Company;
- scaling
up manufacturing; and
- creating
certain collaboration opportunities.
In
determining Mr. Derbin’s bonus, the Board acted in part on a discretionary
basis. His 2004 bonus of 45,000 was paid in 2005 by issuance of 156,794
shares
of the Company’s Common Stock based on $0.287 per share.
(5)
Pursuant to an employment agreement, only 928,441 of the options granted
in 2003
had vested, and only 427,796 of the options granted in 2005 had vested
on
termination of the agreement on December 31, 2005. The balance of the
options
were cancelled.
(6)
Dr.
Rothman entered our employ on March 7, 2005 and included in his salary
was the
issuance of 80,000 shares of Common Stock.
Option
Grants In Recent Fiscal Years
The
following table sets forth information concerning grants of stock options
during
the year ended December 31, 2003, the 10 month period ended October 31, 2004
and
the year ended October 31, 2005 to each of the individuals listed in the
table
under “Compensation of our Officers”. The potential realizable values shown in
the table are net of exercise price, but before deduction of taxes. They
do not
represent our estimate or projection of the purchase price of our Common
Stock
price.
14
|
|
|
Individual
Grants
|
|
||||||||||||||||||||
|
Name
|
Year
|
Number
Of
Securities
Underlying
Options
Granted
|
Percent
Of Total
Options
Granted
To
Employees In
Fiscal
Year
|
Exercise
Price
|
Expiration
Date
|
Potential
Realizable Value At
Assumed
Annual Rates of Stock
Price
Appreciation For
Option
Term($)
|
|||||||||||||||||
|
5%
|
10%
|
||||||||||||||||||||||
|
J.
Todd Derbin(1)
|
2005
|
427,796
|
(1) |
13
|
%
|
$
|
0.29
|
2/1/2015
|
$
|
78,034
|
$
|
197,753
|
|||||||||||
|
President
and Chief Executive Officer
|
2004
2003
|
-
928,441
|
(2) |
86
|
%
|
-
0.195
|
-
11/1/2012
|
$
|
-
113,878
|
$
|
-
288,587
|
||||||||||||
|
Roni
Appel
|
2005
|
|
1,114,344
|
(3) |
34
|
%
|
$
|
0.29
|
3/31/2015
|
$
|
201,165
|
$
|
509,788
|
||||||||||
|
Secretary
and Chief Executive Officer
|
2004
2003
|
35,218
42,262
|
27
4
|
%
%
|
$
$
|
0.35
0.35
|
11/1/2012
11/1/2012
|
$
$
|
7,753
9,304
|
$
$
|
19,648
23,578
|
||||||||||||
|
Dr.
John Rothman
|
2005
|
360,000
|
11
|
%
|
$
|
0.29
|
3/1/2015
|
$
|
64,988
|
$
|
164,692
|
||||||||||||
|
Vice
President
|
|||||||||||||||||||||||
| (1) |
684,473
options were granted to under the 2005 option plan to Mr. Derbin, of
which 256,677 options were surrendered pursuant to a termination
of
employment agreement.
|
| (2) |
Under
the 2003 plan (which was succeeded by its 2004 plan) 1,172,767
options were granted to Mr. Derbin of which 244,326 options were
surrendered pursuant to a termination of employment
agreement.
|
| (3) |
Reflects
the grant in April 2005 equal to 3% of the outstanding shares
and other
options made. Does not reflect a grant in January 2006 post fiscal
year
end increasing the number of options to 5% of the shares and
options of
the Company which was made in the current fiscal
year.
|
____________________
Aggregate
Option Exercises In Last Fiscal Year And Fiscal Year-End Option
Values
No
options were exercised by an officer in the year ended December 31, 2003,
the 10
months ended October 31, 2004 and the 12 months ended October 31, 2005. The
following table sets forth the value of unexercised options with respect
to each
of the executive officers named under the compensation table.
|
Number
Of Securities
Underlying
Unexercised
Options
At Fiscal Year-
End(1)
|
Value
Of Unexercised
In-The-Money
Options
At
Fiscal Year-End($)(2)
|
||||||||||||||||||
|
Name
|
Year
|
Shares
Acquired On
Exercise
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||
|
J.
Todd Derbin
|
2005
|
0
|
1,273,135
|
83,101
|
$
|
47,033
|
$
|
4,017
|
|||||||||||
|
President,
Chief Executive Officer,
and
Director
|
2004
|
0
|
586,382
|
586,382
|
$
|
53,947
|
$
|
51,015
|
|||||||||||
|
|
2003
|
0
|
293,191
|
879,575
|
$
|
26,974
|
$
|
80,921
|
|||||||||||
|
Roni
Appel
|
2005
|
0
|
254,075
|
951,835
|
$
|
-
|
$
|
-
|
|||||||||||
|
Secretary,
Chief Financial
Officer,
and Director
|
2004
|
0
|
91,567
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
|
|
2003
|
0
|
49,305
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
|
Dr.
John Rothman VP
|
2005
|
0
|
0
|
360,000
|
$
|
-
|
$
|
-
|
|||||||||||
| (1) |
Certain
of the options are immediately exercisable for all the option shares
as of
the date of grant but any shares purchased are subject to repurchase
by us
at the original exercise price paid per share if the optionee ceases
service with us before vesting in such shares.
|
| (2) |
The
values are based on the difference between (i) of $0.25, the highest-bid
price on October 31, 2005 quoted on the OTCBB. the fair market
value of
our Common Stock at fiscal year end of $0.195 per share prior to
November
11, 2004, and $0.287 per share post November 11, 2004, determined
by the
board to be equal to our Private Placement price per share and
(ii) the exercise price.
|
2004
Stock Option Plan
Our
Board
of Directors adopted and stockholders approved in November 2004 the 2004
Stock
Option Plan (“2004 Plan”). The 2004 Plan provides for the grant of options to
purchase up to 2,381,525 shares of our Common Stock to employees, officers,
directors, consultants and others who are eligible to receive options under
either plan. Options may be either “incentive stock options” or non-qualified
options under the Federal tax laws. Incentive stock options may be granted
only
to our employees, while non-qualified options may be issued to non-employee
directors, consultants and others, as well as to our employees.
The
Plan
is administered by “disinterested members” of the Board of Directors or the
compensation committee, who determine, among other things, the individuals
who
shall receive options, the time period during which the options may be partially
or fully exercised, the number of shares of Common Stock issuable upon the
exercise of each option and the option exercise price.
Subject
to a number of exceptions, the exercise price per share of Common Stock subject
to an incentive option may not be less than the fair market value per share
of
Common Stock on the date the option is granted. The per share exercise price
of
the Common Stock subject to a non-qualified option may be established by
the
Board of Directors, but shall not, however, be less than 85% of the fair
market
value per share of Common Stock on the date the option is granted. The aggregate
fair market value of Common Stock for which any person may be granted incentive
stock options which first become exercisable in any calendar year may not
exceed
$100,000 on the date of grant.
No
stock
option may be transferred by an optionee other than by will or the laws of
descent and distribution, and, during the lifetime of an optionee, the option
will be exercisable only by the optionee. In the event of termination of
employment or engagement other than by death or disability, the optionee
will
have no more than three months after such termination during which the optionee
shall be entitled to exercise the option, unless otherwise determined by
the
Board of Directors to the extent exercisable on the date of termination.
Upon
termination of employment or engagement of an optionee by reason of death
or
permanent and total disability, the optionee’s options remain exercisable for
one year to the extent the options were exercisable on the date of such
termination. No similar limitation applies to non-qualified
options.
Options
may not be granted under the Plan after November 11, 2014. Subject to a number
of exceptions, holders of incentive stock options granted under the Plan
cannot
exercise these options more than ten years from the date of grant. Options
granted under the Plan generally provide for the payment of the exercise
price
in cash and may provide for the payment of the exercise price by delivery
to us
of shares of Common Stock already owned by the optionee having a fair market
value equal to the exercise price of the options being exercised, or by a
combination of these methods. Therefore, if it is provided in an optionee’s
options, the optionee may be able to tender shares of Common Stock to purchase
additional shares of Common Stock and may theoretically exercise all of his
stock options with no cash investment.
Any
unexercised options that expire or that terminate upon an employee’s ceasing to
be employed by us become available again for issuance under the
Plan.
See
“ Item 2. Proposal to Approve the 2005 Stock Option Plan”
15
SECURITY
OWNERSHIP OF OUR NAMED EXECUTIVE
OFFICERS
|
Name
|
Number
of Shares of Common
Stock Beneficially Owned as of March 31, 2006
|
Percentage
of Class Beneficially Owned*
|
|
J.
Todd Derbin
|
2,195,033
(1)
|
5.47%
|
|
Roni
Appel
|
5,372,160
(2)
|
13.16%
|
|
Dr.
John Rothman
|
590,000(3)
|
1.52%
|
|
All
Directors and Officers as a Group
(9
people)
|
12,582,450(4)
|
28.36%
|
_____________________________________
*
Based
on 38,423,007 shares of Common Stock outstanding as of March 31,
2006.
| (1) |
Reflects
469,982 shares, 1,356,236 options and 368,815 warrants.
|
| (2) |
Represents
2,620,760 shares, 14,449 warrants, 2,231,943 options and 355,528
shares
and 149,480 options and warrants beneficially owned by Carmel Ventures,
Inc. of which Mr. Appel is a controlling person but does not include
58,580 warrants, and 55,580 options held by Mr. Appel and 355,258
warrants
held by Carmel Ventures, Inc. because such warrants and options
are not
under the current circumstances, exercisable within the sixty days
of
March 31, 2006.
|
| (3) |
Reflects
80,000 shares and 510,000 options to purchase
shares.
|
| (4) |
Includes
an aggregate of 5,936,314 options and
warrants.
|
Except
as
otherwise set forth, information on the stock ownership of each person was
provided to the Company by such person.
Other
than the 2004 Plan and the proposed 2005 Stock Option Plan, the Company does
not
have any compensation plans or arrangements benefiting employees or
non-employees under which equity securities of the Company are authorized
for
issuance in exchange for consideration in the form of goods or services.
See
“Item 2. Proposal to Approve 2005 Stock Option Plan”.
16
ITEM
2. PROPOSAL TO APPROVE 2005 STOCK OPTION PLAN
The
Board
in June 2005 approved, subject to stockholders’ approval, the Company’s 2005
Stock Option Plan (the “2005 Plan”), a copy of which is attached to this Proxy
Statement as Annex A. The 2005 Plan authorizes the grant of options to employees
of the Company or its subsidiaries, individuals performing consulting services
to the Company or its subsidiary, directors of the Company or its subsidiary
who
are not employees of the Company or its subsidiary, and employees and
consultants of a corporation which has been acquired by the Company or its
subsidiary.
As
of
March 31, 2006, there were 5,600,000 shares of Common Stock authorized under
the
2005 Plan. The Board, subject to the approval by the Company’s stockholders of
the 2005 Plan, has granted under the 2005 Plan options to purchase an aggregate
of 4,385,319 shares of Common Stock with exercise prices ranging from $0.22
to
$0.287 per share, including options for 510,000 shares to Dr. Rothman, and
options for 150,000 shares to Fredrick D. Cobb who was appointed Vice President
-Finance on February 20, 2006.
The
following table sets forth information regarding options granted under the
2005
plan previously granted by the Company to each of the Company’s executive
officers named under the "Compensation of Officers and Directors", all current
executive officers as a group, all current directors who are not executive
officers as a group and all employees other than executive officers as a
group:
|
Name
and Position
|
Number
of
Stock
Options Previously Granted
|
Weighted
Average Exercise Price
|
|
J.
Todd Derbin, Director
|
427,796
|
$0.287
|
|
Roni
Appel
|
2,287,523
|
$0.253
|
|
Executive
Officer Group (5 persons)
|
3,375,319
|
$0.26
|
|
Non-Executive
Directors Group (4 persons)
|
550,000
|
$0.280
|
|
Non-Executive
Employee Group (1 persons)
|
60,000
|
$0.260
|
________________________
The
2005
Plan may not be amended to increase the maximum number of shares which may
be
granted under the 2005 Plan (except under the anti-dilution provisions contained
therein) or to change the class of persons to whom options may be granted
without the affirmative vote of holders of the Company’s Common
Stock.
The
last
reported sale price of the Company’s Common Stock (symbol “ADXS.OB”) on the Over
the Counter Bulletin Board on [March 31, 2006, was $0.26 per share].
The
proceeds received by us upon the exercise of the stock options granted under
the
2005 Plan will be used for general corporate purposes.
Financial
Statement Treatment of Options
Currently,
the Company expenses the fair value of equity-based awards, such as stock
options granted or modified in accordance with generally accepted accounting
principles (GAAP) in the United States of America. Modifications such as
lowering the exercise prices or extending the expiration dates could result
in
material additions to the Company's non-cash expenses.
The
2005
Plan permits the Company to grant both incentive stock options (“Incentive Stock
Options” or “ISOs”) within the meaning of Section 422 of the Code, and other
options which do not qualify as Incentive Stock Options (the “Non-Qualified
Options”).
17
Unless
earlier terminated by the Board, the 2005 Plan (but not outstanding options)
terminates on December 31, 2014, after which no further awards may be granted
under the 2005 Plan. The 2005 Plan is administered by the full Board or,
at the
Board’s discretion, by a committee of the Board consisting of at least two
persons who are “disinterested persons” defined under Rule 16b-2(c)(ii) under
the Exchange Act (the “Stock Option Committee”). As of March 31, 2006, the Board
has not appointed a Stock Option Committee.
Recipients
of options under the 2005 Plan (“Optionees”) are selected by the Board or the
Stock Option Committee. The Board or Stock Option Committee determines the
terms
of each option grant including (1) the purchase price of shares subject to
options, (2) the dates on which options become exercisable and (3) the
expiration date of each option (which may not exceed ten years from the date
of
grant). The minimum per share purchase price of options granted under the
2005
Plan for Incentive Stock Options is the Fair Market Value (as defined in
the
2005 Plan) or for Nonqualified Options is 85% of Fair Market Value of one
share
of the Common Stock on the date the option is granted.
Optionees
have no voting, dividend or other rights as stockholders with respect to
shares
of Common Stock covered by options prior to becoming the holders of record
of
such shares. The purchase price upon the exercise of options may be paid
in
cash, by certified bank or cashier’s check, by tendering stock held by the
Optionee, as well as by cashless exercise either through the surrender of
other
shares subject to the option or through a broker. The total number of shares
of
Common Stock available under the 2005 Plan, and the number of shares and
per
share exercise price under outstanding options will be appropriately adjusted
in
the event of any reorganization, merger or recapitalization of the Company
or
similar corporate event.
The
Board
may at any time terminate the 2005 Plan or from time to time make such
modifications or amendments to the 2005 Plan as it may deem advisable and
the
Board or Stock Option Committee may adjust, reduce, cancel and regrant an
unexercised option if the fair market value declines below the exercise price
except as may be required by any national stock exchange or national market
association on which the Common Stock is then listed. In no event may the
Board,
without the approval of stockholders, amend the 2005 Plan to increase the
maximum number of shares of Common Stock for which options may be granted
under
the 2005 Plan or change the class of persons eligible to receive options
under
the 2005 Plan.
Subject
to limitations set forth in the 2005 Plan, the terms of option agreements
will
be determined by the Board or Stock Option Committee, and need not be uniform
among Optionees.
FEDERAL
INCOME TAX CONSEQUENCES. The following is a brief discussion of the Federal
income tax consequences of transactions under the 2005 Plan. This discussion
is
not intended to be exhaustive and does not describe state or local tax
consequences.
Incentive
Options
No
taxable income is realized by the Optionee upon the grant or exercise of
an
Incentive Stock Option, except as noted below with respect to the alternative
minimum tax. If Common Stock is issued to an Optionee pursuant to the exercise
of an Incentive Stock Option, and if no disqualifying disposition of such
shares
is made by such Optionee within two years after the date of grant or within
one
year after the transfer of such shares to such Optionee, then (1) upon sale
of such shares, any amount realized in excess of the option price will be
taxed
to such Optionee as a long-term capital gain and any loss sustained will
be a
long-term capital loss, and (2) no deduction will be allowed to the Optionee’s
employer for federal income tax purposes.
18
Except
as
noted below for corporate “insiders,” if the Common Stock acquired upon the
exercise of an Incentive Stock Option is disposed of prior to the expiration
of
either holding period described above, generally (1) the Optionee will
realize ordinary income in the year of disposition in an amount equal to
the
excess (if any) of the fair market value of such shares at exercise (or,
if
less, the amount realized on the disposition of such shares) over the option
price paid for such shares and (2) the Optionee’s employer will be entitled to
deduct such amount for Federal income tax purposes if the amount represents
an
ordinary and necessary business expense. Any further gain (or loss) realized
by
the Optionee will be taxed as short-term or long-term capital gain (or loss),
as
the case may be, and will not result in any deduction by the
employer.
Subject
to certain exceptions for disability or death, if an Incentive Stock Option
is
exercised more than three months following termination of employment, the
exercise of the Option will generally be taxed as the exercise of a
Non-Qualified Option.
For
purposes of determining whether an Optionee is subject to any alternative
minimum tax liability, an Optionee who exercises an Incentive Stock Option
generally would be required to increase his or her alternative minimum taxable
income, and compute the tax basis in the stock so acquired, in the same manner
as if the Optionee had exercised a Non-Qualified Option. Each Optionee is
potentially subject to the alternative minimum tax. In substance, a taxpayer
is
required to pay the higher of his/her alternative minimum tax liability or
his/her “regular” income tax liability. As a result, a taxpayer has to determine
his potential liability under the alternative minimum tax.
Non-Qualified
Options
Except
as
noted below for corporate “insiders,” with respect to Non-Qualified Options:
(1) no income is realized by the Optionee at the time the option is
granted, except for options which vest immediately if granted at an exercise
price less than fair market value; (2) generally, at exercise, ordinary
income is realized by the Optionee in an amount equal to the difference between
the option price paid for the shares and the fair market value of the shares,
if
unrestricted, on the date of exercise, and the Optionee’s employer is generally
entitled to a tax deduction in the same amount subject to applicable tax
withholding requirements; and (3) at sale, appreciation (or depreciation)
after the date of exercise is treated as either short-term or long-term capital
gain (or loss) depending on how long the shares have been held.
As
a
result of a recent ruling by the Internal Revenue Service (the “IRS”), if a
granted Non-Qualified Option contains an exercise price below fair market
value
on the date of grant, the Optionee will realize on the first date the option
is
exercisable ordinary income in an amount equal to the difference between
the
exercise price and the fair market value on the date of grant.
Special
Rules Applicable To Corporate Insiders
As
a
result of the rules under Section 16(b) of the Exchange Act, “insiders” (as
defined therein), depending upon the particular exemption from the provisions
of
Section 16(b) utilized, may not receive the same tax treatment as set forth
above with respect to the grant and/or exercise of options. Generally, insiders
will not be subject to taxation until the expiration of any period during
which
they are subject to the liability provisions of Section 16(b) with respect
to
any particular option. Insiders should check with their own tax advisers
to
ascertain the appropriate tax treatment for any particular option.
BENEFITS.
Inasmuch as awards to all participants under the 2005 Plan will be granted
at
the sole discretion of the Board or Stock Option Committee, such benefits
under
the 2005 Plan are not determinable.
19
VOTE
REQUIRED. Approval of the 2005 Plan will require the affirmative vote of
the
holders of a majority of the shares of the Common Stock of the Company voting,
in person or by proxy, at the Annual Meeting.
RECOMMENDATION.
The Company believes in attracting or retaining employees, management personnel
and consultants, the attraction of options has diminished importance if it
represents a decreased portion of the voting equity of the Company. Accordingly,
in view of the recent sale of our secured convertible debentures and the
accompanying warrants in a recent private placement which are convertible
into and exercisable for at least 16,834,495 shares of Common Stock or a
much
larger amount if converted at a market price of the Common Stock which is
less
than $0.287 per share, the Company believes the 2005 Plan will enhance its
efforts to attract and retain individuals with good ability to service the
Company, motivate their efforts and serve the business interests of the Company,
while reducing the cash payments which the Company would otherwise be required
to make to accomplish such purposes.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR THE
PROPOSAL TO APPROVE THE 2005 STOCK OPTION PLAN.
ITEM
3. PROPOSAL TO REINCORPORATE AS A DELAWARE CORPORATION
The
Board
of Directors has adopted a Plan and Agreement of Merger, a copy of which
is
attached to the Proxy Statement as Annex B with its wholly owned subsidiary,
also named Advaxis, Inc., a Delaware corporation (the "Delaware Company")
providing for the merger of the Company with the survivor to be the Delaware
corporation and the stockholders of the Company to be the stockholders of
the
surviving Delaware corporation. Each outstanding share of Common Stock of
Advaxis will be converted into one share of the common stock of the Delaware
Company (the “Merger”).
The
Delaware Company’s certificate of incorporation is the same as the current
articles of incorporation of the Company, except for limited provisions such
as
the registered office for Delaware. See Annex C hereto.
The
principal purpose of the Merger is to change the state of incorporation of
the
Company from Colorado to Delaware and thereby to take advantage of several
features of Delaware corporate law which are expected to help us facilitate
our
corporate actions. The
Merger itself will not involve any change in the business, assets, properties,
or management (i.e. the directors and officers) of the Company and the Delaware
Company will remain responsible for all of the liabilities of the Company
and
the liabilities of the Delaware Company.
Such
changes will be effective only upon the filing of the related Certificate
of
Merger with Delaware and Articles of Merger with Colorado.
For
many
years the State of Delaware has followed a policy of encouraging incorporation
in that state and, in furtherance of that policy, has adopted comprehensive,
modern and flexible corporate laws which are periodically updated and revised
to
meet changing business needs. As a result, many corporations have been initially
incorporated in Delaware or have subsequently reincorporated in Delaware
in a
manner similar to that proposed by the Company. Because of the prominence
of the
State of Delaware as a state of incorporation for many corporations, the
Delaware courts have developed considerable expertise in dealing with corporate
issues and a substantial body of case law has developed construing the Delaware
General Corporation Law (“DGCL”) and establishing public policies with respect
to corporations incorporated in Delaware.
Consequently,
DGCL law is comparatively well known and understood. The Company anticipates
that, as in the past, DGCL will continue to be interpreted and explained
in a
number of significant court decisions. Stockholders should be aware, however,
that the DGCL has been publicly criticized on the grounds that it does not
afford minority stockholders all the same substantive rights and protections
that are available under the laws of a number of other states and that, as
a
result of the Merger, the rights of stockholders will change in a number
of
important respects. Below is a comparison of material stockholder rights
under
the laws of the Colorado Business Corporation Law (the “CBCL”), the current law
governing the Company and its articles of incorporation, with the DGCL.
20
Capital
Stock
The
articles of incorporation of the Company and the certificate of incorporation
of
the Delaware Company provide for an authorized capital stock of 505,000,000
shares of which 500,000,000 shares are Common Stock par value $0.001 per
share,
and 5,000,000 shares of “blank check” preferred stock, par value $0.001 per
share.
There
are outstanding as of March 31, 2006, 38,423,007 shares
of
the Company’s common stock which
held
of
record by approximately
200 stockholders.
No shares of preferred
stock are
outstanding.
The
Board, under the certificate of incorporation of the Delaware Company and
the
articles of incorporation of the Company, is authorized to issue the preferred
stock is such series as it may determine with such rights including as to
dividend, voting, liquidation or conversion as it may determine.
Voting
Rights on Extraordinary Transactions
Colorado.
Under
the CBCL, the holders of the Company’s common stock have the right to vote, as a
separate class on, among other things: (i) a plan of merger or a plan of
share
exchange, and (ii) a proposal to dissolve the corporation or to revoke the
dissolution of the corporation. In addition, under the CBCL, the holders
of
common stock are entitled to vote, as a separate class, on any sale, lease,
exchange or other disposition of all or substantially all of the property
and
assets of the Company, which would include a sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
Company to any subsidiary of the Company that is not a direct or indirect
wholly
owned corporation. The foregoing actions require approval by the holders
at a
duly held meeting of the holders of a majority of the outstanding shares
of
common stock or in the absence of a meeting by the written consents of the
holders of all of the Company’s common stock.
Delaware.
Under
the
DGCL the foregoing actions requires approval of a majority of the outstanding
voting shares of the corporation other than (i) participation in the share
exchange, (ii) a sale, lease or exchange of all or substantially all of the
property and assets to an entity wholly owned by the Delaware Company, or
(iii)
a disposition other than a sale, lease or exchange of all or substantially
all
the property of the Delaware Company.
Quorum
Both
the
CBCL and DGCL provide that unless otherwise provide by the certificate of
incorporation or bylaws a quorum for a stockholders meeting is the holders
of a
majority of the shares entitled to vote on the matters presented. Both the
Company’s and the Delaware Company’s bylaws provide that one-third of the votes
entitled to be cast on a matter by a voting group shall constitute a quorum
of
that voting group for action on a matter.
21
Number
of Directors
Both
the
CBCL and DGCL permit a board of directors of one or more Directors.
Vote
Required for the Election of Directors
The
CBCL
and DGCL provide that unless otherwise provided by the certificate or articles
of incorporation or bylaws a plurality of the votes of the shares present
in
person or represented by proxy at a meeting and entitled to vote for directors
is required in order to elect a director.
Action
by Stockholders Without a Meeting
Colorado.
As
required by the CBCL, the bylaws of the Company provide that any action required
or permitted to be taken at a stockholders' meeting may be taken without
a
meeting if all of the stockholders entitled to vote thereon consent to such
action in writing and that such action is to be effective as of the date
the
last writing necessary to effect the action is received by the secretary
of the
Company, unless all of the written consents necessary to effect the action
specify a later date as the effective date of the action.
Delaware.
The
Delaware company’s bylaws, consistent with the DGCL, provide that any action
that could be taken at an annual or special meeting of stockholders may be
taken
without a meeting, without prior notice and without a vote if written consents
are signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action
at a
meeting at which all shares entitled to vote thereon were present and voted.
In
addition, consistent with DGCL requirements, the bylaws of the Delaware Company
contain the following two provisions which are not provided for by the current
bylaws of the Company: (i) in order to be effective, all written consents
must
be delivered to the Delaware Company within 60 days of the earliest dated
consent delivered to the Delaware Company, and (ii) prompt notice of the
action
by written consent must be given to those stockholders who have not consented
in
writing and who, if the action had been taken at a meeting, would have been
entitled to notice of the meeting if the record date for such meeting had
been
the date that written consents signed by a sufficient number of stockholders
to
take the action were delivered to the Delaware Company.
Removal
of Directors
Colorado.
As
required by the CBCL, the Company’s articles of incorporation and bylaws provide
that any director may be removed, with or without cause, only by the holders
of
common stock, if the votes cast in favor of removal exceed the votes cast
against removal.
Delaware.
The
bylaws of the Delaware Company provide the same right of removal of directors
but consistent with the DGCL removal by the common stockholders may be effected
with or without cause by a majority vote of the shares of common stock entitled
to vote at an election of directors and that any director may be removed
at any
time for cause by the vote of a majority of the Board.
Indemnification
Colorado.
The CBCL
states that unless otherwise provided by the articles of incorporation, a
corporation shall indemnify a person who was wholly successful on the merits
or
otherwise in the defense of any proceeding because of being a director against
reasonable expenses incurred in connection with the proceedings. The Company’s
articles of incorporation, consistent with the CBCL, provides that the Company
may to the fullest extent permitted (i) by Section 7-109-10L of the CBCL
indemnify directors, officers, employees and agents against expenses,
liabilities and other matters; and (ii) eliminate or limit the personal
liabilities of a director to the corporation or its shareholders under the
CBCL,
if such person acted in good faith and in a manner such person reasonably
believed to be if in the best interests of the Company or with respect to
a
criminal proceeding, such person had no reasonable cause to believe the person's
conduct was unlawful. No indemnification is to be made if such persons are
adjudged to be liable to the Company for his own negligence or misconduct
unless
the court determines that such persons are fairly and reasonably entitled
to
indemnify. In addition, the CBCL requires the Company to give stockholders
before the notice of the next stockholders' meeting, a notice of all
indemnification of, or advancement of expenses to, directors of the Company
in
connection with a proceeding by or in the right of the corporation. The advance
of expenses is to be made against an undertaking to return the advance if
the
director or officer is found not to have met the standard of care for such
office.
22
Delaware.
The
certificate of incorporation and the bylaws of the Delaware Company similarly
provide that the officers and directors of the Delaware Company are to be
indemnified to the fullest extent permitted by Delaware law. Pursuant to
authority conferred by Section 102 of the DGCL, the Delaware Company’s
certificate of incorporation contains a provision providing that the personal
liability of a director is eliminated to the fullest extent provided by the
DGCL. The effect of this provision is that no director of the Delaware Company
is personally liable to the Delaware Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
for (i)
any breach of the director’s duty of loyalty to the Delaware Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payment
of
dividends as provided in Section 174 of the DGCL and (iv) any transaction
from
which the director derived an improper personal benefit. This provision is
intended to eliminate the risk that a director might incur personal liability
to
the Delaware Company or its stockholders for breach of duty of care. The
certificate of incorporation also provides that if the Delaware Law is amended
to eliminate or limit further the liability of directors, then the liability
of
a director of the Company shall be correspondingly eliminated or limited,
without further stockholder action.
The
bylaws of the Delaware Company prohibit indemnification if the officer or
employee is adjudged to be liable unless and only to the extent that the
Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
The
bylaws of the Delaware Company contain the following provisions not currently
contained in the current bylaws of the Company: (i) a clarification that
any
repeal or amendment of the indemnification provisions contained in the bylaws
of
the Delaware Company will not adversely affect any right or protection in
respect of any act or omission occurring prior to the time of such repeal
or
modification, and (ii) the Delaware Company will provide indemnification
to
directors and officers with respect to proceedings commenced by the director
or
officer only if commencement of such proceeding has been authorized by the
board
of directors of the Delaware Company.
Notice
of Adjournments and Other Actions
Colorado.
Consistent with the CBCL, the current bylaws of the Company require that
(i) if
the authorized shares of the Company are to be increased, at least 30 days'
notice shall be given to the stockholders of record and (ii) if a stockholder
meeting is adjourned for more than 120 days (in which case a new record date
is
to be fixed by the Board of the Company), notice shall be given to record
holders as of the new record date.
23
Delaware.
The
bylaws of the Delaware Company provide for the same notice requirements as
the
current bylaws of the Company, except that consistent with the DGCL there
is no
set notice period for an increase in the authorized shares and the notice
requirement in the case of adjournments is 30-days notice, rather than 120-day
notice.
Record
Date
Colorado.
Consistent with the CBCL, the current bylaws of the Company provide that
with
respect to all actions requiring the fixing of a record date (including for
distributions) other than a stockholder action by written consent, the record
date is not to be less than 10 or more than 70 days before the meeting or
action
requiring a determination of stockholders. With respect to a stockholder
action
by written consent, the record date is the date on which a writing upon which
the action is taken is first received by the Company.
Delaware.
Consistent with the DGCL, the bylaws of the Delaware Company provide that
(i)
the record date is not to precede the date upon which the resolution fixing
the
record date is adopted by the board of directors, and (ii) in the case of
an
action by written consent, the record date must be not be more than 10 days
after the date upon which the resolution fixing the record date is adopted
by
the board of directors.
Amendment
to the Articles (Certificate) of Incorporation
Colorado.
Under
the CBCL, amendments to the Company’s articles of incorporation, other than
ministerial amendments authorized by the directors without stockholder action,
may be proposed by the board of directors of the Company or by the holders
of
shares representing at least 10% of all of the votes entitled to be cast
on the
amendment. The board of directors of the Company must recommend the amendment
to
the stockholders, unless the amendment is being proposed by the stockholders,
or
unless the board of directors determines that because of a conflict of interest
or other special circumstances it should make no recommendation and communicates
the basis for its determination to the stockholders with the
amendment.
Delaware.
Under
the DGCL, stockholders are not entitled to enact, without the prior adoption
by
the board of directors, an amendment to the certificate of incorporation
of the
Delaware Company.
Amendment
to the Bylaws
The
bylaws of the Company and of the Delaware Company provide that the board
of
directors or stockholders may amend, restate or repeal the bylaws of the
Company.
Dissolution
Under
the
CBCL and the DGCL, the board of directors may submit a proposal of voluntary
dissolution to the stockholders of the Company entitled to vote thereon.
The
board of directors of the Company must recommend such dissolution to the
stockholders as part of the dissolution proposal, unless the board of directors
of the Company under the CBCL determines that because of a conflict of interest
or other special circumstances it should make no recommendation and communicates
the basis for its determination to the stockholders. Under the DGCL, if the
board of directors of the Delaware Company does not approve such dissolution,
the stockholder vote required for approving a dissolution of the Delaware
Company may only be effected by is a unanimous written consent of all
stockholders entitled to vote thereon.
24
Dividends
Colorado.
Under
the
CBCL, payment of distributions is generally permissible unless after giving
effect to the dividend or distribution, the corporation would be unable to
pay
its debts as they become due in the usual course of business, or if the total
assets of the corporation would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were dissolved at
the
time the dividend was paid, to satisfy the preferential rights of stockholders
whose preferential rights upon dissolution of the corporation are greater
than
those of other stockholders receiving the dividend. The CBCL provides that
no
dividend may be paid on outstanding shares of capital stock with shares of
another class without approval of the stockholders of the class from which
the
dividend is paid.
Delaware.
The
DGCL permits the payment of dividends out of (i) surplus, which it defines
as
the excess of the net assets of the corporation over the capital of the
corporation, or (ii) if there is no surplus, out of the net profits for the
fiscal year in which the dividend is declared and/or for the preceding fiscal
year. Unless the board of directors determines otherwise, the capital of
the
corporation is equal to the aggregate par value of the shares of stock having
par value. There is no requirement as to a class approval of stock dividends
on
shares of another class.
Corporate
Records (Form of Records)
Colorado.
Under
the
CBCL, the Company is required to keep as permanent records minutes of all
meetings of the stockholders and the board of directors of the Company, a
record
of all actions taken by the stockholders or the board of directors of the
Company without a meeting, a record of all actions taken by a committee of
the
board of directors of the Company, and a record of all waivers of notices
of
meetings of stockholders and of the board of directors of the Company or
any
committee of the board of directors. In addition, the CBCL requires the Company
to keep specific records at its principal office, including the Company’s
articles of incorporation, the current bylaws of the Company and the minutes
of
all stockholders' meetings, and records of all action taken by stockholders
without a meeting, for the past three years.
Delaware.
The
DGCL
provides that any records maintained by the Delaware Company in the regular
course of its business, including its stock ledger, books of account and
minute
books, may be kept on, or by means of, or be in the form of, any information
storage device or method, provided that the records so kept can be converted
into clearly legible paper form within a reasonable time. The DGCL does not
require that any specific records be kept at any particular place or for
a
specific period of time.
Examination
of Books and Records
Colorado
and Delaware. Under
the
CBCL and the DGCL, any record or beneficial stockholder of the Company
may, upon five days' written demand, inspect certain records, including of
stockholder actions, minutes of stockholder meetings, communications with
stockholders and recent financial statements. In addition, upon five days'
written demand, any such stockholder may inspect the list of stockholders
and
certain other corporate records, including minutes of the meetings of board
of
directors of the Company except that under CBCL the stockholder either has
to
(i) have been a stockholder for at least 3 months or (ii) be a holder of
at
least 5% of all outstanding shares of any class of shares when the demand
is
made, provided that the demand is made in good faith for a proper purpose
reasonably related to such person's interests as a stockholder. Under
the
DGCL, if the Delaware Company refuses to permit inspection or does not reply
to
the demand within five business days after the demand has been made, the
stockholder may apply to the Court of Chancery for an order to compel such
inspection.
25
Substantial
or Interested Stockholder Restrictions
Colorado.
Under
the
CBCL the articles of incorporation of a corporation may provide (the Company’s
articles of incorporation do not provide) that the shares of a “Substantial
Stockholder” (a beneficial owner of more than 10% of the then issued outstanding
shares of common stock) may not be voted with respect to any matter presented
to
the Company by the Substantial Stockholder; such excess shall be deducted
from
the total number of shares outstanding for purposes of determining the
proportion of common stock required to approve a matter submitted for such
stockholder approval or to constitute a quorum.
Delaware.
Section
203 of the DGCL provides for a three-year moratorium on certain business
combinations with “interested stockholders” (as hereinafter defined).
Section
203 of the DGCL provides, subject to a number of exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations
with
a person or an affiliate, or an associate of an affiliate, who is an “interested
stockholder” for a period of three years from the date that person became an
interested stockholder unless:
| · |
the
transaction resulting in a person becoming an interested stockholder,
or
the business combination, is approved by the board of directors
of the
corporation before the person becomes an interested
stockholder;
|
| · |
the
interested stockholder acquired 85% or more of the outstanding
voting
stock of the corporation in the same transaction that makes such
person an
interested stockholder, excluding shares owned by persons who are
both
officers and directors of the corporation, and the shares held
by certain
employee stock ownership plans; or
|
| · |
on
or after the date the person becomes an interested stockholder,
the
business combination is approved by the corporation's board of
directors
and by the holders of at least 66-2/3% of the corporations’ outstanding
voting stock at an annual or special meeting, excluding the shares
owned
by the interested stockholder. Under Section 203 of the DGCL, an
“interested stockholder” is defined as any person who is either the owner
of 15% or more of the outstanding voting stock of the corporation
or an
affiliate or associate of the corporation and who was the owner
of 15% or
more of the outstanding voting stock of the corporation at any
time within
the three-year period immediately prior to the date on which it
is sought
to be determined whether such person is an interested stockholder.
|
However,
as permitted by the DGCL, the Delaware
Company in its certificate of incorporation has opted out of Section 203
of the
DGCL.
Dissenters'
(Appraisal) Rights
Colorado.
Under
the
CBCL, stockholders are entitled to exercise dissenters' rights in the event
of
certain mergers (including the proposed merger with the Delaware Company),
share
exchanges, sales, leases, exchanges, or other dispositions of all or
substantially all of the property of the corporation. Stockholders also may
dissent in the case of a reverse stock split that reduces the number of shares
owned to a fraction of a share or to scrip if such scrip is to be acquired
for
cash or voided. A merger between a corporation and its subsidiary in which
it
owns at least 90% of the outstanding shares will give rise under the CBCL
to
appraisal rights if as a result of the merger the certificate of incorporation
or bylaws of the parent are amended other than as to limited provisions such
as
name and registered office.
26
Delaware.
The
DGCL
provides appraisal rights only in the case of a stockholder objecting to
certain
mergers or consolidations but stockholders have no appraisal rights in a
sale,
lease, or exchange of all or substantially all of a corporation's
assets.
Derivative
Actions
Colorado.
Under
the
CBCL, if a court finds that a derivative action was brought without reasonable
cause, the court may require the plaintiff to pay the defendants' reasonable
expenses attributable to the defense of such action, exclusive of attorney's
fees. In addition, the Company may, at any time before final judgment, require
the plaintiff to give security for the costs and reasonable expenses which
may
be incurred by the Company or other parties named as defendants in the defense
of such action, but not including attorney's fees, if the stockholder
instituting the action holds less than 5% of the outstanding shares of any
class
of the Company, unless the shares so held have a market value in excess of
$25,000. If the court then finds that the action was instituted without cause,
the corporation may have recourse to such security in the amount determined
by
the court.
Delaware.
The
DGCL's requirements for bringing derivative actions are substantially similar
to
those contained in the CBCL, except that the DGCL does not (i) impose the
reasonable cause requirement or (ii) require security.
Reacquisition
of Stock by the Company
Colorado.
Under
the
CBCL, the Company may acquire its own shares, subject to certain limitations,
and except in certain circumstances, such shares will constitute authorized
but
unissued shares.
Delaware.
The
DGCL
requires that (i) all repurchases of shares be made of out of surplus and
(ii) a
purchase of shares redeemable at the option of the corporation not be made
at a
premium, an amount greater than its redemption price set forth in the
certificate of incorporation.
Under
the
DGCL, shares of stock issued by the Delaware Company as fully paid and
afterwards reacquired by the Delaware Company without applying “capital” in
connection with such reacquisition have the status of “treasury shares” if the
board of directors does not by resolution retire the shares reacquired. Treasury
shares differ from stock that is authorized and unissued in that treasury
shares
that have a par value are freed from the requirement that they must be sold
at
not less than par.
Franchise
Tax
Colorado.
There
is
no franchise tax in Colorado.
Delaware.
The
DGCL
requires corporations to pay franchise tax annually (current maximum is $165,000
a year).
Blank
Check Capital Stock
Both
the
Company’s articles of incorporation and the Delaware Company’s certificate of
incorporation authorize the board of directors to issue up to 5,000,000 shares
of preferred stock in one or more series, and to fix for each series the
number,
dividend rights, conditions of redemption, rights on dissolution, voting
rights,
conversion privileges and other rights and limitations to the extent permitted
by the corporate law.
27
Such
blank check preferred stock may be issued in the future in connection with
acquisitions, financings, or other matters as the board of directors or any
authorized committee deems
appropriate. In the event that any series are to be issued, a certificate
of
designation containing the rights, privileges, and limitations of such series
of
capital stock shall be filed with the Secretary of the State of Colorado
or of
Delaware, as the case may be. The effect of such blank check capital stock
is
that the Board alone, and subject to, federal securities laws and the applicable
provisions of the CBCL or DGCL, as the case may be, are able to authorize
the
issuance of capital stock which could have the effect of delaying, deferring,
or
preventing a change in control of the Company or the Delaware Company without
further action by their stockholders, and may adversely affect the voting
and
other rights of the holders of the outstanding shares of capital stock. The
issuance of a series of preferred stock with voting and conversion rights
may
also adversely affect the voting power of the holders of the then outstanding
shares of Common Stock, including the loss of voting control to
others.
Federal
Income Tax Consequences
The
following discussion is based upon the Internal Revenue Code of 1986, as
amended
(the “Code”), applicable Treasury Regulations, judicial authority and
administrative rulings and practice, all as of the date hereof. The Company
has
not and will not request a ruling from the IRS regarding the tax consequences
of
the Merger.
The
Company believes that the Merger and the resulting reincorporation from Colorado
to Delaware will constitute a tax-free reorganization within the meaning
of
Section 368(a) of the Code. Accordingly, for federal income tax purposes:
(i) no gain or loss will be recognized upon consummation of the
reincorporation merger and the receipt of the Delaware Company’s common
stock;
(ii) the aggregate tax basis of shares of Delaware Company’s common
stock
received
in the Merger will be the same as the aggregate tax basis of shares of Company’s
Common
Stock
exchanged in the reincorporation merger; and (iii) the holding period of
the shares of Delaware Company’s common
stock
received
in the reincorporation merger will include the period for which shares of
Company’s Common
Stock
were
held.
The
foregoing discussion does
not
deal with all federal income tax consequences that may be relevant to a
particular holder of shares of the Company’s Common
Stock,
or any
foreign, state, or local tax considerations. Accordingly,
holders of the Company’s Common Stock are urged to consult their own tax
advisors as to the specific federal, foreign, state, and local tax consequences
to them as a result of the reincorporation merger.
Regulatory
Approval
To
the
knowledge of the Company, the only required regulatory or governmental approval
or filing necessary in connection with the consummation of the Merger will
be
the filing of the Articles of Merger (including the Plan and Agreement of
Merger) with the Secretary of State of Colorado and the filing of the
Certificate of Merger with the Secretary of State of Delaware.
28
Termination
The
Merger may be terminated, notwithstanding stockholder approval, by our Board
at
any time before consummation of the Merger if our Board determines that in
its
judgment the Merger does not appear to be in the best interests of our
stockholders. In the event the Merger is terminated, the Company would remain
as
a Colorado corporation.
Exchange
Of Share Certificates
As
soon
as practicable on or after Merger, our stockholders of record on the effective
date of the Merger immediately will be sent detailed instructions concerning
the
procedures to be followed for submission of certificates representing their
holdings of Common Stock in the Company to our transfer agent, together
with a form of transmittal letter to be sent to the transfer agent at the
time
such certificates are submitted. Thereafter,
the transfer agent will deliver to any holder who has submitted (i) a duly
completed and executed transmittal letter and (ii) the stock certificate
or
certificates representing the holder's shares of Common Stock, a stock
certificate issued by us representing the number of shares of the Common
Stock
of the Delaware Company equal to the number of shares in the Company represented
by the stock certificate submitted by the shareholders.
After
the
Merger but before a new certificate representing Common Stock is surrendered,
certificates representing our Common Stock will represent the like number
of
shares of Common Stock of the Delaware Company.
Failure
by a stockholder to return appropriate transmittal letters or to surrender
certificates representing Common Stock will not affect such person's rights
as a
stockholder, as such stockholder's certificates representing Common Stock
following the Merger will represent the number of shares of Common Stock
of the
Delaware Company as the number of shares of the Common Stock of the Company
before the Merger.
Rule
145 Exemption From Securities Act Registration
Pursuant
to Rule 145 under the Securities Act of 1933, as amended (the “Securities Act”),
the merger of the Colorado corporation into the Delaware Company and the
exchange of our shares of Common Stock in the Colorado corporation into the
shares of the Common Stock of the Delaware Company is exempt from registration
under the Securities Act, since the purpose of the transaction is a change
of
our domicile within the United States. The effect of the exemption is that
the
shares of our Common Stock issuable in the change of domicile may be resold
by
the former stockholders without restriction to the same extent that such
shares
may have been lawfully sold before the change of domicile.
After
the
Merger, the Delaware Company’s stock as the Company's Common Stock will be
listed for trading on the Over the Counter Bulletin Board, and the surviving
corporation will continue to file periodic reports and other documents with
the
SEC and provide to its stockholders the same types of information that we
have
previously filed and provided. For purposes of computing compliance with
the
holding period requirement of Rule 144 under the Securities Act, stockholders
will be deemed to have acquired their shares of the Delaware Company's common
stock on the date they acquired their shares of the Company’s Common Stock. In
summary, the Delaware Company and its stockholders will be in the same
respective positions under the federal securities laws after the Merger as
were
the Company and its stockholders prior to the Merger.
29
Rights
of Dissenting Stockholders
If the
Merger is approved by the Company’s stockholders, a stockholder of the Company
objecting to its terms may seek relief under Sections 100 to 301 of Chapter
113
of Title 7 of the CBCL, with certain exceptions, which do not apply to this
Merger. An outline of such provisions follows, qualified by and reference
to the
full text of those sections which are attached hereto as Annex
D hereto.
Failure
to comply with Sections 102, 103 and 201 may result in a termination or waiver
of the rights of the dissenting stockholder.
| 1. |
A
stockholder claiming dissenter’s rights under Section 102 or 103 in
connection with the Merger must be a record or beneficial owner
of stock
of the Company on the record date set for determining the stockholders
entitled to vote on the Merger. A dissenting beneficial (but not
record)
owner (for example, the owner of shares held in “street
name”
by a broker) must assert his dissenter’s rights in coordination with and
in the name of the record owner.
|
| 2. |
If
the dissenting stockholder claims dissenter’s rights in connection with
the Merger, he must not have voted any of the shares he owns “For”
the Merger. Failing to vote or abstaining from voting does not
waive the
dissenting stockholder’s rights. A
proxy card returned to the Company signed, but not marked to specify
voting instructions, will be voted “For”
the Merger and will be deemed a waiver of the dissenter’s
rights.
|
| 3. |
The
dissenting stockholder must deliver to the Company before the vote
is
taken,
and may do so by delivering to the Company, addressed to the Corporate
Secretary, a written demand for payment to him of the fair value
of his
shares, stating his address, the number of shares as to which he
seeks to
assert his rights, and the amount claimed as the fair value of
such
shares. Voting
against the Merger does not constitute a written
demand.
|
| 4. |
If
the Merger is authorized at the meeting and the Merger is effected,
the
Company must deliver to the dissenting stockholder no later than
10 days
after the Merger is effected a notice stating: (i) where demand
for
payment must be sent and the stockholders' stock certificates must
be
deposited; and (ii) supply a form for demanding payment that includes
the
dates of the first announcement to the media or stockholders of
the term
of the proposed merger.
|
| 5. |
A
dissenter who receives such notice must demand payment, certify
that he
acquired beneficial ownership before the date required to be set
forth in
the dissenter’s notice of certification and deposit his share
certificates. A dissenter waives his right to demand payment unless
he
notifies the surviving corporation of his demand in writing within
30 days
after the corporation made or offered payment for his shares. The
surviving corporation may restrict the transfer of shares not represented
by a certificate from the date the demand for payment is
received.
|
| 6. |
If
the Company and the stockholder do not agree on the fair value
of the
shares the surviving corporation must, within 60 days after receiving
demand for payment petition the district court in Denver
County, Colorado to determine the fair value of the share and accrued
interest or pay the dissenter the amount demanded. Interest on
the fair
value as well as costs of the proceedings, including reasonable
compensation to any appraiser appointed by the Court, are to be
determined
and apportioned as the Court considers
equitable.
|
30
| 7. |
If
the right to receive the fair value is terminated other than by
the
purchase by the Company of the dissenting stockholder’s shares, then, at
the time of termination, all rights will be restored and any distributions
which would have been made with respect to the shares, except for
the
suspension, will be made to the record owner or the shares at the
time of
termination.
|
Vote
Required; Board Recommendation
The
Merger will be deemed approved if it obtains the affirmative vote of at least
a
majority of the outstanding shares of Common Stock of the Company. Abstentions
and other non-votes will have the effect of votes against approval of the
Merger.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL
REINCORPORATING THE COMPANY FROM A COLORADO CORPORATION TO A DELAWARE
CORPORATION
31
ITEM
4. PROPOSAL TO RATIFY APPOINTMENT OF
INDEPENDENT
AUDITORS
The
Board, subject to stockholders ratification, appointed Goldstein Golub Kessler
LLP (“Goldstein”) as independent auditors of the Company for its financial
statements for the fiscal year ending October 31, 2006. Goldstein has audited
the consolidated financial statements of the Company in
fiscal
year ending October 31, 2005. A representative of that firm is expected
to be present at the Annual Meeting, and will have an opportunity to make
a
statement to the stockholders and will be available to respond to appropriate
questions. The ratification of the appointment will require the affirmative
vote
of the holders of a majority of the outstanding shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote.
Abstentions will be included in determining the number of shares of Common
Stock
present or represented and entitled to vote for purposes of approval and
will
have the effect of votes “against” the proposal.
Stockholder
ratification of the appointment is not required by the Company’s articles of
incorporation or bylaws or otherwise. If the stockholders fail to ratify
the
appointment, the Board will reconsider whether to retain that firm. Even
if the
appointment is ratified, the Board in its discretion may direct the appointment
of a different independent accounting firm at any time during the year if
the
Board determines that such a change would be in the best interests of the
Company and its stockholders.
The
Board of Directors recommends that the stockholders vote for the ratification
of
the appointment of Goldstein Golub Kessler LLP as
the Company’s independent auditors for the fiscal year ending October 31,
2005.
Auditor
Fees
The
following is a summary and description of the fees recorded by the Company
to
Goldstein during the twelve month fiscal years ended October 31, 2005
and
2004:
Audit
Fees: The Company recorded fees of $29,500 and $8,500 respectively, to
Goldstein
in connection with its audit of the Company’s financial statements for the
fiscal years ended October 31, 2005, and 2004 and its review of the Company’s
interim financial statements included in the Company’s Quarterly Reports on Form
10-Q during the periods ended January 31, April 30, and July 31,
2005.
Audit-Related
Fees: The Company recorded fees of $47,346 and $14,000 respectively,
to
Goldstein to perform audit-related services for the fiscal years ended
October
31, 2005 and 2004 primarily for review of securities registration
documents, and amendment thereto, reviews of the SEC comments,
assistance with private placement memorandums and other document
reviews.
Tax
Fees:
Preparation of the corporate tax returns were not performed by
Goldstein.
Other
fees: No fees were classified outside the audit and audit related fees
were
recorded.
OTHER
MATTERS
We
are
not aware of any matters to be presented at the Annual Meeting other than
those
described in this Proxy Statement. However, if other matters which are not
known
a reasonable time before the solicitation should come before the Annual Meeting,
it is intended that the holders of proxies solicited hereby will vote on
such
matters in their discretion.
32
A
COPY OF
THE COMPANY’S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED OCTOBER
31, 2005, INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT.
THE
ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A
COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
STOCKHOLDER
PROPOSALS
Any
proposal intended to be presented by a stockholder at the next annual meeting
of
stockholders must be received by the Company at the address specified
below within a reasonable time before the next annual meeting of
stockholders in order for such proposal to be eligible for inclusion in the
Company’s proxy statement and form of proxy for the 2006 Annual Meeting. Any
proposal should be addressed to Roni Appel, Secretary, Advaxis, Inc., The
Technology Center of New Jersey, 675 Route 1, Suite 119, North Brunswick,
New
Jersey 08902 and should be sent by certified mail, return receipt
requested.
| By Order of the Board of Directors | ||
| |
|
|
| May 8, 2006 | Roni Appel, Secretary | |
33
ADVAXIS,
INC.
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
______,
2006
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned hereby appoints J. Todd Derbin and Roni Appel, and each of
them,
with full power of substitution, to vote, as a holder of the Common Stock,
par
value $0.001 per share (“Common Stock”), of Advaxis, Inc., a Colorado
corporation (the “Company”), all the shares of Common Stock which the
undersigned is entitled to vote, through the execution of a proxy with
respect
to the Annual Meeting of Stockholders of the Company (the “Annual Meeting”), to
be held at the Company’s
office at The Technology Center of New Jersey, 675 Route One, Suite 119,
North
Brunswick, New Jersey 08902, on May 25, 2006 at 10:00 a.m. Eastern time,
and any and all adjournments or postponements thereof, and authorizes and
instructs said proxies to vote in the manner directed below.
The
Board of Directors recommends the vote FOR the election of the nominees
for
Directors named below and proposals 2, 3 and 4.
1. Election
of Directors: J.
Todd
Derbin, Roni Appel, James Patton, Thomas McKearn,
Martin Wade and Richard Berman
|
FOR
all Nominees o
|
WITHHOLD
for all Nominees o
|
If
you do
not wish your shares voted FOR a nominee, draw a line through that person’s name
above.
2. Proposal
to approve the Company’s 2005 Stock Option Plan.
|
FOR o AGAINST
o
|
ABSTAIN
o
|
3. Proposal
to approve the Plan and Agreement of Merger.
|
FOR o AGAINST
o
|
ABSTAIN
o
|
4. Proposal
to ratify the appointment of the independent auditors.
|
FOR o AGAINST
o
|
ABSTAIN
o
|
5. In
their
discretion, the proxies are authorized to vote upon such other business
as may
properly come before such meeting or adjournment or postponement
thereof.
THIS
PROXY IS CONTINUED ON THE REVERSE SIDE, PLEASE VOTE,
SIGN
AND DATE ON REVERSE SIDE AND RETURN PROMPTLY.
BACK
OF CARD
PROPERLY
EXECUTED AND RETURNED PROXY CARDS WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS TO THE CONTRARY ARE MADE,
THIS
PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NAMED NOMINEES AS DIRECTORS
AND PROPOSALS 2, 3 AND 4 AS DESCRIBED ON THE REVERSE SIDE OF THIS
CARD.
(Please
sign exactly as the name appears below. Joint owners should each sign.
When
signing as attorney, executor, administrator, trustee or guardian, please
give
full title as such. If a corporation, please sign with full corporate name
by
president or other authorized officer. If a partnership, please sign in
the
partnership name by authorized person.)
|
Dated:
|
|||
| Signature |
|
PLEASE
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED
ENVELOPE.
|
|
|
|||
| Signature, if held by joint owners |
ANNEX
A
ADVAXIS,
INC.
2005
STOCK OPTION PLAN
(Effective
as of January 1, 2005)
1. Purpose.
The
purposes of this 2005 Stock Option Plan (the “Plan”)
are to
induce certain individuals to remain in the employ or service of
Advaxis, Inc.,
a Colorado corporation (the “Company”)
and
its present and future subsidiary corporations (each a “Subsidiary”),
as
defined in Section 425(f) of the Internal Revenue Code of 1986, as
amended (the
“Code”),
to
attract new individuals to enter into such employment and service
and to
encourage such individuals to secure or increase on reasonable terms
their stock
ownership in the Company. The Board of Directors of the Company (the
“Board”)
believes that the granting of stock options (the “Options”)
under
the Plan will promote continuity of management and increased incentive
and
personal interest in the welfare of the Company and aid in securing
its
continued growth and financial success. Options will be either (a)
“incentive
stock options” (which term, when used herein, shall have the meaning ascribed
thereto by the provisions of Section 422 (b) of the Code) or (b)
options which
are not incentive stock options (“non-incentive stock options”), as determined
at the time of the grant thereof by the Administrator referred to
in Section
3(A) hereof.
2. Shares
Subject to Plan.
Options
may be granted to purchase up to Five Million Six Hundred Thousand
(5,600,000)
shares of the common stock, par value $0.001 per share (the “Common
Stock”)
of the
Company.
3. Administration.
(A)
The
Plan shall be administered by either the Board or, at the option
of the Board, a
stock option committee (the “Committee”),
which, if appointed, shall consist of two or more members of the
Board, both or
all of whom shall be “disinterested persons” within the meaning of Rule
16b-3(c)(2)(i) promulgated under Section 16(b) of the Securities
Exchange Act of
1934 (the “Exchange
Act”).
The
Committee, if appointed, shall be appointed annually by the Board,
which may at
any time and from time to time remove any member or members of the
Committee,
with or without cause, appoint additional members to the Committee
and fill
vacancies, however caused, in the Committee. A majority of the members
of the
Committee shall constitute a quorum. All determinations of the Committee
shall
be made by a majority of its members present at a meeting duly called
and held.
Any decision or determination of the Committee reduced to writing
and signed by
all of the members of the Committee shall be fully as effective as
if it had
been made at a meeting duly called and held. The Committee, or if
a Committee
has not been appointed, the Board, in its capacity as administrator
of the Plan,
is hereinafter referred to as the “Administrator”.
1
(B)
Subject
to the express provision of the Plan, the Administrator shall have
complete
authority, in its discretion, to interpret the Plan, to prescribe,
amend and
rescind rules and regulations relating to it, to determine the terms
and
provisions of the respective option agreements or certificates (which
need not
be identical), to determine the individuals (each a “Participant”)
to
whom and the times and the prices at which Options shall be granted,
the periods
during which each Option shall be exercisable, the number of shares
of the
Common Stock to be subject to each Option and whether such Option
shall be an
incentive stock option or a non-incentive stock option and to make
all other
determinations necessary or advisable for the administration of the
Plan. In
making such determinations, the Administrator may take into account
the nature
of the services rendered by the respective Participants, their present
and
potential contributions to the success of the Company and the Subsidiaries
and
such other factors as the Administrator in its discretion shall deem
relevant.
The Administrator’s determination on the matters referred to in this Section
3(B) shall be conclusive. Any dispute or disagreement which may arise
under or
as a result of or with respect to any Option shall be determined
by the
Administrator, in its sole discretion, and any interpretations by
the
Administrator of the terms of any Option shall be final, binding
and conclusive.
4. Eligibility.
An
Option
may be granted to (1) employees and consultants of the Company or
a Subsidiary,
(2) directors of the Company or a Subsidiary who are not employees
of the
Company or a Subsidiary (“Outside
Directors”),
and
(3) employees and consultants of a corporation which has been acquired
by the
Company or a Subsidiary as provided in Section 17.
5. Option
Prices.
(A)
Except
as otherwise provided in Section 17 hereof, the initial per share
option price
of any Option which is an incentive stock option shall not be less
than the fair
market value of a share of the Common Stock on the date of grant;
provided,
however, that, in the case of a Participant who owns more than 10%
of the total
combined voting power of the Common Stock at the time an Option which
is an
incentive stock option is granted to him, the initial per share option
price
shall not be less than 110% of the fair market value of a share of
the Common
Stock on the date of grant.
(B)
Except
as otherwise provided in Section 17 hereof, the initial per share
option price
of any Option which is a non-incentive stock option shall not be
less than 85%
of the fair market value of a share of the Common Stock on the date
of grant.
(C)
For
all purposes of this Plan, the fair market value of a share of the
Common Stock
on any date shall be equal to, if the Common Stock is listed on a
national
securities exchange or traded on the NASDAQ National Market System,
the closing
sale price of a share of the Common Stock on such date or, if there
is no sale
of the Common Stock on such date, the average of the bid and asked
prices on
such exchange or system at the close of trading on such date or,
if the shares
of the Common Stock are not listed on a national securities exchange
or such
system on such date, the last per share sales price of Common Stock
on the
market or system of the NASD on which the Common Stock is then traded
or listed
(the “Relevant
Market System”)
during
the three business days ending on the date of grant or exercise as
reported in
the market report for the Relevant Market System or if no sale has
been reported
for such period, the higher of the (i) closing bid price on the Relevant
Market
System on the date of grant or exercise or (ii) the average of the
closing bid
prices on the Relevant Market System for the three business days
immediately
preceding the date of grant or exercise, in each case as reported
in the Market
Report for the Relevant Market System or, if the shares of the Common
Stock are
not traded or listed on a market or system of the NASD, as shall
be determined
in good faith by the Administrator.
2
6. Option
Term.
Options
shall be granted for such term as the Administrator shall determine,
not in
excess of ten years from the date of the granting thereof; provided,
however,
that, except as otherwise provided in Section 17 hereof, in the case
of a
Participant who owns more than 10% of the total combined voting power
of the
Common Stock at the time an Option which is an incentive stock option
is granted
to him, the term with respect to such Option shall not be in excess
of seven
years from the date of the granting thereof; and provided, further,
however,
that the term of an Option granted to an Outside Director shall be
ten years
form the date of the granting thereof.
7. Limitation
on Amount of Incentive Stock Options Granted.
Except
as
otherwise provided in Section 17 hereof, the aggregate fair market
value of the
shares of the Common Stock for which any Participant may be granted
incentive
stock options which are exercisable for the first time in any calendar
year
(whether under the terms of the Plan or any other stock option plan
of the
Company) shall not exceed $100,000.
8. Exercise
of Options.
(A)
Except
as otherwise provided in Section 17 hereof and except as otherwise
determined by
the Administrator at the time of the grant of Options hereunder,
a Participant
may (i) exercise twenty-five percent (25%) of the Options granted
effective on
and after the first anniversary of the date of the granting of an
Option to him;
and (ii) commencing on such first anniversary exercise an additional
one twelfth
(1/12) of the Options granted hereunder for each additional three-month
period
following the first anniversary so that all Options shall have become
exercisable by the fourth anniversary of the grant.
(B)
To the
extent exercisable, an Option may be exercised either in whole at
any time or in
part from time to time.
(C)
An
Option may be exercised only by a written notice of intent to exercise
such
Option with respect to a specific number of shares of Common Stock
and payment
of the option price to the Company for the number of shares of Common
Stock
specified in any one or a combination of the following: in cash,
by cashless
exercise, or in
kind
by the delivery of shares of the Common Stock having a fair market
value on the
date of delivery equal to the portion of the option price so paid;
provided,
further, however, that, subject to the requirements of Regulation
T promulgated
under the Exchange Act, the Administrator may implement procedures
to allow a
broker chosen by a Participant to make payment of all or any portion
of the
option price payable upon the exercise of an Option and receive,
on behalf of
such Participant, all or any portion of the shares of the Common
Stock issuable
upon such exercise.
3
(D)
The
Administrator may, in its discretion, permit any Option to be exercised,
in
whole or in part, prior to the time when it would otherwise be
exercisable.
9. Transferability.
A
Participant may transfer Options to family members, affiliates, or
one or more
trusts or other entities for the benefit of or owned by family members,
consistent with applicable securities laws, according to such terms
as the
Administrator may determine; provided that the Participant receives
no
consideration for the transfer of an Option and the transferred Option
shall
continue to be subject to the same terms and conditions as were applicable
to
the Option immediately before the transfer.
10. Termination
of Service.
(A)
Except
as otherwise provided by the Administrator, in the event that, other
than by
reason of death or disability (as such term is defined in Section
22(e)(3) of
the Code), a Participant leaves the employ or service of the Company
and the
Subsidiaries or, in the case of an Outside Director, does not stand
for
re-election or is not reelected, whether voluntarily or otherwise,
each Option
theretofore granted to him shall be exercisable to the extent exercisable
immediately prior to the date of termination of employment or service
(or the
date the Director does not stand for reelection or is not reelected)
within the
period ending the earlier to occur of (i) the expiration of the period
of three
months after the date of such termination of services or failure
to stand for or
be reelected a Director and (ii) the date specified in such Option.
(B)
In the
event a Participant's employment or service (including the service
of an Outside
Director) with the Company and the Subsidiaries terminates by reason
of his
death, each Option theretofore granted to him shall become immediately
exercisable in full and shall terminate upon the earlier to occur
of (i) the
expiration of the period of one year after the date of such Participant’s death
and (ii) the date specified in such Option.
(C)
Except
as otherwise provided by the Administrator, in the event that, a
Participant
leaves the employ or service of the Company and the Subsidiaries
by reason of
his or her disability (as such term is defined in Section 22(e)(3)
of the Code),
each Option theretofore granted to him shall become immediately exercisable
in
full and shall terminate upon the earlier to occur of (i) the expiration
of the
period of three months after the date of such termination, resignation
or
failure to stand for election or to be reelected and (ii) the date
specified in
such Option.
4
11. Adjustment
of Number of Shares.
(A)
In the
event that a dividend shall be declared upon the Common Stock payable
in shares
of the Common Stock, the number of shares of the Common Stock then
subject to
any Option and the number of shares of the Common Stock which may
be purchased
upon the exercise of Options granted under the Plan but not yet covered
by an
Option shall be adjusted by adding to each share the number of shares
which
would be distributable thereon if such shares had been outstanding
on the date
fixed for determining the stockholders entitled to receive such stock
dividend.
In the event that the outstanding shares of the Common Stock shall
be changed
into or exchanged for a different number or kind of shares of stock
or other
securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of
shares, sale of
assets, merger or consolidation in which the Company is the surviving
corporation, then, there shall be substituted for each share of the
Common Stock
then subject to any Option and for each share of the Common Stock
which may be
purchased upon the exercise of Options granted under the Plan but
not yet
covered by an Option, the number and kind of shares of stock or other
securities
into which each outstanding share of the Common Stock shall be so
changed or for
which each such share shall be exchanged.
(B)
In the
event that there shall be any change, other than as specified in
Section 11(A)
hereof, in the number or kind of outstanding shares of the Common
Stock, or of
any stock or other securities into which the Common Stock, shall
have been
changed, or for which it shall have been exchanged, then, if the
Administrator
shall, in its sole discretion, determine that such change equitably
requires an
adjustment in the number or kind of shares then subject to any Option
and the
number or kind of shares available for issuance in accordance with
the
provisions of the Plan but not yet covered by an Option, such adjustment
shall
be made by the Administrator and shall be effective and binding for
all purposes
of the Plan and of each Option.
(C)
In the
case or any substitution or adjustment in accordance with the provisions
of this
Section 11, the option price in each Option for each share covered
thereby prior
to such substitution or adjustment shall be the option price for
all shares of
stock or other securities which shall have been substituted for such
share or to
which such share shall have been adjusted in accordance with the
provisions of
this Section 11.
(D)
No
adjustment or substitution provided for in this Section 11 shall
require the
Company to sell a fractional share under any Option.
(E)
In the
event of the dissolution, liquidation, sale of substantially all
of the assets
of the Company or the sale of the Company of more than 50% of the
voting
securities of the Company, the Board, in its discretion, may accelerate
the
exercisability of each Option and/or terminate the same within a
reasonable time
thereafter.
5
12. Purchase
for Investment, Withholding and Waivers.
(A)
Unless
the delivery of the shares upon the exercise of an Option by a Participant
shall
be registered under the Securities Act of 1933, as amended, such
Participant
shall, as a condition of the Company's obligation to deliver such
shares, be
required to give a representation in writing that he is acquiring
such shares
for his own account as an investment and not with a view to, or for
sale in
connection with, the distribution of any thereof.
(B)
In the
event of the death of a Participant, an additional condition of exercising
any
Option shall be the delivery to the Company of such tax waivers and
other
documents as the Administrator shall determine.
(C)
An
additional condition of exercising any non-incentive stock option
shall be the
entry by the Participant into such arrangements with the Company
with respect to
withholding as the Administrator shall determine; provided, however,
that such
Participant may direct the Company to satisfy all or a portion of
such
withholding obligation by withholding from the shares of the Common
Stock
issuable to him on such exercise shares of the Common Stock having
a fair market
value equal to the portion of the withholding obligation so satisfied.
13. Declining
Market Price.
In
the
event the fair market value of the Common Stock declines below the
option price
set forth in any Option, the Administrator may, subject to the approval
of the
Board, at any time, adjust, reduce, cancel and re-grant any unexercised
Option
or take any similar action it deems to be for the benefit of the
Participant in
light of the declining fair market value of the Common Stock.
14. No
Stockholder Status; No Restrictions on Corporate Acts; No Employment
Right.
(A)
Neither
any Participant nor his legal representatives, legatees or distributees
shall be
or be deemed to be the holder of any share of the Common Stock covered
by an
Option unless and until a certificate for such share has been issued.
Upon
payment of the purchase price therefore, a share issued upon exercise
of an
Option shall be fully paid and non-assessable.
(B)
Neither
the existence of the Plan nor any Option shall in any way affect
the right or
power of the Company or its stockholders to make or authorize any
or all
adjustments, recapitalizations, reorganizations or other changes
in the
Company’s capital structure or its business, or any merger or consolidation
of
the Company, or any issue of bonds, debentures, preferred or prior
preference
stock ahead of or affecting the Common Stock or the rights thereof,
or
dissolution or liquidation of the Company, or any sale or transfer
of all or any
part of its assets or business, or any other corporate act or proceeding
whether
of a similar character or otherwise.
(C)
Neither
the existence of the Plan nor the grant of any Option shall require
the Company
or any Subsidiary to continue any Participant in the employ or service
of the
Company or such Subsidiary.
6
15. Termination
and Amendment of the Plan.
The
Board
may at any time terminate the Plan or make such modifications of
the Plan as it
shall deem advisable; provided, however, that the Board may not,
without further
approval of the holders of the shares of the Common Stock, increase
the number
of shares of the Common Stock as to which Options may be granted
under the Plan
(as adjusted in accordance with the provisions of Section 11 hereof),
or change
the class of persons eligible to participate in the Plan, or change
the manner
of determining the Option prices, or extend the period during which
an Option
may be granted or exercised. Except as otherwise provided in Section
16 hereof,
no termination or amendment of the Plan may, without the consent
of the
Participant to whom any Option shall theretofore have been granted,
adversely
affect the rights of such Participant under such Option.
16. Expiration
and Termination of the Plan.
The
Plan
shall terminate on November 12, 2014 or at such earlier time as the
Board may
determine. Options may be granted under the Plan at any time and
from time to
time prior to its termination. Any Option outstanding under the Plan
at the time
of termination of the Plan shall remain in effect until such Option
shall have
been exercised or shall have expired in accordance with its terms.
17. Options
Granted in Connection With Acquisitions.
The
Administrator may determine, in connection with the acquisition by
the Company
or a Subsidiary by way of exchange or purchase of stock, purchase
of assets,
merger or reverse merger or otherwise of another corporation which
will become a
Subsidiary or division of the Company (such corporation being hereafter
referred
to as an “Acquired
Subsidiary”),
that
Options may be granted hereunder to employees or consultants and
other personnel
of an Acquired Subsidiary in exchange for then outstanding options
to purchase
securities of the Acquired Subsidiary. The Administrator, at its
discretion
shall determine as to such Options, the option prices, may be exercisable
immediately or at any time or times either in whole or in part, and
such other
provisions not inconsistent with the Plan, or the requirements set
forth in
Section 15 hereof that certain amendments to the Plan be approved
by the
stockholders of the Company.
18. Change
of Control of the Company
As
used
herein, a “Change of Control” shall be deemed to have occurred if:
(a) Any
“person” (as such term is used in sections 13(d) and 14(d) of the Exchange
Act)
(other than persons who are stockholders on the effective date of
the Plan)
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
more than 50%
of the voting power of the then outstanding securities of the Company;
provided
that a Change of Control shall not be deemed to occur as a result
of a change of
ownership resulting from the death of a stockholder, and a Change
of Control
shall not be deemed to occur as a result of a transaction in which
the Company
becomes a subsidiary of another corporation and in which the stockholders
of the
Company, immediately prior to the transaction, will beneficially
own,
immediately after the transaction, shares entitling such stockholders
to more
than 50% of all votes to which all stockholders of the parent corporation
would
be entitled in the election of directors (without consideration of
the rights of
any class of stock to elect directors by a separate class vote);
or
7
(b) The
consummation of (i) a merger or consolidation of the Company with
another
corporation where the stockholders of the Company, immediately prior
to the
merger or consolidation, will not beneficially own, immediately after
the merger
or consolidation, shares entitling such stockholders to more than
50% of all
votes to which all stockholders of the surviving corporation would
be entitled
in the election of directors (without consideration of the rights
of any class
of stock to elect directors by a separate class vote), (ii) a sale
or other
disposition of all or substantially all of the assets of the Company
or (iii) a
liquidation or dissolution of the Company.
19. CONSEQUENCES
OF A CHANGE OF CONTROL
(A) Assumption
of Grants.
Upon a
Change of Control where the Company is not the surviving corporation
(or
survives only as a subsidiary of another corporation), unless the
Administrator
determines otherwise, all outstanding Options that are not exercised
shall be
assumed by, or replaced with comparable options by, the surviving
corporation
(or a parent or subsidiary of the surviving corporation), and outstanding
Stock
Awards shall be converted to Stock Awards of the surviving corporation
(or a
parent or subsidiary of the surviving corporation).
(B) Acceleration
of unvested Options:
in the
event of a Change of Control, at least 75% of any unvested Options
of any
Participant shall become fully vested and exercisable.
(C) Other
Alternatives.
Notwithstanding the foregoing, in the event of a Change of Control,
subject to
section 19(B) above, the Administrator may take any of the following
actions
with respect to any or all outstanding Grants: the Administrator
may (i)
determine that unvested outstanding Options shall accelerate and
become
exercisable, in whole or in part, upon the Change of Control or upon
such other
event as the Administrator determines, (ii) determine that the restrictions
and
conditions on outstanding Stock Awards shall lapse, in whole or in
part, upon
the Change of Control or upon such other event as the Administrator
determines,
(iii) require that Grantees surrender their outstanding Options in
exchange for
a payment by the Company, in cash or stock as determined by the Administrator
,
in an amount equal to the amount by which the then Fair Market Value
of the
shares of Company Stock subject to the Grantee’s unexercised Options exceeds the
Exercise Price of the Options or (iv) after giving Grantees an opportunity
to
exercise their outstanding Options, terminate any or all unexercised
Options at
such time as the Administrator deems appropriate. Such surrender
or termination
shall take place as of the date of the Change of Control or such
other date as
the Administrator may specify. The Administrator shall have no obligation
to
take any of the foregoing actions, and, in the absence of any such
actions,
outstanding Options and Stock Awards shall continue in effect according
to their
terms (subject to any assumption pursuant to subsection (a)).
*
* *
8
ANNEX
B
Agreement
and Plan of Merger
Of
Advaxis,
Inc.
(a
Colorado corporation)
And
Advaxis,
Inc.
(a
Delaware corporation)
Agreement
and Plan of Merger
entered
into on March 29, 2006 (the “Plan
of Merger”),
between Advaxis,
Inc.,
a
Colorado corporation (“Advaxis
Colorado”
or
the
“Terminating
Corporation”),
and
Advaxis,
Inc.,
a
Delaware corporation (“Advaxis
Delaware”
or
the
“Surviving
Corporation”).
Whereas
the
Terminating Corporation is a business corporation duly organized and validly
existing under the laws of the State of Colorado, with its principal office
located at 212 Carnegie Center, Suite 206, Princeton, New Jersey, 08546;
Whereas
the
total number of shares of stock which the Terminating Corporation has the
authority to issue is 505,000,000, of which 500,000,000 shares are common
stock,
par value $0.001 per share and 5,000,000 shares are blank check preferred
stock,
par value $0.001 per share;
Whereas
the
Surviving Corporation is a business corporation duly organized and validly
existing under the laws of the State of Delaware and is the wholly-owned
subsidiary of the Terminating Corporation. Its registered office is located
at
c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover,
Delaware 19904;
Whereas
the
total
number of shares of stock which the Surviving Corporation has authority
to issue
is 505,000,000, of which 500,000,000 shares are common stock, par value
$0.001
per share and 5,000,000 shares are blank check preferred stock, par value
$0.001
per share;
Whereas
the
Colorado Business Corporation Law (the “CBCL”)
permits a merger of a business corporation of the State of Colorado with
and
into a business corporation of another jurisdiction;
Whereas
the
Delaware General Corporation Law (the “DGCL”)
permits a merger of a business corporation of another jurisdiction with
and into
a business corporation of the State of Delaware;
1
Whereas
Advaxis
Colorado and Advaxis Delaware and the respective Boards of Directors thereof
deem it advisable and to the advantage, welfare, and best interests of
said
corporations and their respective stockholders to merge Advaxis Colorado
with
and into Advaxis Delaware pursuant to the provisions of the CBCL and pursuant
to
the provisions of the DGCL upon the terms and conditions hereinafter set
forth;
and
Therefore,
in
consideration of the premises and of the mutual agreement of the parties
hereto,
being thereunto duly entered into by Advaxis Colorado and approved by a
resolution adopted by its Board of Directors and being thereunto duly entered
into by Advaxis Delaware and approved by a resolution adopted by its Board
of
Directors, the Plan of Merger and the terms and conditions thereof and
the mode
of carrying the same into effect, together with any provisions required
or
permitted to be set forth therein, are herby determined and agreed upon
as
hereinafter in this Plan of Merger set forth.
| 1. |
Advaxis
Colorado and Advaxis Delaware shall, pursuant to the provisions
of the CBCL and provisions of the DGCL, be merged with and into
a single
corporation, to wit, Advaxis Delaware which shall be the surviving
corporation from and after the effective time of the merger,
and which is
sometimes hereinafter referred to as the “Surviving
Corporation,”
and which shall continue to exist as said surviving corporation
under its
surviving name pursuant to the provisions of the DGCL. The separate
existence of Advaxis Colorado, which is sometimes hereinafter
referred to
as the “Terminating
Corporation,”
shall cease at said effective time in accordance with the provisions
of
the CBCL.
|
| 2. |
Annexed
hereto and made a part hereof is a copy of the Amended and Restated
Certificate of Incorporation (the “Certificate
of Incorporation”)
of the Surviving Corporation as the same shall be in force and
effect at
the effective time in the State of Delaware of the merger herein
provided
for; and said Certificate of Incorporation shall continue to
be the
Certificate of Incorporation of said Surviving Corporation until
amended
and changed pursuant to the provisions of the DGCL.
|
| 3. |
The
present bylaws of the Surviving Corporation will be the bylaws
of said
Surviving
Corporation and will continue in full force and effect until
changed,
altered or amended as therein provided and in the manner prescribed
by the
provisions of the DGCL.
|
| 4. |
The
directors and officers in office of the Surviving Corporation
at the effective
time of the merger shall be the members of the first Board of
Directors
and the first officers of the Surviving Corporation, all of whom
shall
hold their directorships and offices until the election and qualification
of their respective successors or until their tenure is otherwise
terminated in accordance with the bylaws of the Surviving
Corporation.
|
| 5. |
Each
stockholder of the Terminating Corporation shall, on the effective
date
of
the merger, be a stockholder of the merged entity and receive
from the
Surviving Corporation the same number of shares as the stockholder
had
owned in the Terminating Corporation. The shares of the Surviving
Corporation, held by the Terminating Corporation prior to the
merger, will
be cancelled upon the effective date of this Plan of
Merger.
|
2
| 6. |
In
the event that this Plan of Merger shall have been fully approved
and
adopted
upon behalf of the Terminating Corporation in accordance with
the
provisions of the CBCL and upon behalf of the Surviving Corporation
in
accordance with the provisions of the DGCL, the said corporations
agree
that they will cause to be executed and filed and recorded any
document or
documents prescribed by the laws of the State of Colorado and
by the laws
of the State of Delaware, and that they will cause to be performed
all
necessary acts within the State of Colorado and the State of
Delaware and
elsewhere the merger herein provided
for.
|
| 7. |
The
Board of Directors and the proper officers of the Terminating
Corporation
and
of the Surviving Corporation are hereby authorized, empowered,
and
directed to do any and all acts and things, and to make, execute,
deliver,
file and record any and all instruments, papers, and documents
which shall
be or become necessary, proper, or convenient to carry out or
put into
effect any of the provisions of this Plan of Merger or the merger
herein
provided for.
|
| 8. |
The
Board of Directors of Advaxis Colorado may, at any time before
the merger
becomes effective and subject to any contractual rights, abandon
the
merger without further shareholder action in a manner determined
by the
Board of Directors of Advaxis Colorado. If the merger is abandoned
after
the Articles of Merger have been filed by the Secretary of
State of
Colorado pursuant to section 7-111-105 stating a delayed effective
date,
the merger may be prevented from becoming effective by delivering
to the
Secretary of State of Colorado, before the date the merger
becomes
effective pursuant to section 7-90-304, a statement of change
for filing
pursuant to part 3 of article 90 of title 7 that states that,
by
appropriate corporate action, the merger has been
abandoned.
|
The
effective time of this Plan of Merger, and the time at which the merger
herein
agreed upon shall become effective in the State of Delaware, shall be
____________, 2006.
3
In
Witness Whereof, this
Agreement and Plan of Merger is hereby executed upon
behalf of each of the constituent corporation parties hereto.
Dated:
March 29, 2006
|
Advaxis,
Inc.
(Colorado)
|
||
| |
|
|
| /s/ Roni Appel | ||
|
Name: Roni Appel |
||
|
Title:
President
and Chief Executive Officer
|
||
|
Advaxis,
Inc. (Delaware)
|
||
| |
|
|
| /s/ Roni Appel | ||
|
Name: Roni Appel |
||
|
Title:
President
and Chief Executive Officer
|
||
4
ANNEX
C
Amended
and Restated Certificate of
Incorporation
1. The
name
of the Corporation is Advaxis, Inc.
2. The
Corporation was originally incorporated and the original Certificate of
Incorporation of the Corporation was filed with the Secretary of State
of the
State of Delaware on February 28, 2002 under the name Advaxis, Inc.
3. This
Amended and Restated Certificate of Incorporation was duly adopted by the
Board
of Directors of the Corporation (the “Board”)
and
the Corporation’s stockholders in accordance with the provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware. This Amended
and Restated Certificate of Incorporation amends and restates in its entirety
the Corporation’s Certificate of Incorporation, as amended or supplemented prior
to the date hereof.
4. The
Corporation’s Certificate of Incorporation is hereby amended and restated in its
entirety to read as follows:
Second:
The
address of the registered office of the Corporation is located at 160 Greentree
Drive, Suite 101, Dover, Delaware 19904 in the county of Kent. The name
of its
registered agent at that address is National Registered Agents, Inc.
Third:
The
purposes for which the Corporation is formed are to engage in any lawful
act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
Fourth:
The
total
number of shares which the Corporation shall have the authority to issue
is Five
Hundred Five Million (505,000,000) shares of which Five Hundred Million
(500,000,000) shares shall be designated “Common Stock” and have a par value of
$0.001 per share, and Five Million (5,000,000) shares shall be “blank check”
preferred stock and have a par value of $0.001.
Fifth:
The
Corporation is to have perpetual existence.
1
Sixth:
In
furtherance and not in limitation of the powers conferred by statute and
except
as otherwise provided herein, the Board of Directors is expressly authorized
to
make, alter, amend or repeal the bylaws of the Corporation.
Seventh:
The
number of directors which constitute the whole Board of Directors of the
Corporation shall be as specified in the bylaws of the Corporation.
Eighth:
Meetings of stockholders may be held within or without the State of Delaware,
as
the bylaws of the Corporation may provide. The books of the Corporation
may be
kept outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the bylaws of the
Corporation.
Ninth:
A.
The
Corporation shall indemnify each of the Corporation’s directors and officers in
each and every situation where, under Section 145 of the General Corporation
Law
of the State of Delaware, as amended from time to time (“Section
145”),
the
Corporation is permitted or empowered to make such indemnification, and
to the
fullest extent permitted by law. The Corporation may, in the sole discretion
of
the Board of Directors of the Corporation, indemnify any other person who
may be
indemnified pursuant to Section 145 to the extent the Board of Directors
deems
advisable, as permitted by Section 145.
B.
No
person shall be personally liable to the Corporation or its stockholders
for
monetary damages for breach of fiduciary duty as a director; provided,
however,
that the foregoing shall not eliminate or limit the liability of a director
(i)
for any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of
the General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit. If the General
Corporation Law of the State of Delaware is subsequently amended to further
eliminate or limit the liability of a director, then a director of the
Corporation, in addition to the circumstances in which a director is not
personally liable as set forth in the preceding sentence, shall not be
liable to
the fullest extent permitted by the amended General Corporation Law of
the State
of Delaware. For purposes of this Article, “fiduciary duty as a director” shall
include any fiduciary duty arising out of serving at the Corporation’s request
as a director of another corporation, partnership, joint venture, trust
or other
enterprise, and “personal liability to the Corporation or its stockholders”
shall include any liability to such other corporation, partnership, joint
venture, trust or other enterprise, and any liability to the Corporation
in its
capacity as a security holder, joint venturer, partner, beneficiary, creditor
or
investor of or in any such other corporation, partnership, joint venture,
trust
or other enterprise. Neither any amendment nor repeal of this Article
Ninth
(B), nor
the adoption of any provision of this Certificate of Incorporation inconsistent
with this Article Ninth
(B),
shall eliminate or reduce the effect of this Article Ninth
(B) in
respect of any matter occurring, or any cause of action, suit or claim
that, but
for this Article Ninth
(B),
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
2
Tenth:
The
directors of the Corporation need not be elected by written ballot unless
the
by-laws of the Corporation so provide.
Eleventh:
The
Corporation has opted out of Section 203 of the General Corporation Law
of the
Sate of Delaware.
[Signature
Page Follows]
3
In
Witness Whereof,
this
Amended and Restated Certificate of Incorporation has been executed by
its
_________ as of this ______ day of _________, 2006.
| ADVAXIS, INC. | ||
| |
|
|
| By: | /s/ Roni Appel | |
|
Name: Roni Appel |
||
|
Title:
President
and Chief Executive
Officer
|
||
4
COLORADO
BUSINESS CORPORATION
LAW
PART
1.
RIGHT OF DISSENT--PAYMENT FOR SHARES
§
7-113-101. Definitions
For
purposes of this article:
(1)
"Beneficial shareholder" means the beneficial owner of shares held in a
voting
trust or by a nominee as the record shareholder.
(2)
"Corporation" means the issuer of the shares held by a dissenter before
the
corporate action, or the surviving or acquiring domestic or foreign corporation,
by merger or share exchange of that issuer.
(3)
"Dissenter" means a shareholder who is entitled to dissent from corporate
action
under section
7-113-102
and who
exercises that right at the time and in the manner required by part 2 of
this
article.
(4)
"Fair
value", with respect to a dissenter's shares, means the value of the shares
immediately before the effective date of the corporate action to which
the
dissenter objects, excluding any appreciation or depreciation in anticipation
of
the corporate action except to the extent that exclusion would be
inequitable.
(5)
"Interest" means interest from the effective date of the corporate action
until
the date of payment, at the average rate currently paid by the corporation
on
its principal bank loans or, if none, at the legal rate as specified in
section
5-12-101, C.R.S.
(6)
"Record shareholder" means the person in whose name shares are registered
in the
records of a corporation or the beneficial owner of shares that are registered
in the name of a nominee to the extent such owner is recognized by the
corporation as the shareholder as provided in section
7-107-204.
(7)
"Shareholder" means either a record shareholder or a beneficial
shareholder.
§
7-113-102. Right to dissent
(1)
A
shareholder, whether or not entitled to vote, is entitled to dissent and
obtain
payment of the fair value of the shareholder's shares in the event of any
of the
following corporate actions:
(a)
Consummation of a plan of merger to which the corporation is a party
if:
(I)
Approval by the shareholders of that corporation is required for the merger
by
section
7-111-103
or
7-111-104
or by
the articles of incorporation; or
(II)
The
corporation is a subsidiary that is merged with its parent corporation
under
section
7-111-104;
1
(b)
Consummation of a plan of share exchange to which the corporation is a
party as
the corporation whose shares will be acquired;
(c)
Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of the corporation for which a shareholder
vote is required under section
7-112-102(1);
and
(d)
Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of an entity controlled by the corporation
if
the shareholders of the corporation were entitled to vote upon the consent
of
the corporation to the disposition pursuant to section
7-112-102(2).
(1.3)
A
shareholder is not entitled to dissent and obtain payment, under subsection
(1)
of this section, of the fair value of the shares of any class or series
of
shares which either were listed on a national securities exchange registered
under the federal "Securities Exchange Act of 1934", as amended, [FN1]
or on
the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a)
The
record date fixed under section
7-107-107
to
determine the shareholders entitled to receive notice of the shareholders'
meeting at which the corporate action is submitted to a vote;
(b)
The
record date fixed under section
7-107-104
to
determine shareholders entitled to sign writings consenting to the corporate
action; or
(c)
The
effective date of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
(1.8)
The
limitation set forth in subsection (1.3) of this section shall not apply
if the
shareholder will receive for the shareholder's shares, pursuant to the
corporate
action, anything except:
(a)
Shares of the corporation surviving the consummation of the plan of merger
or
share exchange;
(b)
Shares of any other corporation which at the effective date of the plan
of
merger or share exchange either will be listed on a national securities
exchange
registered under the federal "Securities Exchange Act of 1934", as amended,
or
on the national market system of the national association of securities
dealers
automated quotation system, or will be held of record by more than two
thousand
shareholders;
(c)
Cash
in lieu of fractional shares; or
2
(d)
Any
combination of the foregoing described shares or cash in lieu of fractional
shares.
(2)
Deleted by Laws 1996, H.B.96-1285, § 30, eff. June 1, 1996.
(2.5)
A
shareholder, whether or not entitled to vote, is entitled to dissent and
obtain
payment of the fair value of the shareholder's shares in the event of a
reverse
split that reduces the number of shares owned by the shareholder to a fraction
of a share or to scrip if the fractional share or scrip so created is to
be
acquired for cash or the scrip is to be voided under section
7-106-104.
(3)
A
shareholder is entitled to dissent and obtain payment of the fair value
of the
shareholder's shares in the event of any corporate action to the extent
provided
by the bylaws or a resolution of the board of directors.
(4)
A
shareholder entitled to dissent and obtain payment for the shareholder's
shares
under this article may not challenge the corporate action creating such
entitlement unless the action is unlawful or fraudulent with respect to
the
shareholder or the corporation.
§
7-113-103. Dissent by nominees and beneficial owners
(1)
A
record shareholder may assert dissenters' rights as to fewer than all the
shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one person
and
causes the corporation to receive written notice which states such dissent
and
the name, address, and federal taxpayer identification number, if any,
of each
person on whose behalf the record shareholder asserts dissenters' rights.
The
rights of a record shareholder under this subsection (1) are determined
as if
the shares as to which the record shareholder dissents and the other shares
of
the record shareholder were registered in the names of different
shareholders.
(2)
A
beneficial shareholder may assert dissenters' rights as to the shares held
on
the beneficial shareholder's behalf only if:
(a)
The
beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b)
The
beneficial shareholder dissents with respect to all shares beneficially
owned by
the beneficial shareholder.
(3)
The
corporation may require that, when a record shareholder dissents with respect
to
the shares held by any one or more beneficial shareholders, each such beneficial
shareholder must certify to the corporation that the beneficial shareholder
and
the record shareholder or record shareholders of all shares owned beneficially
by the beneficial shareholder have asserted, or will timely assert, dissenters'
rights as to all such shares as to which there is no limitation on the
ability
to exercise dissenters' rights. Any such requirement shall be stated in
the
dissenters' notice given pursuant to section
7-113- 203.
3
§
7-113-201. Notice of dissenters' rights
(1)
If a
proposed corporate action creating dissenters' rights under section
7-113-102
is
submitted to a vote at a shareholders' meeting, the notice of the meeting
shall
be given to all shareholders, whether or not entitled to vote. The notice
shall
state that shareholders are or may be entitled to assert dissenters' rights
under this article and shall be accompanied by a copy of this article and
the
materials, if any, that, under articles 101 to 117 of this title, are required
to be given to shareholders entitled to vote on the proposed action at
the
meeting. Failure to give notice as provided by this subsection (1) shall
not
affect any action taken at the shareholders' meeting for which the notice
was to
have been given, but any shareholder who was entitled to dissent but who
was not
given such notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the shareholder's
failure
to comply with the provisions of section
7-113-202(1).
(2)
If a
proposed corporate action creating dissenters' rights under section
7-113-102
is
authorized without a meeting of shareholders pursuant to section
7-107-104,
any
written or oral solicitation of a shareholder to execute a writing consenting
to
such action contemplated in section
7-107- 104
shall be
accompanied or preceded by a written notice stating that shareholders are
or may
be entitled to assert dissenters' rights under this article, by a copy
of this
article, and by the materials, if any, that, under articles 101 to 117
of this
title, would have been required to be given to shareholders entitled to
vote on
the proposed action if the proposed action were submitted to a vote at
a
shareholders' meeting. Failure to give notice as provided by this subsection
(2)
shall not affect any action taken pursuant to section
7-107-104
for
which the notice was to have been given, but any shareholder who was entitled
to
dissent but who was not given such notice shall not be precluded from demanding
payment for the shareholder's shares under this article by reason of the
shareholder's failure to comply with the provisions of section
7-113-202(2).
§
7-113-202. Notice of intent to demand payment
(1)
If a
proposed corporate action creating dissenters' rights under section
7-113-102
is
submitted to a vote at a shareholders' meeting and if notice of dissenters'
rights has been given to such shareholder in connection with the action
pursuant
to section
7-113-201(1),
a
shareholder who wishes to assert dissenters' rights shall:
(a)
Cause
the corporation to receive, before the vote is taken, written notice of
the
shareholder's intention to demand payment for the shareholder's shares
if the
proposed corporate action is effectuated; and
4
(b)
Not
vote the shares in favor of the proposed corporate action.
(2)
If a
proposed corporate action creating dissenters' rights under section
7-113-102
is
authorized without a meeting of shareholders pursuant to section
7-107-104
and if
notice of dissenters' rights has been given to such shareholder in connection
with the action pursuant to section
7-113-201(2),
a
shareholder who wishes to assert dissenters' rights shall not execute a
writing
consenting to the proposed corporate action.
(3)
A
shareholder who does not satisfy the requirements of subsection (1) or
(2) of
this section is not entitled to demand payment for the shareholder's shares
under this article.
§
7-113-203. Dissenters' notice
(1)
If a
proposed corporate action creating dissenters' rights under section
7-113-102
is
authorized, the corporation shall give a written dissenters' notice to
all
shareholders who are entitled to demand payment for their shares under
this
article.
(2)
The
dissenters' notice required by subsection (1) of this section shall be
given no
later than ten days after the effective date of the corporate action creating
dissenters' rights under section
7-113-102
and
shall:
(a)
State
that the corporate action was authorized and state the effective date or
proposed effective date of the corporate action;
(b)
State
an address at which the corporation will receive payment demands and the
address
of a place where certificates for certificated shares must be
deposited;
(c)
Inform holders of uncertificated shares to what extent transfer of the
shares
will be restricted after the payment demand is received;
(d)
Supply a form for demanding payment, which form shall request a dissenter
to
state an address to which payment is to be made;
(e)
Set
the date by which the corporation must receive the payment demand and
certificates for certificated shares, which date shall not be less than
thirty
days after the date the notice required by subsection (1) of this section
is
given;
(f)
State
the requirement contemplated in section
7-113-103(3),
if such
requirement is imposed; and
(g)
Be
accompanied by a copy of this article.
§
7-113-204. Procedure to demand payment
5
(1)
A
shareholder who is given a dissenters' notice pursuant to section
7- 113-203
and who
wishes to assert dissenters' rights shall, in accordance with the terms
of the
dissenters' notice:
(a)
Cause
the corporation to receive a payment demand, which may be the payment demand
form contemplated in section
7-113-203(2)(d),
duly
completed, or may be stated in another writing; and
(b)
Deposit the shareholder's certificates for certificated shares.
(2)
A
shareholder who demands payment in accordance with subsection (1) of this
section retains all rights of a shareholder, except the right to transfer
the
shares, until the effective date of the proposed corporate action giving
rise to
the shareholder's exercise of dissenters' rights and has only the right
to
receive payment for the shares after the effective date of such corporate
action.
(3)
Except as provided in section
7-113-207
or
7-113-209(1)(b),
the
demand for payment and deposit of certificates are irrevocable.
(4)
A
shareholder who does not demand payment and deposit the shareholder's share
certificates as required by the date or dates set in the dissenters' notice
is
not entitled to payment for the shares under this article.
§
7-113-205. Uncertificated shares
(1)
Upon
receipt of a demand for payment under section
7-113-204
from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the
transfer
thereof.
(2)
In
all other respects, the provisions of section
7-113-204
shall be
applicable to shareholders who own uncertificated shares.
§
7-113-206. Payment
(1)
Except as provided in section
7-113-208,
upon
the effective date of the corporate action creating dissenters' rights
under
section
7-113-102
or upon
receipt of a payment demand pursuant to section
7-113-204,
whichever is later, the corporation shall pay each dissenter who complied
with
section
7- 113-204,
at the
address stated in the payment demand, or if no such address is stated in
the
payment demand, at the address shown on the corporation's current record
of
shareholders for the record shareholder holding the dissenter's shares,
the
amount the corporation estimates to be the fair value of the dissenter's
shares,
plus accrued interest.
(2)
The
payment made pursuant to subsection (1) of this section shall be accompanied
by:
6
(a)
The
corporation's balance sheet as of the end of its most recent fiscal year
or, if
that is not available, the corporation's balance sheet as of the end of
a fiscal
year ending not more than sixteen months before the date of payment, an
income
statement for that year, and, if the corporation customarily provides such
statements to shareholders, a statement of changes in shareholders' equity
for
that year and a statement of cash flow for that year, which balance sheet
and
statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b)
A
statement of the corporation's estimate of the fair value of the
shares;
(c)
An
explanation of how the interest was calculated;
(d)
A
statement of the dissenter's right to demand payment under section
7- 113-209;
and
(e)
A
copy of this article.
§
7-113-207. Failure to take action
(1)
If
the effective date of the corporate action creating dissenters' rights
under
section
7-113-102
does not
occur within sixty days after the date set by the corporation by which
the
corporation must receive the payment demand as provided in section
7-113-203,
the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2)
If
the effective date of the corporate action creating dissenters' rights
under
section
7-113-102
occurs
more than sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section
7-113-203,
then
the corporation shall send a new dissenters' notice, as provided in section
7-113-203,
and the
provisions of sections
7-113-204
to
7-113-209
shall
again be applicable.
§
7-113-208. Special provisions relating to shares acquired after announcement
of
proposed corporate action
(1)
The
corporation may, in or with the dissenters' notice given pursuant to
section
7-113-203,
state
the date of the first announcement to news media or to shareholders of
the terms
of the proposed corporate action creating dissenters' rights under section
7-113-102
and
state that the dissenter shall certify in writing, in or with the dissenter's
payment demand under section
7-113-204,
whether
or not the dissenter (or the person on whose behalf dissenters' rights
are
asserted) acquired beneficial ownership of the shares before that date.
With
respect to any dissenter who does not so certify in writing, in or with
the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares
before
such date, the corporation may, in lieu of making the payment provided
in
section
7-113-206,
offer
to make such payment if the dissenter agrees to accept it in full satisfaction
of the demand.
7
(2)
An
offer to make payment under subsection (1) of this section shall include
or be
accompanied by the information required by section
7-113-206(2).
§
7-113-209. Procedure if dissenter is dissatisfied with payment or
offer
(1)
A
dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount
of
interest due and may demand payment of such estimate, less any payment
made
under section
7-113-206,
or
reject the corporation's offer under section
7-113-208
and
demand payment of the fair value of the shares and interest due,
if:
(a)
The
dissenter believes that the amount paid under section
7-113-206
or
offered under section
7-113-208
is less
than the fair value of the shares or that the interest due was incorrectly
calculated;
(b)
The
corporation fails to make payment under section
7-113-206
within
sixty days after the date set by the corporation by which the corporation
must
receive the payment demand; or
(c)
The
corporation does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares as required by section
7-113-207(1).
(2)
A
dissenter waives the right to demand payment under this section unless
the
dissenter causes the corporation to receive the notice required by subsection
(1) of this section within thirty days after the corporation made or offered
payment for the dissenter's shares.
PART
3.
JUDICIAL APPRAISAL OF SHARES
§
7-113-301. Court action
(1)
If a
demand for payment under section
7-113-209
remains
unresolved, the corporation may, within sixty days after receiving the
payment
demand, commence a proceeding and petition the court to determine the fair
value
of the shares and accrued interest. If the corporation does not commence
the
proceeding within the sixty-day period, it shall pay to each dissenter
whose
demand remains unresolved the amount demanded.
(2)
The
corporation shall commence the proceeding described in subsection (1) of
this
section in the district court for the county in this state in which the
street
address of the corporation's principal office is located, or, if the corporation
has no principal office in this state, in the district court for the county
in
which the street address of its registered agent is located, or, if the
corporation has no registered agent, in the district court for the city
and
county of Denver. If the corporation is a foreign corporation without a
registered agent, it shall commence the proceeding in the county in which
the
domestic corporation merged into, or whose shares were acquired by, the
foreign
corporation would have commenced the action if that corporation were subject
to
the first sentence of this subsection (2).
8
(3)
The
corporation shall make all dissenters, whether or not residents of this
state,
whose demands remain unresolved parties to the proceeding commenced under
subsection (2) of this section as in an action against their shares, and
all
parties shall be served with a copy of the petition. Service on each dissenter
shall be by registered or certified mail, to the address stated in such
dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided
by
law.
(4)
The
jurisdiction of the court in which the proceeding is commenced under subsection
(2) of this section is plenary and exclusive. The court may appoint one
or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the
order
appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other
civil
proceedings.
(5)
Each
dissenter made a party to the proceeding commenced under subsection (2)
of this
section is entitled to judgment for the amount, if any, by which the court
finds
the fair value of the dissenter's shares, plus interest, exceeds the amount
paid
by the corporation, or for the fair value, plus interest, of the dissenter's
shares for which the corporation elected to withhold payment under section
7-113-208.
§
7-113-302. Court costs and counsel fees
(1)
The
court in an appraisal proceeding commenced under section
7-113-301
shall
determine all costs of the proceeding, including the reasonable compensation
and
expenses of appraisers appointed by the court. The court shall assess the
costs
against the corporation; except that the court may assess costs against
all or
some of the dissenters, in amounts the court finds equitable, to the extent
the
court finds the dissenters acted arbitrarily, vexatiously, or not in good
faith
in demanding payment under section
7-113- 209.
(2)
The
court may also assess the fees and expenses of counsel and experts for
the
respective parties, in amounts the court finds equitable:
(a)
Against the corporation and in favor of any dissenters if the court finds
the
corporation did not substantially comply with part 2 of this article;
or
(b)
Against either the corporation or one or more dissenters, in favor of any
other
party, if the court finds that the party against whom the fees and expenses
are
assessed acted arbitrarily, vexatiously, or not in good faith with respect
to
the rights provided by this article.
9
(3)
If
the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the
fees
for those services should not be assessed against the corporation, the
court may
award to said counsel reasonable fees to be paid out of the amounts awarded
to
the dissenters who were benefitted.
10