<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 (AMENDMENT NO )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Proxy Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240a-12
Cell Pathways, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement , if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which the transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set for the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by the Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
CELL PATHWAYS, INC.
702 ELECTRONIC DRIVE
HORSHAM, PENNSYLVANIA 19044
April 18, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cell Pathways, Inc. which will be held on May 31, 2000 at 10:00 a.m. at the Four
Seasons Hotel, One Logan Square, 18th Street and Benjamin Franklin Parkway,
Philadelphia, Pennsylvania.
At this year's meeting, you will be asked to elect three directors to serve
terms of three years each; to approve an amendment to the Company's stock option
plan authorizing additional shares for awards under the plan; to adopt an
amendment to the Certificate of Incorporation increasing the number of
authorized shares of capital stock of the Company; and to ratify the selection
of the Company's independent auditors.
The Notice of Annual Meeting of Stockholders, Proxy Statement, form of
proxy and 1999 Annual Report to Stockholders are included with this letter.
Upon adjournment of the meeting, the directors and officers of the Company
will be available to confer informally with stockholders.
We hope that many of you will be with us. Whether or not you plan to
attend, please sign, date and return your proxy promptly in the enclosed
envelope.
Sincerely yours,
/s/ Robert J. Towarnicki
Robert J. Towarnicki
President and Chief Executive Officer
<PAGE> 3
CELL PATHWAYS, INC.
702 ELECTRONIC DRIVE
HORSHAM, PENNSYLVANIA 19044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 2000
To the Stockholders of Cell Pathways, Inc.:
The 2000 Annual Meeting of Stockholders of Cell Pathways, Inc. will be held
at the Four Seasons Hotel, One Logan Square, 18th Street and Benjamin Franklin
Parkway, Philadelphia, Pennsylvania on Wednesday, the 31st day of May at 10:00
a.m. Eastern Daylight Time, for the purpose of asking the stockholders to:
(1) Elect three directors for terms of three years each;
(2) Consider and act upon an amendment to the Cell Pathways, Inc. 1997
Equity Incentive Plan to increase the number of shares authorized for
awards under the plan from 2,350,000 to 5,600,000;
(3) Consider and act upon an amendment to Article IV of the Certificate of
Incorporation to increase the authorized capital stock of the Company
to 150,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock, for a total of 160,000,000 total authorized shares;
(4) Ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the year 2000; and
(5) Consider and act upon such other business as may properly come before
the meeting.
Stockholders of record at the close of business on April 3, 2000 will be
entitled to vote at the meeting. The date of mailing this Notice of Meeting and
Proxy Statement is on or about April 18, 2000.
By order of the Board of Directors
Richard H. Troy
Secretary
Horsham, Pennsylvania
April 18, 2000
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE PAID ENVELOPE.
THE COMPANY'S 1999 ANNUAL REPORT TO STOCKHOLDERS ACCOMPANIES
THE PROXY STATEMENT AND FORM OF PROXY.
<PAGE> 4
CELL PATHWAYS, INC.
702 ELECTRONIC DRIVE
HORSHAM, PENNSYLVANIA 19044
PROXY STATEMENT
SOLICITATION OF PROXY
The enclosed proxy is solicited by the Board of Directors (the "Board") of
Cell Pathways, Inc., (the "Company" or "CPI") for use at the Annual Meeting of
Stockholders to be held on May 31, 2000 at 10:00 a.m. at the Four Seasons Hotel,
One Logan Square, 18th Street and Benjamin Franklin Parkway, Philadelphia,
Pennsylvania, including any adjournment or rescheduling thereof (the "Annual
Meeting"). A copy of the Notice of the Annual Meeting accompanies this Proxy
Statement. It is anticipated that the mailing of this Proxy Statement will
commence on or about April 18, 2000.
Whether or not you plan to attend the Annual Meeting, the Board
respectfully requests the privilege of voting on your behalf and urges you to
sign, date and return the enclosed proxy. By doing so you will, unless such
proxy is subsequently revoked by you, authorize the persons named therein, or
any of them, to act on your behalf at the Annual Meeting.
Any stockholder who submits a proxy may revoke it by giving a written
notice of revocation to the Secretary, or by submitting a duly executed proxy
bearing a later date, at or before the Annual Meeting and before the proxy is
voted.
MATTERS PROPOSED FOR VOTE OF THE STOCKHOLDERS AT THE ANNUAL MEETING
The following matters will be proposed to the stockholders at the Annual
Meeting:
1. Election of three directors to serve for terms of three years each and
until their respective successors are elected and qualified.
2. Approval of an amendment to the Cell Pathways, Inc. 1997 Equity
Incentive Plan to increase the number of shares authorized for awards
under the plan since its inception in 1993 from 2,350,000 to 5,600,000.
3. Adoption of an amendment to Article IV of the Certificate of
Incorporation of the Company to increase the number of shares of Common
Stock authorized for issuance from 70,000,000 to 150,000,000 and the
number of shares of Preferred Stock authorized for issuance from
5,000,000 to 10,000,000, for a total of 160,000,000 authorized shares.
4. Ratification of the selection of Arthur Andersen LLP as independent
auditors of the Company for 2000.
SHARES OUTSTANDING; VOTING
Shares represented by valid proxies in the accompanying form, and not
revoked prior to exercise, will be voted in accordance with the instructions
indicated thereon. If no contrary instruction is indicated, shares represented
by such proxies will be voted FOR the election of the individuals herein
nominated for directors, FOR the approval of the amendment to the 1997 Equity
Incentive Plan, FOR the adoption of the amendment to the Certificate of
Incorporation, and FOR the ratification of the selection of the Company's
independent auditors. The Company does not know of any other matters that will
be presented at the meeting. However, if any other matters properly come before
the meeting, or any of its adjournments, the person or persons voting the
proxies will vote them in accordance with their best judgment on such matters.
If a director nominee is unable to serve or for good cause will not serve, the
proxies will be voted for such substitute nominee as the board of directors may
propose; the Company has no reason to believe that this contingency may arise in
connection with this Annual Meeting.
<PAGE> 5
Only holders of shares of the Common Stock of the Company (the "Common
Stock") at the close of business on April 3, 2000, the record date for the 2000
Annual Meeting, will be entitled to vote at the Annual Meeting. On April 3,
2000, the outstanding stock of the Company entitled to vote consisted of
27,506,499 shares of Common Stock, with each such share entitled to one vote.
Appearance at the Annual Meeting in person or by proxy of the holders of Common
Stock entitled to cast 13,753,250 votes is required for a quorum. Shares
represented by abstentions or broker non-votes will be counted as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. A broker "non-vote" occurs when a registered broker holding a customer's
shares in the name of the broker has not received voting instructions on the
matter from the customer, is barred by applicable rules from exercising
discretionary voting authority in the matter, and so indicates on the proxy. The
following paragraphs set forth the vote of eligible shares required for each
proposal, assuming the presence of a quorum.
With respect to Proposal No. 1, directors will be elected by a plurality of
the votes cast. This means that the director nominee with the most affirmative
votes for a particular slot is elected for that slot. In an uncontested election
for directors, the plurality requirement is not a factor. Abstentions will not
negatively affect the election of candidates receiving the plurality of votes.
With respect to Proposal No. 2, the proposed amendment to the 1997 Equity
Incentive Plan, action of stockholders will be taken by a majority of the votes
cast, excluding abstentions and broker non-votes. Abstentions and broker
non-votes will be treated as not voted and will not be counted as votes for or
against the proposal. Unless a beneficial owner provides his broker with voting
instructions, a broker non-vote occurs and the shares cannot be voted by the
broker on this proposal.
With respect to Proposal No. 3, the proposed amendment to Article IV of the
Certificate of Incorporation, action of the stockholders requires the
affirmative vote of a majority of the shares outstanding and entitled to vote,
or at least 13,753,250 votes. Abstentions and broker non-votes will be treated
as not voted in such matters and will not be counted as votes for or against
such proposal. Unless a beneficial owner provides his broker with voting
instructions, a broker non-vote occurs and the shares cannot be voted by the
broker on this proposal. The failure of abstentions and broker non-votes to be
counted will negatively affect ratification of the proposed amendment by virtue
of not being counted toward achieving an affirmative vote of a majority of the
shares outstanding and entitled to vote.
With respect to Proposal No. 4, ratification of the selection of Arthur
Andersen LLP as independent auditors for the year 2000, action of the
stockholders will be taken by a majority of the votes cast, excluding
abstentions.
If any additional matters should properly come before the meeting, then,
except as otherwise provided by law or by the Certificate of Incorporation or
Bylaws of the Company with respect to particular types of matters, action of the
stockholders would be taken by a majority of the votes cast at the meeting,
excluding abstentions which would not be counted as votes for or against.
Your vote is important. Accordingly, you are asked to complete, sign and
return the accompanying proxy card (or voting instruction sheet for your broker
or other nominee), whether or not you plan to attend the meeting. If you plan to
attend the meeting to vote in person and your shares are registered with the
Company's transfer agent in the name of a broker or other nominee, you must
secure a proxy card from the broker or other nominee assigning voting rights to
you for your shares.
2
<PAGE> 6
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, Class
I, Class II and Class III. Each class consists as nearly as may be possible of
one-third of the total number of directors, and one class is elected each year
for a three-year term. The terms of the Class II directors expire at the 2000
Annual Meeting and their successors are to be elected at the 2000 Annual Meeting
for three-year terms expiring at the Annual Meeting of 2003. The terms of the
Class I and Class III directors expire at the Annual Meetings of 2002 and 2001,
respectively.
The nominees for election as Class II directors of the Company are William
A. Boeger, John J. Gibbons and Louis M. Weiner, M.D.
The following information is provided for the three nominees proposed to be
elected as Class II directors, and also for the continuing Class I and Class III
directors. All of such nominees and Class I and Class III directors were elected
by the Company's stockholders, except for Messrs. Gibbons and Weiner who were
elected by the Company's Board of Directors as Class II directors for terms
expiring at the Annual Meeting of 2000 in accordance with the terms of the
Agreement and Plan of Reorganization dated June 23, 1998 pursuant to which the
Company acquired Tseng Labs, Inc.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION WITH THE COMPANY
---- --- -------- -------------------------
<S> <C> <C> <C>
NOMINEES FOR CLASS II DIRECTORS:
William A. Boeger(1,2)................. 50 1992 Chairman of the Board of Directors
John J. Gibbons(1,2)................... 61 1998 Director
Louis M. Weiner........................ 48 1998 Director
CONTINUING CLASS I DIRECTORS:
Thomas M. Gibson(1).................... 73 1996 Director
Bruce R. Ross(2)....................... 59 1998 Director
CONTINUING CLASS III DIRECTORS:
Judith A. Hemberger(2)................. 52 1998 Director
Robert J. Towarnicki................... 48 1996 Director; Chief Executive Officer and
President of the Company
Richard H. Troy........................ 62 1992 Director; Senior Vice President --
Corporate Development, General Counsel
and Secretary of the Company
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation and Stock Option Committee
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR election of the
nominees for Class II Directors.
THE BOARD OF DIRECTORS
William A. Boeger, 50, has served as Chairman of the Board of Directors of
the Company since September 1996 and as a Director since December 1992. Mr.
Boeger is a managing general partner of Quest Ventures. From 1994 to 1999 he
served as President and Chief Executive Officer of Calypte Biomedical
Corporation, and served as Chairman of the Board of Calypte from 1993 to 1999.
Since 1986 he has been Managing General Partner of Quest Ventures II, a venture
capital company that he founded. From 1980 to 1986, Mr. Boeger was employed by
Continental Capital Ventures, a venture capital fund focused on early stage
technology companies, where he attained the position of General Partner. Mr.
Boeger is also a director of Iridex Corporation, Chronix Biomedical, and Pepgen
Biomedical.
3
<PAGE> 7
John J. Gibbons, 61, has served as a Director since November of 1998. He
was the President, Chief Executive Officer and Chairman of Tseng Labs, Inc. from
November 1997 until the acquisition of Tseng Labs, Inc. by the Company in
November 1998. From December 1996 until November 1997, Mr. Gibbons was Executive
Vice President and Chief Operating Officer of Tseng Labs, Inc. From January 1996
to November 1996, Mr. Gibbons served as a consultant to Tseng. Mr. Gibbons
served as Tseng's Chief Financial Officer from January 1989 to May 1991, and as
a Vice-Chairman from May 1991 to December 1995. Mr. Gibbons was a director of
Tseng from 1983 through November 1998. Tseng was a supplier of video graphic
controller chips to the computer industry. Mr. Gibbons is the Chief Executive
Officer of John J. Gibbons & Co., Inc., a financial consulting firm founded by
him in 1979.
Thomas M. Gibson, 73, has served as a Director of the Company since August
1996. From 1947 to 1992 he served with Gibson Electric Company, Inc., of which
he was Chief Executive Officer at the time of his retirement. He served as
President of Jupiter Electric Company, Inc. until 1996 and has served as
President of Integrated Technologies Development Corporation since 1995. In the
early 1980s he co-founded Gibson Information Systems, a data service bureau
which he sold in 1986. He is President of Thomas Gibson, Inc. management
consultants.
Judith A. Hemberger, Ph.D., 52, has served as a director of the Company
since June 1998. She is Executive Vice President and Chief Operating Officer of
Pharmion Corporation. From 1998 to 1999 she served as Senior Vice President,
Business and Planning, Avax Technologies, Inc. From 1979 to 1997, she served
with Marion Merrell Dow Inc., most recently as Senior Vice President, Global
Regulatory Affairs (1995-1997), and Vice President, Global Medical Affairs and
Commercial Development (1994-1995). She is a member of the Board of Directors of
Schein Pharmaceutical Company, the International Board of Directors of
Pharmaceutical Research Associates and Regulatory/Clinical Consultants, Inc.
Since 1985, she has been Adjunct Associate Professor, Division of Pharmacology,
University of Missouri at Kansas City School of Pharmacy.
Bruce R. Ross, 59, has served as a Director of the Company since January
1998. From 1994 to 1997, he served as Chief Executive Officer of The National
Comprehensive Cancer Network, an association of fifteen U.S. cancer centers.
From 1976 to 1994, he held various positions with Bristol-Myers Squibb Company,
including as Senior Vice President, Policy, Planning and Development of the U.S.
Pharmaceutical Group from 1993 to 1994 and as President of the U.S.
Pharmaceutical Group from 1990 to 1992. He is a director of Idec
Pharmaceuticals, Inc. and of the Fox Chase Cancer Center and is President of
Cancer Rx, Inc.
Robert J. Towarnicki, 48, has served as Chief Executive Officer and a
Director of the Company since October 1996 and as President of the Company since
January 1998. Prior to joining the Company, from 1992 to 1996, he served as
President, Chief Operating Officer, a Director and most recently as Executive
Vice President of Integra LifeSciences Corporation, which is the publicly held
parent firm for a group of biotechnology and medical device companies including
Collatech, Inc., ABS LifeSciences Inc., Telios Pharmaceuticals, Inc. and
Vitaphore Corporation. In addition, from 1991 to 1992, he served as Founder,
President and Chief Executive Officer of MediRel, Inc. From 1989 to 1991, he was
General Manager of Focus/MRL, Inc.; from 1985 to 1989, he was Vice President of
Development and Operations for Collagen Corporation; and from 1974 to 1985, he
held a variety of operations management positions at Pfizer, Inc. and Merck &
Co., Inc.
Richard H. Troy, 62, has served as Senior Vice President -- Corporate
Development of the Company since November 1997, Vice President -- Finance, Law
and Administration from January 1993 until November 1997, and General Counsel,
Secretary and a Director of the Company since December 1992. He has been an
advisor to the Company since its inception in 1990, and he is a Director and
President of FGN, Inc., the predecessor partnership's first general partner and
a principal stockholder of the Company. Prior to joining the Company, from 1990
to 1992, he served as Vice President and Associate General Counsel of UST, Inc.
From 1973 to 1990, he worked at Combustion Engineering, Inc., most recently as
Vice President and Deputy General Counsel. From 1964 to 1973, he practiced law
with the firm of Shearman & Sterling in New York City.
4
<PAGE> 8
Louis M. Weiner, M.D., 48, has served as a director of the Company and as a
member of the Company's Scientific Advisory Board since the latter part of 1998.
He has served as the Chairman of the Department of Medical Oncology, Division of
Medical Science at Fox Chase Cancer Center since 1994 and has been on staff at
Fox Chase Cancer Center since 1984. Since 1995, Dr. Weiner has been a Professor
in the Department of Medicine, Temple University School of Medicine. Since 1995,
he has chaired the Biologic Response Modifiers Committee of the Eastern
Cooperative Oncology Group.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors held nine board meetings and seven
committee meetings. All directors were able to attend at least 75% of the
meetings of the board and of the committees of which they were members, with the
exception of Dr. Weiner and Mr. Ross who would have been able to participate in
over 75% of said meetings had planned telephone connections to conference and
other facilities functioned as anticipated.
The Compensation and Stock Option Committee of the Board of Directors
determines the salaries and bonuses of the elected officers of the Company and
administers the 1997 Equity Incentive Plan. This committee met five times in
1999. The Audit Committee of the Board of Directors confers with the Company's
outside auditors with respect to the scope and results of the annual audit and
other matters affecting the audit and reviews with the auditors and Company
personnel the financial statements and matters pertaining to the internal
accounting function. This committee met twice during 1999. The Compensation and
Stock Option Committee consists of Directors Boeger, Gibbons, Hemberger and
Ross. The Audit Committee consists of Directors Boeger, Gibbons and Gibson. The
Board of Directors selects nominees for election to the Board and has not formed
a Nominating Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No director who served as a member of the Compensation and Stock Option
Committee during 1999 is a current or former officer or employee of the Company.
The following directors served on the committee for at least part of 1999:
Boeger, Gibbons, Hemberger, Quy, Ross and Schiff. Mr. Gibbons was chief
executive officer of Tseng Labs, Inc. at the time Tseng was acquired by the
Company in November 1998. Prior to the acquisition, Tseng had sold its business
and was a cash shell. Mr. Gibbons has not served as an officer, employee or
consultant of the Company or any subsidiary since the closing of the
acquisition.
COMPENSATION OF DIRECTORS
The Company's non-employee directors do not currently receive any
compensation for service on the Board or any committee thereof other than
pursuant to the 1997 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Directors are reimbursed for certain expenses in connection with
attendance at CPI Board and committee meetings. Directors who are employees of
CPI do not receive separate compensation for their services as directors.
The Directors' Plan was adopted by the Board on October 14, 1997 and
approved by the Company's stockholders shortly thereafter. This Plan provides
for the automatic grant of options to purchase shares of Company Common Stock to
non-employee directors of the Company. The Directors' Plan is administered by
the Board, unless the Board delegates administration to a committee.
Each person who first becomes a Non-Employee Director is automatically
granted an option to purchase 18,157 shares of Common Stock (the "Inaugural
Grant"). In addition, on the date of each annual stockholder meeting, each
Non-Employee Director who has served at least one full year as director is
automatically granted an option to purchase 5,447 shares of CPI Common Stock
(the "Anniversary Grant"). Options subject to an Inaugural Grant under the
Directors' Plan vest in three equal, annual installments commencing on the first
anniversary of the date of the grant of the option. Options subject to an
Anniversary Grant under the Directors' Plan vest in full on the first
anniversary of the date of the grant of the option. The vesting of options under
the Directors' Plan is conditioned on the continued service of the recipient as
a director, employee or consultant of CPI or any affiliate of the CPI through
the respective vesting dates.
5
<PAGE> 9
The exercise price of the options granted under the Directors' Plan is
equal to the fair market value of CPI Common Stock granted on the date of grant.
No option granted under the Directors' Plan may be exercised after the
expiration of 10 years from the date it was granted. In the event of certain
changes of control, options outstanding under the Directors' Plan will
automatically become fully vested and will terminate if not exercised prior to
such change of control.
At the time Dr. Weiner agreed to become a member of the Board of Directors,
he also agreed to become a member of the Company's Scientific Advisory Board. In
the latter capacity, Dr. Weiner received a stock option, vesting over three
years, to acquire 13,750 shares of Common Stock at $6.60 per share, and is
compensated at the rate of $4,000 per quarter.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of January 31, 2000 as to each person who owns more
than five percent of the outstanding Common Stock of the Company and each person
who is a director or executive officer of the Company, and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
BENEFICIAL OWNER AND ADDRESS(1) OF BENEFICIAL OWNERSHIP PERCENT
- ------------------------------- ----------------------- -------
<S> <C> <C>
Gem Capital Management, Inc.(2)............................. 1,780,939 6.8%
70 East 55th Street, 12th Floor
New York, NY 10022
FGN, Inc.................................................... 1,772,186 6.7%
c/o Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, IL 60603
Attn: Michael P. Cannon, Esq.
Morgan Stanley Dean Witter & Co.(3)......................... 2,757,179 10.1%
1585 Broadway
New York, NY 10036
William A. Boeger(4)........................................ 340,741 1.3%
John J. Gibbons(5).......................................... 114,088 *
Thomas M. Gibson(6)......................................... 129,172 *
Lloyd G. Glenn(7)........................................... 18,291 *
Brian J. Hayden(8).......................................... 65,004 *
Judith A. Hemberger, Ph.D(9)................................ 8,687 *
Rifat Pamukcu, M.D.(10)..................................... 407,338 1.7%
Bruce R. Ross(11)........................................... 12,105 *
Robert J. Towarnicki(12).................................... 267,469 1.1%
Richard H. Troy(13)......................................... 2,101,221 8.0%
Louis M. Weiner, M.D.(14)................................... 10,635 *
All executive officers and directors (11 persons)(15)....... 3,474,751 13.0%
</TABLE>
- ---------------
* Indicates beneficial ownership of less than one percent.
** The address of the directors and executive officers is 702 Electronic
Drive, Horsham, PA 19044.
(1) This table is based upon information supplied by officers, directors and
principal stockholders. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, the Company
believes that each of the stockholders named in this table has sole voting
and investment power with respect to the shares indicated as beneficially
owned. Applicable percentages are based on 26,246,740 shares of Common
Stock outstanding as of January 31, 2000, adjusted as required by the rules
promulgated by the Securities and Exchange Commission.
(2) Includes 1,726,885 shares beneficially owned by Oak Tree Partners, L.P., an
entity that may be deemed an affiliate of Gem Capital Management, Inc. and
54,054 shares beneficially owned by Gem Capital Management, Inc. Profit
Sharing Plan. Gem Capital Management, Inc. disclaims beneficial ownership
of such shares except to the extent of its pecuniary interest therein.
(3) Represents shares held by funds managed by Morgan Stanley Dean Witter & Co.
and their affiliates and includes warrants to purchase 1,000,000 shares of
Common Stock at $14 per share.
(4) Includes 13,379 shares and options to purchase 10,894 shares owned of
record by Mr. Boeger, 187,982 shares owned of record by Quest Ventures II
and 128,486 shares owned of record by Quest Ventures International. Mr.
Boeger is a managing general partner of Quest Ventures II and Quest
Ventures International, and may be deemed to share voting and investment
power with respect to such shares. Mr. Boeger disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest
therein.
7
<PAGE> 11
(5) Includes options to purchase 114,084 shares of Common Stock.
(6) Includes options to purchase 10,894 shares and warrants to purchase 1,288
shares beneficially owned by Thomas M. Gibson and 106,690 shares in the
Thomas M. Gibson Trust established by Thomas M. Gibson.
(7) Includes options to purchase 12,500 shares.
(8) Includes options to purchase 64,487 shares.
(9) Includes 635 shares owned jointly with Ms. Hemberger's mother, and options
to purchase 6,052 shares of Common Stock.
(10) Includes options to purchase 116,362 shares, 27,500 of which are unvested
and would currently be subject to a repurchase option by CPI.
(11) Represents options to purchase 12,105 shares.
(12) Includes options to purchase 84,000 shares. Also includes 3,678 shares
beneficially owned by Mr. Towarnicki's son and 3,678 shares owned by Mr.
Towarnicki's daughter, with respect to which shares Mr. Towarnicki
disclaims beneficial ownership except to the extent of his pecuniary
interest therein.
(13) Includes 17,500 shares subject to repurchase by CPI, options to purchase
20,000 shares. Also includes 32,000 shares beneficially owned by Mr. Troy's
spouse, Elizabeth N. Troy, and 24,000 shares beneficially owned by Mr.
Troy's daughter, Elizabeth D. Troy, as well as 1,772,186 shares owned of
record by FGN, Inc., of which Mr. Troy is a director and the President. Mr.
Troy may be deemed to share voting and investment power with respect to
such 56,000 shares beneficially owned by his spouse and daughter and to
such 1,772,186 shares beneficially owned by FGN, Inc.; however, Mr. Troy
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.
(14) Represents options to purchase 10,635 shares.
(15) Includes shares and options or warrants to purchase 498,301 shares held by
directors and executive officers of the Company. See Notes 4 through 13
above.
8
<PAGE> 12
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND EXECUTIVE OFFICERS OF THE
COMPANY
The following table sets forth for the fiscal years ended December 31,
1999, 1998 and 1997, the compensation for services rendered to the Company
awarded or paid to, or earned by, the Chief Executive Officer and each executive
officer of the Company who was serving as of the end of the 1999 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES ALL
--------------------------------- UNDERLYING OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ----------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Robert J. Towarnicki.................. 1999 $260,000 $ 75,000 -- $ --
Chief Executive Officer; 1998 195,000 115,000 120,000 25,000(1)
President 1997 175,000 40,000 100,000 --
Rifat Pamukcu, M.D.................... 1999 195,000 52,500 -- --
Chief Scientific Officer; 1998 175,000 75,000 80,000 --
Senior Vice President -- 1997 145,000 25,000 25,000 --
Research and Development
Richard H. Troy....................... 1999 180,000 33,750 -- --
Senior Vice President -- 1998 160,000 62,500 50,000 --
Corporate Development; 1997 140,000 25,000 10,000 --
General Counsel; Secretary
Brian J. Hayden....................... 1999 170,000 33,750 -- --
Chief Financial Officer; 1998 155,000 42,500 30,000 --
Vice President -- Finance; 1997 21,760(2) 15,000 90,785 --
Treasurer
Lloyd G. Glenn........................ 1999 154,380 29,000 -- 25,000(1)
Vice President -- Sales and 1998 78,462(3) 19,615 50,000 --
Marketing 1997 -- -- -- --
</TABLE>
- ---------------
(1) Represents relocation expenses.
(2) Brian J. Hayden began serving as Chief Financial Officer and Vice President,
Finance in November 1997.
(3) Lloyd G. Glenn began serving as Vice President, Marketing in June 1998. He
was promoted to Vice President of Sales and Marketing in March 2000.
EXECUTIVE EMPLOYMENT AGREEMENTS
In October 1996, the Company entered into an employment agreement with
Robert J. Towarnicki providing for initial annual compensation of $175,000 and
up to $35,000 as an annual bonus, an option to purchase up to 175,000 shares of
the Company's Common Stock at $0.50 per share subject to a four-year vesting
schedule, certain relocation expenses and a severance payment equal to six
months of salary and vesting of at least 87,500 options in the event of
termination without cause.
In February 1993, the Company entered into an employment agreement with
Rifat Pamukcu providing for initial annual compensation of $110,000 and up to
$30,000 as an annual bonus, certain relocation expenses and a severance payment
equal to nine months of salary in the event of involuntary termination or
termination by Dr. Pamukcu for good reason.
In January 1993, the Company entered into a memorandum of employment with
Richard H. Troy providing for initial annual compensation of $110,000, up to
$30,000 as an annual bonus, and a severance payment equal to six months of
salary and benefits in the event of termination without cause or termination by
Mr. Troy for good reason.
9
<PAGE> 13
In November 1997, the Company entered into an employment agreement with
Brian J. Hayden providing for initial annual compensation of $155,000 and up to
20% of base compensation as an annual bonus, an option to purchase 90,785 shares
of Common Stock at $4.75 per share subject to a four year vesting schedule, a
sign-on bonus of $15,000, and a severance payment equal to six months of salary
and twelve months of health care premiums in the event of termination without
cause.
STOCK OPTION GRANTS TO AND EXERCISES BY EXECUTIVE OFFICERS
The Company grants options to its executive officers and employees under
its 1997 Equity Incentive Plan (the "Plan"). During 1999, no stock options were
granted to the Chief Executive Officer or to any other executive officer.
The following table shows for the fiscal year ended December 31, 1999
certain information regarding options exercised by and held at such dates by the
Chief Executive Officer and the executive officers of the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1999 AT DECEMBER 31, 1999
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME(1) ON EXERCISE REALIZED UNEXERCISABLE(1) UNEXERCISABLE(2)
- ------- ----------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Robert J. Towarnicki............ -- $ -- 84,000/136,000 $379,200/$493,800
Rifat Pamukcu, M.D.............. -- -- 116,362/48,638 757,659/128,891
Richard H. Troy................. 10,000 51,800 20,000/30,000 53,000/79,500
Brian J. Hayden................. -- -- 64,487/56,298 274,291/213,742
Lloyd G. Glenn.................. -- -- 12,500/37,500 33,125/99,375
</TABLE>
- ---------------
(1) All options are subject to vesting. With respect to options granted prior to
August 1997 early exercise is possible, with the unvested portions thereof
remaining subject to a repurchase option by the Company.
(2) To date, all options have been granted at exercise prices equal to the fair
market value per share of Common Stock, as determined by the Board; the
Company's closing stock price at December 31, 1999 was $9.250 per share.
(3) No Executive Officer has sold any shares.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT
The Compensation and Stock Option Committee of the Board of Directors
determines the compensation of the executive officers of the Company. Pursuant
to rules adopted by the Securities and Exchange Commission, the Committee
furnishes the following report on executive compensation.
COMPENSATION PHILOSOPHY
Cell Pathways' executive compensation program seeks to accomplish several
major goals:
- To align the interests of executive officers with the long-term interests
of stockholders through participation in the Company's long-term, equity
based incentive compensation programs, principally stock options.
- To motivate executives to achieve key business objectives and to reward
them when such objectives are met.
- To recruit and retain highly qualified executive officers by offering
compensation that is competitive with that offered for comparable
positions in comparable development stage biotechnology and
pharmaceutical companies.
In reviewing the compensation packages for each executive officer, the
Committee reviewed information from published surveys and data provided by
corporate advisors. Factors that are considered in determining salary, incentive
awards and stock options include but are not limited to: company size; stage of
development; and geographic location. The Company competes for executive talent
with biotechnology and pharmaceutical companies in the Philadelphia region; the
compensation package paid by such companies is a factor in attracting and
retaining executive talent.
BASE SALARY
Base salary represents the fixed component of the executive compensation
program. Base salaries of the chief executive officer and senior management are
determined by reviewing comparable market base salary compensation, individual
performance, relevant experience and demonstrated capabilities in meeting the
requirements of the position. The Chief Executive Officer's base salary is
determined by the Committee's evaluation of his attainment of stated overall
goals and targets for the Company and his individual contribution and
performance.
LONG TERM INCENTIVES
Stock option awards within the approved Company plans are designed to align
the long-term interest of the Company's executives with those of its
stockholders. Stock options are used as a mechanism to attract executives to the
Company and to be competitive with other biotechnology companies in the region.
In addition, based on the attainment of corporate goals or individual
accomplishments, the Committee may use stock options as a further incentive for
the executives.
CASH BONUSES
The Committee believes that discretionary cash bonuses are important to
motivate and reward executive officers. Cash bonuses are based on significant
achievements and are not guaranteed. Annual cash bonuses may be awarded to
executives based on attainment of Company-wide and individual goals and
objectives.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Towarnicki's compensation for 1999 was determined based on his
experience in the industry and his accomplishments in 1999. Compensation awarded
to Mr. Towarnicki in 1999 was comprised of a base salary and a performance bonus
based on near-term accomplishments. Mr. Towarnicki's salary for 1999 was
$260,000 which was adjusted on January 1, 2000 to $273,000 to reflect
accomplishments made in 1999.
11
<PAGE> 15
Additionally, Mr. Towarnicki received an incentive bonus of $75,000 related to
his significant accomplishments in 1999. The Committee made these adjustments
based on the following accomplishments:
- Filed the Company's first new drug application.
- Completed a private round of financing which raised approximately $14
million of capital in 1999 and, through the exercise of warrants, an
additional $14 million of capital in 2000.
- Completed a clinical trial in prostate cancer demonstrating positive
results.
- Commenced industry collaboration with Aventis for combination clinical
work with Aptosyn(TM) and Taxotere(R), and made significant progress in
additional collaborations with Roche and Lilly which were finalized in
the first quarter of 2000.
- Established contracts with third parties for the sales and distribution
of Aptosyn(TM), upon approval.
- Completed a human safety trial of the Company's second compound, CP 461.
- Conducted fiscal operations in 1999 on budget.
Compensation and Stock Option
Committee
William A. Boeger
John J. Gibbons
Judith A. Hemberger
Bruce R. Ross
12
<PAGE> 16
COMMON STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's Common Stock from the commencement of public trading on November 4,
1998 through December 31, 1999 with the cumulative total return of the NASDAQ
Stock Market -- U.S. Index and the NASDAQ Pharmaceuticals Index. The graph
assumes a $100 investment made at the beginning of the period and reinvestment
of all dividends. The comparisons depicted in the graph are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
NASDAQ US NASDAQ PHARMACEUTICALS CLPA
--------- ---------------------- ----
<S> <C> <C> <C>
11/4/98 100.00 100.00 100.00
12/31/98 121.00 119.90 134.40
3/31/99 135.60 131.60 45.40
6/30/99 148.30 134.00 70.60
9/30/99 151.90 153.10 58.80
12/31/99 223.80 223.10 56.50
</TABLE>
13
<PAGE> 17
PROPOSAL 2: APPROVAL OF AMENDMENT TO 1997 EQUITY INCENTIVE PLAN
The Company's stock option plan for officers, employees and consultants
(the "Plan") was first adopted by the Board of Directors and approved by the
stockholders in 1993. The Plan was last amended by the directors and
stockholders in 1997, at which time it was renamed the Cell Pathways Inc. 1997
Equity Incentive Plan.
The Plan authorizes a total of 2,350,000 shares of Common Stock to be made
the subject of awards under the Plan, including all awards since its inception
in 1993. From inception of the Plan in 1993 through the date hereof, options
have been granted in respect of 2,250,121 shares, options have been exercised in
respect of 585,875 shares, options have been cancelled in respect of 95,650
shares, and options are outstanding in respect of 1,517,096 shares. Only 195,529
shares remain available for stock option grants under the Plan.
PROPOSED AMENDMENT TO THE PLAN
On February 23, 2000, the Board of Directors voted unanimously to amend the
Plan to authorize a further 3,250,000 shares for future possible awards under
the Plan, increasing the total authorized amount to 5,600,000 shares, including
all awards since inception of the Plan. The stockholders of the Company are
being asked at this meeting to approve this amendment.
The increase in the number of shares authorized for award under the Plan is
being proposed because the shares currently available for issuance under the
Plan are becoming depleted and are not sufficient to accommodate the needs of
the Company as it prepares for growth. In accordance with the Company's
compensation philosophy, stock options have been awarded to all of its
employees. Additional stock option grants have been made either on a periodic
basis or to recognize performance or promotion. The Company is currently
preparing to expand from its historic focus on research and development to
include commercialization activities. This may require the recruitment of
significant additional personnel, many in disciplines which are new to the
Company. Recruitment of key employees with developed expertise may, in many
cases, require substantial stock options as part of the compensation package.
Accordingly, the Board of Directors has voted unanimously to amend the Plan,
subject to stockholder approval, to increase the number of shares authorized for
awards under the Plan by an additional 3,250,000 shares in order to cover the
growing needs of the Company for the next several years.
No grant of options to any current officer or employee of the Company is
pending or has been committed or allocated. Awards of stock options to
non-employee members of the Board of Directors are covered under the automatic
provisions of the separate Directors' Plan.
GENERAL DESCRIPTION OF THE PLAN
The principal features of the Plan are summarized below. This summary is
qualified in its entirety by reference to the Plan itself. The text of the Plan
is on file with the Securities and Exchange Commission and is available from the
Commission's EDGAR database over the internet. A copy of the Plan may be
obtained by writing to the Secretary of the Company.
The Plan authorizes the Company to grant to eligible employees, directors
and consultants of the Company, as determined by the Board of Directors or a
Board committee, options to purchase shares of the Company's Common Stock. The
Plan provides for the grant of incentive stock options ("ISO"), as defined under
the Internal Revenue Code of 1986, as amended (the "Code"), to employees, and
for the grant of nonstatutory stock options ("NSO"), restricted stock purchase
awards, stock appreciation rights and stock bonuses to employees, directors and
consultants of the Company. The Board of Directors, or a committee appointed by
the Board (currently the Compensation and Stock Option Committee), administers
the Plan and determines recipients and types of awards to be granted, including
the exercise price, number of shares subject to the award and the exercisability
thereof.
The terms of stock options granted under the Plan may not exceed 10 years.
The exercise price of options granted under the Plan is not less than 100% of
the fair market value of the stock. Options granted under the Plan vest at the
rate specified in the option agreement. Ratable vesting over four years has been
customary for
14
<PAGE> 18
employees and officers, and ratable vesting over three years has been customary
for members of the Scientific Advisory Board.
Generally, no stock option may be transferred by the optionee other than by
will or the laws of descent or distribution, provided that an optionee may
designate a beneficiary who may exercise the option following the optionee's
death. An optionee whose relationship with the Company or any affiliate ceases
for any reason may exercise vested options for a term provided in the option
agreement. No ISO may be granted to any person who, at the time of the grant,
owns (or is deemed to own) stock possessing more than 10% of the total combined
voting power of the Company or any affiliate of the Company, unless the option
exercise price is at least 110% of the fair market value of the stock subject to
the option on the date of grant and the term of the option does not exceed five
(5) years from the date of grant. In addition, the aggregate fair market value,
determined at the time of grant, of the shares of Common Stock with respect to
which ISO's are exercisable for the first time by an optionee during any
calendar year may not exceed $100,000.
Shares subject to stock awards that have expired or otherwise terminated
without having been exercised in full again become available for the grant of
awards under the Plan. Restricted stock purchase awards granted under the Plan
may be granted pursuant to a repurchase option in favor of the Company in
accordance with a vesting schedule and at a price determined by the Compensation
and Stock Option Committee (or Board); no such awards have been made. Stock
bonuses may be awarded in consideration of past services without a purchase
payment; no stock bonuses have been awarded under the Plan, although stock
bonuses were awarded in 1996, prior to amendment of the Plan, in order to
recognize performance in 1993-95. Rights under a stock bonus or restricted stock
bonus agreement generally may not be transferred other than by will or the laws
of descent and distribution during such period as the stock awarded pursuant to
such an agreement remains subject to the agreement. Upon certain changes in
control of the Company, all outstanding awards under the Plan shall have the
time at which they may be exercised in full be accelerated and the awards
terminated if not exercised prior to such change in control. In some instances
the Company is required to make a cash payment in settlement of accelerated, but
unexercised options that have terminated due to the change in control.
FEDERAL TAX CONSEQUENCES
The federal income tax consequences of the issuance and exercise of stock
options are, in general, as follows. At the time of receiving a stock option,
the optionee experiences no taxable income and the Company receives no tax
deduction. When an optionee exercises an ISO, the optionee usually will not be
subject to tax on such exercise, except for the possible imposition of the
alternative minimum tax on the difference between the exercise price and the
higher fair market value of the stock at the time of exercise. The Company
receives no tax deduction upon such exercise. When an optionee exercises a NSO,
the optionee generally will be taxed at ordinary income rates on the difference
between the exercise price of the option and the higher fair market value of the
stock on the date of exercise. The Company receives a tax deduction equivalent
to the income recognized by the optionee. Upon sale of stock acquired upon
exercise of a NSO, the gain, if any, experienced by the optionee is considered
capital gain; this gain is taxed at the lower long-term rates or the higher
short-term rates depending upon how long the stock has been held. The Company
receives no tax deduction upon such sale. Upon sale of stock acquired upon
exercise of an ISO, the possible tax consequences are more complicated. If the
sale is more than two years after the grant of the option and more than one year
after the exercise of the option, then the optionee's gain, if any, is treated
as capital gain, and the Company receives no tax deduction. However, if the sale
occurs within either one year of exercise or two years of receipt of the ISO,
then the optionee experiences ordinary income on the difference between the
exercise price and the lesser of (i) the "spread" on the day of exercise and
(ii) the "spread" on the day of sale, and experiences capital gain on any amount
in excess thereof, while the Company receives a tax deduction in the amount of
the ordinary income recognized by the optionee.
15
<PAGE> 19
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the approval of
the amendment to the 1997 Equity Incentive Plan. The affirmative vote of a
majority of eligible votes cast, excluding abstentions and broker non-votes, is
required for approval of the amendment.
PROPOSAL 3: ADOPTION OF AMENDMENT TO CERTIFICATE OF INCORPORATION
Under the Company's Certificate of Incorporation, the total number of
shares of all classes of stock that the Company has authority to issue is
75,000,000, of which 70,000,000 are shares of Common Stock (par value $.01 per
share) and 5,000,000 are shares of Preferred Stock (par value $.01 per share).
PROPOSED AMENDMENT
At its meeting on February 23, 2000, the Board of Directors voted
unanimously to amend Article IV of the Certificate of Incorporation to increase
the number of shares of Common Stock authorized for issuance to 150,000,000, to
increase the number of shares of Preferred Stock authorized for issuance to
10,000,000, and to increase the total authorized number of shares of stock to
160,000,000. The stockholders are being asked at this meeting to adopt this
amendment.
The primary purpose of the proposed amendment is to permit future possible
stock splits, if such were to be in the best interest of the stockholders and if
market conditions warrant. The Company has approximately 30,000,000 shares of
Common Stock outstanding or subject to issuance under outstanding stock options
and warrants. With 70,000,000 shares of Common Stock authorized, the Company
could achieve only one two-for-one stock split. The Board of Directors believes
that it would be in the best interest of the stockholders if the Company were
able to accommodate more frequent and/or larger stock splits in the event that
circumstances should warrant. Therefore, the Board of Directors has found it
advisable to ask the stockholders at the Annual Meeting to adopt an amendment to
the Certificate of Incorporation increasing the authorized number of shares of
Common Stock from 70,000,000 to 150,000,000. The increase in the number of
authorized shares of Preferred Stock from 5,000,000 to 10,000,000 is intended to
parallel the increase in the authorized number of shares of Common Stock.
As a general matter, shares of authorized stock of any class may be issued
by a company in a financing or an acquisition without further approval by the
stockholders. CPI has no present plans to issue stock in an acquisition and,
while CPI periodically issues stock in financings to sustain its operations, it
does not seek the presently proposed increase in authorized stock for this
purpose. The primary purpose of the proposed increase in the amount of
authorized stock is to facilitate future possible stock splits if and when
Company developments occasion stock price appreciation which would warrant such
split(s). Developments subsequent to the date of this Proxy Statement could
cause Company plans to change. Further, there can be no assurance that the
market price of the Company's Common Stock will experience sufficient
appreciation to warrant one or more stock splits.
DISCUSSION OF GENERAL MATTERS
As a general matter, authorized shares of stock available for issuance by
the Company might be issued at such times and under such circumstances as to
have a dilutive effect on earnings per share and on the equity ownership of the
holders of the Company. The ability of the Board of Directors to issue shares of
stock -- whether of Common Stock or Preferred Stock -- could enhance the Board's
ability to negotiate on behalf of the stockholders in a takeover situation and
also could be used by the Board to make a change in control more difficult,
thereby denying stockholders the potential to sell their shares at a premium and
entrenching current management. The Board could authorize the issuance of shares
of Preferred Stock with terms and conditions which could discourage a takeover
or other transaction that holders of some or a majority of shares of Common
Stock might believe to be in their best interests or in which such holders might
receive a premium for their shares of stock over the then-market price of such
shares.
16
<PAGE> 20
As of the date hereof, no shares of the Company's Preferred Stock are
outstanding and the Board has no present intention to issue any shares of
Preferred Stock. Pursuant to the Stockholder Rights Plan adopted by the Board of
Directors in 1998, 600,000 shares of Preferred Stock have been reserved for
issuance as Series A Junior Participating Preferred Stock in the event of an
unsolicited takeover attempt which is found by the Board of Directors not to be
in the best interest of the stockholders.
As proposed to be amended, Article IV of the Certificate of Incorporation
would read as follows:
"The Corporation shall be authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares that the Corporation shall be authorized to issue
is one hundred sixty million (160,000,000) shares. One hundred fifty
million (150,000,000) shares shall be Common Stock, each having a par
value of One Cent ($.01). Ten million (10,000,000) shares shall be
Preferred Stock, each having a par value of One Cent ($.01)."
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the adoption of
the proposed amendment to the Certificate of Incorporation. The affirmative vote
of a majority of the outstanding stock entitled to vote is required for adoption
of the amendment.
PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, independent accountants, has audited the
Company's accounts since the inception of the Company. The Audit Committee of
the Board of Directors has selected Arthur Andersen to audit the financial
statements of the Company for the year 2000. Representatives of Arthur Andersen
have been invited to attend the Annual meeting, will have an opportunity to make
a statement if they desire to do so, and will be available to respond to
appropriate questions.
Ratification of the selection of Arthur Andersen LLP to audit the financial
statements of the Company for the year 2000 requires the affirmative vote of a
majority of the votes cast, excluding abstentions. If the stockholders determine
not to ratify the selection of Arthur Andersen LLP, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may select a
different firm of independent auditors at any time during the year if they
determine that such a change would be in the best interests of the Company and
its stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR ratification of
Arthur Andersen LLP as independent auditors for the year 2000.
OTHER BUSINESS
The Board of Directors knows of no other business which will come before
the meeting. If any other matters shall properly come before the meeting, your
authorized proxies will vote on such matters in accordance with their best
judgement on such matters.
The Bylaws of the Company provide that no business may be conducted at an
annual meeting unless properly brought before the meeting. For business to be
properly brought before an annual meeting, it must be specified in the notice of
meeting, be otherwise brought before the meeting by or at the direction of the
Board of Directors, or be otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing
which must be received by the Secretary of the Company at the principal
executive offices of the Company not later than the close of business on the
sixtieth (60th), and not earlier than the close of business on the ninetieth
(90th), day prior to the anniversary of the preceding year's annual meeting,
which would mean between March 2 and April 1, 2001, subject to adjustment if the
meeting date is substantially changed from the date in 2000. The stockholder's
notice to the Secretary must set forth with respect to each proposed
17
<PAGE> 21
matter a brief description of the matter, the reasons for conducting the
business at an annual meeting, the name and address of the proposing stockholder
as they appear on the books of the Company, the number of shares beneficially
owned by the proposing stockholder, any material interest of the stockholder in
the matter proposed, and any other information required to be provided pursuant
to Regulation 14A under the Securities Exchange Act of 1934. The chairman of an
annual meeting shall determine whether proposed business is properly brought
before the meeting. If the Company has not received notice of a matter prior to
the close of business on the sixtieth day prior to an annual meeting, proxies
received by the Company with respect to such annual meeting may, and unless
otherwise directed, confer discretionary voting with respect to such matter.
COSTS OF SOLICITATION
The Company will pay the costs of soliciting proxies, including printing,
handling and mailing of this Proxy Statement, the proxy and related material
furnished to stockholders. Copies of solicitation materials will be furnished to
banks, brokerage houses, custodians, nominees and fiduciaries holding shares of
Common Stock in their names which are beneficially owned by others to forward to
such beneficial owners. The Company may reimburse persons representing
beneficial owners for their costs of forwarding proxy material to the beneficial
owners. The Company has retained the firm of Georgeson Shareholder
Communications Inc. to assist in proxy solicitation and anticipates the cost
thereof to be approximately $8,500 plus reasonable out-of-pocket expenses.
Certain officers, directors and regular employees of the Company may solicit
proxies by telephone, telegraph, facsimile or in person. These persons will
receive no extra compensation for their services.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2001 annual meeting of Stockholders must
be received by the Secretary of the Company no later than December 20, 2000 in
order to be included in the Company's proxy statement and form of proxy relating
to that meeting.
By Order of the Board of Directors,
Richard H. Troy
Secretary
Horsham, Pennsylvania
April 18, 2000
Certain statements made in this Proxy Statement, and oral statements made with
respect to this Proxy Statement, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are those which express plan, anticipation, intent, contingency or
future development and/or otherwise are not statements of historical fact. These
statements are subject to risks and uncertainties, known and unknown, which
could cause actual results and developments to differ materially from those
expressed or implied in such statements. Such risks and uncertainties relate to,
among other factors, the absence of approved products; history of operating
losses; early stage of development; the costs, delays and uncertainties inherent
in basic pharmaceutical research, drug development, clinical trials and the
regulatory approval process, with respect to both the Company's current product
candidates and its future product candidates, if any; dependence on development
of Aptosyn(TM) (exisulind); the limitations on, or absence of, the predictive
value of data obtained in laboratory tests, animal models and human clinical
trials when planning additional steps in product development; the uncertainty of
obtaining regulatory approval, including uncertainty of approval of the New Drug
Application submitted for Aptosyn(TM) (exisulind) for familial adenomatous
polyposis (a rare disease that puts those afflicted at high risk of developing
colon
18
<PAGE> 22
cancer), whether in connection with the adequacy of the data generated in the
clinical trials of Aptosyn(TM) (exisulind) or otherwise; the uncertainty of the
effect of product approval, if achieved, on market price of the Common Stock;
the timing and scope of any approval which might be received for any compound
for any indication in the future; acceptance by providers of healthcare
reimbursement; the validity, scope and enforceability of patents; the actions of
competitors; dependence upon third parties; product liability; and the need for
further financing. These and other risks are detailed in the Company's reports
filed from time to time under the Securities Act of 1933 and/or the Securities
Exchange Act of 1934, including the sections entitled "Business," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Other Events" in the Company's reports on Form 10-K
for the year ended December 31, 1999, Form 10-Q for each of the first three
quarters of 2000, Form 8-K for the month of August 1999, and Form S-3 filed in
December 1999. Given these uncertainties, current and prospective investors are
cautioned not to place undue reliance on any such forward-looking statements,
any of which may turn out to be wrong due to inaccurate assumptions, unknown
risks, uncertainties or other factors. The Company undertakes no obligation to
update or revise the statements made herein or the factors which may relate
thereto.
19
<PAGE> 23
[CELL PATHWAYS, INC. LETTERHEAD]
Date: April 7, 2000
Securities and Exchange Commission
450 Fifth Street, NW
Judiciary Plaza
Washington, D.C. 20549
Re: Cell Pathways, Inc.
Commission File No. 00024889
IRS Employer No. 23-2969600
Dear Ladies and Gentlemen:
Pursuant to Rule 14a-6 we are hereby filing our preliminary proxy statement and
form of proxy 10 calendar days prior to the date the definitive copies of such
materials are first to be sent to the securities holders. On April 17, 2000, the
Company intends to print the definitive proxy statement and form of proxy for
release to security holders on Tuesday, April 18, 2000.
Pursuant to Item 10 of Schedule 14a, the Company is hereby filing as an appendix
to the proxy statement the amended 1997 Equity Incentive Plan ("Plan"). The Plan
is not part of the proxy statement and will not be furnished to security
holders. The options and shares contemplated by the amendment to the Plan will
be covered by an amendment to the existing registration statement on Form S-8
filed and effective on November 3, 1998, SEC File No. 333-66701, after approval
of the amendment by the stockholders.
Very truly yours,
/s/ Brian J. Hayden
Brian J. Hayden
Vice President of Finance and Chief Financial Officer
<PAGE> 24
CELL PATHWAYS, INC.
1997 EQUITY INCENTIVE PLAN
ADOPTED SEPTEMBER 13, 1993
AMENDED AND RESTATED OCTOBER 14, 1997
AMENDED FEBRUARY 23, 2000
1. PURPOSES.
(a) The Cell Pathways, Inc. 1993 Stock Option Plan was originally
adopted by the Board of Directors of Cell Pathways, Inc., a Delaware corporation
(the "Company") in 1993 and approved by the stockholders in 1994; was amended by
the Board of Directors and approved by the stockholders in 1996; was continued,
amended and restated with the name "Cell Pathways, Inc. 1997 Equity Incentive
Plan" (the "Plan") by actions of the Board of Directors and stockholders in
1997; was further amended by the Board of Directors on February 23, 2000; and is
being submitted to the stockholders for approval at the Annual Meeting of
Stockholders on May 31, 2000. The purpose of the Plan is to provide a means by
which selected Employees and Directors of and Consultants to the Company, and
its Affiliates, may be given an opportunity to benefit from increases in value
of the stock of the Company through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase
restricted stock, and (v) stock appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
1.
<PAGE> 25
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means Cell Pathways, Inc., a Delaware corporation.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means a
right granted pursuant to subsection 8(b)(2) of the Plan.
(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(h) "CONTINUOUS SERVICE" means that the service of an individual to the
Company, whether as an Employee, Director or Consultant, is not interrupted or
terminated. The Board or the chief executive officer of the Company may
determine, in that party's sole discretion, whether Continuous Service shall be
considered interrupted in the case of: (i) any leave of absence approved by the
Board or the chief executive officer of the Company, including sick leave,
military leave, or any other personal leave; or (ii) transfers between the
Company, Affiliates or their successors.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board.
(k) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of common stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest
2.
<PAGE> 26
volume of trading in the Company's common stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the Fair
Market Value shall be determined in good faith by the Board.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means
a right granted pursuant to subsection 8(b)(3) of the Plan.
(p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan or, if
3.
<PAGE> 27
applicable, such other person who holds an outstanding Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(x) "PLAN" means this 1997 Equity Incentive Plan.
(y) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect with respect to the Company at the time discretion
is being exercised regarding the Plan.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK APPRECIATION RIGHT" means any of the various types of
rights which may be granted under Section 8 of the Plan.
(bb) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus, any right to purchase restricted stock, and any
Stock Appreciation Right.
(cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(dd) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right
granted pursuant to subsection 8(b)(1) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; whether a Stock
4.
<PAGE> 28
Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock
bonus, a right to purchase restricted stock, a Stock Appreciation Right, or a
combination of the foregoing; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award; whether a person shall be
permitted to receive stock upon exercise of an Independent Stock Appreciation
Right; and the number of shares with respect to which a Stock Award shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 14.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee of
the Board composed of not fewer than two (2) members (the "Committee"), all of
the members of which Committee may be, in the discretion of the Board,
Non-Employee Directors and/or Outside Directors. If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board, including the power
to delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Additionally, prior to the Listing Date, and
notwithstanding anything to the contrary contained herein, the Board may
delegate administration of the Plan to a committee of one or more members of the
Board and the term "Committee" shall apply to any person or persons to whom such
authority has been delegated. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a committee of one or more
members of the Board the authority to grant Stock Awards to eligible persons who
(1) are not then subject to Section 16 of the Exchange Act and/or (2) are either
(i) not then Covered Employees and are not expected to be Covered Employees at
the time of recognition of income resulting from such Stock Award, or (ii) not
persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code.
5.
<PAGE> 29
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
under the Plan shall not exceed in the aggregate five Million Six Hundred
Thousand (5,600,000) shares of the Company's common stock, such shares to be
calculated in accordance with the provisions of the Plan and from the date of
commencement of the Plan in 1993. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the stock not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan. Shares subject to Stock
Appreciation Rights exercised in accordance with Section 8 of the Plan shall not
be available for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date of
grant and such Option is not exercisable after the expiration of five (5) years
from the date of grant.
(c) Subject to the provisions of Section 13 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options and
Stock Appreciation Rights covering more than one million five hundred thousand
(1,500,000) shares of the Company's common stock in any calendar year. This
subsection 5(c) shall not apply prior to the Listing Date and, following the
Listing Date, shall not apply until (i) the earliest of: (A) the first material
modification of the Plan (including any increase to the number of shares
reserved for issuance under the Plan in accordance with Section 4); (B) the
issuance of all of the shares of common stock reserved for issuance under the
Plan; (C) the expiration of the Plan; or (D) the first meeting of stockholders
at which directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security under section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.
6.
<PAGE> 30
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement, except that payment of the common
stock's "par value" (as defined in the Delaware General Corporation Law) shall
not be made by deferred payment, or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the Option is granted or to whom the
Option is transferred pursuant to subsection 6(d), or (C) in any other form of
legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option shall
only be transferable by the Optionee upon such terms and conditions as are set
forth in the Option Agreement for such Nonstatutory Stock Option, as the Board
or the Committee shall determine in its discretion. The person to whom the
Option is granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
7.
<PAGE> 31
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) TERMINATION OF CONTINUOUS SERVICES. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination) within such
period of time specified in the Option Agreement, or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Service (other
than upon the Optionee's death or disability) would result in liability under
Section 16(b) of the Exchange Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in the Option
Agreement, or (ii) the tenth (10th) day after the last date on which such
exercise would result in such liability under Section 16(b) of the Exchange Act.
Finally, an Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Service (other
than upon the Optionee's death or disability) would be prohibited at any time
solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in the first
paragraph of this subsection 6(f), or (ii) the expiration of a period of three
(3) months after the termination of the Optionee's Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it as of the date of termination), but only within such
8.
<PAGE> 32
period of time specified in the Option Agreement, or the expiration of the term
of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the shares covered by such Option shall
revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Service, the Option may be exercised (to the extent
the Optionee was entitled to exercise the Option as of the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(d), but only within the period
specified in the Option Agreement, or the expiration of the term of such Option
as set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.
(i) EARLY EXERCISE. The Option Agreement may, but need not, include a
provision whereby the Optionee may elect at any time during Continuous Service
to exercise the Option as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested shares so purchased may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
such an Option Agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option. Notwithstanding
the foregoing, a Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as described in subsection 5(b)),
9.
<PAGE> 33
shall have an exercise price which is equal to one hundred ten percent (110%) of
the Fair Market Value of the stock subject to the Re-Load Option on the date of
exercise of the original Option and shall have a term which is no longer than
five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 12(e) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under subsection 4(a) and the limits on the grants of Options under subsection
5(c) and shall be subject to such other terms and conditions as the Board or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement. Notwithstanding the
foregoing, the Board or the Committee may determine that eligible participants
in the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(b) TRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement shall be transferable by the grantee only upon such terms and
conditions as are set forth in the applicable Stock Award Agreement, as the
Board or the Committee shall determine in its discretion, so long as stock
awarded under such Stock Award Agreement remains subject to the terms of the
agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement, except that payment of the common stock's "par
value" (as defined in the Delaware General Corporation Law) shall not be
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<PAGE> 34
made by deferred payment, or other arrangement with the person to whom the stock
is sold; or (iii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in its discretion. Notwithstanding the
foregoing, the Board or the Committee to which administration of the Plan has
been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of stock held by that person which have not vested as
of the date of termination under the terms of the stock bonus or restricted
stock purchase agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under the
Plan to Employees or Directors of or Consultants to, the Company or its
Affiliates. To exercise any outstanding Stock Appreciation Right, the holder
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Award Agreement evidencing such right. Except as
provided in subsection 5(c), no limitation shall exist on the aggregate amount
of cash payments the Company may make under the Plan in connection with the
exercise of a Stock Appreciation Right.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
appreciation distribution payable on the exercised Tandem Right shall be in cash
(or, if so provided, in an equivalent number of shares of stock based on Fair
Market Value on the date of the Option surrender) in an amount up to the excess
of (A) the Fair Market Value (on the date of the Option surrender) of the number
of shares of stock covered by that portion of the surrendered Option in which
the Optionee is vested over (B) the aggregate exercise price payable for such
vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will be
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granted appurtenant to an Option and may apply to all or any portion of the
shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock to
which the Concurrent Right pertains. The appreciation distribution payable on an
exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date of
the exercise of the Concurrent Right) in an amount equal to such portion as
shall be determined by the Board or the Committee at the time of the grant of
the excess of (A) the aggregate Fair Market Value (on the date of the exercise
of the Concurrent Right) of the vested shares of stock purchased under the
underlying Option which have Concurrent Rights appurtenant to them over (B) the
aggregate exercise price paid for such shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will
be granted independently of any Option and shall, except as specifically set
forth in this Section 8, be subject to the same terms and conditions applicable
to Nonstatutory Stock Options as set forth in Section 6. They shall be
denominated in share equivalents. The appreciation distribution payable on the
exercised Independent Right shall be not greater than an amount equal to the
excess of (A) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company stock equal to the
number of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent Right
on such date, over (B) the aggregate Fair Market Value (on the date of the grant
of the Independent Right) of such number of shares of Company stock. The
appreciation distribution payable on the exercised Independent Right shall be in
cash or, if so provided, in an equivalent number of shares of stock based on
Fair Market Value on the date of the exercise of the Independent Right.
12.
<PAGE> 36
9. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the consent
of the affected holders of Options and/or Stock Appreciation Rights, the
cancellation of any outstanding Options and/or any Stock Appreciation Rights
under the Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or different numbers
of shares of stock, but having an exercise price per share not less than the
Fair Market Value or, in the case of a 10% stockholder (as described in
subsection 5(b)) receiving a new grant of an Incentive Stock Option, not less
than one hundred ten percent (110%) of the Fair Market Value) per share of stock
on the new grant date. Notwithstanding the foregoing, the Board or the Committee
may grant an Option and/or Stock Appreciation Right with an exercise price lower
than that set forth above if such Option and/or Stock Appreciation Right is
granted as part of a transaction to which section 424(a) of the Code applies.
(b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award of
Options and Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(c) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock Appreciation Rights shall be counted against
the maximum awards of Options and Stock Appreciation Rights permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 9(b) shall be applicable only to the extent required by Section
162(m) of the Code.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.
13.
<PAGE> 37
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
12. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest pursuant to subsection 6(e), 7(d) or 8(b),
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.
(b) Neither an Employee, Director or Consultant nor any person to whom
a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such person
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant or
other holder of Stock Awards any right to continue in the employ of the Company
or any Affiliate (or to continue acting as a Director or Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without cause the right of the Company's Board of Directors
and/or the Company's stockholders to remove any Director as provided in the
Company's By-Laws and the provisions of the Delaware General Corporation Law
California Corporations Code, or the right to terminate the relationship of any
Consultant subject to the terms of such Consultant's agreement with the Company
or Affiliate of the Company.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred pursuant to
subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring stock
under any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising
14.
<PAGE> 38
the Stock Award; and (2) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the Stock Award for
such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (i) the issuance of
the shares upon the exercise or acquisition of stock under the Stock Award has
been registered under a then currently effective registration statement under
the Securities Act, or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person during any calendar year pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the type(s) and
number of securities and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company".)
(b) If at any time while unexercised Options remain outstanding under
this Plan (a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, any person
acquiring securities from the Company solely pursuant to written agreement with
the Company, or any corporation owned, directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock in the Company, is or
15.
<PAGE> 39
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities,
(b) during any period of two consecutive years commencing the day after the
first election of directors following termination of the stockholder voting
provisions of the Company's Stockholders' Agreement dated as of December 10,
1992, as amended, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in
clauses (a) (c) or (d) of this Section 13(b)) whose election by the board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof, (c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (d) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
(each of (a), (b), (c) and (d) an "Acceleration Event"), then each outstanding
Option that has not theretofore become vested and/or exercisable according to
its terms shall become vested and/or exercisable. Upon the occurrence of an
Acceleration Event, the Committee shall provide for cancellation of the
unexercised portions of all Options outstanding as of the Cancellation Date;
provided, however, that if an Option has been held for less than six months,
then for purposes of such cancellation the Acceleration Event and/or
Cancellation Date shall be restricted in such manner as the Committee may
determine necessary to comply with the conditions and requirements of Rule
16b-3. "Cancellation Date" shall mean (i) the 60th day following the occurrence
of any Acceleration Event described in clause (a) or (b) of the first sentence
hereof, and (ii) the closing of any merger, consolidation, liquidation or sale
of assets stockholder approval of which constituted an Acceleration Event under
clause (c) or (d) of the first sentence hereof. Upon cancellation of any Option
pursuant to this Section 13(b) following an Acceleration Event under clause (a),
(b) or (d) of the first sentence hereof, the Company shall make, and upon
cancellation of any Option pursuant to this Section 13(b) following an
Acceleration Event under clause (c) of the first sentence hereof, the Company
may make, in exchange therefor, a cash payment under such Option in an amount
equal to the product of the number of shares covered by the unexercised portion
of the Option multiplied by the difference between the per share exercise price
of such Option and (i) in the case of a transaction described in clause (a) or
(b) of the first sentence hereof, the highest Fair Market Value of such share at
any time during the 60-day period immediately preceding the Cancellation Date,
and (ii) in the case of a transaction described in clause (c) or (d) of the
first sentence hereof, the Fair Market Value of such share on the
16.
<PAGE> 40
Cancellation Date. The instrument evidencing any Option may also provide for
acceleration of otherwise unexercisable portions of any Option upon other
specified events or occurrences as the Committee shall determine, such as
involuntary terminations of the Optionee's employment following certain changes
in the control of the Company.
14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for Stock Awards under
the Plan;
(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with the requirements of Rule 16b 3.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall
17.
<PAGE> 41
not be impaired by any such amendment unless (i) the Company requests the
consent of the person to whom the Stock Award was granted and (ii) such person
consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on October 12, 2007, which shall be
within ten (10) years from the date the Plan is adopted by the Board or approved
by the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Stock Award was
granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.
18.
<PAGE> 42
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
CELL PATHWAYS,INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 31,2000
The undersigned stockholder of Cell Pathways, Inc., a Delaware corporation
("CPI"), hereby acknowledges receipt of the Notice of the 2000 Annual Meeting of
Stockholders and Proxy Statement of CPI, and hereby appoints Robert J.
Towarnicki, Brian J. Hayden and Richard H. Troy, and each of them, proxies and
attorneys-in-fact, with full power of substitution to each, on behalf and in the
name of the undersigned, to represent the undersigned at the 2000 Annual Meeting
of Stockholders of CPI, to be held at the Four Seasons Hotel, One Logan Square,
18th Street and Benjamin Franklin Parkway, Philadelphia, Pennsylvania, on May
31, 2000, at 10:00 a.m., local time, and at any and all postponements,
continuations and adjournments thereof, and to vote all shares of common stock
which the undersigned may be entitled to vote if then and there personally
present, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
Proposal 1:
Election of Directors:
FOR WITHHOLD FOR ALL
ALL FOR ALL NOMINEES
NOMINEES NOMINEES EXCEPT
[ ] [ ] [ ]
WILLIAM A.BOEGER JOHN J.GIBBONS LOUIS M.WEINER,M.D.
INSTRUCTION:TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL NOMINEES EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
Proposal 2:
Amendment to the 1997 Equity Incentive Plan to increase the authorized number
of shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL LISTED ABOVE.
Proposal 3:
Amendment to the Certificate of Incorporation to increase the authorized
number of shares of capital stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL LISTED ABOVE.
Proposal 4:
Selection of Arthur Anderson LLP as Auditors for 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL LISTED ABOVE.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1, 2, 3 AND 4 AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT.
IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE
THEREWITH. IF ANY OTHER MATTERS SHOULD PROPERLY COME BEFORE THE CPI ANNUAL
MEETING, THIS PROXY WILL BE VOTED WITH RESPECT TO SUCH MATTERS IN ACCORDANCE
WITH THE JUDGMENT OF THE PERSONS VOTING SUCH PROXIES.
Please be sure to sign and date this Proxy in the box below.
Date
-------------
- ------------------------------ ------------------------------
Stockholder sign above Co-holder (if any) sign above
- -------------------------------------------------------------------------------
- Detach above card,sign,date and mail in postage paid envelope provided. -
CELL PATHWAYS,INC.
Signature should be exactly as your name(s) appear on proxy.If stock is held
jointly, each holder should sign.If signing as attorney, executor,
administrator, trustee or guardian, please give full title.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
