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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNITED THERAPEUTICS CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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[UNITED THERAPEUTICS CORPORATION LOGO]
1110 SPRING STREET
SILVER SPRING, MD 20910
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23 , 2000
NOTICE IS HEREBY GIVEN that the 2000 annual meeting of stockholders of United
Therapeutics Corporation, a Delaware corporation, will be held at The Peninsula,
700 Fifth Avenue, New York, NY 10019, on Tuesday, May 23, 2000, at 11:00 a.m
Eastern Time, for the following purposes:
1. To elect directors;
2. To approve an amendment to the United Therapeutics Amended and Restated
Equity Incentive Plan to permit grants to employees and consultants of
subsidiaries of United Therapeutics; and
3. To transact such other business as may properly come before the meeting
and all adjournments thereof.
The Board of Directors has fixed April 7, 2000 as the record date for the
determination of the stockholders entitled to notice of, and to vote at, the
annual meeting and all adjournments thereof. A list of stockholders entitled to
vote at the annual meeting will be available for examination by any stockholder
at United Therapeutics' executive offices not less than ten days prior to the
annual meeting and at the annual meeting.
By the order of the Board of Directors,
Paul A. Mahon
Assistant Secretary and General Counsel
April 14, 2000
Silver Spring, Maryland
EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES. STOCKHOLDERS WHO ATTEND
THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
<PAGE> 3
UNITED THERAPEUTICS CORPORATION
1110 SPRING STREET
SILVER SPRING, MD 20910
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
This proxy statement is solicited on behalf of the Board of Directors
in connection with the annual meeting of stockholders to be held on Tuesday, May
23, 2000 at 11:00 a.m., local time, at The Peninsula, 700 Fifth Avenue, New
York, NY 10019, and all adjournments thereof. This proxy statement along with
the accompanying proxy card is being mailed to stockholders commencing on or
about April 14, 2000.
PROXY PROCEDURE
If the enclosed proxy card is properly executed and returned prior to
the meeting, the shares represented by the proxy card will be voted in
accordance with the stockholder's directions or, if no directions are indicated,
the shares will be voted in accordance with the recommendation of the Board of
Directors as specified in this proxy statement. If the enclosed proxy is
executed and returned to United Therapeutics, it nevertheless may be revoked at
any time before it is exercised (i) by written notice to the Secretary of United
Therapeutics at the company's principal executive offices at 1110 Spring Street,
Silver Spring, MD 20910, (ii) by properly submitting to the Secretary at the
company's principal executive offices a duly executed proxy bearing a later
date, or (iii) by attending the meeting and voting in person.
PROXY SOLICITATION
All costs of solicitation of proxies will be borne by United
Therapeutics. In addition to the solicitation of proxies by use of the mails,
United Therapeutics may utilize the services of the officers and regular
employees of United Therapeutics (who will receive no compensation therefor in
addition to their regular salaries) to solicit proxies personally and by
telephone. United Therapeutics will request banks, brokers, custodians, nominees
and fiduciaries to forward copies of the proxy solicitation materials to
beneficial owners and to request authority for the execution of proxies. United
Therapeutics will reimburse such persons or entities for their expenses in doing
so.
VOTING AT MEETING
Only holders of record of the common stock of United Therapeutics at
the close of business on April 7, 2000 are entitled to notice of, and to vote
either in person or by proxy, at the annual meeting. At the close of business on
April 7, 2000, 18,567,389, shares of common stock were issued and outstanding.
Each share of common stock held of record as of the record date is entitled to
one vote on each matter submitted to a vote at a meeting of stockholders.
A majority of the outstanding shares of common stock on the record
date, present in person or by proxy, will constitute a quorum for the
transaction of business at the annual meeting. Shares of common stock
represented by proxies that are marked "without authority," with respect to the
election of any one or more nominees for election as directors, or that abstain
from voting, will be counted for the purpose of determining whether there is a
quorum for the transaction of business at the annual meeting. Broker non-votes
will be treated as not represented at the annual meeting as to any matter for
which a non-vote is indicated on the broker's proxy.
The affirmative vote of a plurality of the shares present in person or
represented by proxy at the annual meeting is required to elect directors.
"Plurality" means that the nominees who receive the largest number of votes cast
are elected as directors up to the maximum number of directors to be elected at
the annual meeting. Consequently, any shares represented at the annual meeting
but not voted for any reason have no impact on the
<PAGE> 4
election of directors. The affirmative vote of the holders of a majority of the
shares entitled to vote which are present in person or represented by proxy at
the annual meeting is required to approve the amendment to the Equity Incentive
Plan.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
United Therapeutics' Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws provide that the Board of Directors shall
consist of not less than five and not more than twenty directors, the exact
number to be determined from time to time by resolution of the Board of
Directors. By resolution, the Board of Directors has currently set the number of
directors at nine. The Amended and Restated Certificate of Incorporation also
provides for a classified Board of Directors divided into three classes whose
terms expire at different times. At the annual meeting, all nine members will be
elected to the Board of Directors as follows: (1) three Class I directors will
each serve a term of three years and their terms in office will expire in 2003;
(2) three Class II directors will each serve an initial term of one year and
their initial terms in office will expire in 2001; and (3) three Class III
directors will each serve an initial term of two years and their initial terms
will expire in 2002.
The Board of Directors has no reason to doubt the availability of its
nominees, and each nominee has indicated a willingness to serve if elected. If
any nominee declines or is unable to serve for any reason, it is intended that,
at the discretion of the Board of Directors, the Board of Directors will appoint
a replacement director or the size of the Board will be reduced. Stockholders
voting at the annual meeting may not vote for more than the number of nominees
listed in the enclosed proxy.
The persons named on the enclosed proxy card intend to vote such proxy
for the election of the nine nominees named below as directors of United
Therapeutics, unless the stockholder indicates on the proxy card that the vote
should be withheld or contrary directions are indicated. If the proxy card is
signed and returned without any direction given, shares of stock represented by
the proxy will be voted FOR the election of the nine nominees named on the proxy
card.
INFORMATION REGARDING NOMINEES FOR CLASS I DIRECTORS
TO BE ELECTED FOR TERMS EXPIRING IN 2003
Martine A. Rothblatt, J.D., M.B.A. (age 45), is a co-founder of United
Therapeutics. She has served as Chairman of its Board of Directors and Chief
Executive Officer since its inception in 1996. In 1995, Ms. Rothblatt endowed
the PPH Cure Foundation to help find cures for pulmonary hypertension, which
afflicts one of her daughters, and continues to manage the foundation. Since
1990, she has helped develop, as an independent consultant, satellite
communications businesses, including CD Radio Inc. (now Sirius Satellite Radio
Inc.), which she founded and served as Chairman and Chief Executive Officer
until December 1992, and WorldSpace Corp., which she co-founded and served as
Chief Operating Officer from January 1993 through January 1995. Since February
1995 Ms. Rothblatt has served as President of Beacon Projects, Inc., a company
she incorporated for her satellite communications consulting and real estate
management activities, and as Of Counsel to the law firm of Mahon Patusky
Rothblatt & Fisher, Chartered. Ms. Rothblatt also serves as Vice Chairman of the
Law and Medicine Committee of the International Bar Association and President of
the William Harvey Medical Research Foundation. Ms. Rothblatt devotes
substantially all of her time to the affairs of United Therapeutics.
James W. Crow, Ph.D. (age 56), is a co-founder of United Therapeutics
and has served as President and Chief Operating Officer and as a member of its
Board of Directors since its inception in 1996. Prior to 1996, Dr. Crow worked
for more than 18 years at Glaxo Wellcome Inc., formerly Burroughs Wellcome Co.,
in positions such as International Project Leader, Associate Medical Director
and Senior Clinical Research Scientist. While he was associate director of the
Pulmonary II Section, Dr. Crow led the team that developed and obtained FDA
approval for Flolan for the treatment of primary pulmonary hypertension patients
in September 1995.
Gilles Cloutier, Ph.D. (age 55), is a co-founder of United Therapeutics
and has served as Executive Vice President, Business Development and Treasurer
and as a member of its Board of Directors since its inception in
2
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1996. He also served as Chief Financial Officer from December 1997 to January
2000. Prior to 1996, Dr. Cloutier served as President of CatoPharma Canada, Inc.
from April 1992 to February 1997. From April 1990 to April 1992, Dr. Cloutier
was the Vice President of Clinical Operations at Quintiles Transnational Corp.
Dr. Cloutier has more than 24 years of experience in all phases of the drug
development process in the United States, Canada and other international
locations.
INFORMATION REGARDING NOMINEES FOR CLASS II DIRECTORS
TO BE ELECTED FOR TERMS EXPIRING IN 2001
Olivia Giscard d'Estaing, M.S.B. (age 38), has served on the Board of
Directors since July 1998. She has been employed as Director of Asset Management
Services at Banque Eurofin since 1988. She is in charge of mutual fund
management with assets over $1 billion.
H. Beecher Hicks, III, M.B.A. (age 32), has served as Vice President of
Bank of America Catalyst Fund since 1999. From 1996 to 1999, Mr. Hicks served as
Vice President of Banc of America Securities LLC. From 1993 to 1995, Mr. Hicks
served as Senior Associate with PriceWaterhouseCoopers LLP, Financial Advisory
Services, Mergers & Acquisitions. Prior to 1993, Mr. Hicks worked at the
Monsanto Company. From 1998 to 1999, Mr. Hicks also served as a White House
Fellow, Corporation for National Service.
Michael C. Miles, M.B.A. (age 44), co-founded McManus & Miles, an
investment bank specializing in financial advisory and private placement
services, in 1989 and has served as its managing director since 1989. Prior to
co-founding McManus & Miles and since 1982, Mr. Miles served at The First Boston
Corporation where he specialized in merger and project related financings.
INFORMATION REGARDING NOMINEES FOR CLASS III DIRECTORS
TO BE ELECTED FOR TERMS EXPIRING IN 2002
Shelmer D. Blackburn, Jr., B.A. (age 39), is a co-founder of United
Therapeutics and has served as Director of Operations, Secretary and a member of
its Board of Directors since its inception in 1996. In 1999, Mr. Blackburn was
promoted to Vice President of Operations. Prior to 1996, Mr. Blackburn worked
for eight years at Glaxo Wellcome Inc., formerly Burroughs Wellcome Co., where
he was responsible for the design and management of clinical trials for Flolan,
as well as for an artificial surfactant for the treatment of neonatal patients
with respiratory distress syndrome.
Noah A. Samara, J.D., M.B.D. (age 43), has served on the Board of
Directors of United Therapeutics since 1997. He has served as Chairman and Chief
Executive Officer of WorldSpace Corporation, a satellite communications company,
since August 1990.
David Gooray, M.D. (age 50), has served on the Board of Directors of
United Therapeutics since December 1997. Dr. Gooray has practiced cardiovascular
medicine in Virginia, Maryland and the District of Columbia since July 1986.
Since 1986, he has also served as an instructor in medicine at Howard University
Medical School and principal investigator in a National Institutes of Health
study.
There are no family relationships between or among any director,
director nominee and executive officer of United Therapeutics.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF ALL THE ABOVE-NAMED NOMINEES AS DIRECTORS OF UNITED
THERAPEUTICS.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of United Therapeutics' common stock as of April 7, 2000 by
each person who United Therapeutics knows owns more than 5% of its common stock,
each of its directors, each of its named executive officers, and all of its
directors and executive officers as a group. The address of each person listed
below is the company's address. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Beneficial ownership also
includes shares of stock subject to rights, options and warrants currently
exercisable or convertible, or exercisable or convertible within 60 days of the
date of this table. Percentage of beneficial ownership is based on 18,567,389
shares of common stock outstanding. Unless otherwise indicated, to the knowledge
of United Therapeutics, all persons listed have sole voting and investment power
with respect to their shares of common stock, except to the extent authority is
shared by spouses under applicable law.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME BENEFICIALLY OWNED SHARES
- ---- ------------------ ------
<S> <C> <C>
Noah A. Samara................................ 2,238,729 12.1%
Martine A. Rothblatt(1)....................... 1,150,927 6.2%
Jean-Guy Lambert(2)........................... 472,776 2.5%
James W. Crow(3).............................. 367,001 2.0%
Gilles Cloutier(4)............................ 396,666 2.1%
Shelmer D. Blackburn, Jr.(5).................. 400,909 2.2%
Olivia Giscard d'Estaing(6)................... 134,676 *
David Gooray, M.D............................. 11,333 *
Henry Hicks................................... -- --
Michael Miles................................. 10,000 *
All directors and executive officers as a group
(12 persons)(7)........................ 5,205,704 28.0%
</TABLE>
- ----------------------
* Represents less than one percent.
(1) Includes 16,776 shares held by Ms. Rothblatt's minor children and
373,204 shares held by her spouse. Ms. Rothblatt disclaims beneficial
ownership of such shares. Also includes 40,000 shares of common stock
issuable upon exercise of stock options within 60 days.
(2) Includes 392,500 shares of common stock owned by Dacha Capital, Inc.
Mr. Lambert is the President and Chief Executive Officer of Dacha
Capital. Mr. Lambert disclaims beneficial ownership of shares held by
Dacha Capital except to the extent of his proportionate interest
therein. Also includes 41,666 shares of common stock issuable upon
exercise of stock options within 60 days.
(3) Includes 36,668 shares of common stock issuable upon exercise of stock
options within 60 days.
(4) Includes 376,666 owned by The Hammock House Inc., LLC. Dr. Cloutier is
the Managing Director of Hammock House. Also includes 30,000 shares of
common stock issuable upon exercise of stock options within 60 days.
(5) Includes 21,668 shares of common stock issuable upon exercise of stock
options within 60 days.
(6) Includes 129,676 shares of common stock owned by Caisse Central des
Banques Populaires, an affiliate of Eurofin. Ms. Giscard d'Estaing is
the Director of Asset Management at Banque Eurofin. Ms. Giscard
d'Estaing disclaims beneficial ownership of shares held by Caisse
Central des Banques Populaires.
(7) Includes 183,335 shares of common stock issuable upon exercise of stock
options within 60 days.
Prior to its initial public offering on June 17, 1999, United
Therapeutics was a private company. Directors and executive officers of the
company beneficially owned 59.6% of the outstanding shares of the company's
common stock before the initial public offering. Such persons now beneficially
own 28.0% of the outstanding shares.
4
<PAGE> 7
BOARD MEETINGS AND COMMITTEES;
COMPENSATION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors met ten times in 1999. The Board of Directors
has a compensation committee, an audit committee and a nominating committee. Dr.
Gooray and Ms. D'Estaing attended fewer than seventy-five percent of all
meetings of the Board of Directors and committees on which they served in 1999.
COMPENSATION COMMITTEE
Members: David Gooray, M.D. and Noah A. Samara
The Compensation Committee met three times in 1999. The Compensation
Committee is responsible for the overall design, approval and implementation of
the executive compensation plans, policies and programs for officers and other
key executives of United Therapeutics. The Compensation Committee
responsibilities include: determining compensation levels, based on information
about compensation levels of other companies, company performance, stockholder
return and individual performance, for executive officers of United Therapeutics
and administering United Therapeutics' equity incentive plan.
AUDIT COMMITTEE
Members: David Gooray, M.D., Jean-Guy Lambert and Olivia Giscard
D'Estaing
The Audit Committee met twice in 1999. The Audit Committee
responsibilities include: reviewing written disclosures and letters from United
Therapeutics' independent auditors; evaluating the qualifications and
performance of the independent auditors; meeting with the independent auditors
in advance of the annual audit to review the scope of the proposed annual audits
and quarterly reviews; approving the compensation of the independent auditors;
reviewing with independent auditors any matters required to be discussed
pursuant to Statement of Auditing Standards No. 61; reviewing and discussing
with financial management and independent auditors financial statements proposed
to be included in United Therapeutics' Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q and make recommendation regarding inclusion of financial
statements in Annual Report on Form 10-K; and discussing annually with
independent auditors the adequacy and effectiveness of United Therapeutics'
internal controls and assessing progress management has made in addressing
issues raised by independent auditors.
NOMINATING COMMITTEE
Members: Martine A. Rothblatt, James W. Crow, Ph.D. and Noah A. Samara
The Nominating Committee did not meet in 1999, but met once during the
first quarter of 2000 to consider and make recommendations to the full Board of
Directors concerning the slate of director nominees for the 2000 annual meeting.
The Nominating Committee reviews and recommends candidates for the Board of
Directors. Pursuant to United Therapeutics' Amended and Restated Certificate of
Incorporation, the Board of Directors will accept nominations of persons for
election to the Board of Directors from any stockholder of United Therapeutics
who is entitled to vote at the annual meeting of stockholders as of the record
date for the annual meeting of stockholders and who submits a notice to United
Therapeutics in accordance with the Amended and Restated Certificate of
Incorporation. The notice must set forth the information about the nominee and
the stockholder making the nomination required by United Therapeutics' Amended
and Restated Certificate of Incorporation and the information required by the
federal proxy solicitation rules. See "Stockholder Proposals and Director
Nominations," below.
5
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DIRECTOR COMPENSATION
United Therapeutics reimburses each member of its Board of Directors
for out-of-pocket expenses incurred in connection with attending Board meetings.
Each director who is not also an employee also receives a fee of $8,000 per
year. Beginning in 2000, each non-employee director will be granted a
non-qualified option to purchase 100 shares of United Therapeutics Common Stock
for each meeting attended by the director. Such options shall be exercisable at
a price equal to the closing price of the stock as reported on Nasdaq on the
date of grant.
MANAGEMENT
The following table sets forth certain summary information concerning
the compensation awarded to or earned by United Therapeutics' Chief Executive
Officer and the other executive officers who earned in excess of $100,000 in
cash compensation during the years ended December 31, 1999 and 1998. All options
reflected in the chart were awarded under United Therapeutics' Amended and
Restated Equity Incentive Plan.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)
- --------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Martine A. Rothblatt................................. 1999 $167,340 $18,000 80,000
Chairman and Chief Executive Officer 1998 120,000 -- 83,333
James W. Crow........................................ 1999 160,000 16,000 40,000
President and Chief Operating Officer 1998 150,000 -- 69,999
Gilles Cloutier...................................... 1999 160,000 16,000 20,000
Executive Vice President, Business Development 1998 150,000 -- 50,000
and Treasurer
Shelmer D. Blackburn, Jr............................. 1999 113,000 11,300 20,000
Director of Operations and Secretary 1998 100,000 -- 53,333
</TABLE>
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STOCK OPTION GRANTS AND EXERCISES
The following tables show for the year ended December 31, 1999 certain
information regarding options granted to, and held at year end by, the named
executive officers. Each of the options listed in the table below was granted
pursuant to United Therapeutics' Amended and Restated Equity Incentive Plan and
vests ratably over four years. The first table is based on an aggregate of
607,903 options granted to employees, directors and consultants in 1999,
including the named executive officers. The exercise price per share of each
option was equal to the fair market value of the common stock on the date of
grant. The value of unexercised in-the-money options at December 31, 1999 is
based on the closing bid price of $46.00 on that date, less the exercise price,
without taking into account any taxes that may be payable in connection with the
transaction, multiplied by the number of shares underlying the option.
OPTION GRANTS IN FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED(#) FISCAL YEAR SHARE DATE 5% 10%
- ---- ---------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Martine A. Rothblatt.... 80,000 16.0% $27.50 9/09 $1,383,568 $3,506,233
James W. Crow........... 40,000 8.0 27.50 9/09 691,789 1,753,117
Gilles Cloutier......... 20,000 4.0 27.50 9/09 345,892 876,558
Shelmer D. Blackburn.... 20,000 4.0 27.50 9/09 345,892 876,558
</TABLE>
Amounts reported in the potential realizable value column above are hypothetical
values that may be realized upon exercise of the options immediately prior to
the expiration of their term, calculated by assuming that the stock price on the
date of grant as determined by the Board of Directors appreciates at the
indicated annual rate compounded annually for the entire term of the option (10
years). The 5% and 10% assumed rates of appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent United
Therapeutics' estimate or projection of the future common stock price.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999(#) DECEMBER 31, 1999($)
------------------------------------ --------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Martine A. Rothblatt........... 26,667 203,352 $786,676 $4,843,295
James W. Crow.................. 25,001 143,331 795,035 3,763,255
Gilles Cloutier................ 20,000 140,000 620,000 2,700,000
Shelmer D. Blackburn, Jr....... 15,001 91,665 485,035 2,461,607
</TABLE>
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<PAGE> 10
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS
In April 1999, United Therapeutics entered into an Executive Employment
Agreement with Martine A. Rothblatt, its Chief Executive Officer. The employment
agreement provides for an initial five year term ending on December 31, 2004,
and automatically renews for successive one-year periods after each year, unless
either party terminates the agreement. The current annual salary specified in
the agreement is $180,000. Ms. Rothblatt is entitled to bonuses for each year of
the initial term of the agreement in the form of stock options, in addition to
other discretionary bonuses that may be awarded by the Board of Directors. On
the first anniversary of United Therapeutics' initial public offering, Ms.
Rothblatt will receive an option to purchase the number of shares of common
stock equal to one percent of the increase in the company's market
capitalization after United Therapeutics' initial public offering up to that
date, divided by 18. At each of the next four anniversaries of the initial
public offering, Ms. Rothblatt will receive an option to purchase the number of
shares equal to one percent of the increase in United Therapeutics' market
capitalization since the last anniversary, divided by 18. These options will be
awarded pursuant to the Amended and Restated Equity Incentive Plan, discussed
below, and will be fully exercisable on the date of grant. The options will have
an exercise price equal to or exceeding the fair market value of a share of
United Therapeutics' common stock on the date of grant. The options are
exercisable over five years if Ms. Rothblatt is a 10% or greater stockholder on
the date of grant, or 10 years otherwise. The maximum number of shares reserved
for such grants is 7,939,517 and the maximum number that may be granted in any
one calendar year may not exceed 500,000 shares in 2000, 701,353 shares in 2001,
681,434 shares in 2002, 2,757,832 shares in 2003 and 3,298,898 shares in 2004.
If Ms. Rothblatt's employment is terminated due to her death or
disability, the company will continue to pay to Ms. Rothblatt or her estate her
current base salary through the end of the calendar year following such death or
disability, and if her employment is terminated for disability, United
Therapeutics will pay for continued benefits under its short-term and long-term
disability insurance programs. If Ms. Rothblatt's employment is terminated by
United Therapeutics other than for cause, or if Ms. Rothblatt terminates her
employment for good reason, as these terms are defined in the agreement,
including circumstances involving a change in control of United Therapeutics,
she will be entitled to a lump sum cash payment equal to the sum of:
o Her current base salary plus any bonus and incentive payments
which have been earned through the date of termination;
o The greater of her bonus and incentive payments for the prior
year or the average of such payments for the prior two years,
on a prorated basis for the year of termination;
o Three times the sum of her highest annual base salary for the
preceding 12 months and the greater of her previous year's
bonus and incentive payment or the average of those payments
for the previous two years; and
o The difference between the fair market price and the exercise
price of any non-vested options held by Ms. Rothblatt.
In addition, Ms. Rothblatt will receive certain employee and retirement
benefits. The agreement prohibits Ms. Rothblatt from engaging in activities
competitive with the company for five years following termination of her
employment.
United Therapeutics has entered into employment agreements with each of
Drs. Crow and Cloutier and Mr. Blackburn. The term of Dr. Crow's agreement ends
on July 15, 2002, and provides for an annual base salary of at least $150,000.
The term of Mr. Blackburn's agreement ends on August 1, 2002, and provides for
an annual base salary of at least $100,000. The term of Dr. Cloutier's agreement
ends on April 7, 2003, and provides for an annual base salary of at least
$150,000. Each of the agreements with Drs. Crow and Cloutier and Mr. Blackburn
also provides for an automatic annual renewal unless either party terminates
with at least 30 days notice to the other party. In addition, each of the
agreements provides that if the employee is terminated by United Therapeutics
other than for cause, or if the employee terminates the agreement for good
reason, as those terms are defined in the
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agreements, the employee is entitled to his base salary through the full term of
the agreement. In addition, each of these agreements prohibits Drs. Crow and
Cloutier and Mr. Blackburn from accepting employment, consultancy or other
business relationships with a competitor of United Therapeutics for twelve
months following his last receipt of compensation from United Therapeutics.
REPORT OF THE COMPENSATION COMMITTEE
United Therapeutics' executive compensation program is administered by
the Compensation Committee. In addition to base salary, compensation for United
Therapeutics' executive officers may include annual performance bonuses, stock
options pursuant to the Amended and Restated Equity Incentive Plan and
otherwise. It is the intention of the Compensation Committee to use salary and
bonuses as compensation for current and past performance, while using stock
options and restricted stock grants to provide incentives for superior long-term
performance. To establish compensation for executive officers of United
Therapeutics, the Compensation Committee uses subjective performance
evaluations, and with respect to executive officers other than Ms. Rothblatt,
the salary and bonus recommendations of Ms. Rothblatt.
Ms. Rothblatt's 1999 compensation was determined in accordance with her
Executive Employment Agreement. Each of the other named executive officers also
has an employment agreement with the Company. In 1999, Ms. Rothblatt and each of
the other executive officers received a cash bonus in an amount equal to 10% of
his or her base salary, which bonus was based upon the achievement of certain
development and performance goals by the Company in 1999.
Members of the Compensation Committee
Noah A. Samara
David Gooray
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for fiscal year 1999 were
David Gooray and Noah A. Samara. None of the Compensation Committee members has
served as an officer or employee of United Therapeutics or its subsidiaries.
From the company's inception until March 1999, Martine A. Rothblatt, Chairman
and Chief Executive Officer, served on the Compensation Committee. Effective
March 1999, Ms. Rothblatt resigned from the Compensation Committee.
STOCK PRICE PERFORMANCE
The graph below compares cumulative total shareholder return with the
cumulative return (assuming reinvestment of dividends) of the Standard & Poor's
Midcap 400 Index and the Standard & Poor's Biotechnology Index. The information
on the graph covers the period from June 17, 1999 (the date United Therapeutics'
common stock began trading pursuant to the company's initial public offering),
through December 31, 1999. The stock price information shown on the graph below
is not necessarily indicative of future stock price performance.
9
<PAGE> 12
COMPARISON OF 6 MONTH CUMULATIVE TOTAL RETURN*
AMONG UNITED THERAPEUTICS CORPORATION,
THE S&P MIDCAP 400 INDEX AND THE S&P BIOTECHNOLOGY INDEX
[GRAPH]
<TABLE>
<CAPTION>
UNITED THERAPEUTICS S&P S&P
CORPORATION MIDCAP 400 BIOTECHNOLOGY
----------- ---------- -------------
<S> <C> <C> <C>
6/17/99 $100.00 $100.00 $100.00
12/31/99 $377.44 $113.09 $189.92
</TABLE>
* $100 Invested on 6/17/99 in stock or on 5/31/99 in index - including
reinvestment of dividends. Fiscal Year Ending December 31.
** Date of United Therapeutics' initial public offering.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1999, Unither Telemedicine Services Corporation entered into
an agreement to form Quantum Medical Corporation, a Delaware corporation.
Unither Telemedicine received approximately 35 percent of the initial
outstanding common stock of Quantum Medical Corporation. Ms. Rothblatt will
serve as Co-Chairman of the new company. At December 31, 1999, Unither
Telemedicine's investment in Quantum Medical Corporation had an original cost of
zero and was reported at zero, and its equity in the underlying net assets was
approximately $158,000.
In July 1999, a subsidiary of Unither Telemedicine Services Corporation
entered into an agreement to form WonderClick.com (formerly AboveCable.com,
Inc.), a Delaware corporation, to provide Internet access via cable television
portals worldwide. This subsidiary received 20 percent of the initial
outstanding common stock of WonderClick.com and the exclusive rights to offer
telemedicine and electronic health services at the portal level. WorldSpace
Corporation purchased a 50 percent common stock shareholding in the new
corporation. The Chairman and Chief Executive Officer of WorldSpace is a major
stockholder and member of the Board of Directors of United Therapeutics. As of
December 31, 1999, the equity investment by the subsidiary of Unither
Telemedicine in WonderClick.com had an original cost of zero and was reported at
zero. The subsidiary's equity in the underlying net assets was approximately
$349,000.
On April 29, 1998, United Therapeutics purchased an office building for
its corporate headquarters from an entity owned by Ms. Rothblatt for
approximately $581,000, including expenses. United Therapeutics leased office
space from Beacon Projects, Inc. in 1997 and 1998 under a lease that was
terminated when the company purchased its building. Ms. Rothblatt is the
President and owner of Beacon Projects. Payments under that lease totaled
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<PAGE> 13
$12,000 for the year ended December 31, 1998, and $15,000 for the year ended
December 31, 1997. In addition, Unither Telemedicine Services Corporation, a
subsidiary of United Therapeutics, entered into a lease for office space with
Beacon Projects in March 1999. Payments under this lease will be approximately
$30,000 annually until the lease expires in 2001. The Board of Directors
approved these transactions based on independent appraisals and without the
participation of Ms. Rothblatt. United Therapeutics believes that the terms of
each of the transactions were at least as favorable as terms it could have
obtained in arm's length transactions with an independent third party.
Each of Ms. Rothblatt, Paul A. Mahon, General Counsel and Assistant
Secretary of United Therapeutics, and Christopher Patusky, an officer of the
company's telemedicine subsidiary, is a principal of the law firm Mahon Patusky
Rothblatt & Fisher, Chartered, which United Therapeutics has retained in the
past and intends to retain in the future. United Therapeutics paid the law firm
approximately $338,000 during the year ended December 31, 1999, approximately
$157,000 during the year ended December 31, 1998, approximately $81,000 during
the year ended December 31, 1997 and approximately $5,000 during the period from
inception to December 31, 1996.
In 1998, United Therapeutics entered into a cooperative drug discovery
agreement with William Harvey Research Limited. United Therapeutics paid
$258,000 during the year ended December 31, 1999 and $162,000 during the year
ended December 31, 1998 under this agreement. Under the agreement, United
Therapeutics is required to pay William Harvey a royalty equal to 10% of net
sales and license fees that the company earns from discoveries of William
Harvey. Ms. Rothblatt is president of William Harvey Medical Research
Foundation, an affiliate of William Harvey Research Limited.
During 1997, Ms. Rothblatt loaned United Therapeutics $500,000 at an
interest rate of 10% per annum. On August 19, 1997, principal and accrued
interest totaling $508,334 was converted into common stock pursuant to the terms
of the loan agreement. The company issued to Ms. Rothblatt 309,428 shares at
approximately $1.62 per share.
During 1996 and 1997, United Therapeutics earned substantially all of
its revenue from the PPH Cure Foundation. Ms. Rothblatt is also a Director of
the PPH Cure Foundation. United Therapeutics earned $115,909 for the year ended
December 31, 1997, and $153,972 during the period from the date of inception of
June 26, 1996 through December 31, 1996.
The Amended and Restated Certificate of Incorporation and the Amended
and Restated By-laws provide that United Therapeutics will indemnify each of its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law. In addition, United Therapeutics has entered into indemnity
agreements with each of the directors, which provide that United Therapeutics
will indemnify each director to the fullest extent permitted by law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires United
Therapeutics' directors and executive officers and persons who own beneficially
more than ten percent of any class of equity securities of the company to file
with the Securities and Exchange Commission initial reports of such ownership
and reports of changes in such ownership. Officers, directors and such
beneficial owners are required by Securities and Exchange Commission regulation
to furnish United Therapeutics with copies of all Section 16(a) forms they file.
To United Therapeutics' knowledge, based solely on review of the copies
of such reports furnished to the company, during the fiscal year ended December
31, 1999, the company's directors, executive officers and greater than ten
percent beneficial owners complied with all Section 16(a) filing requirements
applicable to them, except Paul A. Mahon filed late with respect to one
transaction.
11
<PAGE> 14
PROPOSAL NO. 2
AMENDMENT TO AMENDED AND RESTATED EQUITY INCENTIVE PLAN
A VOTE IN SUPPORT OF THIS PROPOSAL WOULD EXTEND COVERAGE OF UNITED
THERAPEUTICS EQUITY INCENTIVE PLAN TO EMPLOYEES, DIRECTORS AND
CONSULTANTS OF SUBSIDIARIES OF UNITED THERAPEUTICS. SHAREHOLDER
APPROVAL IS REQUIRED FOR TAX PURPOSES.
On October 16, 1999, the Board of Directors adopted an amendment to the
United Therapeutics Corporation Amended and Restated Equity Incentive Plan,
subject to approval by the company's stockholders, to permit awards to be
granted to individuals who are directors (including non-employee directors),
officers or other key employees (including employees who also are directors or
officers) of or consultants to subsidiaries of United Therapeutics. Prior to the
amendment, the Plan covered directors, officers and key employees and
consultants of United Therapeutics. There are currently approximately 31
subsidiary employees who would be eligible to participate under the Plan as
amended.
SUMMARY OF THE PLAN
The Plan originally became effective November 12, 1997, was
subsequently amended and restated effective April 9, 1999, and was amended again
effective June 11, 1999 and, subject to the shareholder approval being sought
here, on October 16, 1999. The purpose of the Plan is to provide flexibility to
United Therapeutics to motivate, attract, and retain the services of employees
upon whom the company's success depends. The Plan currently provides for the
grant of awards, including options, stock appreciation rights, restricted stock
awards or performances share awards or any other right or interest relating to
shares or cash, to eligible participants. There are currently approximately 32
such eligible participants under the Plan, not including subsidiary employees.
The Plan contemplates the issuance of common stock upon exercise of
options or other awards granted under the Plan. A total of 14,939,517 shares of
common stock has been reserved and is available for awards under the Plan,
including the shares of common stock specifically reserved for future stock
option grants to the Chief Executive Officer upon the attainment of certain
performance criteria in accordance with her Executive Employment Agreement as
discussed above ("Management--Executive Officer Employment Agreements"). The
maximum number of shares that may be granted to any one or more participants in
any calendar year (not including the Chief Executive Officer, whose grants are
governed by her Employment Agreement) may not exceed 500,000 shares.
The Plan is administered by the Compensation Committee, which has the
power to determine the terms and conditions of awards. In addition, the
committee has the authority to amend, modify or terminate the Plan. No amendment
of the Plan may be made without approval of United Therapeutics' stockholders,
however, if required by the Internal Revenue Code, by the insider trading rules
of Section 16 of the Securities Exchange Act of 1934, or by the Nasdaq National
Market. In addition, no action by the committee may affect any shares previously
issued or any award previously granted under the Plan without the participant's
written consent.
Options granted under the Plan are not generally transferable and must
be exercised within 10 years, subject to earlier termination upon termination of
the option holder's employment, disability or death, but in no event later than
the expiration of the option's term. The exercise price of all options granted
under the Plan must be at least equal to the fair market value of the underlying
shares of common stock on the date of the grant. Incentive stock options granted
to any participant who owns 10% or more of United Therapeutics' outstanding
common stock must have an exercise price equal to or exceeding 110% of the fair
market value of a share of common stock on the date of the grant and must not be
exercisable for longer than five years.
Under the Plan, a participant may also be awarded a "performance
award," which means that the participant may receive cash, stock or other awards
which is contingent upon achieving performance goals established by the
committee. The committee may also make "deferred share" awards, which entitles
the recipient to receive the company's stock in the future for services
performed between the date of the award and the date the
12
<PAGE> 15
participant may receive the stock. A participant who is granted a "stock
appreciation right" under the Plan has the right to receive all or a percentage
of the fair market value of a share of stock on the date of exercise of the
stock appreciation right minus the grant price of the stock appreciation right
determined by the committee. If a stock appreciation right is granted in
connection with an incentive stock option, the grant price must not be less than
the fair market value of the stock on the date of grant. Finally, the committee
may make "restricted stock" awards under the Plan, which are subject to such
terms and conditions as the committee determines and as are set forth in the
award agreement relating to the restricted stock. Unless the committee otherwise
provides, upon termination of a participant's employment during the period when
the restrictions apply, the participant's restricted stock is forfeited to
United Therapeutics.
In the event of certain changes of control of United Therapeutics, the
committee has discretion to provide that any award under the Plan that may be
exercised will become fully exercisable, and/or that all restrictions on any
awards under the Plan will lapse as the committee determines, which may be prior
to the change of control. The Plan will terminate in November 2007, unless
terminated sooner by the Board.
As of March 31, 2000 options to purchase 2,054,997 shares of common
stock were outstanding under the Plan and employee stock option agreements. No
performance awards, deferred share awards, stock appreciation rights or
restricted stock awards are outstanding under the Plan. As of March 31, 2000,
there were 13,278,127 shares reserved for future grants or purchases under the
Plan, including the shares of common stock reserved for issuance to the Chairman
and Chief Executive Officer pursuant to her employment agreement. The number and
identity of participants to whom awards will be made has not yet been determined
by the committee. Subject to shareholder approval of the Plan amendment to
extend the Plan to subsidiary employees, the Committee has granted to employees
of SynQuest options to acquire 123,500 shares of common stock as of March 31,
2000. None of these persons is a named executive officer of United Therapeutics.
If the Plan amendment is not approved, each of the SynQuest options granted by
the committee will be deemed to be non-Plan grants of non-qualified options.
The foregoing summary of certain provisions of the Plan is qualified by
reference to the text of the Plan.
The market value of United Therapeutics' common stock was $69.03 as of
April 7, 2000, representing the average of the closing bid and ask prices of the
common stock reported by the Nasdaq National Market on that date.
FEDERAL INCOME TAX CONSEQUENCES
Non-Qualified Stock Options. Although a participant will not recognize
income upon the original grant of options, if the participant chooses to
exercise the options, he or she will recognize ordinary income in an amount
equal to the difference between the fair market value of the shares of common
stock on the date of exercise and the aggregate exercise price for such shares.
To the extent, and in the year, that the participant recognizes income, United
Therapeutics may take a deduction. The participant's tax basis in the shares
received will equal the fair market value of such shares on the date of
exercise.
If the participant disposes of shares purchased pursuant to a
non-qualified option, any gain or loss will be short-term or long-term capital
gain or loss, depending upon the period during which such shares were held. See
capital Gains and Losses below. If a participant surrenders previously acquired
shares to pay for a non-qualified option, the excess, if any, of the fair market
value of the newly-acquired shares over the fair market value of the surrendered
shares will be includable in his or her income. No gain or loss will be
recognized on the surrender of the previously acquired shares.
A participant does not recognize income when he or she receives
restricted shares pursuant to the exercise of a non-qualified option (unless he
or she elects to do so within thirty days of the transfer of restricted shares).
Upon the lapse of the restriction, the participant will recognize income in an
amount equal to the fair market value of the shares on the date the restriction
lapses, and United Therapeutics will be entitled to a tax deduction of the same
amount. If the participant elects to recognize income within thirty days of
receipt of the shares, the participant will recognize income in an amount equal
to the fair market value of the shares on the date of receipt of the restricted
shares, and United Therapeutics will be entitled to an income tax deduction of
the same amount.
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<PAGE> 16
Incentive Stock Options. Participants who receive incentive stock
options are not required to recognize income, and United Therapeutics may not
take a deduction upon the grant of such options. Similarly, when a participant
exercises any incentive stock options, provided he or she does not dispose of
the shares for at least one year after exercise and at least two years after the
date of grant, the participant will not be required to recognize income, and
United Therapeutics may not take a deduction. The participant's basis in the
shares of common stock received upon exercise will equal the aggregate exercise
price that the participant paid for such shares.
Furthermore, the participant must include in his or her alternative
minimum taxable income the difference between the fair market value of the
shares of United Therapeutics' common stock received on the date of exercise and
the aggregate exercise price of such shares. Section 55 of the Internal Revenue
Code imposes an alternative minimum tax equal to the excess, if any, of a
percentage of the participant's alternative minimum taxable income over his or
her irregular federal income tax. Alternative minimum taxable income is
determined by adding (a) the difference between the fair market value of the
participant's shares of the common stock received on the date of exercise of an
incentive stock option and the aggregate exercise price of such shares, plus (b)
other items of tax preference, to the participant's adjusted gross income, and
then subtracting certain allowable deductions and an exemption amount.
If a participant pays the exercise price of an incentive stock option
with previously acquired shares, the participant does not recognize gain or loss
on the exercise of such option. If the participant pays for the exercise of a
current incentive stock option with shares previously acquired upon the exercise
of an incentive stock option, however, and the participant did not hold the
stock for at least the one-year-after-exercise or two-years-from-grant holding
period, the disposition will be disqualified. In this case, the participant will
recognize ordinary income on the disqualifying disposition equal to the
difference between the fair market value of such shares on the date of exercise
of the prior incentive stock option and the amount paid for such shares (but not
in excess of the gain realized on the disqualifying disposition).
Capital Gains and Losses. If a participant holds shares for more than
twelve months and, in the case of shares acquired by exercise of an incentive
stock option, does not dispose of such shares for at least two years after the
date of the underlying option grant, upon a subsequent disposition, the
participant will realize long term capital gain or loss equal to the difference
between the amount received upon such disposition and his or her basis in the
shares.
Except in the case of shares acquired by exercise of an incentive stock
option, if a participant disposes of the shares twelve months or less after he
or she acquired them, the participant will realize short term capital gain or
loss equal to the difference between the amount received upon such disposition
and his or her basis in the shares.
If a participant disposes of shares acquired through exercise of an
incentive stock option within two years from the date of grant or within two
years from the date of exercise, the participant will recognize ordinary income
equal to the excess, if any, of the lesser of (a) the amount received on such
disposition, or (b) the fair market value of the shares on exercise of the
incentive stock option, over the option price. The amount received, if any, in
excess of the amount of ordinary income recognized upon such disposition, will
be long term or short term capital gain, depending upon whether the participant
has held the shares for more than twelve months.
To the extent that a participant recognizes ordinary income, United
Therapeutics is allowed to take a deduction.
The foregoing is only a summary of the tax consequences related to
options which may be granted under the Plan and is based on United Therapeutics'
understanding of those consequences under current law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN.
14
<PAGE> 17
INDEPENDENT AUDITORS
United Therapeutics is presently utilizing the services of KPMG LLP,
which has been the company's independent auditors since 1997 and will serve as
the company's independent auditors for the fiscal year ended December 31, 2000.
Representatives of KPMG LLP will be present at the annual meeting, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholder proposals intended for inclusion in United Therapeutics'
proxy statement and form of proxy for the 2001 annual stockholders meeting must
be received by United Therapeutics no later than December 17, 2000. Upon receipt
of any stockholder's proposal, United Therapeutics will determine whether to
include the proposal in the proxy statement and form of proxy in accordance with
the regulations governing solicitation of proxies.
In order for a stockholder to nominate a director for election at the
2001 annual stockholders meeting, the company's Amended and Restated Bylaws
require that the stockholder give timely notice of the nomination to the company
in advance of the meeting. Such notice must be given not less than 90 days nor
more than 120 days prior to the anniversary date of the 2000 annual meeting of
stockholders.
In order for a stockholder to bring other business before the 2001
annual stockholders meeting, timely notice must be given to United Therapeutics
in advance of the meeting. Such notice must be given no less than 90 nor more
than 120 days prior to the anniversary date of the 2000 meeting, and must
include a description of the proposed business, the reason for conducting the
proposed business at the meeting and other matters as specified in United
Therapeutics' Amended and Restated Bylaws. These requirements are separate from
and in addition to the requirements a stockholder must meet to have a proposal
included in United Therapeutics' proxy statement. These time limits also apply
in determining whether notice is timely for purposes of rules adopted by the
Securities and Exchange Commission relating to the exercise of discretionary
voting authority by proxies designated by the company.
All notices of proposals must be given to United Therapeutics'
Secretary, Shelmer D. Blackburn, Jr., whose address is 1110 Spring Street,
Silver Spring, MD 20910.
The company will furnish a copy of United Therapeutics' Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws to any
stockholder without charge upon written request to the Secretary by the
stockholder.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
consideration at the annual meeting. If any other matter properly comes before
the meeting, the persons named in the accompanying proxy intend to vote on such
matters in accordance with their judgment.
APRIL 14, 2000
15
<PAGE> 18
APPENDIX
<PAGE> 19
UNITED THERAPEUTICS CORPORATION
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
(As amended effective as of March 8, 2000)
<PAGE> 20
ARTICLE I
PURPOSE
1.1 General.
The purpose of the United Therapeutics Corporation Equity Incentive
Plan (the "Plan") is to promote the success, and enhance the value, of United
Therapeutics Corporation (the "Company"), by linking the personal interests of
its qualified directors, officers and other key employees to those of Company
stockholders and by providing its qualified directors, officers and other key
employees with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of employees upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time
to time to selected directors, officers and key employees.
ARTICLE 2
EFFECTIVE DATE
2.1 Effective Date.
The Plan was originally effective November 12, 1997, subject to
approval by the stockholders of the Company, which approval was duly obtained.
Amendments to the Plan were approved by the Board of Directors on April 9, 1999,
subject to the approval of the stockholders of the Company. The Plan as so
amended and restated will be deemed to be approved by the stockholders if it
receives the approval of the holders of a majority of the shares of stock of the
Company in accordance with the applicable provisions of the Laws of the State of
Delaware and the By-laws of the Company. Any Awards granted under the Plan as so
amended prior to stockholder approval are effective when made (unless the
Committee specifies otherwise at the time of grant), but no Award may be
exercised or settled and no restrictions relating to any Award may lapse before
stockholder approval. If the stockholders fail to approve the Plan as amended
within twelve (12) months of April 9, 1999, any Award previously made pursuant
to the amended Plan shall be automatically canceled without any further act.
ARTICLE 3
DEFINITIONS
3.1 Definitions.
When appearing in this Plan with the initial letter capitalized, and
the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Sections 1.1
or 2.1, unless a clearly different meaning is required by the context. The
following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, or Performance Share Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
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<PAGE> 21
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" means the committee of the Board described in Article
4.
(f) "Company" means United Therapeutics Corporation.
(g) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Company, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in
the judgment of the Committee, is permanent and continuous in nature.
The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant's
condition. Such disability determination shall be made in accordance
with Code section 22(e)(3).
(h) "Effective Date" has the meaning assigned such term in Section 2.1.
(i) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property
determined by such methods or procedures as may be established from
time to time by the Committee.
(j) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.
(k) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(l) "Option" means a right granted to a Participant under the Plan to
purchase Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock
Option.
(m) "Participant" means a person who, as a director, officer or key
employee of the Company, has been granted an Award under the Plan.
(n) "Performance Award" means a right granted to a Participant under
Article 9 to receive cash, Stock, or other Awards, the payment of which
is contingent upon achieving certain performance goals established by
the Committee (includes "Performance Shares" and "Performance Units").
(o) "Performance Share" means a right granted to a Participant under
Article 9 to receive shares of Company Stock, the payment of which is
contingent upon achieving certain performance goals.
(p) "Performance Units" means a right granted to a Participant under
Article 9 to receive units the value of which is equivalent to $1.00,
the payment of which is contingent upon achieving certain performance
goals.
(q) "Plan" means the United Therapeutics Corporation Amended and
Restated Equity Incentive Plan, as it may be further amended from time
to time.
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<PAGE> 22
(r) "Restricted Stock Award" means Stock granted to a Participant under
Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(s) "Retirement" means a Participant's termination of employment with
the Company after attaining any normal or early retirement age
specified in any pension, profit sharing or other retirement program
sponsored by the Company.
(t) "Stock" means the United Therapeutics Corporation par value common
stock of the Company and such other securities of the Company as may be
substituted for Stock pursuant to Article 12.
(u) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR and the grant price of the SAR, as
determined pursuant to Article 8.
(v) "1933 Act" means the Securities Act of 1933, as amended from time
to time.
(w) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
ARTICLE 4
ADMINISTRATION
4.1 Committee.
The Plan shall be administered by the Compensation Committee of the
Board. The Committee shall consist of two or more members of the Board who are
(i) "outside directors" as that term is used in Section 162 of the Code and the
regulations promulgated thereunder, and (ii) "non-employee directors," as such
term is defined for purposes of Rule 16b-3 promulgated under Section 16 of the
1934 Act or any successor provision, except as may be otherwise permitted under
Section 16 of the 1934 Act and the rules and regulations promulgated thereunder.
4.2 Action by the Committee.
For purposes of administering the Plan, the following rules of
procedure shall govern the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting who are, at which a quorum is present and acts approved in writing by a
majority of the Committee in lieu of a meeting shall be deemed the acts of the
Committee. Each member of the Committee is entitled, in good faith, to rely or
act upon any report or other information furnished to that member by any officer
or other employee of the Company, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.
4.3 Authority of Committee.
The Committee has the exclusive power, authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
4
<PAGE> 23
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, based
in each case on such considerations as the Committee in its sole
discretion determines;
(e) Determine whether, to what extent, and under what circumstances an
Award may be granted, or the exercise price of an Award may be paid in
(cash, Stock, other Awards, or other property), or an Award may be
canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection with
an Award;
(h) Establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.
4.4 Decisions Binding.
The Committee is hereby granted discretionary authority to construe and
interpret the provisions of the Plan. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 Number of Shares.
Subject to adjustment as provided in Section 12.1, the aggregate number
of shares of Stock reserved and available for Awards, except with respect to
Options granted pursuant to Section 7.3, shall be 7,000,000. Subject to
adjustment as provided in Section 12.1, the aggregate number of shares of Stock
reserved and available for the Options granted pursuant to Section 7.3 shall be
7,939,517.
5.2 Lapsed Awards.
To the extent that an Award is canceled, terminates, expires or lapses
for any reason, any shares of Stock subject to the Award will again be available
for the grant of an Award under the Plan and shares subject to SARs or other
Awards settled in cash will be available for the grant of an Award under the
Plan.
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<PAGE> 24
5.3 Stock Distributed.
Any Stock distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, treasury Stock or Stock purchased on the
open market.
5.4 Limitation on Number of Shares Subject to Awards.
Notwithstanding any provision in the Plan to the contrary, the maximum
number of shares of Stock with respect to one or more Awards that may be granted
to one or more Participants over any one calendar year period during the term of
the Plan shall not exceed 500,000 in the aggregate; provided, however, that the
maximum number of shares of Stock with respect to an Option granted to the Chief
Executive Officer pursuant to Section 7.3 in 2000 shall not exceed 500,000; in
2001 shall not exceed 701,353; in 2002 shall not exceed 681,434; in 2003 shall
not exceed 2,757,832; and in 2004 shall not exceed 3,298,898.
ARTICLE 6
ELIGIBILITY
6.1 General.
Awards may be granted only to individuals who are directors (including
non-employee directors), officers or other key employees (including employees
who also are directors or officers) of or consultants to the Company or to the
Company's subsidiaries, as determined by the Committee.
ARTICLE 7
STOCK OPTIONS
7.1 General.
The Committee is authorized to grant Options to Participants in such
amounts as it deems appropriate in its discretion and subject to such conditions
and based on such criteria as it may deem advisable (including performance based
criteria or conditions) consistent with the other terms of the Plan and the
following:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee.
(b) Time and Conditions of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions,
if any, that must be satisfied before all or part of an Option may be
exercised.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants. Without limiting the power and discretion conferred on
the Committee pursuant to the preceding sentence, the Committee may, in
the exercise of its discretion, but need not, allow a Participant to
pay the Option price by directing the Company to withhold from the
shares of Stock that
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<PAGE> 25
would otherwise be issued upon exercise of the Option that number of
shares having a Fair Market Value on the exercise date equal to the
Option price, all as determined pursuant to rules and procedures
established by the Committee.
(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions as may be specified by the
Committee.
(e) Dividend Equivalents. Any Option may provide for the payment of
dividend equivalents to the Participant on a current, deferred or
contingent basis or may provide that Dividend Equivalents be credited
against the option price. The right to Dividend Equivalents, if so
provided, shall be evidenced in the Award Agreement.
7.2 Incentive Stock Options.
The terms of any Incentive Stock Options granted under the Plan must
comply with the following additional rules:
(a) Exercise Price. Subject to Section 7.2 (e) below, the exercise
price per share of Stock shall be set by the Committee, provided that
the exercise price for any Incentive Stock Option shall not be less
than the Fair Market Value as of the date of the grant.
(b) Exercise. Subject to Section 7.2(e) below, in no event may any
Incentive Stock Option be exercisable for more than ten (10) years from
the date of its grant.
(c) Lapse of Option. An Option shall lapse under the following
circumstances:
(1) A vested Option shall lapse according to the Stock Option
Agreement entered into by the Participant and according to
this Plan, provided, however, that vested Incentive Stock
Options not exercised within three months after the
Participant's termination of employment shall be treated as
Non-Qualified Stock Options as defined by the Code.
(2) If the Participant becomes disabled within the meaning of
Disability under Section 3.1(g) of the Plan, then the Option
will lapse twelve (12) months after employment ceased due to
the Disability.
(3) If the Participant dies before the Option lapses pursuant
to paragraph (1), (2) or (3) or before its original expiration
as indicated above, the Incentive Stock Option shall lapse,
unless it is previously exercised, on the date on which the
Option would have lapsed had the Participant lived and had his
employment status (i.e., whether the Participant was employed
by the Company on the date of his death or had previously
terminated employment) remained unchanged. Upon the
Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's legal representative or
representatives, by the person or persons entitled to do so
under the Participant's last will and testament, or, if the
Participant shall fail to make testamentary disposition of
such Incentive Stock Options or shall die intestate, by the
person or persons entitled to receive such Incentive Stock
Options under the applicable laws of descent and distribution.
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(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined at the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of
stock of the Company unless the exercise price per share of such Option
is at least 110% of the Fair Market Value per share of Stock at the
date of grant and the Option expires no later than five (5) years after
the date of grant.
(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the original Effective Date (i.e.,
November 12, 19977).
(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
(h) Grants only to Employees. Incentive Stock Options may be granted
only to employees of the Company.
7.3 Incentive Stock Option Grants to Chief Executive Officer
Pursuant to the terms of the Executive Employment Agreement entered
into by and between the Company and its Chief Executive Officer, dated April 5,
1999, as amended, the Company shall make annual grants of Incentive Stock
Options to the Chief Executive Officer. The number of shares subject to each
Incentive Stock Option shall be determined in accordance with the Employment
Agreement. The terms of the Award Agreement for such Option grants shall be in
form and substance as attached to the Employment Agreement.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 Grant of SARs.
The Committee is authorized to grant SARs to Participants on the
following terms and conditions:
(a) Right to Payment. Upon the exercise of a SAR, the Participant to
whom it is granted has the right to receive all or a percentage of:
(1) The Fair Market Value of one share of Stock on the date of
exercise, minus,
(2) The grant price of the SAR as determined by the Committee.
In the case of a SAR offered in tandem with an Incentive Stock
Option, the grant price of the SAR shall not be less than the
Fair Market Value of one share of Stock on the date of grant.
(b) Tandem Awards. SARs may be granted alone or in tandem with options.
If a SAR is granted in tandem with an option, the SAR may only be
exercised at a
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time when the related option is exercisable and the difference between
the Fair Market Value and the grant price is a positive number. The
exercise of the tandem SAR requires the surrender of the related option
for cancellation.
(c) Other Terms. All awards of SARs shall be evidenced by an Award
Agreement. The terms, methods of exercise, methods of settlement, form
of consideration payable in settlement, and any other terms and
conditions of any SAR shall be determined by the Committee at the time
of the grant of the Award and shall be reflected in the Award
Agreement. The grant of any SAR may include the right to Dividend
Equivalents as described in Section 7.1(e).
ARTICLE 9
PERFORMANCE AWARDS
9.1 Grant of Performance Awards.
The Committee is authorized to grant Performance Awards to Participants
on such terms and conditions as may be selected by the Committee. The Committee
shall have the complete discretion to determine the number of Performance Awards
granted to each Participant. All grants of Performance Awards shall be evidenced
by an Award Agreement.
9.2 Right to Payment.
A grant of Performance Awards gives the Participant rights, valued as
determined by the Committee, and payable to, or exercisable by, the Participant
to whom the Performance Awards are granted, in whole or in part, as the
Committee shall establish at grant or thereafter. The Committee shall set
performance goals and other terms or conditions to payment of the Performance
Awards in its discretion which, depending on the extent to which they are met,
will determine the number and value of Performance Shares that will be paid to
the Participant.
9.3 Other Terms.
Performance Awards may be payable in cash, Stock, or other property,
and have such other terms and conditions as determined by the Committee and
reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1 Grant of Restricted Stock.
The Committee is authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. All Awards of Restricted Stock shall be evidenced by
a Restricted Stock Award Agreement.
10.2 Issuance and Restrictions.
Restricted Stock shall be subject to such restrictions as the Committee
may choose to impose. These restrictions may lapse separately or in combination
at such
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times, under such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter. An
award of Restricted Stock will provide the Participant with voting, dividend and
other ownership rights provided in the Award Agreement.
10.3 Forfeiture.
Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment during the
applicable restriction period, Restricted Stock, that is at that time subject to
restrictions, shall be forfeited and reacquired by the Company; provided,
however, that the Committee may provide in any Award Agreement that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of termination resulting from any specified cause, and the
Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.
10.4 Certificates for Restricted Stock.
Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company shall retain
physical possession of the certificate until such time as all applicable
restrictions lapse.
ARTICLE 10A
DEFERRED SHARES
10A.1 Deferred Shares.
The Committee is authorized to make Awards of Deferred Shares to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. A Deferred Share Award shall entitle the Participant
to receive Stock from the Company in the future in consideration for services
performed during the Deferral Period. All services required of the Participant
for receipt of the Deferred Share shall be evidenced by an Award Agreement.
10A.2 Deferral Period.
The "Deferral Period" means the time period mandated by the Award
Agreement during which specified services are to be performed by the Participant
that will merit receipt of the Deferred Shares.
10A.3 Other Conditions.
The Committee may authorize Dividend Equivalents, defined under Section
7.1(e), to be provided on or after the date of any grant under this Section.
During the Deferral Period the Participant has no right to transfer any rights
covered by the Award and no right to vote the Stock.
The grant of any Deferred Shares may require the payment of additional
consideration. However, in no case shall the additional consideration exceed the
Fair Market Value of the Shares on the date of grant.
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ARTICLE 11
PROVISIONS APPLICABLE TO AWARDS
11.1 Stand-Alone, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in substitution
for, any other Award granted under the Plan. If an Award is granted in
substitution for another Award, the Committee may require the surrender of such
other Award in consideration of the grant of the new Award. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.
11.2 Exchange Provisions.
The Committee may at any time offer to exchange or buy out any
previously granted Award for a payment in cash, Stock, or another Award (subject
to Section 12.1), based on the terms and conditions the Committee determines and
communicates to the Participant at the time the offer is made.
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11.3 Term of Award.
The term of each Award shall be for the period as determined by the
Committee, provided that in no event shall the term of any Incentive Stock
Option or a Stock Appreciation Right granted in tandem with the Incentive Stock
Option exceed a period of ten years from the date of its grant.
11.4 Form of Payment for Awards.
Subject to the terms of the Plan, the Award Agreement or any applicable
law, payments or transfers to be made by the Company on the grant or exercise of
an Award may be made in such form as the Committee determines at or after the
time of grant, including without limitation, cash, Stock, other Awards, or other
property, or any combination, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee.
11.5 Limits on Transfer.
No right or interest of a Participant in any Award may be encumbered or
pledged to or in favor of any party other than the Company , or shall be subject
to any lien, obligation, or liability of such Participant to any other party
other than the Company. No Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a qualified
domestic relations order as defined in Section 414(p)(1)(B) of the Code, if the
order satisfies Section 414(p)(1)(A) of the Code.
11.6 Beneficiaries.
Notwithstanding Section 13.5, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the Participant and to receive any distribution with respect to any Award upon
the Participant's death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights under the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the
Participant is married, a designation of a person other than the Participant's
spouse as his beneficiary with respect to more than 50 percent of the
Participant's interest in the Award shall not be effective without the written
consent of the Participant's spouse. If no beneficiary has been designated or
survives the Participant, payment shall be made to the person entitled thereto
under the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.
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<PAGE> 31
11.7 Stock Certificates.
All Stock certificates delivered under the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal or state securities laws, rules and regulations
and the rules of any national securities exchange or automated quotation system
on which the Stock is listed, quoted, or traded. The Committee may place legends
on any Stock certificate to reference restrictions applicable to the Stock.
11.8 Acceleration Upon Death or Disability.
Notwithstanding any other provision in the Plan or any Participant's
Award Agreement to the contrary, upon the Participant's death or Disability, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse. Any Option or Stock Appreciation
Rights Awards shall then lapse in accordance with the other provisions of the
Plan and the Award Agreement. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.
11.9 Acceleration Upon Certain Events.
In the event of (i) the commencement of a public tender offer for all
or any portion of the Stock, (ii) a proposal to merge, consolidate or otherwise
combine with another company is submitted to the stockholders of the Company for
approval, or (iii) the Board approves any transaction or event that would
constitute a change of control of the Company of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to become fully exercisable, and/or all restrictions on all
outstanding Awards to lapse, in each case as of such date as the Committee may,
in its sole discretion, declare, which may be on or before the consummation of
such tender offer or other transaction or event. To the extent that this
provision causes Incentive Stock Options to exceed the dollar limitation set
forth in Section 7.2(d), the excess Options shall be deemed to be Non-Qualified
Stock Options.
ARTICLE 12
CHANGES IN CAPITAL STRUCTURE
12.1 General.
In the event a stock dividend is declared upon the Stock, the shares of
Stock then subject to each Award shall be increased proportionately without any
change in the aggregate purchase price therefor. In the event the Stock shall be
changed into or exchanged for a different number or class of shares of stock or
securities of the Company or of another company, whether through reorganization,
recapitalization, stock split, reverse stock split, combination of shares,
merger or consolidation, there shall be substituted for each such share of Stock
then subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged. The Committee shall make such
adjustments to the aggregate purchase price for the shares then subject to each
Award as it deems necessary or advisable to put Participants in the same
relative position after such change in capital structure as before such change.
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<PAGE> 32
ARTICLE 13
AMENDMENT, MODIFICATION AND TERMINATION
13.1 Amendment, Modification and Termination.
With the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Plan; provided, however, that no
amendment of the Plan may be made without approval of the stockholders of the
Company as may be required by the Code, by the insider trading rules of Section
16 of the 1934 Act, by any national securities exchange or automated quotation
system on which the Stock is listed or reported.
13.2 Awards Previously Granted.
No termination, amendment, or modification of the Plan shall adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant.
ARTICLE 14
GENERAL PROVISIONS
14.1 No Rights to Awards.
No Participant or employee shall have any claim to be granted any Award
under the Plan, and neither the Company nor the Committee is obligated to treat
Participants and employees uniformly.
14.2 No Stockholder Rights.
No Award gives the Participant any of the rights of a stockholder of
the Company unless and until shares of Stock are in fact issued to such person
in connection with such Award.
14.3 Withholding.
The Company shall have the authority and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any taxable event
arising as a result of the Plan. With respect to withholding required upon any
taxable event under the Plan, the Committee may, at the time the Award is
granted or thereafter, require that any such withholding requirement be
satisfied, in whole or in part, by withholding shares of Stock having a Fair
Market Value on the date of withholding equal to the amount to be withheld for
tax purposes, all in accordance with such procedures as the Committee
establishes.
14.4 No Right to Employment.
Nothing in the Plan or any Award Agreement shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue in
the employ of the Company.
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<PAGE> 33
14.5 Unfunded Status of Awards.
The Plan is intended to be an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company.
14.6 Indemnification.
To the extent allowable under applicable law, each member of the
Committee shall be indemnified and held harmless by the Company from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
such member in connection with or resulting from any claim, action, suit, or
proceeding to which such member may be a party or in which he may be involved by
reason of any action or failure to act under the Plan and against and from any
and all amounts paid by such member in satisfaction of judgment in such action,
suit, or proceeding against him provided he gives the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the By-Laws of the Company or as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
14.7 Relationship to Other Benefits.
No payment under the Plan shall be taken into account in determining
any benefits under any pension, retirement, savings, profit sharing, group
insurance, welfare or benefit plan of the Company.
14.8 Expenses.
The expenses of administering the Plan shall be borne by the Company.
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<PAGE> 34
14.9 Titles and Headings.
The titles and headings of the Sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
14.10 Gender and Number.
Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the
singular and the singular shall include the plural.
14.11 Fractional Shares.
No fractional shares of Stock shall be issued and the Committee shall
determine, in its discretion, whether cash shall be given in lieu of fractional
shares or whether such fractional shares shall be eliminated by rounding up.
14.12 Securities Law Compliance.
With respect to any person who is, on the relevant date, obligated to
file reports under Section 16 of the 1934 Act, transactions under the Plan are
intended to comply with Rule 16b-3(d) as transactions between the Company and
its officers or directors. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be void to the extent permitted by
law and voidable as deemed advisable by the Committee.
14.13 Government and Other Regulations.
The obligation of the Company to make payment of awards in Stock or
otherwise shall be subject to all applicable laws, rules, and regulations, and
to such approvals by government agencies as may be required. The Company shall
be under no obligation to register under the 1933 Act, any of the shares of
Stock paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
14.14 Governing Law.
To the extent not governed by federal law, the Plan and all Award
Agreements shall be construed in accordance with and governed by the laws of the
District of Columbia.
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<PAGE> 35
UNITED THERAPEUTICS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2000
The undersigned hereby names, constitutes and appoints Martine A.
Rothblatt and Paul A. Mahon, and each of them, with full powers of substitution
to act as true and lawful attorneys and proxies for the undersigned, and in the
place and stead of the undersigned to attend the Annual Meeting of the
Stockholders of United Therapeutics Corporation to be held at 11:00 a.m. on
Tuesday, May 23, 2000, and at any adjournment thereof, and to vote all the
shares of Common Stock held of record in the name of the undersigned on April
7, 2000, with all the powers that the undersigned would possess if he or she
were personally present.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF
NO SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR APPROVAL OF THE
AMENDMENT TO THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE
ABOVE-NAMED PROXIES IN THEIR BEST JUDGEMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to United
Therapeutics at the Annual Meeting of the stockholder's decision to terminate
this proxy, then the power of said proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt
from United Therapeutics prior to the execution
of this proxy of the Notice of Annual Meeting
of Shareholders, a Proxy Statement and the
1999 Annual Report to Shareholders. UNITED THERAPEUTICS CORPORATION
P.O. BOX 11415
NEW YORK, N.Y. 10203-0415
(continued and to be SIGNED on the
reverse side)
<PAGE> 36
o DETACH PROXY CARD HERE o
<TABLE>
<S> <C> <C> <C>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE LISTED NOMINEES NAMED BELOW.
1. Election of Directors FOR all nominees listed below, / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
except as marked to the for all nominees listed below
contrary
Nominees: Class I: Martine A. Rothblatt, James W. Crow, Ph.D., Gilles Cloutier, Ph.D.
Class II: Olivia Giscard of d'Estaing, Henry Hicks, Michael Miles
Class III: Shelmer D. Blackburn, Noah A. Samara, David Gooray, M.D.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW.)
*Exceptions ______________________________________________________________________________________________________________________
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT.
2. Approval of an amendment to the Amended and Restated Equity 3. The transaction of such other business as may properly
Incentive Plan. come before the meeting and any and all adjournments
thereof.
FOR / / AGAINST / / ABSTAIN / / I plan to attend
the meeting. / /
Change of Address and
or Comments Mark Here / /
NOTE: Please sign exactly as name or names appear
on this proxy card. When signing as attorney,
executor, administrator, trustee, custodian or
guardian, please give full title. If shares are
held jointly, each holder should sign.
Date ____________________________________, 2000
_______________________________________________
SHAREHOLDER (print name)
_______________________________________________
SHAREHOLDER (sign name)
VOTES MUST BE INDICATED
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. /X/
</TABLE>
o PLEASE DETACH HERE o
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
