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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2004
Prana Biotechnology Limited
(Name of Registrant)
Level 1, 100 Dorcas Street, South Melbourne, Victoria 3205 Australia
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F __
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes __ No X
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-_____________
This Form 6-K is being incorporated by reference into the Registrant's Form F-3
Registration Statement File No. 333-116232
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PRANA BIOTECHNOLOGY LIMITED
6-K Items
1. Prana Biotechnology Limited Proxy Statement for Annual Meeting to be held
November 17, 2004.
2. Prana Biotechnology Limited Form of Proxy Card.
ITEM 1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
NOTICE OF
ANNUAL GENERAL MEETING
Incorporating Explanatory Memorandum and Proxy Form
To be held on
Wednesday 17 November 2004 at 10:30am at our
offices, Level 2, 369 Royal Parade, Parkville, 3052.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Notice of 2004 Annual General Meeting
-------------------------------------
Notice is given that the 2004 Annual General Meeting of Shareholders (the
"Meeting") of Prana Biotechnology Limited (the "Company") will be held at
10.30am on Wednesday, 17 November, 2004 at our offices at Level 2, 369 Royal
Parade, Parkville, 3052.
BUSINESS
--------
2004 ANNUAL FINANCIAL STATEMENTS
To present before the Meeting the Annual Financial Statements of the Company
comprising the Annual Financial Report, the Directors' Report and the Auditor's
Report.
RESOLUTIONS - ORDINARY BUSINESS
-------------------------------
To consider and, if deemed advisable, to adopt the following resolutions as
ordinary resolutions with or without amendment:
Resolution 1: Re-Election of Mr. Geoffrey Kempler to Serve as a Director
"That Mr. Geoffrey Kempler, a Director of the Company and the Chairman of the
Company's Board of Directors, who retires by rotation from office and is
eligible for re-election to the office of Director at the Meeting, be and hereby
is re-elected as a Director of the Company for a term of up to three years
expiring in 2007."
Resolution 2: Election of Dr. Jonas Alsenas to Serve as a Director
"That Dr. Jonas Alsenas, who was appointed by the Company's Board of Directors
as a Director of the Company during the year following the 2003 Annual General
Meeting of Shareholders as an additional Director on the Company's Board of
Directors (as permitted under the Company's Constitution), being eligible for
election as a Director of the Company and offering himself for election, be and
hereby is elected as a Director of the Company for an unlimited term so long as
he is the Company's Managing Director."
Resolution 3: Approval of Previous Issuance of Ordinary Shares to P.N.
Gerolymatos S.A.
"That the issuance of 1,350,000 ordinary shares of the Company to P.N.
Gerolymatos S.A, pursuant to and under the terms of the Settlement Agreement
dated 28 July, 2004, between the Company, P.N. Gerolymatos S.A. and certain
other parties, be and hereby is approved."
Resolution 4: Approval of Previous Issuance of Ordinary Shares to Certain
Consultants
"That the issuance of 1,098,232 fully paid ordinary shares of the Company to
certain consultants of the Company, as described and under the terms set forth
in the Explanatory Memorandum to the Notice of Meeting, be and hereby is
approved."
Resolution 5: Approval of Previous Grants of Options to Certain Consultants
"That the grant of options to purchase 912,000 ordinary shares of the Company to
certain consultants of the Company, as described and under the terms set forth
in the Explanatory Memorandum to the Notice of Meeting, exercisable at A$0.50
per ordinary share, be and hereby is approved."
Resolution 6: Approval of Previous Grants of Options to Certain Employees
"That, the grants of options to certain employees of the Company to purchase
20,000 ordinary shares of the Company, exercisable at A$0.50 per ordinary share
on or before 30 June 2005, under the terms and conditions set forth in the
Company's Employee and Consultant Option Plan 2000, be and hereby is approved."
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Resolution 7: Approval of Issuance of Warrants to Rodman & Renshaw, LLC
"That the issuance of warrants to purchase 320,000 American Depositary Receipts
of the Company, or ADRs, each representing ten ordinary shares of the Company,
exercisable at US$8.00 per ADR on or before 4 June 2009, to Rodman & Renshaw
LLC, be and hereby is approved."
Resolution 8: Approval of Grant of Unlisted Options to Dr. Jonas Alsenas
"That, subject to the approval of Resolution 10 with or without amendment the
grant of options to purchase 380,000 American Depositary Receipts of the
Company, or ADRs, each representing ten ordinary shares of the Company,
exercisable at US$5.00 per ADR, under the terms and conditions set forth in the
Explanatory Memorandum to the Notice of the Meeting, to Dr. Jonas Alsenas, in
his capacity as Chief Executive Officer of the Company, be and hereby is
approved. Such options will be granted by the Company under and pursuant to the
terms of the 2004 ADS Option Plan, subject to the adoption thereof at the
Meeting (or under any other option plan duly adopted by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose)."
Resolution 9: Non-Executive Directors Remuneration Pool
"That, the aggregate amount available per annum for the remuneration of
Non-Executive Directors for their services (payable in cash, shares or options)
be increased by AU$1,000,000, from AU$250,000 up to a maximum amount of
AU$1,250,000 per annum."
Resolution 10: Adoption of the 2004 American Depositary Share (ADS) Option Plan
"That, the Company's 2004 American Depositary Share (ADS) Option Plan (the "ADS
Plan"), attached as Annexure A to the Explanatory Memorandum attached to this
Notice of Meeting, under which options to purchase American Depositary Shares of
the Company may be granted to employees, directors, consultants and independent
contractors of the Company and its subsidiaries, as determined from time to time
by a committee of the Board of Directors of the Company, be and hereby is
approved and adopted in all respects. Options granted under the ADS Plan are
exercisable at such exercise price and will have such term and other conditions
as set forth in the ADS Plan."
Resolution 11: Adoption of the 2004 Employees, Directors' and Consultants' Share
and Option Plan
"That, the Company's 2004 Employees, Directors' and Consultants' Share and
Option Plan (the "ASX Plan"), attached as Annexure B to the Explanatory
Memorandum attached to this Notice of Meeting, under which ordinary shares may
be issued and options to purchase ordinary shares may be granted to employees,
directors and consultants of the Company and its subsidiaries, as determined
from time to time by a committee of the Board of Directors of the Company, be
and hereby is approved and adopted in all respects. Options granted under the
ASX Plan are exercisable at such exercise price and will have such term and
other conditions as set forth in the ASX Plan."
Resolution 12: Approval of Maximum Shares Issuable under the 2004 American
Depositary Share (ADS) Option Plan and the 2004 Employees,
Directors' and Consultants' Share and Option Plan
"That, subject to the approval of Resolution 10 with or without amendment and/or
subject to the approval of Resolution 11 with or without amendment, the Company
is hereby authorised to issue up to an aggregate 12,000,000 ordinary shares of
the Company or American Depositary Shares of the Company, representing
12,000,000 ordinary shares, under and pursuant to the 2004 American Depositary
Share (ADS) Option Plan and the 2004 Employees, Directors' and Consultants'
Share and Option Plan."
Resolution 13: Approval of Grant of Unlisted Options to Mr. Geoffrey Kempler
"That, subject to the approval of Resolution 1 with or without amendment and the
approval of Resolution 11 with or without amendment, the Company is hereby
authorised to grant to Mr. Geoffrey Kempler unlisted options to purchase
1,000,000 ordinary shares of the Company, exercisable for nil consideration on
or before 30 June, 2010. Such options will be granted by the Company under and
pursuant to the terms of the 2004 Employees', Directors' & Consultants' Share
and Option Plan, subject to the adoption thereof at the Meeting (or under any
other option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose). Such options may not be
exercised until and unless the price of the Company's ordinary shares has
achieved and maintained a minimum value of $1.00 for five consecutive trading
days. The ordinary shares issued upon exercise of such options may not be
disposed of without the prior consent of the Company's Board of Directors."
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Resolution 14: Approval of Grant of Unlisted Options to Prof. Colin Masters
"That, subject to the approval of Resolution 11 with or without amendment, the
Company is hereby authorised to grant to Professor Colin Masters unlisted
options to purchase 1,000,000 ordinary shares of the Company, exercisable for
nil consideration on or before 30 June, 2010. Such options will be granted by
the Company under and pursuant to the terms of the 2004 Employees', Directors' &
Consultants' Share and Option Plan, subject to the adoption thereof at the
Meeting (or under any other option plan duly adopted by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose). Such options may not be exercised until and unless the price of the
Company's ordinary shares has achieved and maintained a minimum value of $1.00
for five consecutive trading days. The ordinary shares issued upon exercise of
such options may not be disposed of without the prior consent of the Company's
Board of Directors."
Resolution 15: Approval of Grant of Unlisted Options to Mr. Brian Meltzer
"That, subject to the approval of Resolution 9 with or without amendment and the
approval of Resolution 11 with or without amendment, the Company is hereby
authorised to grant to Mr. Brian Meltzer unlisted options to purchase 300,000
ordinary shares of the Company, exercisable for nil consideration on or before
30 June, 2010. Such options will be granted by the Company under and pursuant to
the terms of the 2004 Employees', Directors' & Consultants' Share and Option
Plan, subject to the adoption thereof at the Meeting (or under any other option
plan duly adopted by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose). Such options may not be
exercised until and unless the price of the Company's ordinary shares has
achieved and maintained a minimum value of $1.00 for five consecutive trading
days. The ordinary shares issued upon exercise of such options may not be
disposed of without the prior consent of the Company's Board of Directors."
Resolution 16: Approval of Grant of Unlisted Options to Dr. George Mihaly
"That, subject to the approval of Resolution 9 with or without amendment and the
approval of Resolution 11 with or without amendment, the Company is hereby
authorised to grant to Dr. George Mihaly unlisted options to purchase 300,000
ordinary shares of the Company, exercisable for nil consideration on or before
30 June, 2010. Such options will be granted by the Company under and pursuant to
the terms of the 2004 Employees', Directors' & Consultants' Share and Option
Plan, subject to the adoption thereof at the Meeting (or under any other option
plan duly adopted by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose). Such options may not be
exercised until and unless the price of the Company's ordinary shares has
achieved and maintained a minimum value of $1.00 for five consecutive trading
days. The ordinary shares issued upon exercise of such options may not be
disposed of without the prior consent of the Company's Board of Directors."
Resolution 17: Approval of Issuance of Ordinary Shares to Mr. Brian Meltzer in
Lieu of Director's Base Fees
"That, subject to the approval of Resolution 9 with or without amendment and the
approval of Resolution 11 with or without amendment, an annual base fee for
director services in an aggregate amount of AU$40,000 be paid by way of issuance
of fully paid ordinary shares of the Company to Mr. Brian Meltzer, a Director of
the Company. Such shares will be issued by the Company under and pursuant to the
terms of the 2004 Employees', Directors' & Consultants' Share and Option Plan,
subject to the adoption thereof at the Meeting (or under any other share plan
duly adopted by a majority of the non-employee members of the Board of Directors
of the Company or a majority of the members of a committee of non-employee
directors established for such purpose). The number of shares to be issued will
be calculated based on a price per ordinary share equal to the lesser of:
a) 80% of the average market price for the Company's ordinary shares
calculated over the five days prior to the Company's 2004 Annual General
Meeting of Shareholders, or;
b) 80% of the average closing price for the Company's ordinary shares
calculated over the six months prior to the Company's 2004 Annual General
Meeting of Shareholders."
Resolution 18: Approval of Issuance of Ordinary Shares to Dr. George Mihaly in
Lieu of Director's Base Fees
"That, subject to the approval of Resolution 9 with or without amendment and the
approval of Resolution 11 with or without amendment, an annual base fee for
director services in an aggregate amount of AU$40,000 be paid by way of issuance
of fully paid ordinary shares of the Company to Dr. George Mihaly, a Director of
the Company. Such shares will be granted by the Company under and pursuant to
the terms of the 2004 Employees', Directors' & Consultants' Share and Option
Plan, subject to the adoption thereof at the Meeting (or under any other share
plan duly adopted by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose). The number of shares to be
issued will be calculated based on a price per ordinary share equal to the
lesser of:
a) 80% of the average market price for the Company's ordinary shares
calculated over the five days prior to the Company's 2004 Annual General
Meeting of Shareholders, or;
b) 80% of the average closing price for the Company's ordinary shares
calculated over the six months prior to the Company's 2004 Annual General
Meeting of Shareholders."
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Resolution 19: Approval of Issuance of Ordinary Shares to Prof. Colin Masters in
Lieu of Director's Base Fees
"That, subject to the approval of Resolution 11 with or without amendment, an
annual base fee for director services in an aggregate amount of AU$40,000 be
paid by way of issuance of fully paid ordinary shares of the Company to Prof.
Colin Masters, a Director of the Company. Such shares will be granted by the
Company under and pursuant to the terms of the 2004 Employees', Directors' &
Consultants' Share and Option Plan, subject to the adoption thereof at the
Meeting (or under any other share plan duly adopted by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose). The number of shares to be issued will be calculated based on a price
per ordinary share equal to the lesser of:
a) 80% of the average market price for the Company's ordinary shares
calculated over the five days prior to the Company's 2004 Annual General
Meeting of Shareholders, or;
b) 80% of the average closing price for the Company's ordinary shares
calculated over the six months prior to the Company's 2004 Annual General
Meeting of Shareholders."
Date: 12 October 2004
By Order Of The Board
/s/Richard Revelins
Richard Revelins
Company Secretary
The accompanying Explanatory Memorandum and the following information for
shareholders form part of this Notice of Meeting.
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INFORMATION FOR SHAREHOLDERS:
Voting Exclusion Statement
--------------------------
In accordance with the Australian Stock Exchange, or ASX, Listing Rule 14, the
Company will disregard votes cast:
a) On resolution 3 by:
o P.N. Gerolymatos S.A., and
o An associate of that person/entity
b) On resolution 4 by
o Professor Ashley Bush, and
o The Anne McBride Company Inc., and
o Mr. David Bartash, and
o An associate of the above named person/entity
c) On resolution 5 by:
o Professor Ashley Bush, and
o Mr. Richard Revelins, and
o An associate of the above named person/entity
d) On resolution 6 by:
o Ms. Gaik Kok, and
o Ms. Elisabeth Gautier, and
o Ms. Brenda Leung, and
o An associate of the above named person/entity
e) On resolution 7 by:
o Rodman & Renshaw, LLC, and
o An associate of that person/entity
f) On resolution 8 by:
o Dr. Jonas Alsenas, and
o An associate of that person/entity
g) On resolution 9 by:
o A Director of the Company
o An associate of that person/entity
h) On resolution 13 by:
o Mr. Geoffrey Kempler, and
o An associate of that person/entity
i) On resolution 14 and resolution 19 by:
o Professor Colin Masters, and
o An associate of that person/entity
j) On resolution 15 and resolution 17 by:
o Mr. Brian Meltzer; and
o An associate of that person/entity
k) On resolution 16 and resolution 18 by:
o Dr. George Mihaly; and
o An associate of that person/entity
However, the Company need not disregard a vote if:
o It is cast by a person as proxy for a person who is entitled to vote,
in accordance with the directions on the proxy form; or
o It is cast by the person chairing the meeting as proxy for a person
who is entitled to vote, in accordance with a direction on the proxy
form to vote as the proxy decides.
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Proxy Instructions
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A member who is entitled to vote at a meeting may appoint:
(a) one proxy if the member is only entitled to one vote; and
(b) one or two proxies if the member is entitled to more than one vote.
Where more than one proxy is appointed each proxy may be appointed to represent
a specific proportion of the member's voting rights. If the appointment does not
specify the proportion or number of votes each proxy may exercise, each proxy
may exercise half of the votes in which case any fraction of votes will be
disregarded.
The proxy form (and the power of attorney or other authority, if any, under
which the proxy form is signed) or a copy or facsimile which appears on its face
to be an authentic copy of the proxy form (and proof of the power of attorney or
other authority satisfactory to the Directors) must be lodged at or sent by
facsimile transmission to the registered office of the Company at Suite 2, 1233
High Street, Armadale, Victoria, 3143, or facsimile +61 3 9824 8161, not less
than 48 hours before the Meeting, or adjourned meeting as the case may be, at
which the individual named in the proxy form proposes to vote.
The proxy form must be signed by the member or his/her attorney duly authorised
in writing or, if the member is a corporation, in a manner permitted by the
Australian Corporations Act 2001. A proxy given by a foreign corporation must be
executed in accordance with the laws of that corporation's place of
incorporation.
The proxy may, but need not, be a member of the Company.
A proxy form is attached to this Notice.
Statement Regarding Undirected Proxies
--------------------------------------
As disclosed on the proxy form it is the intention of the Chairman of the
Meeting to vote any undirected proxies in favour of all resolutions. Pursuant to
changes to the ASX Listing Rules, which came into effect for shareholder
meetings held after 1 January 2002, the proxy from is required to contain
certain disclosures regarding the voting intentions of the Chairman regarding
undirected proxies. Shareholders are advised to read the proxy form carefully.
By marking the box at the top of the proxy form, proxy holders acknowledge that
the Chairman may exercise your proxy even if he has an interest in the outcome
of the resolution and votes cast by him other than as proxy holder will be
disregarded because of that interest. If you do not mark the box at the top of
the proxy form or alternatively each resolution your proxy may be considered
invalid.
Corporate Representatives
-------------------------
Any corporation which is a member of the Company may authorise (by certificate
under common seal or other form of execution authorised by the laws of that
corporation's place of incorporation, or in any other manner satisfactory to the
chairperson of the Meeting) a natural person to act as its representative at any
general meeting.
Voting Entitlement
------------------
For the purposes of the Australian Corporations Act 2001 and corporations
Regulations, shareholders entered on the company's Register of Members as at
5:00pm, 15 November 2004 are entitled to attend and vote at the meeting.
On a poll, members have one vote for every fully paid ordinary share held.
Holders of options are not entitled to vote.
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Prana Biotechnology Limited
---------------------------
ABN 37 080 699 065
Explanatory Memorandum
----------------------
This Explanatory Memorandum dated 6 October, 2004, has been issued by Prana
Biotechnology Limited ABN 37 080 699 065 (the "Company"). This Explanatory
Memorandum forms part of and should be read in conjunction with the Notice of
2004 Annual General Meeting of the Company scheduled to be held on 17 November,
2004, to which this Explanatory Memorandum is attached. This Explanatory
Memorandum has been prepared to assist shareholders of the Company in the
consideration of the resolutions proposed in the Notice of 2004 Annual General
Meeting.
The Board of Directors of the Company recommends that shareholders vote in
favour of the Resolutions described in this Explanatory Memorandum. Certain
Directors withhold their recommendation in regard to specific resolutions, where
the passing of the specific resolution may result in a benefit to that Director,
in accordance with the Australian Stock Exchange, or ASX, Listing Rule 14, as
detailed in the Voting Exclusion Statement attached to the Notice of Meeting.
PRESENTATION OF 2004 ANNUAL FINANCIAL STATEMENTS
The 2004 Annual Financial Statements of the Company will be presented to the
shareholders at the Meeting, in accordance with the Australian Corporations Act
2001. Shareholders will be given the opportunity to ask the Board of Directors
and a representative of the accounting firm that audited the Company's financial
statements questions in respect of the 2004 Annual Financial Statements.
RESOLUTIONS - ORDINARY BUSINESS
1. RE-ELECTION OF MR. GEOFFREY KEMPLER TO SERVE AS A DIRECTOR
----------------------------------------------------------
At each Annual General Meeting of the Company, one third of the directors
of the Company (except a Managing Director) must retire from office by
rotation, in accordance with the Company's Constitution. No director
(except a Managing Director) shall retain office for a period in excess of
three years without submitting himself or herself for re-election. A
director who retires from office by rotation and is eligible for
re-election may offer him or herself for re-election.
Mr. Kempler has served as Chairman of the Board of Directors of the Company
since November 11, 1997, and was last re-elected to serve as a director of
the Company at the Company's 2001 Annual General Meeting of shareholders
held on November 16, 2001. Accordingly, Mr. Kempler must retire from office
as a director and may stand for re-election to serve as a director at the
Meeting.
Mr Kempler, aged 49, is one of the founders of the Company and has been
primarily responsible for the successful negotiation of the Company's
existing contractual relationships with Massachusetts General Hospital, the
University of Melbourne and the Biomolecular Research Institute. Between
November 1997 and August 2004 served as the Company's Chief Executive
Officer. Mr Kempler is a qualified industrial psychologist and the major
shareholder of Prana Biotechnology Limited.
2. ELECTION OF DR. JONAS ALSENAS TO SERVE AS A DIRECTOR
----------------------------------------------------
In accordance with the Company's Constitution, the Board of Directors of
the Company may appoint any person to be a director, either to fill a
vacancy or as an additional director (provided that the total number of
directors does not exceed the maximum allowed by law), and any director so
appointed may hold office only until the next annual general meeting of
shareholders when he or she shall be eligible for election.
On March 25, 2004, Dr. Alsenas, aged 43, was appointed by the Company's
Board of Directors to serve as a Director of the Company. Dr. Alsenas was
appointed Chief Executive Officer of the Company on August 9, 2004.
Accordingly, the shareholders are being asked at the Meeting to approve the
election of Dr. Alsenas to serve as a Director of the Company for an
unlimited term so long as he is the Company's Managing Director.
Prior to joining the Company, Dr. Alsenas was a leading U.S. biotechnology
and pharmaceutical company analyst. Dr. Alsenas is a member of the Audit
Risk and Compliance Committee. Until December 2003, Dr Alsenas served as
Managing Director (Research Analyst/Portfolio Manager), of ING Investment
Management, New York, where he co-managed a hedge
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Page 8
fund with an emphasis on investments in biotechnology. From April 1996
through June 2000, Dr. Alsenas was Principal and ultimately Managing
Director as a research analyst at the investment banking firm Furman Selz,
LLC and its successor ING Barings, LLC, where he provided research coverage
of the biotechnology sector. Dr Alsenas began his career in 1991 with
Scheer & Company in Branford, Connecticut where he provided strategic
consulting and due diligence for biotechnology and pharmaceutical industry
clients and investors, including venture capital groups and portfolio
managers. Dr Alsenas received a Doctor of Veterinary Medicine degree from
the Ohio State University and a Bachelor of Arts from Northwestern
University.
APPROVAL OF PREVIOUS ISSUANCE OF ORDINARY SHARES AND GRANTS OF OPTIONS
According to Chapter 7.1 of the ASX Listing Rules, an entity must not issue
or agree to issue equity securities exceeding 15% of the share capital of
the Company within a 12 month period. The Company is seeking shareholder
approval of the issuance of ordinary shares and grants of options to
purchase ordinary shares to certain person and entities in order to have
the flexibility to issue up to 15% of the Company's share capital in a
rolling 12 month period. Resolutions 3, 4, 5 and 6 relate to previous
issuances of equity.
3. APPROVAL OF PREVIOUS ISSUANCE OF ORDINARY SHARES TO P.N. GEROLYMATOS S.A.
-------------------------------------------------------------------------
On 28 July, 2004, the Company and The General Hospital Corporation of
Massachusetts settled an on-going litigation with P.N. Gerolymatos S.A.
regarding the exploitation rights to certain patents. Under the terms of
the settlement agreement, among other things, the Company issued on 9
August 2004 to P.N. Gerolymatos S.A. 1,350,000 fully paid ordinary shares
of the Company, which are being held in escrow until 9 August, 2005 (being
12 months from the date of issue).
4. APPROVAL OF PREVIOUS ISSUANCE OF ORDINARY SHARES TO CERTAIN CONSULTANTS
-----------------------------------------------------------------------
a) The Company was originally established to develop and commercialize
Prof. Bush's findings that the toxicity associated with Alzheimer's
disease is due to aberrant behaviour by metals in the brain, namely
zinc and copper, binding to proteins. Prof. Bush has been an integral
part of the Company since it was founded in 1997. His demonstration of
a long-term commitment to the Company, in addition to the successful
clinical trial of our first compound for the treatment of Alzheimer's
disease, reinforces the Company's belief that Prof. Bush's
contribution to the Company is essential in its mission to develop
therapeutic drugs designed to treat this malignant condition.
On February 25, 2004, the Company announced that it had entered into a
new consultancy agreement with Professor Ashley Bush MD, PhD, of
Harvard Medical School, under which Prof. Bush agreed to provide the
Company with consulting services for a period of ten years. In
consideration of his services, we agreed to pay Prof. Bush an annual
consulting fee of US$100,000. Prof. Bush is also entitled to receive
1,650,000 ordinary shares and options to purchase 824,000 ordinary
shares at an exercise price $0.50 per share, over the life of the
contract.
On 10 May, 2004, pursuant to the new contract with Prof. Ashley Bush,
the Company issued to Prof. Ashley Bush 825,000 fully paid ordinary
shares of the Company.
b) On 20 February, 2004, the Company issued 155,502 fully paid ordinary
shares of the Company to The Anne McBride Company Inc. in lieu of
US$65,000 corporate advisory fees.
c) The Company, prior to its listing on the NASDAQ SmallCap Market,
engaged Mr. David Bartash to provide to it U.S. corporate advice. In
accordance with the agreement entered into between the Company and Mr.
Bartash for these services, Mr. Bartash has received ordinary shares
of the Company in lieu of cash remuneration bi-annually (for the
periods of April 15-October 15 and October 15 -April 15). The number
of ordinary shares issued to Mr. Bartash under such agreement is
calculated according to the exchange rate and the closing price of the
Company's ordinary shares on the ASX on the day commencing the period
of the service.
In accordance with its agreement with Mr. Bartash, the Company issued
to Mr. Bartash, (i) on 12 January, 2004, 67,955 fully paid ordinary
shares in lieu of US$30,000 corporate advisory fees for the period of
15 October, 2003 through 15 April, 2004; and (ii) on 16 September 2004,
49,755 fully paid ordinary shares in lieu of US$30,000 corporate
advisory fees for the period of 15 April, 2004 through 15 October,
2004. The difference in the amount of ordinary shares issued in each
tranche is due to share price fluctuations and US$-AU$ exchange rate
fluctuations.
Both The Anne McBride Company Inc. and Mr David Bartash provide
corporate advice to the Company in relation to its operations in the
United States. The Company believes that in addition to providing a
valuable service to the Company, the willingness of the above named
consultants to forgo monetary compensation for their services and in
lieu thereof, to receive equity in the Company, is beneficial to the
Company.
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Page 9
5. APPROVAL OF PREVIOUS GRANTS OF OPTIONS TO CERTAIN CONSULTANTS
-------------------------------------------------------------
a) On 10 May, 2004, the Company granted to Prof. Ashley Bush options to
purchase 412,000 ordinary shares of the Company, pursuant to the
agreement we entered into with Prof. Ashley Bush described in Note
4(a) of this Explanatory Memorandum. Such options are exercisable at
$0.50 per ordinary share on or before February 1, 2007.
b) On 27 November, 2003, the Company granted to Mr. Richard Revelins
options to purchase 500,000 ordinary shares of the Company in lieu of
fees for services provided by him to the Company as Company Secretary.
To date, Mr. Revelins has not received cash compensation for the
invaluable services he has provided to the Company. Such options are
exercisable at $0.50 per ordinary share on or before 30 June 2005 and
were granted under the Company's Employee and Consultant Option Plan
2000.
6. APPROVAL OF PREVIOUS GRANTS OF OPTIONS TO CERTAIN EMPLOYEES
-----------------------------------------------------------
On 5 December, 2003, the Company granted to certain scientists employed by
the Company options to purchase an aggregate 20,000 ordinary shares of the
Company. These options were issued as an additional incentive to such
scientists, in accordance with the Company Policy for recruiting, retaining
and rewarding valuable human resources. These options were granted to the
following employed scientists in the following amounts:
Elisabeth Gautier: options to purchase 5,000 ordinary shares
Brenda Leung: options to purchase 5,000 ordinary shares
Gaik Kok: options to purchase 10,000 ordinary shares
Such options are exercisable at $0.50 per ordinary share on or before 30
June 2005 and were granted under the Employee and Consultants Option Plan
2000.
APPROVAL OF ISSUANCE OF ORDINARY SHARES AND GRANTS OF OPTIONS
7. APPROVAL OF ISSUANCE OF WARRANTS TO RODMAN & RENSHAW, LLC
---------------------------------------------------------
At the general meeting of shareholders held on June 1, 2004, shareholders
of the Company approved a private placement in the United States of
4,000,000 American Depositary Receipts, or ADRs, to institutional and
professional investors at a price of US$5.00 per ADR, for an aggregate
US$20 million. The private placement also involved the acquisition by the
investors of five-year warrants to purchase an additional 3,000,000 ADRs at
an exercise price of US$8.00 per ADR. Should these warrants be exercised in
full, we would raise an additional US$24 million.
Rodman & Renshaw, LLC acted as the placement agent for the private
placement and part of its fee was to receive warrants to purchase an
additional 320,000 ADRs, each representing ten ordinary shares of the
Company, exercisable at a price of US$8.00 per ADR on or before 4 June,
2009. The approval of the issuance of such warrants to Rodman & Renshaw,
LLC was omitted in error from the shareholder approval of the private
placement transaction. Accordingly, the Company is seeking shareholder
approval of the issuance of such warrants to Rodman & Renshaw, LLC.
8. APPROVAL OF GRANT OF UNLISTED OPTIONS TO DR. JONAS ALSENAS
----------------------------------------------------------
The Company is seeking shareholder approval, in accordance with ASX Listing
Rule 10.14, to grant Dr. Jonas Alsenas options to purchase 380,000 ADRs,
each representing ten ordinary shares of the Company, exercisable at a
price of US$5.00 per ADR. Such options will vest over a period of four
years, 25% at the end of each year from the date of grant. The options will
expire at the end of eight years from date of grant. Such options will be
granted by the Company under and pursuant to the terms of the 2004 ADS
Option Plan, subject to its adoption at the Meeting (or under any other
option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose). If
approved by the shareholders at the Meeting, such options will be granted
to Dr. Alsenas within one month from the date of the Meeting. This option
grant forms part of the employment agreement entered into by the Company
with Dr. Alsenas, under which Dr. Alsenas agreed to serve as our Chief
Executive Officer as of such date. Dr. Alsenas agreed to devote his best
efforts and full business time and attention to the performance of service
to the Company.
As a consequence of his interest in Resolution 8, Dr. Jonas Alsenas
absented himself from the discussion of the Board of Directors with respect
to, and did not vote in respect of, the proposal to present to the
Company's shareholders Resolution 8 or the accompanying part of the
Explanatory Memorandum. Mr. Kempler, Prof. Masters, Mr. Meltzer and Dr.
Mihaly recommend that shareholders vote in favour of Resolution 8 in order
to enable the Company to continue to benefit from Dr. Jonas Alsenas'
expertise.
--------------------------------------------------------------------------------
Page 10
9. NON-EXECUTIVE DIRECTORS REMUNERATION POOL
-----------------------------------------
The Company is seeking shareholder approval to increase the aggregate
amount available per annum for the remuneration of non-executive directors
for their services (payable in cash, ordinary shares or options) by
AU$1,000,000, from AU$250,000 to AU$1,250,000, for the following reasons:
a) New corporate governance recommendations & requirements in connection
with the ASX's Principles of Good Corporate Governance and the
Sarbanes-Oxley Act of 2002 (in respect of our NASDAQ Stock Market
listing), require the Company to have a majority of independent,
non-executive directors, some of whom must have special financial
expertise, before 1 July 2005; and
b) The Company, now being a global company, has opened subsidiaries in
the United States and the United Kingdom, recognising the importance
of a local presence in these markets to further develop and
commercialise its interests. In light of the forgoing, the Company
would like to allow itself the opportunity and ability to appoint new
non-executive directors to the Company with local knowledge of these
markets, and thus add value to the Company.
This proposal to increase the aggregate amount of fees available for the
remuneration of non-executive directors (payable in cash, shares or
options) will enable the Company during the next year to maintain a level
of remuneration of its non-executive directors that is competitive and in
line with international market conditions and industry standards. This will
ensure that the Company continues to be able to attract and retain high
calibre non-executive directors. It will also give the Company's Board of
Directors the flexibility to introduce two or more new non-executive
directors, if that is considered desirable. Under the current non-executive
director remuneration limit, the Board of Directors does not have the
ability to take such steps.
Mr. Geoffrey Kempler, Dr. Jonas Alsenas and Professor Colin Masters
approved the Board of Directors proposal to present to the shareholders
Resolution 9 and this accompanying part of this Explanatory Memorandum. As
a consequence of their interest in Resolution 9, Mr. Brian Meltzer and Dr.
George Mihaly absented themselves from the discussion with respect to, and
did not vote in respect of, the proposal to present to the shareholders
Resolution 9 or this accompanying part of this Explanatory Memorandum. Mr.
Geoffrey Kempler, Dr. Jonas Alsenas and Professor Colin Masters recommend
that the shareholders vote in favour of Resolution 9 in order to enable the
Company to attract, retain and duly reward high calibre Directors.
10, 11,
& 12 ADOPTION OF THE 2004 AMERICAN DEPOSITARY SHARE (ADS) OPTION PLAN
-----------------------------------------------------------------------
AND THE 2004 EMPLOYEES,DIRECTORS' AND CONSULTANTS' SHARE AND OPTION PLAN
--------------------------------------------------------------------------
The Company is seeking shareholder approval to adopt the 2004 Employees',
Directors' and Consultants' Share and Option Plan (the "2004 ASX Plan") and
the 2004 American Depository Share (ADS) Option Plan (the "2004 ADS Plan";
and together with the 2004 ASX Plan, the "2004 Plans"). Under the 2004 ASX
Plan, the Company may issue ordinary shares of the Company traded on the
Australian Stock Exchange, and under the 2004 ADS Plan the Company may
issue American Depository Shares ("ADSs") of the Company reported on the
NASDAQ SmallCap Market. The Board of Directors believes that the approval
of the 2004 Plans by the shareholders is essential to allow the Company and
its subsidiaries to be able to continue to attract, motivate and retain
valuable human capital, whose present and potential contribution are
important to the Company's interests, development and success.
In addition, shareholders are being asked to authorise the Company to issue
under the 2004 Plans up to an aggregate 12,000,000 ordinary shares or ADSs
representing 12,000,000 ordinary shares. Any increase in such maximum
number of ordinary shares or ADSs issuable under the 2004 Plans is subject
to shareholder approval.
According to ASX Listing Rule 10.14, any issue of securities to a director
of the Company is subject to shareholder approval at a meeting of
shareholders; the director and his/her associates are excluded from voting
in regards to such resolutions. As such, the Company is seeking shareholder
approval in Resolutions 8, 13-19 to issue securities under the Plans.
THE 2004 ADS PLAN
-----------------
The Company is seeking shareholder approval to adopt the Company's 2004 ADS
Plan, a copy of which is attached hereto as Annexure A and the terms of
which are incorporated by reference into this Explanatory Memorandum. The
adoption of the 2004 ADS Plan was approved by the Company's Board of
Directors, including all of the non-employee directors. The purpose of the
2004 ADS Plan is to promote the interests of the Company and its
non-Australian based employees, officers, consultants, independent
contractors and directors. The Board of Directors believe that an American
Depositary Share option plan is presently required due to the appointment
of Mr. Jonas Alsenas, a U.S.-based director, as Chief Executive Officer of
the Company, and the recent establishment of a wholly-owned subsidiary in
the United States.
--------------------------------------------------------------------------------
Page 11
Options granted under the 2004 ADS Plan may be incentive stock options, as
provided in Section 422 of the Internal Revenue Code of 1986, as amended,
or the Code, or non-qualified stock options. Incentive stock options may
only be granted to employees of the Company and its subsidiaries
(including, without limitation, officers and directors who are also
employees of the Company and its subsidiaries) and may not be granted to
any owner of 10% or more of the total combined voting power of all classes
of stock of the Company and its subsidiaries, or a 10% Holder. To the
extent that the aggregate fair market value, determined on the date that an
option is granted, of ADSs with respect to which incentive stock options
are exercisable for the first time by an optionee during any calendar year
exceeds $100,000, such option shall be treated as a non-qualified stock
option.
Under the 2004 ADS Plan, the Company will be entitled to grant to
employees, officers, consultants, independent contractors and directors of
the Company or any of its subsidiaries, from time to time, options to
purchase up to an aggregate 1,200,000 American Depositary Shares, or ADSs,
of the Company, representing 12,000,000 ordinary shares of the Company
(which constitute approximately 10% of the issued and outstanding share
capital of the Company as of the date of this Explanatory Memorandum and is
subject to adjustment as provided in the 2004 ADS Plan). The number of ADSs
with respect to which options may be granted to any employee under the 2004
ADS Plan in any calendar year shall not exceed 500,000 ADSs, representing
5,000,000 ordinary shares of the Company. ADSs that are forfeited under the
terms of the 2004 ADS Plan and ADSs that are the subject of options that
expire unexercised or which are otherwise surrendered by an optionee
without receiving any payment or other benefit with respect thereto may
again become available for new option grants under the 2004 ADS Plan.
The 2004 ADS Plan will be administered by a committee comprised of members
of the Board of Directors of the Company, or the Committee. The Committee
will have authority, in its sole discretion, to grant options under the
2004 ADS Plan, to interpret the provisions of the 2004 ADS Plan and to
prescribe, amend, and rescind rules and regulations relating to the 2004
ADS Plan or any options granted thereunder as it may deem necessary or
advisable. All decisions made by the Committee pursuant to the provisions
of the 2004 ADS Plan shall be final, conclusive and binding on all persons.
The type of option (incentive stock option or non-qualified stock option),
exercise price, option term and vesting schedule of options granted under
the 2004 ADS Plan are determined by the Committee, in accordance with the
provisions of the ADS Plan, and specified in an option agreement by and
between the Company and the optionee, subject to the terms of the 2004 ADS
Plan. The exercise price per each ADS will be determined by the Committee
at the time any option is granted, however the exercise price of an
incentive stock option will not be less than 100% of the fair market value
of such ADS on the date of the grant and the price of an incentive stock
option granted to a 10% Holder will not be less than 110% of the fair
market value of such ADS on the date of the grant. Options granted under
the 2004 ADS Plan will not be exercisable after the expiration of ten years
from the date of grant, and in the case of an incentive stock option
granted to a 10% Holder, the term of the option will be five years from the
date of grant or such shorter term as may be provided in the option
agreement. The options will vest over a four year period in four equal
installments, 25% at the end of each year from the date of grant, unless
otherwise provided by the Committee in an option agreement.
Options granted under the 2004 ADS Plan are not assignable or transferable
by the grantee, other than by will or the laws of descent and distribution,
and may be exercised during the lifetime of the grantee only by the grantee
or his guardian or legal representative
THE 2004 ASX Plan
-----------------
The Company is seeking shareholder approval to adopt the Company's 2004
Employees', Directors' & Consultants' Share & Option Plan, or the 2004 ASX
Plan, a copy of which is attached hereto as Annexure B and the terms of
which are incorporated by reference into this Explanatory Memorandum. The
adoption of the 2004 ASX Plan was approved by the Company's Board of
Directors, including all of the non-employee directors. Under the 2004 ASX
Plan, the Company will be entitled to issue to employees, directors and
consultants of the Company and its subsidiaries, from time to time, up to
and aggregate amount of 12,000,000 ordinary shares of the Company (which
constitute approximately 10% of the issued and outstanding share capital of
the Company as of the date of this Explanatory Memorandum and is subject to
adjustment as provided in the 2004 ASX Plan), either by the issuance of
ordinary shares or under options to purchase ordinary shares granted under
the 2004 ASX Plan.
The 2004 ASX Plan will be administered by a committee comprised of members
of the Board of Directors of the Company, or the Committee. The Committee
will have authority, in its sole discretion, to grant options under the
2004 ASX Plan, to interpret the provisions of the 2004 ASX Plan and to
prescribe, amend, and rescind rules and regulations relating to the 2004
ASX Plan or any issue or grant thereunder as it may deem necessary or
advisable. All decisions made by the Committee pursuant to the provisions
of the 2004 ASX Plan shall be final, conclusive and binding on all persons.
The number of shares issued or options granted, the exercise price and
option term or options granted, the vesting schedule and escrow periods of
shares issued and options granted, under the 2004 ASX Plan are determined
by the Committee, in accordance with the provisions of the ASX Plan, and
specified in an offer document from the Company and accepted by the
eligible person, subject to the terms of the 2004 ASX Plan. Options granted
under the 2004 ASX Plan will
--------------------------------------------------------------------------------
Page 12
be unlisted and exercisable at an exercise price equal to less than market
value of an ordinary share on the ASX at the date of grant, as set forth in
the 2004 ASX Plan, or such other exercise price that the Committee
determines to be appropriate under the circumstances. The term of an option
granted under the 2004 ASX Plan will be determined by the Committee,
however no option will be exercisable after the expiration of ten years
from the date of its grant. Except as otherwise provided in the 2004 ASX
Plan or determined by the Committee and set forth in an offer document, the
issuance of shares and exercise of options granted under the 2004 ASX Plan
will either (i) be subject to an escrow, under which such shares or options
cannot be disposed of or exercised, respectively, within six months from
the date of issue or grant (or 12 months if issued or granted to a
director); or (ii) will vest over a four year period in four equal
installments, 25% at the end of each year from the date of grant. Shares
issued and options granted under the 2004 ASX Plan may be subject to other
performance criteria and hurdles, as determined by the Committee.
The Board of Directors of the Company believes that the adoption of the
2004 ASX Plan is necessary for the Company in order to:
a) provide eligible persons with an additional incentive to work to
improve the performance of the Company;
b) attract and retain eligible persons essential for the continued growth
and development of the Company;
c) promote and foster loyalty and support amongst eligible persons for
the benefit of the Company;
d) enhance the relationship between the Company and eligible persons for
the long term mutual benefit of all parties; and
e) provide an alternative to cash payments.
13, 14,
15, 16 APPROVAL OF GRANT OF UNLISTED OPTIONS TO DIRECTORS
--------------------------------------------------
In recognition of the Board of Directors' future contributions to the
growth and success of the Company, the Company seeks shareholder approval,
in accordance with ASX Listing Rule 10.14, to issue to its directors, in
their capacity as such, unlisted options to purchase ordinary shares of the
Company, exercisable for nil consideration on or before 30 June 2010, as
set forth below. Such options will be granted by the Company under and
pursuant to the terms of the 2004 Employees', Directors' & Consultants'
Share & Option Plan, subject to its adoption at the Meeting (or under any
other option plan duly adopted by a majority of the non-employee members of
the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose).
--------------------------------------------------------------------------------
Name Position Amount of Options
--------------------------------------------------------------------------------
Mr. Geoffrey Kempler Executive Chairman 1,000,000
--------------------------------------------------------------------------------
Professor Colin Masters Executive Director 1,000,000
--------------------------------------------------------------------------------
Mr. Brian Meltzer Non-Executive Director 300,000
--------------------------------------------------------------------------------
Dr. George Mihaly Non-Executive Director 300,000
--------------------------------------------------------------------------------
Total 2,600,000
--------------------------------------------------------------------------------
The above options will be held in escrow for one year from date of grant.
In addition, the vesting terms of these option grants will provide that
these options may not be exercised until and unless the price of the
Company's ordinary shares has achieved and maintained a minimum value of
$1.00 for five consecutive trading days. Further, under the terms of this
option grant, the directors will not be entitled to dispose of the ordinary
shares issued to them upon exercise of these options without the prior
consent of the Company's Board of Directors. If approved by the
shareholders, such options will be granted to the forgoing directors within
one month from the date of the Meeting.
Using The Black Scholes Model to valuate these options as follows:
Volatility measured over 36 months: 63.90%
Escrow period: 12 months
Risk Free Rate: 5.36% (5 year Government Bonds)
Exercise Price: $0.00
The value of the options according to this model is AU$0.54 per option.
The Black Scholes Model does not take into consideration the other
restrictions and hurdles placed on these options as set out above.
Therefore, for accounting purposes, we have applied a 35% discount to the
above value, in-order to reflect these restrictions.
We therefore reach an estimated valuation of the options at AU$0.351 per
option.
The grant of options to Mr. Geoffrey Kempler is subject to Resolution 1 and
11 being approved with or without amendment.
The grant of options to Professor Colin Masters is subject to Resolution 11
being approved with or without amendment.
--------------------------------------------------------------------------------
Page 13
The grant of options to Mr. Brian Meltzer and Dr. George Mihaly, both of
whom are Non - Executive Directors, is subject to Resolution 9 and 11 being
approved with or without amendment.
As a consequence of the interest of Mr. Geoffrey Kempler, Professor Colin
Masters, Mr. Brian Meltzer, and Dr. George Mihaly in Resolutions 13, 14,
15, and 16, respectively, each such person absented himself from the
discussion of the Board of Directors with respect to, and did not vote in
respect of, the proposal to present to the Company's shareholders the
respective Resolution in which he has an interest or the accompanying part
of this Explanatory Memorandum. Dr. Jonas Alsenas, as Chief Executive
Officer of the Company, and drawing upon his industry knowledge of
like-sized biotechnology companies with NASDAQ listings, recommends that
shareholders vote in favour of Resolutions 13, 14, 15, and 16, in order to
enable the Company to continue to benefit from Mr. Geoffrey Kempler's,
Professor Colin Masters', Mr. Brian Meltzer's and Dr. George Mihaly's
expertise.
17, 18
& 19 APPROVAL OF ISSUANCE OF ORDINARY SHARES IN LIEU OF BASE DIRECTORS FEES
----------------------------------------------------------------------
At the 2003 annual general meeting of shareholders held on 17 December,
2003, shareholders of the Company approved the issuance of fully paid
ordinary shares to each of Mr. Brian Meltzer, Dr. George Mihaly and
Professor Colin Masters, directors of the Company, in lieu of a cash
payment of AU$40,000 per each such director as an annual base fee for
director services.
The Company believes that such means of remuneration is beneficial to the
Company and it seeks shareholder approval, in accordance with ASX Listing
Rule 10.14, to issue to each of the forgoing directors, in lieu of cash
remuneration to each director of an annual base fee for director services
in the amount of AU$40,000, fully paid ordinary shares of the Company. Such
shares will be issued by the Company under and pursuant to the terms of the
2004 Employees' Directors' & Consultants' Share & Option Plan, subject to
its adoption at the Meeting (or under any other share plan duly adopted by
a majority of the non-employee members of the Board of Directors of the
Company or a majority of the members of a committee of non-employee
directors established for such purpose). If approved by the shareholders,
such shares will be issued to the forgoing directors within one month from
the date of the Meeting.
The number of ordinary shares to be issued will be calculated based on a
price per ordinary share equal to the lesser of:
a) 80% of the average market price for the Company's ordinary Shares
calculated over the five days prior to the Meeting; or
b) 80% of the average closing price for the Company's ordinary shares
calculated over the six months prior to the Meeting.
As a consequence of the interest of Mr. Brian Meltzer, Dr. George Mihaly
and Professor Colin Masters in Resolutions 17, 18 and 19, respectively,
each such person absented himself from the discussion of the Board of
Directors with respect to, and did not vote in respect of, the proposal to
present to the Company's shareholders the respective Resolution in which he
has an interest or the accompanying part of this Explanatory Memorandum.
Mr. Kempler and Dr. Alsenas recommend that shareholders of the Company vote
in favour of Resolutions 17, 18 and 19 in order to enable the Company to
continue to benefit from Mr. Brian Meltzer's, Dr. George Mihaly's and
Professor Colin Masters' expertise.
--------------------------------------------------------------------------------
Page 14
ANNEXURE A
----------
PRANA BIOTECHNOLOGY LIMITED
ABN 37 080 699 065
2004 AMERICAN DEPOSITARY SHARE (ADS) OPTION PLAN
Prana Biotechnology Limited, a corporation formed under the laws of the
Commonwealth of Australia (the "Company"), hereby establishes and adopts the
following 2004 American Depository Share (ADS) Option Plan (the "Plan"),
effective November 17, 2004 (the "Effective Date"), subject to the approval of
the Plan by the majority of the shares entitled to vote at a duly constituted
meeting of the shareholders of the Company.
1. Purpose.
-------
The purpose of the Plan is to promote the interests of the Company, its
Subsidiaries and shareholders by enabling the Company and its Subsidiaries to
attract and retain outstanding employees, officers, consultants, independent
contractors and directors ("Eligible Persons") and align the interests of
Eligible Persons with those of the Company and its shareholders through the
incentive inherent in the ownership of ordinary shares of the Company
("Shares"). For purposes of the Plan, the term "Subsidiary" shall mean
"subsidiary corporation," as such term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code"). For purposes of the
Plan, the term "Award" shall mean a grant of an option to purchase American
Depositary Shares ("ADSs") representing Shares.
2. Shares Subject to Awards.
------------------------
(a) Awards under the Plan ("Awards") may be granted in the following forms:
(i) incentive stock options ("Incentive Stock Options") as provided in
Section 422 of the Code; provided, however, that no Award of Incentive
Stock Options shall be made hereunder after the date that is the tenth
anniversary of the Effective Date; and
(ii) non-qualified stock options ("Non-qualified Options") (the term
"Options" includes incentive stock options and non-qualified options).
(b) Subject to the adjustment provisions of Section 11 hereof, the aggregate
number of ADSs which may be issued under options under the Plan shall not exceed
1,200,000 (the equivalent of 12,000,000 Shares), and the number of ADSs with
respect to which Options may be granted to any employee in any calendar year
shall not exceed 500,000 (the equivalent of 5,000,000 Shares). ADSs delivered
under the Plan may be authorized and unissued ADSs or issued ADSs reacquired by
the Company, or both. The ADSs that are forfeited under the terms of the Plan
and ADSs that are the subject of Options that expire unexercised or which are
otherwise surrendered by the holder of such Option (the "Optionee") without
receiving any payment or other benefit with respect thereto may again become
available for new Awards under the Plan.
3. Administration of the Plan.
--------------------------
The Plan shall be administered by a committee (the "Committee") comprised of
members of the Board of Directors of the Company (the "Board") selected by the
Board. The Board may remove from, add members to, or fill vacancies in the
Committee. The Committee shall consist of a compensation committee of the Board
comprised solely of two or more "outside directors" within the meaning of
Section 162(m)(4)(C)(i) of the Code, unless the Board determines that there is
no need to comply with the requirements of Section 162(m) of the Code.
The Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it may deem appropriate for the conduct of
meetings and proper administration of the Plan. All actions of the Committee
shall be taken by majority vote of its members, except that the members thereof
may authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee. Subject to the
provisions of the Plan, the Committee shall have authority, in its sole
discretion, to grant Awards under the Plan, to interpret the provisions of the
Plan and to prescribe, amend, and rescind rules and regulations relating to the
Plan or any Award thereunder as it may deem necessary or advisable. All
decisions made by the Committee pursuant to the provisions of the Plan shall be
final, conclusive and binding on all persons. No member of the Committee shall
be liable for anything done or omitted to be done by him or by any other member
of the Committee in connection with the Plan, except for his own willful
misconduct or as expressly provided by statute.
4. Eligibility.
-----------
Awards shall be made to such Eligible Persons of the Company or any of its
Subsidiaries as the Committee shall select from time to time; provided, however,
that Incentive Stock Options may only be granted to employees of the Company and
its Subsidiaries (including, without limitation, officers and directors who are
also employees of the Company and its Subsidiaries) and shall not be granted to
any owner of 10% or more of the total combined voting power of all classes of
stock of the Company and its Subsidiaries, as determined under Section 422(b)(6)
of the Code. The Committee's designation of an Optionee in any year shall not
require the Committee to designate such person to receive Awards or grants in
any other year.
5. Stock Option Agreements. All Options granted pursuant to the Plan shall be
evidenced in writing by option agreements ("Option Agreements") in such form and
containing such terms and conditions as the Committee shall determine which are
not inconsistent with the provisions of the Plan, including the following:
(a) Type of Option; Number of ADSs. Each Option shall be designated as either an
Incentive Stock Option or a Non-qualified Option. Each Option Agreement shall
state the total number of ADSs to which it pertains. To the extent that the
aggregate Fair Market Value, as defined below and determined on the date that an
Option is granted, of ADSs with respect to which Incentive Stock Option are
exercisable for the first time by an Optionee during any calendar year (under
all plans of the Company and its Subsidiaries) exceeds U.S.$100,000, such Option
shall be treated as a Non-qualified Option.
(b) Option Price. The Option exercise price per each ADS shall be determined by
the Committee at the time any Option is granted and stated in the Option
Agreement; provided, that the exercise price per ADS of an Incentive Stock
Option and an Option that needs to satisfy the requirements of Section 162(m) of
the Code shall not be less than 100% of the Fair Market Value of such ADS on the
date of the Award. Notwithstanding the preceding sentence, the price per ADS of
an Incentive Stock Option awarded to an Optionee who, at the time such Option is
granted, owns stock representing more than 10% of the total combined voting
power of all classes of stock of the Company or its Subsidiaries, shall not be
less than 110% of the Fair Market Value of such ADS on the date of the Award.
For all purposes under the Plan, Fair Market Value shall mean the per ADS
closing price of the ADSs for the day immediately preceding the date as of which
Fair Market Value is being determined (or if there was no reported closing price
on such date, on the last preceding date on which the closing price was
reported) reported on the National Association of Securities Dealers Automated
Quotations (NASDAQ) system, or other national securities exchange on which the
ADSs are then principally traded, and reported in the trading tables of The Wall
Street Journal.
(c) Option Term. The period for which the Option is granted shall be determined
by the Committee and set forth in the Option Agreement; provided, however, that
no Option shall be exercisable after the expiration of ten years from the date
of its Award. Notwithstanding the preceding sentence, in the case of an
Incentive Stock Option granted to an Optionee who, at the time such Option is
granted, owns stock representing more than 10% of the combined voting power of
all classes of stock of the Company or its Subsidiaries, the term of the Option
shall be five years from the date of the Award or such shorter term as may be
provided in the Option Agreement. No Option may be exercised after the
expiration of its term.
(d) Vesting Period. Except as otherwise provided in the Plan or by the Committee
in an Option Agreement, Options shall become vested and exercisable in
accordance with the following vesting schedule:
less than one year after date of Award. 0% of the total Award
one year after date of Award. . . . . . . . 25% of the total Award
two years after date of Award. . . . . . . . 50% of the total Award
three years after date of Award. . . . . . . 75% of the total Award
four years after date of Award. . . . . . . . 100% of the total Award
Options shall automatically cease to vest in accordance with the above schedule
and, except as provided in Sections 7, 8, 9 and 10, shall become null and void
upon the termination of employment for any reason.
(e) Time and Manner of Payment. Each Option Agreement shall provide that Options
granted under the Plan shall be exercised by the Optionee (or by his executors,
administrators, guardian or legal representative) as to all or any portion of
the ADSs covered thereby, by the giving of written notice of exercise to the
Company, specifying the number of ADSs to be purchased. Full payment of such
purchase price shall be made within ten business days following the receipt of
such notice by the Company and shall be made (i) in cash, by certified check or
bank check, or (ii) in any other manner permitted in the discretion of the
Committee. Such notice of exercise and full payment, shall be delivered to the
Company at its principal business office or such other office as the Committee
may direct, and shall be in such form, containing such further provisions
consistent with the provisions of the Plan, as the Committee may prescribe. In
no event may any Option granted hereunder be exercised for a fraction of an ADS.
The Company shall issue or cause to be issued to the Optionee ADSs or American
Depositary Receipts ("ADRs") evidencing the ADSs as soon as practicable after an
Option is exercised, and, within a reasonable time thereafter, such issuance
shall be evidenced on the books of the Company. No person exercising an Option
shall have any of the rights of
a holder of ADSs prior to the date that such ADSs are issued following the
exercise of such Option. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date of such issuance.
(f) Other Provisions. An Option Agreement may contain any other terms and
conditions that the Committee, in its sole discretion, deems appropriate;
provided, however, that no such term or condition shall be inconsistent with the
terms of the Plan or, in the case of an Incentive Stock Option, Section 422 of
the Code. Each Option Agreement may condition the exercise of any Option upon
the attainment of specified productivity goals by a Company group or division or
an individual Optionee.
6. Non-Transferability of Options.
------------------------------
No Option shall be assignable or transferable by the Optionee, other than by
will or the laws of descent and distribution, and may be exercised during the
lifetime of the Optionee only by the Optionee or his guardian or legal
representative.
7. Termination of Employment.
-------------------------
(a) Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event of the termination of employment or service of an
Optionee with the Company and its Subsidiaries for any reason (other than
termination for cause, death, disability or Change of Control of the Company as
provided below), Options granted to him that have not previously expired or been
exercised shall, to the extent vested on the date of such termination, be
exercisable by the Optionee within 30 days after the date of such termination,
unless such Option is earlier terminated pursuant to its terms. All Options that
are not exercisable as of the date of such termination or which are not
exercised within 30 days thereafter, shall be deemed cancelled and terminated as
of such date.
(b) Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event an Optionee retires from employment or service with the
Company and its Subsidiaries, Options granted to him shall become 100% vested as
of the effective date of the Optionee's retirement. Whether an Optionee has
terminated employment on account of retirement shall be determined by the
Committee in its sole discretion.
(c) Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event that an Optionee's employment or service is terminated
by the Company or any of its Subsidiaries for "cause," all Options, whether or
not exercisable as of the date of such termination, shall be canceled and
terminated as of such date. For these purposes, termination for "cause" shall
mean the following: the Optionee's violation of copyright, trademark and/or
patent protection maintained by the Company or a Subsidiary; the Optionee's
engaging or assisting in any business in competition with the Company or a
Subsidiary as employee, owner, partner, director, officer, stockholder,
consultant or agent (ownership of minority interests in publicly-traded
corporations, partnerships or companies or of 5% or less of the equity of
privately-held corporations, partnerships or companies shall not be considered
competition for purposes of this Plan); the Optionee's dishonesty, or acting in
any manner inconsistent with the utmost good faith and loyalty in the
performance of the Optionee's duties; conviction of the Optionee by a court of
law of competent jurisdiction for fraud, misappropriation, embezzlement, or any
felony; failure of the Optionee to perform his duties to the reasonable
satisfaction of the Company or its Subsidiaries.
8. Death.
-----
Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event an Optionee dies while employed by or providing service
to the Company or any of its Subsidiaries, all unvested Options shall become
100% vested and any Option granted to him that has not previously expired or
been exercised shall be exercisable by the estate of such Optionee or by any
person who acquired such Option by bequest or inheritance, at any time within
one year after the date of death of the Optionee, unless such Option is earlier
terminated pursuant to its terms. All Options not exercised within such one year
period shall be deemed canceled and terminated on the first anniversary of the
Optionee's death.
9. Disability.
----------
Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event of the termination of employment of an Optionee due to
total disability, the Optionee or his guardian or legal representative, shall
have the right to exercise any Option which has not been previously exercised or
expired and which the Optionee was eligible to exercise as of the first date of
total disability, at any time within one year after such termination, unless
such Option is earlier terminated pursuant to its terms. All Options that are
not exercisable as of the date of the Optionee's termination or which are not
exercised within one year thereafter shall be deemed canceled and terminated as
of such applicable date. The term "total disability" shall, for purposes of this
Plan, be defined in the same manner as such term is defined in Section 22(e)(3)
of the Code and shall be determined by the Committee in its sole discretion.
10. Change of Control.
-----------------
(a) In the event of a proposed sale or conveyance of all or substantially all of
the assets of the Company, or the merger or consolidation of the Company and/or
its Subsidiaries with or into another corporation, each outstanding Option shall
be assumed or an equivalent option shall be substituted by the successor
corporation or a parent or subsidiary of the successor corporation. In the event
that such successor corporation refuses to assume such Option or to substitute
an equivalent option, such Option may, at the discretion of the Committee,
become 100% vested upon the consummation of the merger or sale of assets.
(b) Except as otherwise determined by the Committee or provided in an Option
Agreement, in the event of the involuntary termination of employment or service
of an Optionee from the Company and its Subsidiaries on account of and within
six months of a Change of Control of the Company, as determined by the
Committee, Options granted to such Optionee that have not previously expired or
been exercised shall become 100% vested as of the date of such termination of
employment and shall be exercisable by the Optionee within 30 days after such
date, unless such Option is earlier terminated pursuant to its terms. A Change
of Control shall be deemed to have occurred when:
(i) any person (as such term is used in Section 13 of the Exchange
Act and the rules and regulations thereunder), and any person acting
in concert with such person, directly or indirectly, acquires or
otherwise becomes entitled to vote more than 50% of the voting power
entitled to be cast at elections for directors of the Company; or
(ii) there occurs any merger or consolidation of the Company, or any
sale, lease or exchange of all or any substantial part of the
consolidated assets of the Company and its Subsidiaries to any other
person, and (A) in the case of a merger or consolidation, the holders
of outstanding stock of the Company entitled to vote in elections of
directors of the Company immediately before such merger or
consolidation (excluding for this purpose any person that directly or
indirectly owns or is entitled to vote 20% or more of the voting
power of the Company) hold less than 50% of the voting power of the
survivor of such merger or consolidation or its parent, or (B) in the
case of any such sale, lease or exchange, the Company does not own at
least 50% of the voting power of the other person; or
(iii) one or more new directors of the Company are elected and at
such time five or more directors (or, if less, a majority of the
directors) then holding office were not nominated as candidates by a
majority of the directors in office immediately before such election.
11. Adjustments.
-----------
Except in the case of a Change of Control of the Company as provided in Section
10, in the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, ADSs, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of ADSs or other securities, the issuance of warrants or other rights to
purchase ADSs or other securities, or other similar corporate transaction or
event affects the ADSs with respect to which Options have been or may be issued
under the Plan, such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as the Committee may deem equitable, adjust any
or all of (i) the number and type of shares that thereafter may be made the
subject of Options, (ii) the number and type of shares subject to outstanding
Options, and (iii) the exercise price with respect to any Option, or, if deemed
appropriate, make provision for a cash payment to the holder of any outstanding
Option; provided, however, that the number of ADSs subject to any Option
denominated in ADSs shall always be a whole number.
12. Tax Withholding.
---------------
The Company shall notify an Optionee of any income tax withholding requirements
arising as a result of the grant of any Award or exercise of an Option. The
Company shall have the right to withhold from the Optionee such withholding
taxes as may be required by law, or to otherwise require the Optionee to pay
such withholding taxes. If the Optionee shall fail to make such tax
payments as are required, the Company or its Subsidiaries shall, to the extent
permitted by law, have the right to retain and withhold a number of ADSs,
otherwise due to such Optionee, having a market value not less than the amount
of such taxes required to be withheld by the Company to reimburse the Company
for any such taxes and cancel (in whole or in part) any such ADSs so withheld.
13. Right of Discharge Reserved.
---------------------------
Nothing in the Plan nor the grant of an Award hereunder shall confer upon any
employee, officer, director, consultant, independent contractor or other
individual the right to continue in the employment of or service with the
Company or any of its Subsidiaries or affect any right that the Company or any
Subsidiary may have to terminate the employment or service of (or to demote or
to exclude from future Options under the Plan) any such employee, officer,
director, consultant, independent contractor or other individual at any time for
any reason. Except as specifically provided by the Committee, the Company shall
not be liable for the loss of existing or potential profit from an Award granted
in the event of termination of an employment or service or other relationship
even if the termination is in violation of an obligation of the Company or any
Subsidiary of the Company to the employee, officer, director, consultant or
independent contractor.
14. Severability.
------------
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part, such unlawfulness, invalidity or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which remain in full force and effect. If the making of any
payment or the provision of any other benefit required under the Plan shall be
held unlawful or otherwise invalid or unenforceable, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable shall be made or provided under
the Plan.
15. Amendment and Termination of the Plan.
-------------------------------------
The Board may, from time to time, alter, amend, suspend or terminate the Plan
with respect to Options that have not been granted, subject to any requirement
for stockholder approval imposed by applicable law or any rule of any stock
exchange or quotation system on which ADSs are listed or quoted; provided,
however, that the Board may not amend the Plan in any manner that would result
in non-compliance with any applicable law. Neither the Board nor the Committee
may, without the consent of the Optionee, alter or in any way impair the rights
of such Optionee under any Award previously granted. Neither the termination of
the Plan nor the Change of Control of the Company shall affect any Option
previously granted.
If the approval of the Plan by the stockholders is not obtained within 12 months
of the Effective Date, the Plan shall be null and void and each Award of an
Option hereunder shall be null and void.
16. Conditions Upon Issuance of ADSs.
--------------------------------
ADSs shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such ADSs or the ADRs
evidencing such ADSs shall comply with applicable laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. As a condition to exercise of an Option, the Committee may require
the person exercising the Option to represent and warrant at the time of
exercise that the ADSs are being purchased only for investment and without any
present intention to sell or distributed such ADSs.
17. Gender and Number.
-----------------
Any masculine terminology used in this Plan document shall also include the
feminine, and the definition of any term herein in the singular shall also
include the plural except when otherwise indicated by the context.
18. Governing Law.
-------------
The Plan and all determinations made and actions taken thereunder, to the extent
not otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of New York and construed accordingly.
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ANNEXURE B
----------
PRANA BIOTECHNOLOGY LIMITED
ABN 37 080 699 065
2004 EMPLOYEES', DIRECTORS' AND CONSULTANTS' SHARE AND OPTION PLAN
1. PURPOSE
The Board of Directors of the Company proposes to introduce an
employee, director and consultants share and option plan, to be called
the Prana Biotechnology Limited 2004 Employees', Directors' and
Consultants' Share and Option Plan ("2004 ASX Plan") for the purpose
of:
(a) providing Eligible Persons with an additional incentive to work
to improve the performance of the Company;
(b) attracting and retaining Eligible Persons essential for the
continued growth and development of the Company;
(c) to promote and foster loyalty and support amongst Eligible
Persons for the benefit of the Company; and
(d) to enhance the relationship between the Company and Eligible
Persons for the long term mutual benefit of all parties.
2. COMMENCEMENT
Subject to the adoption of the 2004 ASX Plan by the shareholders of the
Company at the 2004 Annual General Meeting of the Company and to due
compliance with the Corporations Act 2001, the 2004 ASX Plan shall take
effect as of the date of the 2004 Annual General Meeting of the
Company.
3. DEFINITIONS
In these Rules, unless the context otherwise requires:
"Subsidiary" means such term as defined in the Australian Corporations
Act 2001;
"ASX" means Australian Stock Exchange Limited;
"Company" means Prana Biotechnology Limited ACN 080 699 065;
"Board of Directors" means the Board of Directors of the Company from
time to time acting by resolution made in accordance with the
Corporations Act 2001 and the Constitution of the Company;
"Director" means a director from time to time of the Company;
"Eligible Person" means a person who is:
(i) an employee of; or
(ii) a director of; or
(iii) a consultant to,
the Company or any Subsidiary;
"Listing Rules" means the Listing Rules from time to time of the ASX;
"Option" means an option to purchase Shares;
"Rules" means the rules of the 2004 ASX Plan, as amended from time to
time;
"Share" means an ordinary fully paid share ranking pari passu in the
capital of the Company; and
"Unexercised Options" means Options granted under the 2004 ASX Plan
from time to time which have not been exercised or expired in
accordance with their terms and the terms of the 2004 ASX Plan.
4. MAXIMUM AGGREGATE NUMBER OF SHARES ISSUABLE UNDER THE 2004 ASX PLAN
The aggregate number of Shares issuable under the 2004 ASX Plan, either
by the issuance of Shares or under Options granted under the 2004 ASX
Plan, shall not exceed 12,000,000 ordinary shares.
5. ADMINISTRATION OF THE 2004 ASX PLAN
The 2004 ASX Plan shall be administered by a committee (the
"Committee") comprised of members of the Board of Directors of the
Company, selected by the Board of Directors. The majority of members
shall be independent non-executive directors.
The Committee is authorised, subject to the provisions of the 2004 ASX
Plan, to establish such rules and regulations as it may deem
appropriate for the conduct of meetings and proper administration of
the 2004 ASX Plan. All actions of the Committee shall be taken by
majority vote of its members, except that the members thereof may
authorise any one or more of them or any officer of the Company to
execute and deliver documents on behalf of the Committee. Subject to
the provisions of the 2004 ASX Plan, the Committee shall have
authority, in its sole discretion, to issue securities under the 2004
ASX Plan, to interpret the provisions of the 2004 ASX Plan and to
prescribe, amend, and rescind rules and regulations relating to the
2004 ASX Plan or any issue thereunder as it may deem necessary or
advisable. All decisions made by the Committee pursuant to the
provisions of the 2004 ASX Plan shall be final, conclusive and binding
on all persons. No member of the Committee shall be liable for anything
done or omitted to be done by him or by any other member of the
Committee in connection with the 2004 ASX Plan, except for his own
willful misconduct or as expressly provided by law.
6. APPLICATION
All Options or Shares offered to an eligible person pursuant to the
2004 ASX Plan shall be evidenced in writing by a Share or Option offer
document ("Offer Document"). The Offer Document shall contain such
terms and conditions as
the Committee shall determine, which are not inconsistent with the
provisions of the 2004 ASX Plan, including the following:
a) QUANTITY
--------
The quantity of Shares to be issued or Options to be granted
under the Offer Document.
b) EXERCISE PRICE OF OPTIONS
-------------------------
The exercise price of an Option issued under the 2004 ASX Plan
will be equal to less than market value of an ordinary share on
the ASX at the date of grant or such other exercise price that
the Committee determines to be appropriate under the
circumstances.
Market value will be determined by reference to the volume
weighted average market price of the Company's ordinary share
during the five trading days on the ASX up to and including the
date of grant of the options or such other date or period as the
Committee shall consider appropriate.
c) OPTION TERMS
------------
The term of an Option shall be determined by the Committee and
set forth in the Offer Document; provided, however, that no
Option shall be exercisable after the expiration of ten years
from the date of its grant.
d) ESCROW TERM; VESTING PERIOD
---------------------------
Except as otherwise provided in the 2004 ASX Plan or determined
by the Committee and set forth in an Offer Document, the issuance
of Shares and exercise of Options shall be subject to either an
escrow or vesting schedule, as the Committee shall determine and
set forth in the Offer Document, in accordance with the following
terms and conditions:
(i) Escrow Term. In the event that the Committee shall determine
that the issuance of Shares and exercise of Options shall be
subject to an escrow, Shares issued or Options granted under
the 2004 ASX Plan cannot be disposed of or exercised,
respectively, within six months from the date of issue or
grant (or 12 months if issued or granted to a Director).
Shares issued or Options granted under the 2004 ASX Plan may
be disposed of or exercised at any time from six months
after the date of issuance or grant, respectively (or 12
months if issued or granted to a Director), subject to any
other terms of the issuance or grant.
(ii) Vesting Period. In the event that the Committee shall
determine that the issuance of Shares and exercise of
Options shall be subject to a vesting schedule, the issuance
of Shares and exercise of Options shall become vested and
issued or exercisable in accordance with the following
vesting schedule:
less than one year after date of issuance or grant . . 0% of the total number granted
one year after date of issuance or grant. . . . . . . . 25% of the total number granted
two years after date of issuance or grant. . . . . . . 50% of the total number granted
three years after date of issuance or grant . . . . . 75% of the total number granted
four years after date of issuance or grant . . . . . . 100% of the total number granted
Shares and options shall automatically cease to vest in
accordance with the above schedule and, except as provided in
Sections 9, 11, 12 and 13, shall become null and void upon the
termination of employment for any reason.
e) TIME AND MANNER OF PAYMENT OF EXERCISE OF OPTIONS
-------------------------------------------------
Each Offer Document shall provide that Options granted under the
2004 ASX Plan shall be exercised by the Eligible Person (or
nominee) as to all or any portion of the Shares covered thereby,
by the giving of written notice of exercise to the Company,
specifying the number of Options to be exercised. Full payment of
such exercise price shall be made within ten business days
following the receipt of such notice by the Company and shall be
made (i) in cash or bank cheque, or (ii) in any other manner
permitted in the discretion of the Committee. Such notice of
exercise and full payment, shall be delivered to the Company at
its principal business office or such other office as the
Committee may direct, and shall be in such form, containing such
further provisions consistent with the provisions of the 2004 ASX
Plan, as the Committee may prescribe. The Company shall issue or
cause to be issued to the Eligible Person ordinary shares of the
Company as soon as practicable after an Option is exercised, and,
within a reasonable time thereafter, such issuance shall be
evidenced on the books of the Company. No person exercising an
Option shall have any of the rights of a holder of an ordinary
share prior to the date that such ordinary shares are issued
following the exercise of such Option. No adjustment shall be
made for cash dividends or other rights for which the record date
is prior to the date of such issuance.
7. CANCELLATION OF OFFER
The Board of Directors retains the right to withdraw an Offer Document
at any time prior to receiving an acceptance from the Eligible Person
to whom the offer was made, or that Eligible Person's nominee.
8. ACCEPTANCE
(a) The Company shall be obliged to accept any acceptance application
made pursuant to Rule 6, provided that the application accords, in
all respects, with these Rules and is for such number of Shares or
Options, or part thereof, to which the Eligible Person is
entitled. Upon acceptance of a duly complying application, the
Company, within ten business days, shall deliver a Option
Certificate or confirmation of Share issue in respect of the
Shares or Options granted to the Eligible Person.
(b) Each Eligible Person (and, if applicable, his or her nominee) will
be taken to agree to be bound by these Rules upon the acceptance
of the offer from the Committee to take up Shares or Options under
this 2004 ASX Plan.
9. OTHER CONDITIONS
(a) The Offer Document may contain any other terms and conditions that
the Committee, in its sole discretion, deems appropriate; provided
however that such terms or condition shall not be inconsistent
with the terms of the 2004 ASX Plan, Corporations Act 2001 or ASX
Listing Rules.
(b) Subject to the terms and conditions set forth in the rules of the
2004 ASX Plan, Shares and Options may be assigned at the
discretion of the Committee. The instrument of assignment shall be
duly executed and shall be lodged at the registered office of the
Company together with such other information as the Company may
reasonably require with respect to the assignment, and the Company
shall enter the name of the assignee in a register of Shares or
Options as the holder of the relevant Shares or Options. The
Company shall not be bound to recognise the assignment until a
copy of the duly executed instrument of assignment is lodged with
the Company.
(c) Options shall not be listed for official quotation on the ASX.
(d) Shares issued under the 2004 ASX Plan shall be listed for official
quotation on the ASX. The Company shall, in accordance with the
Listing Rules, apply to have Shares issued pursuant to an exercise
of Options listed for official quotation by the ASX.
(e) Options cannot be granted to Directors or their associates unless
prior approval of the Company's shareholders is obtained in
accordance with the Listing Rules.
(f) The Options will not give any right to participate in dividends
until Shares are issued pursuant to the exercise of the relevant
Options.
(g) In the event of the proposed dissolution or liquidation of the
Company, all outstanding Options will terminate immediately prior
to the consummation of such proposed action, unless otherwise
provided by the Board of Directors. The Board of Directors may, in
the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board
and give each Eligible Person the right to exercise his or her
Options as to all or any part of the Optioned Shares, including
Shares as to which the Option would not otherwise be exercisable.
(h) In the event of a proposed sale or conveyance of all or
substantially all of the assets of the Company, or the merger or
consolidation of the Company with or into another corporation,
each outstanding Option shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event that such
successor corporation refuses to assume such Option or to
substitute an equivalent option, such Option may, at the
discretion of the Committee, accelerate in full upon the
consummation of the merger or sale of assets.
(i) The Committee shall have the power and right, but not obligation,
to accelerate the exercisability of any Options, notwithstanding
any limitations in this 2004 ASX Plan, upon a Change in Control
(as defined herein below). In the event of a Change in Control of
the Company, whether by tender offer for more than 50% of the
outstanding voting shares, proxy contest for the election of
members of the Board of Directors or other means, which lacks the
approval of the Board (a "Hostile Change in Control"), each
outstanding Option under this 2004 ASX Plan shall automatically
accelerate in full and unvested Shares shall vest in full
immediately. For purposes of the 2004 ASX Plan, a "Change in
Control" shall be deemed to have occurred if any person, or any
two or more persons acting as a group, and all affiliates of such
person or persons, who prior to such time owned less than fifty
percent (50%) of the then outstanding ordinary shares of the
Company, shall acquire such additional shares of the Company's
ordinary shares in one or more transactions, or series of
transactions, such that following such transaction or
transactions, such person or group and affiliates beneficially own
more than fifty percent (50%) of the Company's outstanding
ordinary shares.
(j) In the event that all or substantially all of the issued and
outstanding capital of the Company is to be sold (the "Sale"),
each Eligible Person shall be obligated to participate in such
Sale and sell his or her Shares and/or Options in the Company,
provided, however, that each such Share or Option shall be sold at
a price equal to that of any other Share sold under the Sale
(minus the applicable exercise price), and subject to the absolute
discretion of the Board of Directors.
10. RIGHTS OF EMPLOYEES
The 2004 ASX Plan shall not form part of any contract of employment
between the Company and any of its employees and shall not confer,
directly or indirectly, on any employee any legal or equitable rights
whatsoever against the Company. Without limiting the generality of the
following, nothing in these Rules:
(a) confers on any Eligible Person the right to receive any Shares and
Options;
(b) confers on any person the right to continue as an employee;
(c) affects any rights which the Company may have to terminate the
employment of any employee; or
(d) may be used to increase damages in any action brought against the
Company in respect of such termination.
11. TERMINATION OF EMPLOYMENT
(a) Except as otherwise determined by the Committee or provided in an
Offer Document, in the event of the termination of employment or
service of an Eligible Person with the Company and its Subsidiaries for
any reason (other than termination for cause, death, disability or
Change of Control of the Company as provided in these Rules), Options
granted to him that have not previously expired or been exercised
shall, to the extent vested on the date of such termination, be
exercisable by the Eligible Person within 30 days after the date of
such termination, unless such Option is earlier terminated pursuant to
its terms. All Options that are not exercisable as of the date of such
termination or which are not exercised within 30 days thereafter, shall
be deemed cancelled and terminated as of such date.
(b) Except as otherwise determined by the Committee or provided in an
Offer Document, in the event an Eligible Person retires from employment
or service with the Company and its Subsidiaries, Options granted to
them shall become 100% vested as of the effective date of the Eligible
Persons retirement. Whether an Eligible Person has terminated
employment on account of retirement shall be determined by the
Committee in its sole discretion.
(c) Except as otherwise determined by the Committee or provided in an
Offer Document, in the event that an Eligible Persons employment or
service is terminated by the Company or any of its Subsidiaries for
"cause," all Options, whether or not exercisable as of the date of such
termination, shall be cancelled and terminated as of such date. For
these purposes, termination for "cause" shall mean the following: the
Eligible Person's violation of copyright, trademark and/or patent
protection maintained by the Company or a Subsidiary; the Eligible
Person engaging or assisting in any business in competition with the
Company or a Subsidiary as employee, owner, partner, director, officer,
stockholder, consultant or agent (ownership of minority interests in
publicly-traded corporations, partnerships or companies or of 5% or
less of the equity of privately-held corporations, partnerships or
companies shall not be considered competition for purposes of this 2004
ASX Plan); the Eligible Person's dishonesty, or acting in any manner
inconsistent with the utmost good faith and loyalty in the performance
of the Eligible Person's duties; conviction of the Eligible Person by a
court of law of competent jurisdiction for fraud, misappropriation,
embezzlement, or any felony; failure of the Eligible Person to perform
his duties to the reasonable satisfaction of the Company or its
Subsidiaries.
12. DEATH
Except as otherwise determined by the Committee or provided in an Offer
Document, in the event an Eligible Person dies while employed by or
providing service to the Company or any of its Subsidiaries, all
unvested Options shall become 100% vested and any Option granted to him
that has not previously expired or been exercised shall be exercisable
by the estate of such Eligible Person or by any person who acquired
such Option by bequest or inheritance, at any time within one year
after the date of death of the Eligible Person, unless such Option is
earlier terminated pursuant to its terms. All Options not exercised
within such one year period shall be deemed cancelled and terminated on
the first anniversary of the Eligible Person's death.
13. DISABILITY
Except as otherwise determined by the Committee or provided in an Offer
Document, in the event of the termination of employment of an Eligible
Person due to total disability, the Eligible Person or his guardian or
legal representative, shall have the right to exercise any Option which
has not been previously exercised or expired and which the Eligible
Person was eligible to exercise as of the first date of total
disability, at any time within one year after such termination, unless
such Option is earlier terminated pursuant to its terms. All Options
that are not exercisable as of the date of the Eligible Person's
termination or which are not exercised within one year thereafter shall
be deemed cancelled and terminated as of such applicable date.
Subject to compliance with the Listing Rules (particularly but not only
Listing Rule 6.23), the Committee may, in its discretion, extend the
time periods in, or waive the application of any provision of Rules
11,12 or 13.
14. ADJUSTMENTS
Except in the case of a Change of Control of the Company as provided in
Section 9, in the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, shares,
other securities, or other property), recapitalisation, share split,
reverse share split, reorganisation, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of shares or other
securities, the issuance of option or other rights to purchase shares
or other securities, or other similar corporate transaction or event
affects the shares with respect to which
Options have been or may be issued under the 2004 ASX Plan, such that
an adjustment is determined by the Committee to be appropriate in order
to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the 2004 ASX Plan, then
the Committee shall, in such manner as the Committee may deem
equitable, adjust any or all of (i) the number and type of shares that
thereafter may be made the subject of Options, (ii) the number and type
of shares subject to outstanding Options, and (iii) the exercise price
with respect to any Option, or, if deemed appropriate, make provision
for a cash payment to the holder of any outstanding Option; provided,
however, that the number of shares subject to any Option denominated in
shares shall always be a whole number.
15. RIGHT OF DISCHARGE RESERVED
Nothing in the 2004 ASX Plan nor the issuance Shares nor the grant of
Options hereunder shall confer upon any employee, officer, director,
consultant, independent contractor or other individual the right to
continue in the employment of or service with the Company or any of its
Subsidiaries or affect any right that the Company or any Subsidiary may
have to terminate the employment or service of (or to demote or to
exclude from future Options under the 2004 ASX Plan) any such employee,
officer, director, consultant, independent contractor or other
individual at any time for any reason. Except as specifically provided
by the Committee, the Company shall not be liable for the loss of
existing or potential profit from an issuance or grant of securities in
the event of termination of an employment or service or other
relationship even if the termination is in violation of an obligation
of the Company or any Subsidiary of the Company to the employee,
officer, director, consultant or independent contractor.
16. SEVERABILITY
If any provision of the 2004 ASX Plan shall be held unlawful or
otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of the 2004 ASX Plan or part thereof, each of which remain in
full force and effect. If the making of any payment or the provision of
any other benefit required under the 2004 ASX Plan shall be held
unlawful or otherwise invalid or unenforceable, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or
benefit from being made or provided under the 2004 ASX Plan, to the
extent that it would not be unlawful, invalid or unenforceable, and the
maximum payment or benefit that would not be unlawful, invalid or
unenforceable shall be made or provided under the 2004 ASX Plan.
17. AMENDMENT AND TERMINATION OF THE 2004 ASX PLAN
The Board of Directors may, from time to time, alter, amend, suspend or
terminate the 2004 ASX Plan with respect to Shares or Options that have
not been granted, subject to any requirement for shareholder approval
imposed by applicable law or any rule of any stock exchange or
quotation system on which shares are listed or quoted; provided,
however, that the Board of Directors may not amend the 2004 ASX Plan in
any manner that would result in non-compliance with any applicable law.
Neither the Board of Directors nor the Committee may, without the
consent of the Eligible Person, alter or in any way impair the rights
of such Eligible Person under any issue previously granted. Neither the
termination of the 2004 ASX Plan nor the Change of Control of the
Company shall affect any Option previously granted.
If the approval of the 2004 ASX Plan by the shareholders is not
obtained, the 2004 ASX Plan shall be null and void and each issue of an
Share or Options hereunder shall be null and void.
18. GENDER AND NUMBER
Any reference to masculine terminology used in this 2004 ASX Plan
document shall also include the feminine, and the definition of any
term herein in the singular shall also include the plural except when
otherwise indicated by the context.
19. GOVERNING LAW
The 2004 ASX Plan and all determinations made and actions taken
thereunder, are governed by Australian Corporations Act 2001, ASX
Listing Rules and any other Federal or State laws of Australia.
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ITEM 2
Resolution 1 Re-Election of Mr. Geoffrey Kempler to Serve as a Director
Resolution 2 Election of Dr. Jonas Alsenas to Serve as a Director
Resolution 3 Approval of Previous Issuance of Ordinary Shares to P.N.
Gesolymalos S.A.
Resolution 4 Approval of Previous Issuance of Ordinary Shares to Certain
Consultants
Resolution 5 Approval of Previous Grants of Options to Certain
Consultants
Resolution 6 Approval of Previous Grants of Options to Certain Employees
Resolution 7 Approval of Issuance of Warrants to Rodman & Renshaw LLC
Resolution 8 Approval of Grant of Unlisted Options to Dr. Jonas Alsenas
Resolution 9 Non-Executive Directors Remuneration Pool
Resolution 10 Adoption of the 2004 American Depositary Share (ADS)
Option Plan
Resolution 11 Adoption of the 2004 Employees, Directors' and Consultants
Share and Option Plan
Resolution 12 Adoption of Maximum Shares issuable under the 2004
American Depositary Share (ADS) Option Plan and the 2004
Employees, Directors' and Consultants Share and Option
Plan
Resolution 13 Approval of Grant of Unlisted Options to Mr. Geoffrey
Kempler
Resolution 14 Approval of Grant of Unlisted Options to Prof. Colin
Masters
Resolution 15 Approval of Grant of Unlisted Options to Mr. Brian Meltzer
Resolution 16 Approval of Grant of Unlisted Options to Dr. George Mihaly
Resolution 17 Approval of Issuance of Ordinary Shares to Mr. Brian
Meltzer in Lieu of Director's Base Fees
Resolution 18 Approval of Issuance of Ordinary Shares to Dr. George
Mihaly in Lieu of Director's Base Fees
Resolution 19 Approval of Issuance of Ordinary Shares to Prof. Colin
Masters in Lieu of Director's Base Fees
DETACH PROXY CARD HERE
Mark, Sign, Date and Return [X]
the Proxy Card Promptly Votes must be indicated
Using the Enclosed Envelope. (x) in Black or Blue ink.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. [ ] [ ] [ ] 6. [ ] [ ] [ ]
2. [ ] [ ] [ ] 7. [ ] [ ] [ ]
3. [ ] [ ] [ ] 8. [ ] [ ] [ ]
4. [ ] [ ] [ ] 9. [ ] [ ] [ ]
5. [ ] [ ] [ ] 10. [ ] [ ] [ ]
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
11. [ ] [ ] [ ] 16. [ ] [ ] [ ]
12. [ ] [ ] [ ] 17. [ ] [ ] [ ]
13. [ ] [ ] [ ] 18. [ ] [ ] [ ]
14. [ ] [ ] [ ] 19. [ ] [ ] [ ]
15. [ ] [ ] [ ]
To change your address, please mark this box. [ ]
[SCAN LINE]
The Voting Instruction must be signed by the person in whose
name the relevant Receipt is registered on the books of the
Depositary. In the case of a Corporation, the Voting
Instruction must be executed by a duly authorized Officer or
Attorney.
-------------------------------- -----------------------
Date Share Owner sign here Co-Owner sign here
PRANA BIOTECHNOLOGY LIMITED
Instructions to The Bank of New York, as Depositary
(Must be received prior to the close of business on November 10, 2004)
The undersigned holder of one or more American Depositary Receipts
("Receipts") of PRANA BIOTECHNOLOGY LIMITED (the "Company") ordinary shares
hereby requests and instructs The Bank of New York, as Depositary, to vote or
cause to be voted the number of shares represented by such Receipt(s) of the
Company, registered in the name of the undersigned on the books of the
Depositary as of the close of business October 21, 2004, at the Annual General
Meeting of the Company to be held on November 17, 2004, in respect of the
resolutions specified on the reverse side.
NOTE:
If no instructions are received by the Depositary from any Owner with
respect to any of the Deposited Securities represented by the American
Depositary Shares evidenced by such Owner's Receipts on or before November
10, 2004, the Depositary shall deem such Owner to have instructed the
Depositary to give a discretionary proxy to a person designated by the
Company.
To include any comments, please mark this box. [ ]
Please complete and date this proxy on the reverse side and return it promptly
in the accompanying envelope.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRANA BIOTECHNOLOGY LIMITED
---------------------------
(Registrant)
By:/s/Jonas V. Alsenas
-------------------
Jonas V. Alsenas
Chief Executive Officer
Date: November 3, 2004