<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
Alliance Pharmaceutical Corp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
ALLIANCE PHARMACEUTICAL CORP.
3040 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
--------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Alliance
Pharmaceutical Corp. (the "Corporation") will be held at 10:00 a.m. on
Wednesday, November 12, 1997, at the La Jolla Marriott Hotel, 4240 La Jolla
Village Drive, La Jolla, CA 92037 for the following purposes:
1. To elect eight directors of the Corporation.
2. To approve an increase in the number of shares authorized for
issuance under the 1991 Stock Option Plan of Alliance
Pharmaceutical Corp. by 1,500,000 shares.
3. To ratify the appointment by the Corporation's Board of Directors
of Ernst & Young LLP as independent auditors of the Corporation
for its fiscal year ending June 30, 1998.
4. To transact such other business as may properly come before the
annual meeting and any adjournments thereof.
Only holders of record of the Corporation's Common Stock and its Series D
Preferred Stock at the close of business on September 30, 1997, are entitled to
notice of, and to vote at, the meeting and any adjournments thereof. Such
shareholders may vote in person or by proxy. The stock transfer books of the
Corporation will not be closed.
Shareholders are urged to attend the meeting in person. If you are not
able to do so and wish that your shares be voted, please sign, date and return
the accompanying proxy in the enclosed envelope. No postage is required if
mailed in the United States.
By Order of the Board of Directors,
DUANE J. ROTH, CHAIRMAN
Dated: October 6, 1997
<PAGE>
ALLIANCE PHARMACEUTICAL CORP.
3040 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
November 12, 1997
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Alliance Pharmaceutical Corp. (the
"Corporation") to be voted at the Annual Meeting of Shareholders to be held on
Wednesday, November 12, 1997, at 10:00 a.m. at the La Jolla Marriott Hotel, 4240
La Jolla Village Drive, La Jolla, CA 92037 and at any adjournment or
adjournments thereof (the "Meeting") for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.
The mailing address of the principal executive offices of the Corporation
is 3040 Science Park Road, San Diego, CA 92121 (telephone number 619/558-4300).
The enclosed Proxy and this Proxy Statement are being first sent to shareholders
of the Corporation on or about October 8, 1997.
The Board of Directors has fixed the close of business on September 30,
1997 as the record date for the determination of shareholders of the Corporation
entitled to receive notice of, and vote at, the Meeting. At the close of
business on the record date, an aggregate of 31,465,564 shares of common stock,
par value $.01 per share, of the Corporation (the "Common Stock") were issued
and outstanding, each of which is entitled to one vote on each matter to be
voted upon at the Meeting, and 500,000 shares of Series D Preferred Stock, par
value $.01 per share, of the Corporation (the "Preferred Stock") were issued
and outstanding, each of which is entitled to one vote on each matter to be
voted upon at the Meeting. The Common Stock and the Preferred Stock vote
together as one class.
All votes will be tabulated by the inspector of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the shareholders and will
have the same effect as negative votes. Broker non-votes are not counted for
any purpose in determining whether a matter has been approved.
SOLICITATION AND REVOCATION
PROXIES IN THE FORM ENCLOSED ARE SOLICITED BY, OR ON BEHALF OF, THE BOARD
OF DIRECTORS OF THE CORPORATION. THE PERSONS NAMED IN THE PROXY HAVE BEEN
DESIGNATED AS PROXIES BY THE BOARD OF DIRECTORS. Shares represented by properly
executed proxies received by the Corporation will be voted at the Meeting in the
manner specified therein or, if no specification is made, will be voted FOR the
election of the eight directors listed herein, FOR an increase in the number of
shares authorized for issuance under the Corporation's 1991 Stock Option Plan,
and FOR the ratification of the appointment by the Corporation's Board of
Directors of Ernst & Young LLP as independent auditors of the Corporation for
its fiscal year ending June 30, 1998, all as described in this Proxy Statement.
Any proxy given by a shareholder pursuant to this solicitation may be
revoked by the shareholder at any time before it is exercised, by written
notification delivered to the Secretary of the Corporation, by voting in person
at the Meeting, or by executing another proxy bearing a later date.
<PAGE>
Proxies will be solicited by mail. They may also be solicited by officers
and regular employees of the Corporation personally, by telephone or otherwise,
but such persons will not be specifically compensated for such services. The
Corporation may use the services of Shareholder Communications Corporation to
aid in the solicitation of proxies. The Corporation estimates that the fee
payable to Shareholder Communications Corporation for such services should not
exceed $8,000. Banks, brokers, nominees and other custodians and fiduciaries
will be reimbursed for their reasonable out-of-pocket expenses in forwarding
soliciting material to their principals, the beneficial owners of Common Stock.
The costs of soliciting proxies will be borne by the Corporation.
1. ELECTION OF DIRECTORS
Eight directors are to be elected at the Meeting to hold office until the
next annual meeting of shareholders and until the election and qualification of
their respective successors. The Board of Directors has nominated Duane J.
Roth, Pedro Cuatrecasas, M.D., Carroll O. Johnson, Stephen M. McGrath, Donald
E. O'Neill, Helen M. Ranney, M.D., Jean G. Riess, Ph.D., and Thomas F. Zuck,
M.D., all of whom are currently directors of the Corporation. Directors are
elected by a plurality vote.
Unless otherwise specified in the accompanying proxy, the shares voted
pursuant thereto will be cast for these nominees. If, for any reason, any of
the nominees should be unable to accept nomination or election, it is intended
that such proxy will be voted for the election, in his or her place, of a
substituted nominee who would be recommended by management. Management,
however, has no reason to believe that any nominee will be unable to serve as a
director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
Set forth below is certain information with respect to each nominee as of
August 29, 1997:
DUANE J. ROTH. Mr. Roth is 47 and has served as a director of the
Corporation since 1985. He has served as President, Chief Operating Officer and
Chief Executive Officer of the Corporation since 1985, and has served as
Chairman since October 1989. Prior to joining the Corporation, Mr. Roth served
as President of Analytab Products, Inc., an American Home Products company
involved in manufacturing and marketing medical diagnostics, pharmaceuticals and
devices. For the previous ten years, he was employed in various sales,
marketing and general management capacities with Ortho Diagnostic Systems, Inc.,
a Johnson & Johnson company, which is a manufacturer of diagnostic and
pharmaceutical products. Mr. Roth's brother, Theodore D. Roth, is an Executive
Vice President of the Corporation.
PEDRO CUATRECASAS, M.D. Dr. Cuatrecasas is 63 and was elected as a
director of the Corporation in August 1996. He has over 20 years of experience
in the pharmaceutical industry. Dr. Cuatrecasas retired from the positions of
Vice President of Warner-Lambert Company and President, Parke-Davis
Pharmaceutical Research, on December 31, 1996, where he had been employed since
1989. For the previous ten years, he was Vice President of Research,
Development and Medical at Burroughs Wellcome Company. Before joining Burroughs
Wellcome Company, he was with Glaxo, Inc. Dr. Cuatrecasas is a member of the
National Academy of Sciences and the Institute of Medicine. He is a director of
Pioneer Hybrid International, Inc. and Mitokor Corp. He received his M.D. from
Washington University School of Medicine.
CARROLL O. JOHNSON. Mr. Johnson is 64 and has served as a director of the
Corporation since 1989. He has been President of Research Management, Inc.
("RMI") since 1985, an independent contract research organization which provides
services to the pharmaceutical industry in the implementation of clinical
trials. Previously, he served for 25 years in various research, sales and
marketing positions with several pharmaceutical companies, including Pharmacia
Laboratories, Inc., where he created a national sales force which introduced
three major products.
STEPHEN M. MCGRATH. Mr. McGrath is 61 and has served as a director of the
Corporation since 1989. He is an Executive Vice President of Oppenheimer & Co.,
Inc. ("Oppenheimer") and serves as the Director of its Corporate Finance
Department. For the eleven years prior to his employment by Oppenheimer in
1983, he held various executive positions with Warner-Lambert Company. Before
joining Warner-Lambert Company, Mr. McGrath was Controller and Assistant
Treasurer of Sterling Drug, Inc. and a certified public accountant for Price
Waterhouse & Co. He is a director of PetroCorp, Inc.
<PAGE>
DONALD E. O'NEILL. Mr. O'Neill is 71 and has served as a director of the
Corporation since 1991. He retired from Warner-Lambert Company in 1991 after 20
years of service. During his tenure, he held various managerial positions,
including President of the Parke-Davis Group, President of the Health
Technologies Group and President - International Operations. At the time of his
retirement from Warner-Lambert Company, he held the offices of Executive Vice
President of the corporation, and President and Chairman of its International
Operations. He is a director of Targeted Genetics Corp., Fuisz Technologies,
Immunogen, Inc., Cytogen Corp, and Fujisawa U.S.A.
HELEN M. RANNEY, M.D. Dr. Ranney is 77 and has served as a director of the
Corporation since 1991. She is Professor EMERITA, Department of Medicine,
University of California at San Diego, having served as Chairman of the
Department from 1973 through 1986. From 1986 through 1991, she was
Distinguished Physician of the U.S. Department of Veterans Affairs. She
formerly was Professor of Medicine at Albert Einstein College of Medicine (New
York) and at the State University of New York, Buffalo. Dr. Ranney is a member
of many professional societies, including the National Academy of Sciences, the
Institute of Medicine, the Association of American Physicians (past President),
and the American Society of Hematology (past President). She has more than 150
publications, primarily relating to blood and blood disorders. Dr. Ranney
served on the Board of Directors of Squibb Corp. prior to its merger with
Bristol-Myers. She received her M.D. from the College of Physicians and
Surgeons, Columbia University.
JEAN G. RIESS, PH.D. Professor Riess is 60 and has served as a director
of the Corporation since 1989. Until his retirement in 1996, he had been the
Director of Laboratoire de Chimie Moleculaire at the University of Nice for over
20 years. He has been an active researcher since receiving a Ph.D. from the
University of Strasbourg, with numerous patents and over 300 publications. For
more than 20 years Dr. Riess has focused on chemistry related to
perfluorochemical emulsions for medical application. He has directed research
in synthesis of tailored perfluorochemicals, in emulsion technology, in
synthesis of fluorinated surfactants, in the physical chemistry of emulsion
stabilization, and in surfactant self-aggregation.
THOMAS F. ZUCK, M.D. Dr. Zuck is 63 and has served as a director of the
Corporation since 1990. He is Professor of Transfusion Medicine and Director of
Hoxworth Blood Center at the University of Cincinnati Medical Center and is
President of Ohio Enterprises International, Inc. ("OEI"), a consulting company.
Dr. Zuck formerly was director of the Division of Blood and Blood Products at
the Office of Biologics Research & Review within the U.S. Food and Drug
Administration. He has served in numerous scientific professional societies,
including as President of the American Association of Blood Banks and the
Council of Community Blood Centers. He was Editor-in-Chief of the journal
TRANSFUSION and has more than 100 publications to his credit. Dr. Zuck is a
retired U.S. Army Colonel, where he was a Commander of the Letterman Army
Institute of Research and, for many years, involved with the Army's blood
substitute development program. Dr. Zuck received his LL.B. from Yale Law
School and his M.D. from Hahnemann Medical College.
COMPENSATION OF DIRECTORS
Directors do not receive cash compensation for attendance at Board of
Directors' meetings or committee meetings. Non-qualified stock options are
awarded to nonemployee directors of the Corporation pursuant to the Formula
Stock Option Plan for Nonemployee Directors of the Corporation (the "Directors'
Formula Option Plan"). Options under the Directors' Formula Option Plan are
granted under and subject to the Corporation's 1991 Stock Option Plan. The
options have a term of ten years from the date of grant and are exercisable at a
price per share equal to the fair market value of a share of Common Stock on the
date of grant. Each nonemployee director (i) upon his or her initial election,
shall automatically be granted an option to acquire 25,000 shares of Common
Stock which shall be exercisable in four installments of 6,250 shares each with
the first installment being at his or her initial election and the remaining
installments becoming exercisable on the date of each annual meeting of the
Board of Directors of the Corporation ("Annual Meeting") thereafter that such
person is a director, until fully exercisable, and (ii) upon the third Annual
Meeting following his or her initial election and each Annual Meeting thereafter
that such person remains a nonemployee director, shall automatically be granted
an option to acquire 7,500 shares of Common Stock. Except as otherwise
described above, all options are immediately exercisable in full on the date of
grant.
<PAGE>
OTHER TRANSACTIONS
The following affiliations exist between the Corporation and certain
directors:
Mr. McGrath is an Executive Vice President of Oppenheimer, an investment
banking firm which renders financial advice to the Corporation from time to
time. In November 1996, the Corporation acquired MDV Technologies, Inc. and
Oppenheimer was paid a fee to render financial advice in connection with the
transaction. The Corporation also retained Oppenheimer to provide financial
advice in connection with the licensing of its ultrasound contrast agent in
September 1997 and will pay a fee to Oppenheimer in the current fiscal year for
such services.
In January 1997, the Corporation renewed a one-year research services
agreement with RMI for $2,000 per month. Mr. Johnson is the president and owner
of RMI.
In January 1997, the Corporation renewed a one-year consulting agreement
with OEI for $2,000 per month. Dr. Zuck is the president and owner of OEI.
Dr. Ranney receives $2,000 per month and office space for providing
consulting services to the Corporation.
In August 1997, the Corporation agreed to pay Dr. Riess $80,000 for the
rights to certain inventions and concepts.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The standing committees of the Board of Directors consist of an Executive
Committee, a Compensation Committee, an Audit Committee, and a Nominating
Committee. The Executive Committee was established to act when the full Board
of Directors is unavailable. It has all the authority of the Board between
meetings of the entire Board as to matters which have not been specifically
delegated to other committees of the Board, except the authority that by law
cannot be delegated by the Board of Directors. The members of the Executive
Committee are Dr. Ranney and Messrs. McGrath and Roth. The Compensation
Committee advises and makes recommendations to the Board of Directors regarding
matters relating to the compensation of directors, officers, and senior
management. The members of the Compensation Committee are Drs. Ranney and
Cuatrecasas and Mr. O'Neill. The Audit Committee advises and makes
recommendations to the Board concerning the internal controls of the
Corporation, the independent auditors to be nominated for election by the
shareholders, and other matters relating to the financial activities of the
Corporation. The members of the Audit Committee are Messrs. Johnson and McGrath
and Dr. Zuck. The Nominating Committee has the authority to nominate members of
the Board of Directors to the entire Board for consideration. The Nominating
Committee will not consider nominees recommended by shareholders. The members
of the Nominating Committee are Dr. Riess and Messrs. Johnson and Roth.
During the fiscal year ended June 30, 1997, there were four meetings of the
Board of Directors. The Compensation Committee held two meetings, the Audit
Committee held two meetings, the Nominating Committee held one meeting, and the
Executive Committee did not meet. Each Board member attended all of the
meetings of the Board and all of the meetings of the committee(s) of which he or
she is a member.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and persons who own more than 10% of
a registered class of the Corporation's equity securities to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Corporation. Officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the copies of
such reports furnished to the Corporation during the fiscal year ended June 30,
1997, one report, covering one transaction, was filed late on behalf of each of
Dr. Riess and Dr. Zuck.
<PAGE>
OWNERSHIP OF VOTING SECURITIES BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Corporation's voting securities as of August 29,
1997 as to (i) each of the directors and director nominees, (ii) each of the
executive officers listed in the Summary Compensation Table, (iii) each person
known by the Corporation to own more than 5% of any class of the Corporation's
outstanding voting securities, and (iv) all directors and executive officers of
the Corporation as a group:
- -------------------------------------------------------------------------------
Common Stock
Amount and Nature of Percentage of
Name and Address Beneficial Ownership (1) Class (2)
- ---------------- ------------------------ ---------
Duane J. Roth 445,446 (3) 1.4%
Pedro Cuatrecasas, M.D. 19,250 (4) *
Carroll O. Johnson 47,000 (5) *
Stephen M. McGrath 108,826 (6) *
Donald E. O'Neill 75,500 (7) *
Helen M. Ranney, M.D. 56,300 (8) *
Jean G. Riess, Ph.D. 120,233 (9) *
Thomas F. Zuck, M.D. 57,500 (10) *
Harold W. DeLong 110,225 (11) *
Theodore D. Roth 129,317 (12) *
N. Simon Faithfull, M.D., Ph.D. 78,100 (13) *
Gordon L. Schooley, Ph.D. 84,855 (14) *
All directors and executive officers as a 1,693,391 5.2%
group (19 persons)
Wellington Management Company 2,951,388 (15) 9.5%
75 State Street
Boston, MA 02109
Preferred Stock
Schering Berlin Venture Corp. 500,000 (16) 100%
Schering AG
Muellerstrasse 173
13342 Berlin
Germany
- -------------------------------------------------------------------------------
* Indicates ownership of less than 1% of outstanding shares.
(1) Each person listed or included in the group has sole voting power and
sole investment power with respect to the shares owned by such person,
except as indicated below.
(2) Shares subject to options and warrants exercisable within 60 days have
been deemed to be outstanding for percentage calculations with respect
to the person holding such options and warrants.
(3) Consists of (i) 225,301 shares owned by Mr. Roth, (ii) 58,800 shares
subject to options granted by the Corporation under its 1983
Non-Qualified Stock Option Program ("the 1983 Program"), (iii) 160,150
shares subject to options granted by the Corporation under its 1991
Stock Option Plan ("the 1991 Plan"), and (iv) 1,195 shares owned by Mr.
Roth's spouse.
<PAGE>
(4) Consists of (i) 3,000 shares owned by Dr. Cuatrecasas, and (ii) 16,250
shares subject to options granted by the Corporation under the 1991
Plan.
(5) Consists of (i) 4,000 shares owned by Mr. Johnson, and (ii) 43,000
shares subject to options granted by the Corporation under the 1991
Plan.
(6) Consists of (i) 68,000 shares owned by Mr. McGrath, (ii) 15,326 shares
subject to warrants, and (iii) 25,500 shares subject to options granted
by the Corporation under the 1991 Plan.
(7) Consists of (i) 20,000 shares owned by Mr. O'Neill, (ii) 53,500 shares
subject to options granted by the Corporation under the 1991 Plan, and
(iii) 2,000 shares owned by Mr. O'Neill's spouse.
(8) Consists of (i) 2,800 shares owned by Dr. Ranney, and (ii) 53,500 shares
subject to options granted by the Corporation under the 1991 Plan.
(9) Consists of (i) 74,733 shares owned by Dr. Riess, and (ii) 45,500 shares
subject to options granted by the Corporation under the 1991 Plan.
(10) Consists of (i) 2,000 shares owned by Dr. Zuck, (ii) 30,000 shares
subject to options granted by the Corporation under the 1983 Program,
and (iii) 25,500 shares subject to options granted by the Corporation
under the 1991 Plan.
(11) Consists of (i) 20,000 shares owned by Mr. DeLong, (ii) 89,425 shares
subject to options granted by the Corporation under the 1991 Plan, and
(iii) 800 shares owned by Mr. DeLong's minor children.
(12) Consists of (i) 20,225 shares owned by Mr. Roth, (ii) 19,667 shares
subject to options granted by the Corporation under the 1983 Program,
and (iii) 89,425 shares subject to options granted by the Corporation
under the 1991 Plan.
(13) Consists of (i) 7,000 shares owned by Dr. Faithfull, (ii) 43,000 shares
subject to options granted by the Corporation under the 1983 Program,
and (iii) 28,100 shares subject to options granted by the Corporation
under the 1991 Plan.
(14) Consists of (i) 16,855 shares owned by Dr. Schooley, and (ii) 68,000
shares subject to options granted by the Corporation under the 1991
Plan.
(15) Wellington Management Company ("WMC") in its capacity as investment
advisor may be deemed beneficial owner of these shares which are owned
by many clients. WMC has sole voting power or sole dispositive power
over none of the shares, shared voting power over 1,224,700 shares, and
shared dispositive power over all such shares.
(16) The Series D Preferred Stock ("Preferred Stock") was issued to Schering
Berlin Venture Corp. ("SBVC") and has one vote per share. The Preferred
Stock votes together with the Common Stock as one class, except where
otherwise required by law. The Preferred Stock was purchased by SBVC in
conjunction with the Corporation's grant, in September 1997, to Schering
AG, Germany ("Schering"), of a worldwide license agreement ("License
Agreement") for the Corporation's drug compounds, drug compositions and
medical devices and systems related to perfluorocarbon-containing
ultrasound imaging products. The Preferred Stock is convertible into
Common Stock upon certain events at a rate based upon a 20-day average
of the closing market prices of the Common Stock at the time of
conversion. In addition, Schering agreed to pay certain licensing and
milestone fees, to pay for certain development expenses for the product
on a worldwide basis, and to pay royalties to the Corporation after
commercialization.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning annual and long-term
compensation for the Corporation's Chief Executive Officer and the other four
highest paid executive officers (collectively, the "Named Executive Officers")
for the year ended June 30, 1997, as well as the total compensation paid to each
individual for the Corporation's two previous fiscal years:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Summary Compensation Table
Long-Term
Compen-
Annual Compensation sation
-----------
Awards
-------------------------------------------------------
Name Other Securities
and Annual Underlying
Principal Salary Bonus (a) Compen- Options/
Position Year ($) ($) sation ($) (b) SARs (#)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Duane J. Roth 1997 344,000 80,000 186,300(c) 125,000
Chairman, President, Chief Executive 1996 323,200 142,500 198,100(d) -
Officer, Chief Operating Officer 1995 309,200 119,070 - 132,500
Harold W. DeLong 1997 187,300 41,000 - 30,000
Executive Vice President - 1996 177,700 59,300 - -
Business Development 1995 169,700 49,350 - 40,000
Theodore D. Roth 1997 190,500 61,500 37,500(e) 50,000
Executive Vice President, Secretary, 1996 179,000 70,000 41,800(f) -
Chief Financial Officer 1995 171,300 49,350 69,600(g) 40,000
N. Simon Faithfull 1997 185,700 30,500 - 25,000
Vice President - Medical Research 1996 177,800 44,500 - -
1995 174,500 32,550 - 32,000
Gordon L. Schooley 1997 176,200 30,500 - 25,000
Vice President - Clinical Research 1996 167,100 42,300 - -
and Regulatory Affairs 1995 160,000 31,500 - 32,000
</TABLE>
(a) Bonuses for 1995 were not determined or paid until after January 1996.
(b) Perquisites and other personal benefits for specific officers are only
reported in specific years where such compensation exceeds the lower of 10%
of annual salary and bonus, or $50,000.
(c) Includes tax reimbursement of $184,200 for forgiveness of loan.
(d) Includes forgiveness of $196,300 of principal on a loan made pursuant to
the 1983 Program.
(e) Includes forgiveness of $36,200 of principal and accrued interest on a
relocation loan.
(f) Includes forgiveness of $40,575 of principal and accrued interest on a
relocation loan.
(g) Includes forgiveness of $57,065 of principal and accrued interest on a
relocation loan
EMPLOYMENT ARRANGEMENTS
On October 20, 1994, in connection with the exercise of certain stock
options previously granted to Duane Roth, the Corporation loaned Mr. Roth
$196,300, in accordance with the terms of the 1983 Program. Interest was due
and payable quarterly and all outstanding principal was due and payable on
October 20, 1999. Interest accrued at the rate of seven and three quarters
percent per annum. The note was secured by the 29,000 shares of Common Stock of
the Corporation obtained by Mr. Roth upon exercise of the stock options. In
February 1996, the Board of Directors
<PAGE>
authorized the Corporation to forgive all outstanding principal and interest on
the loan. In December 1996, the Board of Directors authorized payment of
$184,200 to Mr. Roth to cover his income tax obligations on the forgiveness of
such debt.
During fiscal 1992, in connection with his relocation, the Corporation
loaned Theodore Roth $175,000, which was originally due on August 5, 1994. The
loan bears interest at the prime rate reported in THE WALL STREET JOURNAL and
had an outstanding principal balance of $150,000 as of that date. The loan is
evidenced by a promissory note secured by real estate and an assignment of Mr.
Roth's option to purchase stock of the Corporation. On February 16, 1994, the
Board of Directors authorized the Corporation to forgive on December 1, 1994 and
each December 1 thereafter, through December 1, 1998, $30,000 of principal and
all accrued interest through such date; provided Mr. Roth remains employed by
the Corporation. If his termination is without cause by the Corporation or as a
result of a change in control of the Corporation, the debt will be forgiven in
full. Termination of his employment for any other reason requires the debt to
be paid three years from the termination date, with interest. The balance
outstanding as of August 29, 1997, is $60,000.
On June 1, 1995, the Corporation loaned Simon Faithfull $70,000. The loan
accrues interest at the rate of nine percent per annum. The loan is due and
payable on demand; provided that unless and until demand is made, principal and
interest shall be payable in biweekly installments of $500 each. The largest
outstanding balance due since the beginning of the last fiscal year was $77,406,
and the current outstanding balance is $70,271. The note is secured by a lien
on Dr. Faithfull's primary residence.
STOCK OPTION GRANTS AND EXERCISES
The Corporation has granted options to its executive officers under its
1983 Incentive Stock Option Plan (which plan expired on October 1, 1993), its
1983 Non-Qualified Stock Option Program, and its 1991 Stock Option Plan. No
stock appreciation rights ("SARs") have been granted by the Corporation.
The following table sets forth certain information concerning options
granted during fiscal 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
- -----------------------------------------------------------------------------------------------------------------------------
Individual Grants Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Option Term (1)
---------------------------------------------------------------------------------------------------
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or
SARs Employees in Base Price Expiration
Name Granted (#) (2) Fiscal Year ($/Share) (4) Date 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Duane J. Roth 125,000 (3) 10.5% 13.125 11/13/06 1,031,800 2,614,700
Harold W. DeLong 30,000 (3) 2.5% 13.125 11/13/06 247,600 627,500
Theodore D. Roth 50,000 (3) 4.2% 13.125 11/13/06 412,700 1,045,900
N. Simon Faithfull 25,000 (3) 2.1% 13.125 11/13/06 206,400 522,900
Gordon L. Schooley 25,000 (3) 2.1% 13.125 11/13/06 206,400 522,900
</TABLE>
(1) The dollar amounts under these columns are the result of calculations
assuming that the price of Common Stock on the date of the grants of the
options ($13.125 per share) increases at the hypothetical 5% and 10% rates
set by the Securities and Exchange Commission and therefore are not
intended to forecast possible future appreciation, if any, of the
Corporation's stock price.
<PAGE>
(2) All options granted in 1997 to the Named Executive Officers were
non-qualified stock options under the 1991 Plan.
(3) Options are exercisable in increments of 20%, 20%, 20% and 40% commencing
one year after the date of issuance and on each subsequent anniversary,
respectively.
(4) The exercise price per share of the options granted represented the fair
market value of the underlying shares on the date of grant. Options may be
exercised by (i) paying the Corporation at least the par value of the
shares of Common Stock being acquired, allowing the remainder of the
exercise price to be borrowed from the Corporation, or (ii) by surrendering
shares of Corporation Common Stock in payment of the exercise price and
applicable withholding taxes. The 1991 Plan provides that loans to pay the
exercise price shall mature within five years (or earlier, in the event of
a termination of employment or of a consultancy), shall be secured by the
shares of Common Stock purchased, shall provide for quarterly payments of
interest at such rate as the Board of Directors may determine, and shall be
in such form and contain such other provisions as the Board of Directors
may determine from time to time.
The following table summarizes options exercised during fiscal 1997 and
presents the value of unexercised options held by the Named Executive Officers
at fiscal year end:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values
Number of Securities
Underlying Value of Unexercised
Unexercised Options/SARs In-The-Money Options/SARs
at Fiscal Year End ($) at Fiscal Year End (#)
Shares Acquired on Value Exercisable (E)/ Exercisable (E)/
Exercise (#) Realized ($) Unexercisable (U) Unexercisable (U)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Duane J. Roth - - 218,950 (E) 1,005,200 (E)
208,250 (U) 283,300 (U)
Harold W. DeLong - - 89,425 (E) 125,000 (E)
55,075 (U) 85,500 (U)
Theodore D. Roth - - 109,092 (E) 322,600 (E)
75,075 (U) 85,500 (U)
N. Simon Faithfull - - 71,100 (E) 391,900 (E)
44,150 (U) 67,300 (U)
Gordon L. Schooley 17,867 $299,900 68,000 (E) 98,900 (E)
44,150 (U) 67,300 (U)
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") has
provided the following report:
The Committee is composed entirely of outside, nonemployee directors. The
Committee determines the base salaries and the amount of bonus awards to be paid
to the executive officers of the Corporation. In addition, the Committee
recommends the number of the Corporation's stock option grants which should be
made to executive officers and other employees of the Corporation. The
following is a summary of policies of the Committee that affect the compensation
paid to executive officers, as reflected in the tables and text set forth
elsewhere in the proxy statement.
EXECUTIVE COMPENSATION POLICY AND COMPONENTS OF COMPENSATION
The Committee's fundamental executive compensation philosophy is to enable
the Corporation to attract and retain key executive personnel and to motivate
those executives to achieve the Corporation's objectives. The Corporation is
still in its research and development phase and has not yet achieved
profitability. Therefore, traditional methods of evaluating
<PAGE>
executive performance, such as sales and profit levels, return on equity, and
stock price, are inappropriate. Accordingly, assessment of each executive's
performance is based upon attainment of his or her specific objectives in
relation to the Corporation's overall annual strategic goals. The Committee may
in its discretion apply different measures of performance for future fiscal
years. However, it is presently contemplated that all compensation decisions
will be designed to further the fundamental executive compensation philosophy
described above.
Each executive officer's compensation package is reviewed annually and is
comprised of three components: base salary, bonus, and stock option grants. In
addition, executive officers of the Corporation are eligible to participate in
all benefit programs generally available to other employees.
BASE SALARY
In setting the base salary levels of each executive officer, the Committee
considers the base salaries of executive officers in comparable positions in
other similarly situated biotechnology/pharmaceutical development companies. In
setting levels, the Corporation currently targets the 75th percentile of the
relevant labor market. Factors considered include company size, stage of
development of a company's products, and geographical location. The Committee
also considers the individual experience level and actual performance of each
executive officer in view of the Corporation's needs and objectives. Salary
decisions are determined in a structured annual review by the Committee with
input from the Chief Executive Officer.
BONUS AWARDS
Annual bonuses, set as a targeted percentage of total cash compensation,
may be earned by each executive officer, based upon the achievement of
performance goals established at the beginning of the fiscal year and reviewed
at least twice during the year.
Performance goals for the Corporation are developed by management, and
reviewed and approved by the Committee and the Board of Directors. Performance
goals for individual executives are developed by the Chief Executive Officer,
and reviewed and approved by the Committee. Bonuses are awarded to executives
based upon the attainment of these goals during the year, with the Corporation
and the executives accomplishing minimum objectives prior to being eligible to
receive a bonus. The Committee considers the amounts of bonuses it expects to
pay to executives when it compares its compensation practices with other
companies similarly situated.
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION
Generally, the Corporation's Board of Directors or, if appointed, a stock
option committee, approves annual grants of stock options to each of the
Corporation's executive officers under the 1991 Plan based upon recommendations
from the Committee. The grants are designed to align the interest of each
executive officer with those of the shareholders and provide each individual
with a significant incentive to manage the Corporation from the perspective of
an owner with an equity stake in the business. Each grant generally allows the
officer to acquire shares of the Corporation's Common Stock at a fixed price per
share (the market price on the grant date) over a specified period of time (up
to ten years), thus providing a return to the executive officer only if the
market price of the shares appreciates over the option term. The size of the
option grant to each executive officer generally is set as the Committee deems
appropriate in order to retain and motivate key executive officers as well as to
provide them with the perspective of the Corporation's shareholders in assessing
corporate results. The grants also take into account comparable awards to
individuals in similar positions at biotechnology/pharmaceutical development
companies as reflected in external surveys, the individual's potential for
future responsibility and promotion over the option term, the individual's
personal performance in recent periods, and the risk attached to the future
growth of the pharmaceutical industry. In making comparisons in the industry,
the Corporation targets the 75th percentile of the relevant labor market.
The Committee, at its discretion, has the authority to utilize compensation
consultants to assist in defining the relevant labor market for executive
compensation and to recommend annual salary and bonus increases.
<PAGE>
Duane J. Roth, Chief Executive Officer, although not a member of the
Committee, assisted the Committee in developing the compensation packages
awarded to executive officers other than himself.
CEO COMPENSATION
In setting the compensation payable to the Corporation's Chief Executive
Officer, the Committee sought to be competitive with other
biotechnology/pharmaceutical development companies. In making comparisons, the
Corporation targets the 75th percentile of the relevant labor market. The
Committee established Duane Roth's base salary based on an evaluation of his
personal performance and the objective of having his base salary keep pace with
salaries being paid to similarly situated chief executive officers. With
respect to his base salary, it is the Committee's intent to provide him with a
level of stability and certainty each year and not have this particular
component of compensation affected to any significant degree by Corporation
performance factors. The remaining component of his 1997 fiscal year
compensation, however, was dependent upon performance and provided no dollar
guarantees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current officer or
employee of the Corporation or any of its subsidiaries.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Donald E. O'Neill, Chairman Dr. Helen M. Ranney
Dr. Pedro Cuatrecasas
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return to the
Corporation's shareholders during the five-year period ended June 30, 1997, as
well as with that of an overall stock market index (Nasdaq) and a published
industry index (Nasdaq Pharmaceutical):
[GRAPH]
ALLP NASDAQ (US) NASDAZ Pharm
----------------------------------------------------
6/30/92 $100 $100 $100
6/30/93 $47.33 $125.76 $86.93
6/30/94 $52.00 $126.97 $72.71
6/30/95 $44.00 $169.48 $96.52
6/30/96 $88.00 $217.59 $142.13
6/30/97 $53.67 $264.60 $144.59
<PAGE>
2. PROPOSED AMENDMENT OF THE 1991 STOCK OPTION PLAN
Effective November 8, 1991, the Board of Directors and the shareholders of
the Corporation adopted the 1991 Non-Qualified Stock Option Program (the "1991
Program") pursuant to which 1,000,000 shares of Common Stock were reserved for
issuance upon the exercise of options granted under the terms of the 1991
Program. On November 19, 1994, the shareholders of the Corporation approved the
amendment and restatement of the 1991 Program (as amended and restated, it is
entitled the 1991 Stock Option Plan of Alliance Pharmaceutical Corp., the "1991
Plan") pursuant to which an additional 1,000,000 shares of Common Stock were
reserved for issuance upon the exercise of options granted under the terms of
the 1991 Plan. On November 16, 1995, the shareholders of the Corporation
approved an amendment to the 1991 Plan pursuant to which an additional 1,200,000
shares of Common Stock were reserved for issuance upon the exercise of options
granted under terms of the 1991 Plan. On November 13, 1996, the shareholders of
the Corporation approved an amendment to the 1991 Plan pursuant to which an
additional 1,500,000 shares of Common Stock were reserved for issuance upon the
exercise of options granted under terms of the 1991 Plan. As of August 29,
1997, 1,343,410 shares remained available for issuance under the 1991 Plan. On
September 19, 1997, the Board of Directors approved an amendment to the 1991
Plan, subject to shareholder approval, to increase the number of shares
authorized for issuance under the 1991 Plan from 4,700,000 to 6,200,000 shares.
The Board believes that the increase is necessary to meet the Corporation's
objectives of motivating and retaining officers, employees and nonemployee
consultants with appropriate experience and ability, and to increase the
grantees' alignment of interest with the Corporation's shareholders. The
increase of 1,500,000 shares represents 4% percent of the Corporation's Common
Stock on a fully diluted basis as of June 30, 1997.
DESCRIPTION OF THE PLAN
The following is a summary of the principal features of the 1991 Plan:
PURPOSE
The purpose of the 1991 Plan is to assist the Corporation in the
recruitment, retention and motivation of directors, officers, employees and
consultants who are providing, or who are expected to provide, services which
are deemed important to the Corporation, by enabling them to acquire the
Corporation's Common Stock, thereby increasing their proprietary interest in and
commitment to the growth and success of the Corporation.
ADMINISTRATION
The 1991 Plan is administered by the Board of Directors of the Corporation
unless the Board of Directors appoints a committee to administer the 1991 Plan.
The Board of Directors, or if appointed, the stock option committee, which will
be referred to in this summary as the Plan Administrator, has full authority,
subject to the provisions of the 1991 Plan, to determine the eligible
individuals who are to receive option grants under the 1991 Plan, the type of
option (incentive stock option or non-qualified stock option) to be granted, the
consideration for the granting of such options, the number of shares to be
covered by each granted option, the date or dates on which the option is to
become exercisable, and the maximum term for which the option is to remain
outstanding. The Board of Directors currently serves as the Plan Administrator.
ELIGIBILITY AND SHARES SUBJECT TO THE 1991 PLAN
Under the 1991 Plan, 6,200,000 shares of Common Stock have been reserved
for issuance (1,500,000 shares of which are subject to shareholder approval at
the Meeting) upon the exercise of options granted pursuant to the terms of the
1991 Plan. The 1991 Plan provides for the grant of both incentive stock options
("ISOs") intended to qualify as such under section 422 of the Internal Revenue
Code of 1986, as amended, and non-qualified stock options ("NSOs"). ISOs may be
granted only to employees of the Corporation. NSOs may be granted to employees,
nonemployee directors and consultants who provide services which are deemed
important to the Corporation. If any options granted under the 1991 Plan shall
for any reason expire or be canceled or otherwise terminated without having been
exercised in full, the shares allocable to the unexercised portion of such
options shall again become available for the 1991 Plan. If options issued under
the 1991 Plan
<PAGE>
are canceled unexercised, they also become available for new grants. Options to
purchase more than 200,000 shares may not be granted to any individual in a
single calendar year under the 1991 Plan.
As of June 30, 1997, options to purchase an aggregate of 3,798,604 shares
of Common Stock, at a weighted average exercise price of $10.66 per share, were
outstanding under all of the Corporation's stock option plans (including options
granted under the 1983 Incentive Stock Option Plan, which plan expired on
October 1, 1993). As of June 30, 1997, approximately 200 employees (including
one director who is an employee) and seven nonemployee directors were eligible
to participate in the 1991 Plan. On August 29, 1997, the closing price for the
Corporation's Common Stock on the Nasdaq National Market was $10.188. All stock
options granted since November 15, 1991 have been granted with exercise prices
equal to the closing price for the Company's Common Stock on the Nasdaq National
Market on the date of grant. As of June 30, 1997, 2,309,483 stock options
granted under all of the stock option plans had been exercised, and stock
options for a total of 2,863,645 shares of Common Stock were available for
future grants (including those available under the amendment to the 1991 Plan to
be approved at the Meeting).
As of August 29, 1997, the following persons or groups had, in total,
received options to purchase shares of Common Stock under the 1991 Plan as
follows: (i) the Chief Executive Officer and the other Named Executive Officers:
Duane J. Roth, Chairman and Chief Executive Officer, 368,400; Harold W. DeLong,
Executive Vice President - Business Development, 144,500; Theodore D. Roth,
Executive Vice President, 164,500; N. Simon Faithfull, Vice President - Medical
Research, 72,250; Gordon L. Schooley, Vice President - Clinical Research and
Regulatory Affairs, 112,150; (ii) all current executive officers of the
Corporation as a group: 1,225,150; (iii) each current director (and each
director nominee) who is not an executive officer (including options granted
pursuant to the Directors' Formula Option Plan described below): Pedro
Cuatrecasas 35,000; Carroll O. Johnson 43,000; Stephen M. McGrath 25,500; Donald
E. O'Neill 53,500; Helen M. Ranney 53,500; Jean G. Riess 75,500; and Thomas
F. Zuck 25,500; (iv) all current directors who are not executive officers as a
group: 311,500; (v) each person who has received 5% of options granted other
than those named above: none; (vi) all employees of the Corporation, including
all current officers who are not executive officers, as a group: 1,572,850; and
(vii) each associate of any such directors or executive officers Kathryn Flaim
(Stephen Flaim's spouse), 37,000; Carol Hopkins (Ronald Hopkins' spouse),
49,800.
TERMS OF OPTIONS
Each option granted under the 1991 Plan must be exercised within ten years
of the date of its grant unless the Plan Administrator specifies some lesser
time. Stock options granted under the 1991 Plan must be exercised by the
optionee before the earlier of the expiration of such option or the date ten
days after termination of the optionee's employment or service, except that this
period is extended to three months in the case of the optionee's retirement at
or after age 65 or termination of employment or service due to disability, and
to six months in the case of the optionee's death, in which case the option is
exercisable by the optionee's estate. Options granted pursuant to the 1991
Plan, except for grants to nonemployee directors (which vest in accordance with
the Nonemployee Director Formula Plan), will vest at the time or times
determined by the Plan Administrator. Options become immediately exercisable in
full upon the optionee's retirement at or after age 65 or termination of
employment or service due to disability or death, or upon the occurrence of such
circumstance or event as in the opinion of the Plan Administrator merits special
consideration.
Options are subject to such terms and conditions, including price and rate
of exercise, as the Plan Administrator may determine. However, the exercise
price for ISOs will be no less than 100% of fair market value on the date of
grant. The exercise price for NSOs will be no less than the greater of par
value of said shares ($.01 per share) or eighty percent (80%) of the fair market
value of said shares on the date of grant.
Payment of the purchase price for shares purchased pursuant to the exercise
of an option may be made by cash or check, by a "cashless" exercise method
through a broker, by surrendering shares of Common Stock of the Corporation in
payment of the exercise price and applicable withholding taxes, or by such other
methods as the Plan Administrator may permit from time to time. A grantee who
is an employee of or a consultant to the Corporation at the time of exercise of
an option may, if authorized by the Plan Administrator, exercise his/her option
by paying the Corporation at least the par value of the shares of Common Stock
being acquired and borrowing the remainder of the exercise price from the
Corporation. The 1991 Plan provides that such loans shall mature within five
years (or earlier, in the event of a termination of employment or of a
consultancy), shall be secured by the shares of Common Stock purchased, shall
provide for quarterly
<PAGE>
payments of interest at such rate as the Plan Administrator may determine and
shall be in such form and contain such other provisions as the Plan
Administrator may determine from time to time.
DURATION, AMENDMENT AND TERMINATION
The 1991 Plan expires on November 7, 2001. The 1991 Plan may be amended,
suspended or terminated at any time by action of the Board of Directors or the
Plan Administrator, except that no such action may, without shareholder
approval, increase the maximum number of shares reserved for options under the
1991 Plan or for any individual, change the class of eligible persons or
materially increase the benefits accruing to eligible persons under the 1991
Plan. Furthermore, no action may, without the consent of an optionee, adversely
affect his/her rights under any option theretofore granted.
FEDERAL INCOME TAX CONSEQUENCES
Neither the optionee nor the Corporation will incur any federal tax
consequences as a result of the grant of an option. The optionee will have no
taxable income upon exercising an ISO (except that the alternative minimum tax
may apply), and the Corporation will receive no deduction when an ISO is
exercised. Upon exercising an NSO, the optionee generally must recognize
ordinary income equal to the "spread" between the exercise price and the fair
market value of the Common Stock on the date of exercise; and the Corporation
will be entitled to a deduction for the same amount. In the case of an
employee, the option spread at the time an NSO is exercised is subject to income
tax withholding. The tax treatment of a disposition of option shares acquired
under the 1991 Plan depends on how long the shares have been held and on whether
such shares were acquired by exercising an ISO or NSO. The Corporation will not
be entitled to a deduction in connection with a disposition of option shares,
except in the case of a disposition of shares acquired under an ISO before the
applicable ISO holding periods have been satisfied.
Shareholders are requested in this Proposal 2 to approve the increase in
the number of shares authorized for issuance under the 1991 Plan from 4,700,000
to 6,200,000. Under New York law, the affirmative vote of the holders of
securities representing a majority of the voting power present in person or
represented by proxy at the Meeting is required to adopt the proposed amendment
of the 1991 Plan of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
OF THE 1991 STOCK OPTION PLAN.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP to serve
as the independent auditors for the Corporation for the fiscal year ending June
30, 1998. Representatives of Ernst & Young LLP are expected to be present at
the Meeting, will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
Shareholder ratification of the appointment of Ernst & Young LLP as the
Corporation's independent auditors is not required by the Corporation's Bylaws
or otherwise. If the shareholders fail to ratify the appointment, the Board
will reconsider whether or not to retain that firm. Even if the appointment is
ratified, the Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board determines
that such a change would be in the best interests of the Corporation and its
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
4. OTHER BUSINESS
Management knows of no other matters that may be presented to the Meeting.
However, if any other matter properly comes before the Meeting, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
<PAGE>
FUTURE PROPOSALS BY SHAREHOLDERS
Any proposal which a shareholder of the Corporation wishes to have included
in the proxy statement and proxy relating to the Corporation's 1998 Annual
Meeting pursuant to the provisions of Rule 14a-8 under the Securities Exchange
Act of 1934 must be received by the Corporation at its executive offices no
later than June 8, 1998, and must otherwise comply with the requirements of Rule
14a-8. The address of the Corporation's executive office is 3040 Science Park
Road, San Diego, CA 92121.
ANNUAL REPORT ON FORM 10-K
THE CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, TO EACH PERSON
SOLICITED HEREUNDER WHO MAILS A WRITTEN REQUEST THEREFOR TO ALLIANCE
PHARMACEUTICAL CORP., 3040 SCIENCE PARK ROAD, SAN DIEGO, CA 92121, ATTENTION:
LLOYD A. ROWLAND, GENERAL COUNSEL. THE CORPORATION WILL ALSO FURNISH, UPON THE
PAYMENT OF A REASONABLE FEE TO COVER REPRODUCTION AND MAILING EXPENSES, A COPY
OF ALL EXHIBITS TO SUCH ANNUAL REPORT ON FORM 10-K.
It is important that your shares be represented at the Meeting. If you are
unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped, addressed envelope as
promptly as possible.
By Order of the Board of Directors,
Duane J. Roth, Chairman
Date: October 6, 1997
San Diego, California
<PAGE>
ALLIANCE PHARMACEUTICAL CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 12, 1997
The undersigned, revoking any proxy heretofore given, hereby appoints
Carroll O. Johnson, Stephen M. McGrath and Duane J. Roth, or any one of them,
Proxies of the undersigned with full power of substitution, with respect to
all of the shares of the Common Stock which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of Alliance Pharmaceutical Corp.
(the "Corporation") to be held on November 12, 1997, at the La Jolla Marriott
Hotel, 4240 La Jolla Village Drive, La Jolla, CA 92037 at 10:00 a.m., San
Diego time, or any adjournment thereof.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS, FOR AUTHORIZATION OF
ADDITIONAL SHARES OF COMMON STOCK UNDER THE 1991 STOCK OPTION PLAN, AND FOR
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING JUNE 30, 1998. If specific instructions are indicated, this Proxy will
be voted in accordance therewith.
In their discretion, the Proxies are authorized to transact such other
business as may properly come before the meeting or any adjournment thereof.
The Board of Directors has proposed all matters to be voted upon and recommends
a vote FOR all nominees for election as directors, FOR authorization of
additional shares under the 1991 Stock Option Plan, and FOR ratification of
Ernst & Young LLP as independent auditors for the fiscal year ending June 30,
1998. Approval of any matter in this proxy is not related to or conditioned on
the approval of any other matter.
(To be completed and signed on reverse side)
<PAGE>
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE USING
DARK INK ONLY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed below
1. Election of / / / /
Directors
(Instruction: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
NOMINEES: Dr. Pedro Cuatrecasas, Carroll O. Johnson,
Stephen M. McGrath, Donald E. O'Neill,
Dr. Helen M. Ranney, Dr. Jean G. Riess,
Duane J. Roth, Dr. Thomas F. Zuck
FOR AGAINST ABSTAIN
2. Authorization of Additional Shares of / / / / / /
Common Stock under the 1991 Stock
Option Plan
FOR AGAINST ABSTAIN
3. Ratification of Ernst & Young LLP as / / / / / /
independent auditors
Dated:______________________________________________________________, 1997
__________________________________________________________________________
__________________________________________________________________________
Please sign exactly as name appears hereon. If the shares are registered in
the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians, attorneys-in-fact, corporate officers,
general partners and other persons acting in a representative capacity should
add their titles.
The above signed hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and the Proxy Statement furnished herewith. PLEASE FILL IN,
DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POST-PAID RETURN ENVELOPE.
<PAGE>
1991 STOCK OPTION PLAN
OF
ALLIANCE PHARMACEUTICAL CORP.
1. PURPOSE. The purpose of this Stock Option Plan (the "Plan") is to
provide an additional incentive to, and attract and hold in service, directors,
officers and other employees of, and consultants to, the Corporation, and any
future subsidiaries of the Corporation, who are providing, or who are expected
to provide, services which are deemed important to the Corporation.
Accordingly, these persons may be encouraged to acquire stock ownership in, and
increase their commitment to, the Corporation, thereby promoting the interests
of the Corporation and its shareholders. Options granted under the Plan may be
incentive stock options satisfying the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
non-qualified stock options which are not intended to satisfy said Section 422.
2. DEFINITIONS. When used in this Plan, unless the context otherwise
requires:
(a) "Board of Directors" or "Board" shall mean the Board of Directors
of the Corporation, as constituted at any time.
(b) "Chairman of the Board" shall mean the person who at the time
shall be Chairman of the Board of Directors.
(c) "Committee" shall mean the Committee hereinafter described in
Section 3.
(d) "Corporation" shall mean Alliance Pharmaceutical Corp., a New
York corporation.
(e) "Eligible Persons" shall mean those persons described in Section
4 who are potential recipients of Options.
(f) "Fair Market Value" on a specified date shall mean the closing
price at which a Share is traded on the stock exchange, if any, on which
Shares are primarily traded or, if the Shares are not then traded on a
stock exchange, the average of the closing bid and asked prices at which a
Share is traded on the over-the-counter market, as reported on the National
Association of Security Dealers Automated Quotation System, but if no
Shares were traded on such date, then on the last previous date on which a
Share was so traded, or, if none of the above are applicable, the value of
a Share as established by the Committee for such date using any reasonable
method of valuation.
(g) "Options" shall mean the Stock Options granted pursuant to this
Plan.
(h) "Plan" shall mean this 1991 Stock Option Plan of Alliance
Pharmaceutical Corp., as adopted by the Board of Directors on May 20, 1994,
as such Plan from time to time may be amended.
(i) "President" shall mean the person who at the time shall be the
President of the Corporation.
(j) "Share" shall mean a share of common stock, par value $.01 per
share, of the Corporation.
<PAGE>
(k) "Subsidiary" shall mean any corporation 50% or more of whose
stock having general voting power is owned by the Corporation, or by
another Subsidiary as herein defined, of the Corporation.
3. COMMITTEE. The Plan shall be administered by the Board of Directors
unless the Board of Directors otherwise appoints a committee to administer the
Plan.
4. PARTICIPANTS. The class of persons who are potential recipients of
Options granted under this Plan consist of directors and key employees of the
Corporation or a Subsidiary, and consultants to the Corporation or a Subsidiary
(hereinafter referred to as "Consultants"), as determined by the Committee. The
persons to whom Options are granted under this Plan, and the number of Shares
subject to each such Option, shall be determined by the Committee in its sole
discretion, subject, however, to the terms and conditions of this Plan.
5. SHARES. Subject to the provisions of Section 14 hereof, the Committee
may grant Options with respect to an aggregate of up to 4,700,000 Shares, all of
which Shares may be either Shares held in treasury or authorized but unissued
Shares. The maximum number of Shares which may be the subject of Options
granted to any individual in any calendar year shall not exceed 200,000 Shares.
If the Shares that would be issued or transferred pursuant to any Option are not
issued or transferred and cease to be issuable or transferable for any reason,
the number of Shares subject to such Option will no longer be charged against
the limitation provided for herein and may again be made subject to Options;
provided, that the counting of Shares subject to Options granted under the Plan
against the number of Shares available for further Options shall in all cases
conform to the requirements of Rule 16b-3 under the Exchange Act; and provided,
further, that with respect to any Option granted to any Eligible Person who is a
"covered employee" as defined in Section 162(m) of the Internal Revenue Code and
the regulations promulgated thereunder that is canceled, the number of Shares
subject to such Option shall continue to count against the maximum number of
Shares which may be the subject of Options granted to such Eligible Person.
6. GRANT OF OPTIONS. The number of any Options to be granted to any
Eligible Person shall be determined by the Committee in its sole discretion. At
the time an Option is granted, the Committee may, in its sole discretion,
designate whether such Option (a) is to be considered as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code, or (b) is
not to be treated as an incentive stock option for purposes of this Plan and the
Internal Revenue Code. No option which is intended to qualify as an incentive
stock option shall be granted to any individual who, at the time of the grant,
is not an employee of the Corporation or a Subsidiary.
Notwithstanding any other provision of this Plan to the contrary, to the
extent that the aggregate Fair Market Value (determined as of the date an Option
is granted) of the Shares with respect to which Options which are designated as
(or deemed to be) incentive stock options granted to an employee (and any
incentive stock options granted to such employee under any other incentive stock
option plan maintained by the Corporation or any Subsidiary that meets the
requirements of Section 422 of the Internal Revenue Code) first become
exercisable in any calendar year exceeds $100,000, such Options shall be treated
as Options which are not incentive stock options. Options with respect to which
no designation is made by the Committee shall be deemed to be incentive stock
options to the extent that the $100,000 limitation described in the preceding
sentence is met. This paragraph shall be applied by taking options into account
in the order in which they are granted.
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Nothing herein contained shall be construed to prohibit the issuance of
Options at different times to the same person.
An Option shall be evidenced by a written Option agreement in a form
approved by the Committee. An Option agreement signed by the Chairman of the
Board or the President or a Vice President of the Corporation, and dated the day
of grant, or such later date as the Committee in its sole discretion, shall
determine, shall be tendered to each person to whom an Option is granted, except
that such Option agreement shall be deemed rescinded and have no effect if the
Option holder, within a specified period, does not sign an unqualified
acceptance, in such form as the Committee has prescribed, of such Option
agreement. The Option agreement for an Option shall indicate whether or not the
Option is an incentive stock option.
7. PURCHASE PRICE. The purchase price per Share of the Shares to be
purchased pursuant to the exercise of an Option shall be fixed by the Committee
at the time of grant; provided however, that the purchase price per Share under
an incentive stock option shall not in any event be less than 100% of the Fair
Market Value of a Share on the date of grant of the Option and the purchase
price per Share under a non-qualified stock option shall not be less than the
greater of the par value of said Shares or 80% of the Fair Market Value of said
Shares on the date of grant of the Option.
8. DURATION OF OPTIONS. The duration of any Option granted under this
Plan shall be for a period of ten years from the date upon which the Option is
granted or such lesser period as the Committee may determine at the time of
grant.
9. TEN PERCENT SHAREHOLDERS. Notwithstanding any other provision of this
Plan to the contrary, no Option which is intended to qualify as an incentive
stock option may be granted under this Plan to any employee who, at the time the
Option is granted, owns Shares possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation or any Subsidiary,
unless the exercise price under such Option is at least 110% of the Fair Market
Value of a Share on the date such Option is granted and the duration of such
Option is no more than five years.
10. EXERCISE OF OPTIONS. Except as otherwise provided herein, Options,
after the grant thereof, shall be exercisable by the holder at such rate and
times as may be fixed by the Committee; provided, however, that no Options may
be exercised for less than 100 Shares at a time, unless the grant is for a
number of Shares not evenly divisible by 100, in which case the final exercise
may be for the remaining Shares; and provided, further, that no Option may be
exercised prior to the approval of the Plan by a majority vote of the
shareholders.
Notwithstanding the foregoing, all or any part of any remaining unexercised
Options granted to any person may, after approval of the Plan by a majority vote
of the shareholders of the Corporation, be exercised in the following
circumstances: (a) subject to the provisions of Section 13 hereof, immediately
upon (but prior to the expiration of the term of the Option) the holder's
cessation of employment or service due to retirement from the Corporation and
all Subsidiaries on or after his 65th birthday, (b) subject to the provisions of
Section 13 hereof, upon the disability (to the extent and in a manner as shall
be determined by the Committee in its sole discretion) or death of the holder,
or (c) upon the occurrence of such special circumstance or event as in the
opinion of the Committee merits special consideration; provided, however, that
the estate of the deceased holder of an Option may exercise it prior to the
expiration of the six-month period described above.
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An Option shall be exercised by the delivery of a written notice duly
signed by the holder thereof to such effect ("Exercise Notice"), together with
the full purchase price of the Shares purchased pursuant to the exercise of the
Option, to the Chairman of the Board or an officer of the Corporation appointed
by the Chairman of the Board for the purpose of receiving the same. Payment of
the full purchase price shall be made as follows: (i) in cash or by check
payable to the order of the Corporation which amount payable includes all
applicable withholding taxes; (ii) by including in the Exercise Notice an order
to a designated broker to sell part or all of the Shares and to deliver
sufficient proceeds to the Corporation to pay the full purchase price of the
Shares and all applicable withholding taxes; (iii) if specifically authorized by
the Committee and the purchaser is an employee or Consultant at the time of
purchase, by payment in cash of at least $.01 per Share and all applicable
withholding taxes, with the remainder of the Option price being borrowed from
the Corporation as described below; or (iv) by such other methods as the
Committee may permit from time to time. In the case described in clause (iii)
above, the Corporation, unless otherwise determined by the Committee, will lend
to such purchaser an amount up to the excess of the full Option price of the
Shares purchased over the cash payment, but not more than the excess of such
price over the par value of such Shares, such loan to be evidenced by the
purchaser's delivery to the Corporation of his or her unconditional promissory
note to pay the amount of the loan within five years in such manner as is
determined by the Committee. Any such note: (i) shall be dated the date of the
Exercise Notice of the Option, (ii) shall provide for the payment of equal
installments of principal, (iii) shall provide for quarterly payment of interest
on such indebtedness at such rate as the Committee may determine, which cannot
be less than the prime rate and (iv) shall be in such form and contain such
other provisions as the Committee may determine from time to time. In
connection with any such loan, the purchaser shall deposit with the pledge to
the Corporation the certificate or certificates evidencing all of the Shares so
purchased, to be held by the Corporation as collateral security for such loan.
If the employment or consulting arrangement of the purchaser is terminated by
reason of death, any unpaid balance of such indebtedness shall become due and
payable one year after the date of the death, but not later than five years
after the date of purchase, unless otherwise determined by the Committee. If
the employment or consulting arrangement of the purchaser is terminated for any
reason other than death, any unpaid balance of such indebtedness shall become
immediately due and payable on such date of termination, unless otherwise
determined by the Committee. Cash dividends paid on Shares held by the
Corporation as security shall be paid to the purchaser. Voting rights and other
shareholder's rights with respect to all Shares shall vest in the purchaser
although the Shares are held by the Corporation as security. Upon default in
the payment of principal or interest on a loan provided for in this paragraph,
the Corporation, to the extent then permitted by law and without demand or
notice to the debtor, may sell any pledged Shares for the benefit of the debtor
and apply the net proceeds of such sale to the then unpaid principal and
interest on such loan, and any remainder of such proceeds shall be paid to the
debtor.
Within a reasonable time after the exercise of an Option, the Corporation
shall cause to be delivered to the person entitled thereto, a certificate for
the Shares purchased pursuant to the exercise of the Option, subject to the
deposit of such certificate as collateral security for a loan as described in
the preceding paragraph. If the Option shall have been exercised with respect
to less than all of the Shares subject to the Option, the Corporation shall
maintain records indicating the number of Shares with respect to which the
Option remains available for exercise and, absent manifest error, the
Corporation's records shall be determinative.
In lieu of the foregoing option exercise payment methods, the Option holder
may deliver with the Exercise Notice (A) shares of the Corporation's Common
Stock owned by the holder having a Fair
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Market Value calculated as of the date of the Option exercise equal to the sum
of (i) the aggregate Option exercise price of the Shares with respect to which
such Option or portion is being exercised and (ii) applicable withholding taxes,
duly endorsed for transfer to the Corporation, or (B) written instructions to
withhold shares of the Corporation's Common Stock issuable to the holder upon
exercise of the Option being exercised, having a Fair Market Value calculated as
of the date of the Option exercise equal to the sum of (i) the aggregate Option
exercise price of the Shares with respect to which such Option or portion is
being exercised (including the Shares to be withheld) and (ii) applicable
withholding taxes. Notwithstanding the foregoing, Option holders may not
utilize these alternative methods of payment in connection with incentive stock
options outstanding on November 15, 1995.
Notwithstanding any other provision of the Plan or of any Option, no Option
granted pursuant to the Plan may be exercised at any time when the Option or the
granting or exercise thereof violates any law or governmental order or
regulation.
11. CONSIDERATION FOR OPTIONS. The Corporation shall obtain such
consideration for the grant of an Option as the Committee in its discretion may
determine.
12. NON-TRANSFERABILITY OF OPTIONS. Options and all other rights
thereunder shall be non-transferable or non-assignable by the holder thereof
except to the extent that the estate of a deceased holder of an Option may be
permitted to exercise them. Options may be exercised or surrendered during the
holder's lifetime only by the holder thereof.
13. TERMINATION OF EMPLOYMENT. All or any part of any Option, to the
extent unexercised, shall terminate immediately: (i) in the case of an employee,
upon the cessation or termination for any reason of the holder's employment by
the Corporation or any Subsidiary, or (ii) in the case of a director or
Consultant who is not an employee, upon the holder's ceasing to serve as a
director or Consultant of the Corporation or any Subsidiary, except that the
holder shall have until the end of the tenth business day following the
cessation of his employment with the Corporation or its Subsidiaries or his
service as a director or Consultant of the Corporation or its Subsidiaries, and
no longer, to exercise any unexercised Option that he could have exercised on
the day on which such employment or service terminated; provided, that such
exercise must be accomplished prior to the expiration of the term of such
Option. Notwithstanding the foregoing, if the cessation of employment or service
is due to retirement on or after attaining the age of sixty-five (65) years, or
to disability (to an extent and in a manner as shall be determined in each case
by the Committee in its sole discretion) or to death, the holder or the
representative of the estate of a deceased holder shall have the privilege of
exercising the Options which are unexercised at the time of such retirement, or
of such disability or death; provided, however, that such exercise must be
accomplished prior to the expiration of the term of such Option and (a) within
three months of the holder's retirement or disability, or (b) within six months
of the holder's death, as the case may be. If the employment or service of any
Option holder with the Corporation or its Subsidiaries shall be terminated
because of the Option holder's violation of the duties of such employment or
service with the Corporation or its Subsidiaries as he may from time to time
have, the existence of which violation shall be determined by the Board in its
sole discretion (which determination by the Board shall be conclusive), all
unexercised Options of such Option holder shall terminate immediately upon such
termination of the holder's employment or service with the Corporation or its
Subsidiaries, and an Option holder whose employment or service with the
Corporation or its Subsidiaries is so terminated, shall have no right after such
termination to exercise any unexercised Option he might have exercised prior to
the termination of his employment or service with the Corporation or its
Subsidiaries.
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14. ADJUSTMENT PROVISION. If prior to the complete exercise of any Option
there shall be declared and paid a stock dividend upon the Shares or if the
Shares shall be split up, converted, exchanged, reclassified, or in any way
substituted for, then the Option, to the extent that it has not been exercised,
shall entitle the holder thereof upon the future exercise of the Option to such
number and kind of securities or cash or other property subject to the terms of
the Option to which he would have been entitled had he actually owned the Shares
subject to the unexercised portion of the Option at the time of the occurrence
of such stock dividend, split-up, conversion, exchange, reclassification or
substitution, and the aggregate purchase price upon the future exercise of the
Option shall be the same as if the originally optioned Shares were being
purchased thereunder.
Any fractional shares or securities issuable upon the exercise of the
Option as a result of such adjustment shall be payable in cash based upon the
Fair Market Value of such shares or securities at the time of such exercise. If
any such event should occur, the number of Shares with respect to which Options
remain to be issued, or with respect to which Options may be reissued, shall be
adjusted in a similar manner.
Notwithstanding any other provision of this Plan, in the event of a
recapitalization, merger, consolidation, rights offering, reorganization,
liquidation, or other change in the Corporation's corporate structure or
outstanding Shares, the Committee may make such equitable adjustments to the
number of Shares and class of shares available hereunder as it shall deem
appropriate to prevent dilution or enlargement of rights.
15. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACT. The
Corporation may postpone the issuance and delivery of Shares pursuant to the
grant or exercise of any Option until (a) the admission of such Shares to
listing on any stock exchange on which Shares of the Corporation of the same
class are then listed, and (b) the completion of such registration or other
qualification of such Shares under any State or Federal law, rule or regulation
as the Corporation shall determine to be necessary or advisable. Any holder of
an Option shall make such representations and furnish such information as may,
in the opinion of counsel for the Corporation, be appropriate to permit the
Corporation, in the light of the then existence or non-existence with respect to
such Shares of an effective time to time amended (the "Securities Act"), to
issue the Shares in compliance with the provisions of the Securities Act or any
comparable act. The Corporation shall have the right, in its sole discretion,
to legend any Shares which may be issued pursuant to the grant or exercise of
any Option, or may issue stop transfer orders in respect thereof.
16. INCOME TAX WITHHOLDING. If the Corporation or a Subsidiary shall be
required to withhold any amounts by reason of any Federal, State or local tax
rules or regulations in respect of the issuance of Shares pursuant to the
exercise of any Option, the Corporation or the Subsidiary shall be entitled to
deduct and withhold such amounts from any cash payments to be made to the holder
of such Option. In any event, the holder shall make available to the
Corporation or Subsidiary, promptly when requested by the Corporation or such
Subsidiary, sufficient funds to meet the requirements of such withholding; and
the Corporation or Subsidiary shall be entitled to take and authorize such steps
as it may deem advisable in order to have such funds made available to the
Corporation or Subsidiary out of any funds or property due or to become due to
the holder of such Option.
17. ADMINISTRATION AND AMENDMENT OF THE PLAN. Except as hereinafter
provided, the Board of Directors or the Committee may at any time withdraw or
from time to time amend the Plan as it relates to, and the terms and conditions
of, any Option not theretofore granted, and the Board of Directors or
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the Committee, with the consent of the affected holder of an Option, may at any
time withdraw or from time to time amend the Plan as it relates to, and the
terms and conditions of, any outstanding Option. Notwithstanding the foregoing,
any amendment by the Board of Directors or the Committee which would (i)
increase the number of Shares issuable under the Plan or to any individual, (ii)
materially increase the benefits accruing to Eligible Persons under the Plan, or
(iii) change the class of Eligible Persons, shall be subject to the approval of
the shareholders of the Corporation within one year of such amendment.
Determinations of the Committee as to any question which may arise with
respect to the interpretation of the provisions of the Plan and Options shall be
final. The Committee may authorize and establish such rules, regulations and
revisions thereof not inconsistent with the provisions of the Plan, as it may
deem advisable to make the Plan and Options effective or provide for their
administration, and may take such other action with regard to the Plan and
Options as it shall deem desirable to effectuate their purpose.
The Plan is intended to comply with Rule l6b-3 under the Exchange Act. Any
provision inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
18. NO RIGHT OF EMPLOYMENT OR SERVICE. Nothing contained herein or in an
Option shall be construed to confer on any Eligible Person any right to be
continued in the employ or service of the Corporation or any Subsidiary or
derogate from any right of the Corporation and any Subsidiary to retire, request
the resignation of or discharge such Eligible Person (without or with pay), at
any time, with or without cause.
19. FINAL ISSUANCE DATE. No Option shall be granted under the Plan after
November 7, 2001.
