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:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COLUMBIA LABORATORIES, INC.
(Name of Registrant as Specified in Its Charter)
COLUMBIA LABORATORIES, INC.
(Name of Persons(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] 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:
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COLUMBIA LABORATORIES, INC.
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA 33133
(305) 860-1670
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 2, 1996
To the Stockholders of Columbia Laboratories, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders ("Annual
Meeting") of Columbia Laboratories, Inc. ("Company") will be held at Chase
Regional Bank, 270 Park Avenue, Third Floor Auditorium, New York, New York 10017
at 10:00 A.M. on October 2, 1996 for the following purposes:
1. To elect seven directors;
2. To ratify the appointment of Arthur Andersen LLP as independent
certified public accountants for the Company for the year ending
December 31, 1996;
3. To approve the Columbia Laboratories, Inc. 1996 Long-term
Performance Plan; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
The board has fixed the close of business on August 19, 1996 as the
record date for determination of stockholders who will be entitled to notice of
and to vote at the Annual Meeting.
By Order of the Board of Directors
Margaret J. Roell
Secretary
August 26, 1996
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE
DATE, SIGN AND COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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COLUMBIA LABORATORIES, INC.
2665 SOUTH BAYSHORE DRIVE
MIAMI, FLORIDA 33133
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 2, 1996
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Columbia Laboratories, Inc. ("Company") of proxies
to be voted at the Annual Meeting of Stockholders of the Company to be held on
October 2, 1996, and at any adjournments thereof ("Annual Meeting"), for the
purposes listed in the preceding Notice of Annual Meeting of Stockholders. This
Proxy Statement and the accompanying proxy card are being distributed on or
about August 26, 1996, to holders of the Company's Common and Preferred Stock
entitled to vote at the Annual Meeting.
A stockholder giving a proxy has the power to revoke it at any time
before it is exercised at the Annual Meeting by filing with the Secretary of the
Company an instrument revoking it, by delivering a duly executed proxy card
bearing a later date, or by appearing at the meeting and voting in person.
Shares represented by properly executed proxies will be voted as specified by
the stockholder. Unless the stockholder specifies otherwise, such proxies will
be voted FOR the election of directors nominated in this Proxy Statement, FOR
the ratification of Arthur Andersen LLP as the Company's independent certified
public accountants and FOR the approval of the Columbia Laboratories, Inc. 1996
Long-term Performance Plan.
In the event that a quorum is present or represented by proxy at the
Annual Meeting, but sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Annual Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the votes cast.
The persons named as proxies will vote those proxies which they are entitled to
vote FOR any such proposal in favor of such an adjournment.
VOTING SECURITIES
Only holders of the Company's par value $.01 per share ("Common
Stock"), Series A Convertible Preferred Stock ("Series A Preferred Stock") and
Series B Convertible Preferred Stock ("Series B Preferred Stock"), of record as
of the close of business on August 19, 1996, are entitled to vote at the Annual
Meeting. Each share of Common Stock is entitled to one vote. Each share of
Series A and Series B Preferred Stock is entitled to a number of votes equal to
the number of shares of Common Stock into which it is convertible (12.36 for the
Series A Preferred Stock and 20.57 for the Series B Preferred Stock). As of the
record date, there were 27,___,___ shares of Common Stock outstanding, 1,___
shares of Series A Preferred Stock outstanding having voting power equal to
__,___ shares of Common Stock and 1,___ shares of Series B Preferred Stock
outstanding having voting power equal to __,___ shares of Common Stock. The
holders of a majority of the outstanding shares of Common Stock and shares of
Common Stock into which the Series A and Series B Preferred Stock is
convertible, collectively "Shares", shall constitute a quorum.
A majority of the votes cast by holders of the Shares is required for
approval of the proposals, except with respect to the election of directors in
which case a plurality of the votes cast is required to elect a director.
Abstentions will have the effect of a vote against a proposal. Broker non-votes
will have no effect on the vote.
On August 19, 1996, the last reported sale price of the Company's
Common Stock on the American Stock Exchange was $____.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the meeting, seven directors will be elected by the stockholders to
serve until the next annual meeting of stockholders or until their successors
are elected and qualified. The accompanying form of proxy, when properly
executed and returned to the Company, will be voted FOR the election as
directors of the seven persons named below, unless the proxy contains contrary
instructions. Proxies cannot be voted for a greater number of persons than the
number of nominees named in the Proxy Statement. Management has no reason to
believe that any of the nominees is unable or unwilling to serve, if elected.
However, in the event that any of the nominees should become unable or unwilling
to serve as a director, the proxy will be voted for the election of such person
or persons as shall be designated by the Board of Directors.
The Board of Directors held three meetings (including regular meetings
and telephonic meetings) during the year ended December 31, 1995. The Board of
Directors has two standing committees. The Audit Committee, consisting of Mr.
Kidd and Drs. Kellner and Nachtigall, met twice during the year ended December
31, 1995. The Audit Committee is responsible for recommending to the Board of
Directors the engagement of independent certified public accountants, reviewing
the scope of, and the budget for, the annual audit and tax return preparation
and reviewing the results of the audit engagement, including the financial
statements, with the independent certified public accountants. The
Compensation/Stock Option Committee, consisting of Drs. Kellner and Nachtigall,
met one time during the year ended December 31, 1995. The Compensation/Stock
Option Committee is responsible for determining the salaries of senior
executives and the granting of options to purchase shares of Common Stock to the
Company's employees, directors and consultants. Each of the directors of the
Company participated in at least 75% or more of the meetings of the Board of
Directors and Committees held during the year ended December 31, 1995.
COMPENSATION OF DIRECTORS
Directors that are not employees of the Company annually receive
options to purchase 10,000 shares of Common Stock for serving on the Board of
Directors and options to purchase an additional 1,000 shares of Common Stock for
each committee served on. No other fees are paid to the non-employee directors.
Employee directors receive no additional compensation for serving on the Board
of Directors.
The following table sets forth certain information concerning each
nominee.
WILLIAM J. BOLOGNA (Age 54) has been a director of the Company since
inception and was elected Chairman of the Company's Board of Directors in
January 1992. From December 1988 to January 1992, Mr. Bologna served as Vice
Chairman of the Company's Board of Directors. In addition, since 1980, he has
been Chairman of Bologna & Hackett ("B&H"), an advertising agency specializing
in pharmaceutical products which has in the past performed services for various
international pharmaceutical companies. Prior to 1980, Mr. Bologna was employed
by William Douglas McAdams, Inc., a company engaged in the marketing of
pharmaceuticals, in a variety of positions, including Senior Vice President. In
1965, Mr. Bologna received his B.S. in Pharmacy from Fordham University. He
received an MBA in Finance from Fordham University in 1971.
NICHOLAS A. BUONICONTI (Age 55) has been a director of the Company
since June 1991 and was elected Vice Chairman and Chief Operating Officer of the
Company in April 1992. Mr. Buoniconti, an attorney, is a member of the
Massachusetts and Florida Bars. From January 1990 to April 1992, he was a member
of the law firm of Nicholas A. Buoniconti, P.A. He held the position of
President and Chief Operating Officer of UST, a Fortune 500 company, from May
1987 to December 1989. From 1985 to 1987, Mr. Buoniconti served as President and
Chief Operating Officer of U.S. Tobacco (which changed its name to UST), as well
as serving on the Board of Directors from 1978 to 1989. He has served as a
member of the Board of Directors of the Miami Project to Cure Paralysis, and is
heavily involved in the fund-raising efforts for the Project through the Marc
Buoniconti Fund, named for his son. Mr. Buoniconti is a former All-Pro
linebacker for the Miami Dolphins. Since 1978, he has co-hosted "Inside the NFL"
on the Home
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Box Office cable network. Mr. Buoniconti is also a director of American Bankers
Insurance Co., Innkeepers USA and The Sports Authority.
JEAN CARVAIS, M.D. (Age 69) is currently a nominee to be a director of
the Company. Since 1984, Dr. Carvais has been an independent consultant in the
pharmaceutical industry. Prior to that time, Dr. Carvais was President of The
Research Institute of Roger Bellon, S.A., now a division of Rhone-Poulene Rorer.
As such, he was involved in the development of a line of anti-cancer drugs,
including Bleomycin and Adriamycin, as well as a new line of antibiotics and
quinalanes. Following the acquisition of Roger Bellon, S.A., Dr. Carvais became
a member of Rhone-Poulene's central research committee which directs the
company's worldwide research and development activities. Dr. Carvais is also a
director of Imclone Systems Incorporated.
NORMAN M. MEIER (Age 57) has been President, Chief Executive Officer
and a director of the Company since inception. From 1971 to 1977, Mr. Meier was
Vice President of Sales and Marketing for Key Pharmaceuticals, Inc., a company
which had been engaged in the marketing and sales of pharmaceuticals until its
sale to Schering-Plough Corporation in June 1986. From 1977 until June 1986, Mr.
Meier served as a consultant to Key Pharmaceuticals, Inc. In 1960, Mr. Meier
received his B.S. in Pharmacy from Columbia University. He received his M.S. in
Pharmacy Administration from Long Island University in 1964. Mr. Meier is also a
director of Universal Heights, Inc.
IRWIN L. KELLNER (Age 57) has been a director of the Company since May
1988. Dr. Kellner is the chief economist for the Chase Regional Bank, a
subsidiary of the Chase Manhattan Bank, formed by the merger of the Chase
Manhattan Bank with the Chemical Bank in April 1996. Dr. Kellner has been
employed by the Bank since 1970. From 1991 to 1996, Dr. Kellner was the Chief
Economist for Chemical Bank while from 1980 to 1991, Dr. Kellner was the Chief
Economist for Manufacturers Hanover, which merged with Chemical in January 1992.
Dr. Kellner, a past president of the Forecasters Club of New York and the New
York Association of Business Economists, holds membership, and has held a
variety of posts, in several professional associations, including the American
Economic Association, American Statistical Association and the National
Association of Business Economists. His other board memberships include the
Children's AIDS Network, North Shore University Hospital, the Don Monti Memorial
Research Foundation and Touro College's Barry Z. Levine School of Health
Sciences. He has also served on the board of the Juvenile Diabetes Foundation.
JOHN E. A. KIDD (Age 51) has been a director of the Company since April
1988 and served as Chairman of the Board of Directors of the Company from
December 1988 to December 1991. For approximately the past five years, Mr. Kidd
has been an Executive Director of a number of public companies located in the
United Kingdom, in which an investment company controlled by his family had been
a major investor.
LILA E. NACHTIGALL, M.D. (Age 62) has been a director of the Company
since November 1992. Dr. Nachtigall has been employed by the New York University
School of Medicine since 1961. Dr. Nachtigall is currently a Professor of
Obstetrics and Gynecology. In addition, Dr. Nachtigall is the Clinic Coordinator
of GYN-Endocrine Clinic at Bellevue Hospital and Co-director of the
GYN-Endocrine Program and Director of Women's Wellness Division at New York
University Medical Center.
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PROPOSAL 2
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent certified public accountants to audit the books, records and
accounts of the Company and its subsidiaries for the year ending December 31,
1996 and proposes that the stockholders ratify such appointment.
Arthur Andersen LLP has served as the Company's independent certified
public accountants since 1990. Representatives of Arthur Andersen LLP will
attend the Annual Meeting to make any statement they consider appropriate and to
respond to appropriate questions raised at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL 3
APPROVAL OF COLUMBIA LABORATORIES, INC.
1996 LONG-TERM PERFORMANCE PLAN
The Columbia Laboratories, Inc. 1996 Long-term Performance Plan (the
"Performance Plan") provides for the grant of stock options, stock appreciation
rights and restricted stock to certain designated employees of the Company,
non-employee directors of the Company and certain other persons performing
significant services for the Company designated by the Compensation/Stock Option
Committee (the "Committee"), except with respect to non-employee directors who
are members of the Committee, which grants will be made at the sole discretion
of the Board of Directors (the "Board"). Each of the Board and the Committee has
adopted the Performance Plan and has directed that such Performance Plan be
submitted to the stockholders for approval at the Annual Meeting. Currently, a
total of 3,___,___ options to purchase shares of Common Stock are outstanding
under the 1988 Stock Option Plan, as amended, ("1988 Plan"), subject to
adjustment in the event of any change in the outstanding shares of the Common
Stock by reason of a stock dividend, stock split, recapitalization, merger,
consolidation or other similar changes generally affecting stockholders of the
Company. If the Performance Plan is approved, no further options will be granted
under the 1988 Plan.
Pursuant to the Performance Plan, an aggregate of 3,000,000 shares of
Common Stock have been reserved for issuance under the Plan. No person may
receive grants under the Performance Plan which could result in such person
receiving (i) options and stock appreciation rights with respect to more than
1,000,000 shares of Common Stock and (ii) more than 500,000 shares of Restricted
Stock over the ten-year life of the Performance Plan (subject to adjustment).
The Performance Plan would also provide for the grant of Restricted Stock that
constitutes Performance-Based Awards (as defined below) to certain employees
designated by the Committee in its sole discretion. Performance-Based Awards are
intended to constitute "qualified performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code (the "Code"). A copy of
the Performance Plan is attached as Appendix A to this Proxy Statement, and the
following description of the Performance Plan is qualified in its entirety by
reference to Appendix A.
The Board believes that the Performance Plan will continue to advance
the interests of the Company and its stockholders by enabling the Company to
continue providing additional incentives and motivation toward superior
performance, attracting and retaining the services of Participants in the
Performance Plan, and enabling the Company to respond to the changing trends in
performance-based compensation. Unless otherwise directed, the persons named in
the accompanying proxy will vote the Shares represented thereby "FOR" the
proposal to approve the Performance Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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The Performance Plan will be administered by the Committee. The
Committee, by majority action thereof, is authorized at its sole discretion to
determine the individuals ("Participants") to whom awards will be granted, the
type and amount of awards and the terms of awards; to interpret the Performance
Plan; to prescribe, amend and rescind rules and regulations relating to the
Performance Plan; to provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration of the Performance
Plan to the extent not contrary to the express provisions of the Performance
Plan.
Under the terms of the Performance Plan, and as determined by the
Committee in its sole discretion, Participants will be eligible to receive (a)
stock options ("Stock Options"), which may be options that qualify as incentive
stock options within the meaning of Section 422 of the Code ("ISOs") or options
that do not qualify as ISOs ("NSOs"), (b) stock appreciation rights ("SARs")
and/or (c) restricted shares of Common Stock ("Restricted Stock"), or any
combination thereof, provided, however, that only employees of the Company or
any subsidiary corporation of the Company will be eligible to receive ISOs.
STOCK OPTIONS. Stock Options enable the Participant granted such Stock
Options to purchase shares of Common Stock at the exercise price established on
the date of grant. ISOs and NQOs may be granted under the Performance Plan. The
exercise price of a Stock Option may not be less than the Fair Market Value of
the Common Stock on the date of grant, provided, however, that in the case of an
ISO granted to a holder of capital stock of the Company (or any subsidiary or
parent corporation) representing 10% or more of the voting power of the Company
(or any subsidiary or parent corporation) (a "10% Holder"), the exercise price
of such ISO may not be less than 110% of the Fair Market Value of the Common
Stock on the date of grant. The "Fair Market Value" is defined for purposes of
the Performance Plan as the closing price on the principal market for the stock
(currently, the American Stock Exchange) on the date of grant. In order to
obtain the underlying shares, a Participant must pay the full exercise price to
the Company at the time of exercise. At the discretion of the Committee,
determined at the time of grant, the exercise price may be paid in any
combination of cash and/or Common Stock. No person may be granted ISOs under the
Performance Plan that are first exercisable during any calendar year for shares
having an aggregate Fair Market Value as of the date of grant of more than
$100,000. ISOs and NQOs may be granted with terms of no more than ten years from
the date of grant, provided, however, in the case of an ISO granted to a 10%
Holder, the term of the ISO must be no more than five years from the date of
grant. Any shares as to which a Stock Option expires or is canceled may be
subject to a new option.
SARS. A SAR gives to the Participant granted such SAR a right to
receive, at the time of exercise, cash, Common Stock, or a combination thereof,
equal in value to the difference between the Fair Market Value of Common Stock
on the date of exercise of the SAR and the base price established by the
Committee therefor on the date of grant. The base price established for any SAR
shall not be less than the Fair Market Value of Common Stock on the date of the
grant. The Committee may impose any limitation that it may determine in its sole
discretion on the maximum amount of appreciation to be paid pursuant thereto. A
SAR may be granted either independent of, or in conjunction with, any Stock
Option. If granted in conjunction with a Stock Option at the sole discretion of
the Committee, a SAR may either be exercised (a) in lieu of the exercise of such
Stock Option, (b) in conjunction with the exercise of such Stock Option, or (c)
upon lapse of such Stock Option. The expiration date of a SAR shall be
established by the Committee.
RESTRICTED STOCK. The Committee may issue shares of Restricted Stock,
which may or may not constitute Performance-Based Awards as described below, to
a Participant at a purchase price, if any, determined by the Committee. Such
Restricted Stock may be subject to forfeiture or repurchase in the event of the
termination of employment within a specific period, or in the event any other
conditions specified by the Committee at the time of grant are not subsequently
met. Such conditions may include conditions based on individual or Company
performance. During the period of restriction, a Participant owning Restricted
Stock shall be entitled to receive and retain all dividends and other
distributions made
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in respect of such stock and to vote such stock without limitations.
PERFORMANCE-BASED AWARDS. Restricted Stock granted to employees
designated by the Committee under the Performance Plan may be granted in a
manner such that the Restricted Stock constitutes "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code. As determined by
the Committee, either the granting or vesting of such Restricted Stock, (the
"Performance-Based Awards") are to be based upon one or more of the following
factors: net sales, pretax income before allocation of corporate overhead and
bonus, budget, earnings per share, net income, division, group or corporate
financial goals, return on stockholders' equity, return on assets, attainment of
strategic and operational initiatives, appreciation in and /or maintenance of
the price of Common Stock or any other publicly-traded securities of the
Company, market share, gross profits, earnings before interest and taxes,
earnings before interest, taxes, dividends and amortization, economic
value-added models and comparisons with various stock market indices. With
respect to Performance-Based Awards, (i) the Committee will establish in writing
the objective performance-based goals applicable to a given fiscal period and
the specific employees or class of employees granted such Performance-Based
Awards no later than 90 days after the commencement of such period (but in no
event after 25% of such period has elapsed) and (ii) no awards will be payable
to any Participant for a given fiscal period until the Committee certifies in
writing that the objective performance goals (and any other material terms)
applicable to such period have been satisfied.
CHANGE OF CONTROL OF THE COMPANY. In the event of a "Change of Control"
(as defined in the Performance Plan), the following shall occur: (a) Stock
Options, if not otherwise exercisable, become immediately exercisable; (b) SARs
become, if not otherwise then exercisable, immediately exercisable; and (c) all
outstanding shares of Restricted Stock immediately become vested. The Committee,
in its sole discretion, may determine that upon the occurrence of a "change in
control", each Stock Option and SAR outstanding under the Performance Plan shall
terminate within a specified number of days after notice to the holder, and such
holder shall receive, with respect to each share subject to such Stock Option
and SAR, an amount of cash or other property, or any combination thereof, equal
to the excess of the aggregate fair market value at the time of such transaction
of the shares subject to such Stock Option or SAR over the aggregate exercise
price therefor. The foregoing provision does not apply to Stock Options and SARs
granted to directors or officers subject to Section 16(a) of the Exchange Act
within six months prior to a "change in control". A "Change of Control" means,
generally, (i) the merger or consolidation of the Company as a result of which
the Company is not the surviving entity, (ii) the sale of all or substantially
all of the assets of the Company, (iii) the acquisition by another person of 50%
or more of the then-outstanding shares of Common Stock, or (iv) the
recapitalization, reorganization, dissolution or liquidation of the Company.
AMENDMENT AND TERMINATION. The Performance Plan is to remain in effect
until (a) all Common Stock reserved under the Performance Plan shall have been
purchased or acquired, (b) the Board terminates the Performance Plan or (c) the
tenth anniversary of the date on which the Performance Plan was first approved
by the Board, whichever shall first occur. The Board at any time may terminate
and, from time to time, may amend or modify the terms of the Performance Plan;
provided, however, that no such action of the Board may, without the approval of
the stockholders of the Company: (i) increase the total amount of stock or
increase the amount and type of awards, or the limit on total grants to any
person, that may be issued under the Performance Plan; (ii) change the
provisions of the Performance Plan regarding the minimum price, if any, of
awards; or (iii) change the class of persons entitled to participate in the
Performance Plan. No amendment, modification or termination of the Performance
Plan may in any manner adversely affect any awards therefore granted under the
Performance Plan without the consent of the Participant affected thereby. In
addition, awards may be substituted or exchanged for other awards under the
Performance Plan by mutual agreement of the Company and the Participant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The statements in the
following paragraphs of the principal federal income tax consequences of awards
under the Performance Plan are based on statutory authority and judicial and
administrative interpretations, as of the date of this Proxy Statement, and are
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subject to change at any time (possibly with retroactive effect). The law is
technical and complex and the discussion below represents only a general
summary.
INCENTIVE STOCK OPTIONS. ISOs granted under the Performance Plan are
intended to meet the definitional requirements of Section 422(b) of the Code
for "incentive stock options."
An employee who receives an ISO does not recognize any taxable income
upon the grant of such ISO. Similarly, the exercise of an ISO generally does not
give rise to federal income tax to the employee, provided that (i) the federal
"alternative minimum tax", which depends on the employee's particular tax
situation, does not apply and (ii) the employee is employed by the Company from
the date of grant of the option until three months prior to the exercise
thereof, except where such employment terminates by reason of disability (where
the three month period is extended to one year) or death (where the requirement
does not apply). If an employee exercises an ISO after these requisite periods,
the ISO will be treated as an NSO and will be subject to the rules set forth
below under the caption "Non-qualified Options and Stock Appreciation Rights".
Further, if after exercising an ISO, an employee disposes of the shares
of Common Stock so acquired more than two years from the date of grant and more
than one year from the date of transfer of the shares of Common Stock pursuant
to the exercise of such ISO (the "applicable holding period"), the employee will
normally recognize a long-term capital gain or loss equal to the difference, if
any, between the amount received for the shares and the exercise price. If,
however, an employee does not hold the shares so acquired for the applicable
holding period -- thereby making a "disqualifying disposition" -- the employee
would realize ordinary income on the excess of the fair market value of the
shares at the time the ISO was exercised over the exercise price and the
balance, if any, would be long-term capital gain (provided the holding period
for the shares exceeded one year and the employee held such shares as a capital
asset at such time).
The Company will not be allowed a federal income tax deduction upon the
grant or exercise of an ISO or the disposition, after the applicable holding
period, of the shares of Common Stock acquired upon exercise of an ISO. In the
event of a disqualifying disposition, the Company will generally be entitled to
a deduction in an amount equal to the ordinary income included by the employee,
provided that such amount constitutes an ordinary and necessary business expense
to the Company and is reasonable and the limitations of Sections 280G and 162(m)
of the Code (discussed below) do not apply.
NON-QUALIFIED OPTIONS AND STOCK APPRECIATION RIGHTS. NSOs granted under
the Performance Plan are options that do not qualify as ISOs. An individual who
receives an NSO or a SAR will not recognize any taxable income upon the grant of
such NSO or SAR. However, the individual generally will recognize ordinary
income upon exercise of an NSO in an amount equal to the excess of (i) the fair
market value of the shares of Common Stock at the time of exercise over (ii) the
exercise price. Similarly, upon the receipt of cash or shares pursuant to the
exercise of a SAR, the individual generally will recognize ordinary income in an
amount equal to the sum of the cash and the fair market value of the shares
received.
As a result of current Section 16(b) of the Exchange Act, the timing of
income recognition may be deferred (generally up to six months following the
exercise of an NSO or SAR (i.e., the "Deferral Period")) for any individual who
is an officer or director of the Company or a beneficial owner of more than 10%
of an any class of equity securities of the Company. Absent a Section 83(b)
election (as described below under "Restricted Stock Awards"), recognition of
income by an individual will be deferred until the expiration of the Deferral
Period, if any.
The ordinary income recognized with respect to the receipt of shares or
cash upon exercise of a NSO or a SAR will be subject to both wage withholding
and employment taxes. In addition to the customary methods of satisfying the
withholding tax liabilities that arise upon the exercise of a SAR for shares or
upon the exercise of a NSO, the Company may satisfy the liability in whole or in
part by withholding shares of Common Stock from those that otherwise would be
issuable to the individual
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tendering other shares owned by him or her, valued at their fair market value as
of the date that the tax withholding obligation arises.
A federal income tax deduction generally will be allowed to the Company
in an amount equal to the ordinary income included by the individual with
respect to his or her NSO or SAR, provided that such amount constitutes an
ordinary and necessary business expense to the Company and is reasonable and the
limitations of Sections 280G and 162(m) of the Code do not apply.
RESTRICTED STOCK AWARD. Absent a written election pursuant to Section
83(b) of the Code filed with the Internal Revenue Service within 30 days after
the date of transfer of shares of Common Stock under a Restricted Stock award (a
"Section 83(b) election"), an individual will recognize ordinary income at the
earlier of the time at which (i) the shares become transferable or (ii) the
restrictions that impose a substantial risk of forfeiture of such shares (the
"Restrictions") lapse, in an amount equal to the excess of the fair market value
(on such date) of such shares over the price paid for the Restricted Stock
award, if any. If a Section 83(b) election is made, the individual will
recognize ordinary income, as of the transfer date, in an amount equal to the
excess of the fair market value of the Common Stock as of the transfer date over
the price paid for such Restricted Stock, if any.
In the case of an employee, the ordinary income recognized with respect
to a Restricted Stock award will be subject to both wage withholding and
employment taxes. If a Section 83(b) election is made, dividends received on
shares which are subject to Restrictions will be treated as dividend income. If
a Section 83(b) election is not made, dividends received on shares subject to
Restrictions will be treated as additional compensation (and not dividend
income) for federal income tax purposes, and, in the case of an employee, will
be subject to wage withholding and employment taxes.
The Company generally will be allowed a deduction for federal income
tax purposes in an amount equal to the ordinary income recognized by the
individual, provided that such amount constitutes an ordinary and necessary
business expense and is reasonable and the limitations of Sections 280G and
162(m) of the Code do not apply.
CHANGE IN CONTROL. As described above, upon a "change in control" of
the Company all the then outstanding Stock Options and SARs will immediately
become exercisable and all shares of Restricted Stock will immediately become
vested. In general, if the total amount of payments to an individual are
contingent upon a "change of control" of the Company (as defined in Section 280G
of the Code), including payments under the Performance Plan that vest upon a
"change in control," equals or exceeds three times the individual's "base
amount" (generally, such individual's average annual compensation for the five
complete years preceding the change of control), then, subject to certain
exceptions, the payments may be treated as "parachute payments" under the Code,
in which case a portion of such payments would be non-deductible to the Company
and the individual would be subject to a 20% excise tax on such portion of the
payments.
CERTAIN LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION. With
certain exceptions, Section 162(m) of the Code denies a deduction to publicly
held corporations for compensation paid to certain executive officers in excess
of $1 million per executive per taxable year (including any deduction with
respect to the exercise of an NSO or SAR, the disqualifying disposition of stock
purchased pursuant to an ISO or the lapse of Restrictions on a Restricted Stock
award). One such exception (the "Exemption") applies to certain
performance-based compensation provided that such compensation has been approved
by stockholders in a separate vote and certain other requirements are met. The
Company believes that Stock Options and SARs as well as Restricted Stock awards
that constitute Performance Based Awards granted under the Performance Plan will
qualify for the Exemption.
The value of Stock Options or Restricted Stock to be awarded during
1996 cannot be determined as of the date hereof. The adoption of the Performance
Plan would not have affected the value of Stock Options which were awarded under
the 1988 Plan in fiscal 1995.
-8-
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of August 19, 1996, directors and named executive officers,
individually and as a group, beneficially owned Common Stock as follows:
<TABLE>
<CAPTION>
NAME OF SHARES, NATURE OF INTEREST
BENEFICIAL OWNER AND PERCENTAGE OF EQUITY SECURITIES(1)
---------------- --------------------------------------
<S> <C> <C>
(TO BE UPDATED AS OF AUGUST 19)
William J. Bologna (2) 2,378,632 8.9%
Norman M. Meier (3) 1,295,800 4.9%
Nicholas A. Buoniconti (3) 990,000 3.6%
Irwin L. Kellner (3) 89,500 *
John E. A. Kidd (3) 135,936 *
Lila E. Nachtigall (3) 32,000 *
Margaret J. Roell (3) 100,200 *
Dominique de Ziegler (3) 25,000 *
Annick Blondeau (3) *
Officers and directors as a group (9 people) 3,329,068 17.7%
</TABLE>
* Represents less than 1 percent.
(1) Includes shares issuable upon exercise of both options and warrants
which are currently exercisable or which may be acquired within 60 days
and shares issuable upon conversion of the Series A and Series B
Preferred Stock (12.36 for the Series A Preferred Stock and 20.57 for
the Series B Preferred Stock).
(2) Includes 20,570 shares issuable upon conversion of 1,000 shares of
Series B Preferred Stock. Includes 470,000 shares issuable upon
exercise of options, which are currently exercisable or which may be
acquired within 60 days. Includes 198,062 shares beneficially owned by
Mr. Bologna's spouse.
(3) Includes shares issuable upon exercise of options, which are currently
exercisable or which may be acquired within 60 days, to purchase
___,000 shares with respect to Mr. Meier, ___,000 shares with respect
to Mr. Buoniconti, __,000 shares with respect to Dr. Kellner, __,936
shares with respect to Mr. Kidd, __,000 shares with respect to Dr.
Nachtigall, ___,000 shares with respect to Ms. Roell, __,000 shares
with respect to Dr. de Ziegler and __,000 shares with respect to Dr.
Blondeau.
As of August 19, 1996, the following table sets forth information
regarding the number and percentage of Common Stock held by all other persons
who are known by the Company to beneficially own or exercise voting or
dispositive control over 5% or more of the Company's outstanding Common Stock:
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS
Strome Susskind Investment
Management, L.P. (1)
100 Wilshire Blvd,
Santa Monica, CA 2,396,400 9.1%
(1) Based on information included on Schedule 13G dated February 13, 1996.
-9-
<PAGE>
EXECUTIVE COMPENSATION
The tables, graph and descriptive information set forth below are
intended to comply with the Securities and Exchange Commission's compensation
disclosure requirements applicable to, among other reports and filings, annual
proxy statements. This information is being furnished with respect to the
Company's Chief Executive officer ("CEO") and its three other executive officers
during 1995, other than the CEO, whose salary and bonus exceeded $100,000 for
the most recent fiscal year (collectively, the "Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ---------------------
Securities
Underlying
Name and Principal Position Year Salary Options (1)
- --------------------------- ---- ------ ------------
Norman M. Meier 1995 $218,000 50,000
President and Chief 1994 180,000 470,000
Executive Officer 1993 180,000 200,000
William J. Bologna 1995 218,000 50,000
Chairman of the Board 1994 180,000 470,000
1993 180,000 200,000
Nicholas A. Buoniconti 1995 167,500 50,000
Vice Chairman and 1994 135,000 910,000
Chief Operating Officer 1993 135,000 200,000
Margaret J. Roell 1995 120,000 15,000
Vice President - 1994 120,000 -
Finance & Administration 1993 120,000 20,000
Chief Financial Officer
(1) The options granted in 1993 to Messrs. Meier, Bologna and Buoniconti were
canceled in 1994.
OPTION GRANTS DURING 1995
Number of % of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees Price Expiration Present
Name Granged In 1995 ($/Sh) Date Value (1)
- ---- ------------ --------- -------- ---------- ---------
Norman M. Meier 50,000 16% $7.25 7/20/2005 $272,500
William J. Bologna 50,000 16% 7.25 7/20/2005 272,500
Nicholas A. Buoniconti 50,000 16% 7.25 7/20/2005 272,500
Margaret J. Roell 15,000 5% 7.25 7/20/2005 81,750
(1) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the
value of the options reflected in the above table include the
following: (i) an exercise price of $7.25, equal to the fair market
value of the underlying stock on the date of grant, (ii) an option term
of ten years, (iii) an interest rate of 6.28% that represents the
interest rate on a U.S. Treasury security with a maturity date
corresponding to that of the option term, (iv) volatility of 59.214%
calculated using daily stock prices for the one-year period prior to
the grant date and (v) no annualized dividends paid with respect to a
share of Common Stock at the date of grant. The ultimate values of the
options will depend on the future price of the Company's Common Stock,
which cannot be forecast with reasonable accuracy. The actual value, if
any, an optionee will realize upon exercise of an option will depend on
the excess of the market value of the Company's Common Stock over the
exercise price on the date the option is exercised.
-10-
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES DURING 1995 AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares Acquired Value December 31, 1995 December 31, 1995
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman M. Meier - $ - 470,000 50,000 $1,968,125 $65,625
William J. Bologna - - 470,000 50,000 1,968,125 65,625
Nicholas A. Buoniconti - - 910,000 50,000 3,810,625 65,625
Margaret J. Roell - - 100,000 35,000 325,000 80,938
</TABLE>
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into five-year employment
agreements with each of William J. Bologna and Norman M. Meier, to serve as
Chairman and President of the Company, respectively. Pursuant to their
respective employment agreements, each such employee is entitled to a base
salary of $250,000. In addition, each such employee was granted options to
purchase 150,000 shares of the Company's Common Stock at an exercise price of
$7.25 with respect to Mr. Meier and $11.25 with respect to Mr. Bologna. These
options vest over the term of the employment agreements. Pursuant to the terms
of such agreements, each employee has agreed to dedicate his services on a
substantially full-time basis and has agreed for the term of his agreement and
for two years thereafter not to compete with the Company.
In April 1992, the Company entered into a five-year employment
agreement with Nicholas A. Buoniconti, to serve as Vice Chairman and Chief
Operating Officer of the Company. Pursuant to this agreement, Mr. Buoniconti was
originally paid an annual salary of $135,000. As of July 1, 1995, Mr.
Buoniconti's annual salary was increased to $200,000. As additional
compensation, Mr. Buoniconti was granted options to purchase 250,000 and 400,000
shares of the Company's Common Stock at exercise prices of $8.00 and $4.88 per
share, respectively, which options vest over five years. Pursuant to the terms
of such agreement, Mr. Buoniconti agreed to dedicate his services on a
substantially full-time basis and has agreed for the term of his agreement and
for two years thereafter not to compete with the Company. During 1994, in
connection with Mr. Buoniconti investing $200,000 into the Company, the exercise
price of the options was reduced to $4.375.
In July 1995, the Company entered into a three-year employment
agreement with Dominique de Ziegler, to serve as director of research
development. Pursuant to this agreement, Dr. de Ziegler is paid an annual salary
of $203,500. As additional compensation, Dr. de Ziegler was granted options to
purchase 25,000 shares of the Company's Common Stock at an exercise prices of
$7.25 per share. Pursuant to the terms of such agreement, Dr. de Ziegler agreed
to dedicate his services on a substantially full-time basis and has agreed for
the term of his agreement and for two years thereafter not to compete with the
Company.
The exercise price of all of the options granted pursuant to the
aforementioned employment agreements are based on the closing price of the
Company's Common Stock on the American Stock Exchange on the day prior to grant.
COMPENSATION/STOCK OPTION COMMITTEE REPORT
The principal elements of the Corporation's executive compensation
program include base salary, annual incentive compensation and long-term
incentive compensation. Historically, as a result of the size and stage of the
Company, the Company's compensation policies and practices have been informal
and subjective and have not been tied to the Company's financial performance.
-11-
<PAGE>
Under the supervision of the Committee, the Company is developing
compensation policies and programs which seek to align closely the financial
interests of the Company's senior management with those of the Company and its
shareholders. In this regard, during 1993, the Committee engaged Hewitt
Associates to make an analysis of competitive compensation levels paid to senior
executives and the appropriateness of granting stock options in lieu of other
benefits (i.e., cash, pension, profit sharing, etc.). As a result of the study,
the Committee recommended a program of compensation for all key employees that
places greater emphasis on incentive stock based pay.
BASE SALARY. The base salaries of each of the named executive officers
are as stated in their individual employment contracts. Based on the results of
the consultant's study both Mr. Meier's base salary and the aggregate cash
salaries of Messrs. Meier, Bologna and Buoniconti are approximately 20% lower
than the average salaries of a comparative group of companies. The comparative
group of companies represent companies in the pharmaceutical industry with
similar revenues, "lives" and profitability to that of the Company. The
companies are not the same companies included in the comparative performance
graph, as the peer index used in the performance graph includes companies with
significantly greater revenues and profitability than that of the Company,
therefore, comparisons of executive compensation with these companies would not
be meaningful. As a result of the study and the continued progress the Company
is making, specifically the signing of the strategic alliance agreement with
American Home Products in May 1995, Messrs. Meier and Bologna's annual salaries
were increased to $250,000 and Mr. Buoniconti's annual salary was increased to
$200,000.
ANNUAL INCENTIVE COMPENSATION. During 1993, the Company's shareholders
approved an Incentive Compensation Plan covering all employees pursuant to which
the Company will award an aggregate of 5% of the Company's pretax earnings for
any year to designated Company employees. As a result of the net loss in 1995,
no amounts were awarded for 1995.
LONG-TERM INCENTIVE COMPENSATION. Under the 1988 Stock Option Plan, as
amended, the Committee grants stock options to senior management and certain key
employees. The amount of the grants are based on individual performance,
including managerial effectiveness, initiative, teamwork and quality control,
and are at such amounts as reflect what the Committee believes are necessary to
attract, retain and motivate senior management and other key employees and
historically have not been tied to the Company's financial performance. Through
the grant of stock options, the objective of aligning senior management's
long-range interests with those of the Company and its shareholders are met by
providing the executive officers with the opportunity to continue to build a
meaningful stake in the Company.
As additional compensation, during 1995, Messrs. Meier, Bologna and
Buoniconti were each granted options to purchase 50,000 shares of Common Stock
and Ms. Roell was granted an option to purchase 15,000 shares of Common Stock,
at $7.25 per share
SECTION 162(M). With certain exceptions, Section 162(m) of the Code
denies a deduction to publicly held corporations for compensation paid to
certain executive officers in excess of $1 million per executive per taxable
year. The Company believes that options granted pursuant to the 1988 Plan should
qualify for a special transition rule which exempts from the deduction
limitations of Section 162(m) compensation paid under certain previously
approved plans. For a discussion of the application of Section 162(m) to awards
made under the Performance Plan, see "PROPOSAL 3 - - Certain Federal Income Tax
Consequences- - Certain Limitations on Deductibility of Executive Compensation".
COMPENSATION AND STOCK OPTION COMMITTEE
Dr. Irwin L. Kellner, Chairman & Lila E. Nachtigall, M.D.
-12-
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present
a chart comparing the cumulative total shareholder return on its Common Stock
with the cumulative total shareholder return of (i) a broad equity market index,
and (ii) a published index or peer group. The following chart compares the
Common Stock with (i) the Russell 2000 Index, and (ii) a group of public
pharmaceutical companies, and assumes an investment of $100 on January 1, 1991
in each of the Common Stock, the stocks comprising the Russell Index and the
stocks of the pharmaceutical companies.
-13-
<PAGE>
(1) The total return for each of the Company's Common Stock, the Russell 2000
Index and the pharmaceutical companies assumes the reinvestment of dividends,
although dividends have not been declared on the Company's Common Stock.
(2) The pharmaceutical companies include: American Home Products, Amgen, ALZA
Corp., Biogen Inc., Bristol-Myers Squibb, Chiron Corp., Forest Labs, Genetech,
Gensia Pharmaceuticals, Genzyme, Glaxo, ICN Pharmaceutical, IVAX Corp., Eli
Lilly, Marion Merrell Dow, Merck, Mylan Labs, Novo-Nordisk, Pfizer,
Rhone-Poulenc Rorer, Roberts Pharmaceutical, Smith Kline Beecham,
Schering-Plough, Upjohn, Warner-Lambert and Xoma.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993, the Company loaned Messrs. Meier and Bologna, $80,000 and
$110,350, respectively. The notes, which bear interest at 10% per annum and are
unsecured but with full recourse, are due on or before December 7, 1996.
During 1994, Messrs. Meier, Bologna and Buoniconti, each invested
$200,000 into the Company, through the purchase of 50,000, 38,663 and 50,000
shares, respectively.
There are no interlocks between the Company and any other companies.
GENERAL
The Board of Directors of the Company knows of no other matters other
than those stated in this Proxy Statement which are to be presented for action
at the Annual Meeting. If any other matters should properly come before the
Annual Meeting, it is intended that proxies in the accompanying form will be
voted on any such matter in accordance with the judgement of the persons voting
such proxies. Discretionary authority to vote on such matters is conferred by
such proxies upon the persons voting them.
The cost of solicitation of proxies, including expenses in connection
with the preparation and mailing of this Proxy Statement, will be borne by the
Company. The Company has retained Corporate Investor Communications, Inc.
("CIC") to aid in the solicitation of proxies. For their services CIC will
receive a fee estimated at $5,500 plus reimbursement of reasonable out-of-pocket
expenses. The Company does not otherwise expect to pay any compensation for the
solicitation of proxies, but will reimburse brokers and nominees for their
reasonable expenses for sending proxy material to principals and obtaining their
proxies. In addition to solicitation by mail, directors, officers and employees
of the Company may solicit proxies personally or by telephone or other means of
communication.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON BEING
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A
COPY OF THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995 (AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION),
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. All such requests
should be directed to Margaret J. Roell, Vice President-Finance and
Administration, 2665 South Bayshore Drive, Miami, Florida 33133.
-14-
<PAGE>
STOCKHOLDER PROPOSALS
All proposals of stockholders to be included in the Proxy Statement to
be presented at the next Annual Meeting of Stockholders must be received by the
Company not later than January 1, 1997.
By Order of the Board of Directors
Margaret J. Roell
Secretary
Date: August 26, 1996
-15-
<PAGE>
APPENDIX A
COLUMBIA LABORATORIES, INC.
1996 LONG-TERM PERFORMANCE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
This is the Columbia Laboratories, Inc. 1996 Long-Term Performance Plan
(the "Plan"), providing for the grant to certain designated employees of the
Company, non-employee directors and certain other persons performing significant
services for the Company of stock-based awards. The purpose of this Plan is to
encourage Participants (as defined below) to acquire Common Stock or to earn
monetary payments based on the value of such Common Stock on a basis mutually
advantageous to Participants and the Company and thus provide an incentive for
continuation of the efforts of Participants for the success of the Company and
for continuity of employment.
SECTION 2. DEFINITIONS.
Whenever used herein, the following terms shall have the respective
meanings set forth below:
(a) ACT means the Securities Exchange Act of 1934, as
amended from time to time.
(b) AWARD means any Stock Option, Stock Appreciation
Right or Restricted Stock granted under the Plan.
(c) AWARD AGREEMENT means the written agreement
evidencing an Award, which shall be executed by
the Company and the Participant.
(d) AWARD DATE means the date as of which an Award is granted,
unless another date is specified in the resolution of the
Committee granting such Award.
(e) BASE PRICE means, in the case of an Option or a Stock
Appreciation Right, a price fixed by the Committee at
which the Option or the Stock Appreciation Right may be
exercised, which shall not be less than 100% of the Fair
Market Value of a share of Stock on the date of grant of
such Option or Stock Appreciation Right.
(f) BOARD means the Board of Directors of the Company.
(g) CHANGE OF CONTROL means the merger or consolidation of the
Company with or into another corporation as the result of
which the Company is not the continuing or surviving
corporation; the sale or other disposition of all or
substantially all of the assets of the Company (including
the exchange of such assets for the securities of another
corporation); the acquisition by another person of 50% or
more of the Company's then outstanding shares of voting
stock or the recapitalization, reclassification,
liquidation or dissolution of the Company; or other
transaction involving the Company pursuant to which the
Common Stock would be converted into cash, securities or
other property.
(h) CODE means the Internal Revenue Code of 1986, as amended
from time to time, together with all rules and regulations
promulgated thereunder.
A-1
<PAGE>
(i) COMMITTEE means a committee composed of at least two
members of the Board who, for as long as Rule 16b-3 under
the Act and/or any rules promulgated pursuant to Section
162(m) of the Code, or their equivalent(s), are then in
effect and applicable with respect to the Plan, shall be
"non-employee directors" and/or "outside directors," as
respectively applicable, within the meaning of such
rule(s) or their equivalent(s) as then in effect.
(j) COMMON STOCK means the common stock, $.01 par value per
share, of the Company.
(k) COMPANY means Columbia Laboratories, Inc., a Delaware
corporation, and its subsidiaries, if any.
(l) DISABILITY means a physical and/or mental condition that
renders a Participant unable to perform the duties of his
position on a full-time basis for a period of one hundred
eighty (180) consecutive business days. Disability shall
be deemed to exist when certified by a physician selected
by the Company or its insurers and acceptable to the
Participant or the Participant's legal representative
(such agreement as to acceptability not to be withheld
unreasonably). The Participant will submit to such
examinations and tests as such physician deems necessary
to make any such Disability determination.
(m) EMPLOYEE means a salaried employee (including officers
and directors who are also employees) of the Company.
(n) FAIR MARKET VALUE means, when a public market for the
Common Stock exists, the average of the high and low
reported sales prices of Common Stock on the exchange on
which such Common Stock is traded (or such other market
as shall constitute the principal trading market for the
Common Stock) on the date for which Fair Market Value is
being determined (or, if there is no such trading on such
date, the last preceding date on which there was such
trading). When no public market for the Common Stock of
the Company exists, Fair Market Value shall be determined
by the Board.
(o) IMMEDIATE FAMILY means a Participant's children,
grandchildren, parents, the spouse of any such person, a
trust for the benefit of any such person, or a partnership
in which such persons are the only partners.
(p) INCENTIVE STOCK OPTION are those Options intended to
qualify as incentive stock options within the meaning of
Section 422 of the Code.
(q) NONQUALIFIED STOCK OPTION means any Option other than an
Incentive Stock Option.
(r) OPTION means the right to purchase Stock at the Base Price
for a specified period of time. For purposes of the Plan,
an Option may be an Incentive Stock Option within the
meaning of Section 422 of the Code, a Nonqualified Stock
Option, or any other type of option.
(s) PARTICIPANT means any Employee, non employee director or
other person performing significant services for the
Company designated by the Committee to participate in the
Plan.
(t) PERIOD OF RESTRICTION means the period during which a
grant of shares of Restricted Stock is restricted pursuant
to Section 11 of the Plan.
(u) REPORTING PERSON means a person subject to Section 16 of
the Act.
A-2
<PAGE>
(v) RESTRICTED STOCK means Stock granted pursuant to Section
11 of the Plan, but any shares of such Stock shall cease
to be Restricted Stock when the conditions to and
limitations on transferability under Section 11 have been
satisfied or have expired, respectively.
(w) RETIREMENT means termination of employment with
eligibility for normal, early or disability retirement
benefits, if any, in effect at the time of such
termination of employment.
(x) STOCK means the authorized and unissued shares of Common
Stock or reacquired shares of Common Stock held in the
Company's treasury.
(y) STOCK APPRECIATION RIGHT or SAR means the right to receive
a payment from the Company equal to the excess of the Fair
Market Value of a share of Common Stock at the date of
exercise over the Base Price. In the case of a Stock
Appreciation Right which is granted in conjunction with an
Option, the Base Price shall be the Option exercise price.
(z) TAXABLE EVENT means an event requiring United States
Federal, state or local tax to be withheld with respect
to an Award hereunder, including but not limited to, the
exercise of Nonqualified Stock Options or SARs, the ending
of a Period of Restriction with respect to Restricted
Stock, or the making by a Participant of an election under
Section 83(b) of the Code.
(aa) VESTED or VESTING means, with respect to Options and
SARs, that the Options or SARs shall be exercisable; and
with respect to Restricted Stock, that the Period of
Restriction has ended.
(ab) WINDOW PERIOD means the third through the twelfth
business day following the release for publication of the
Company's quarterly or annual earnings reports.
SECTION 3. ADMINISTRATION.
Except as otherwise provided herein, the Plan will be administered by
the Committee. Except as otherwise provided herein, the Committee is authorized
in its sole discretion to determine the individuals to whom Awards will be
granted, the type and amount of such Awards and the terms (including expiration
dates) of grants; to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to provide for conditions and assurance
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the administration of
the Plan to the extent not contrary to the express provisions of the Plan. The
determinations of the Committee shall be made in accordance with the judgment of
its members as to the best interests of the Company and its stockholders and in
accordance with the purpose of the Plan. A majority of members of the Committee
shall constitute a quorum, and all determinations of the Committee shall be made
by a majority of its members. Any determination of the Committee under the Plan
may be made without notice or meeting of the Committee, by a writing signed by a
majority of the Committee members. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final and binding and conclusive for all purposes and upon all persons
whomsoever. The Board of Directors shall be authorized in its sole discretion to
act in place of the Committee with respect to grants to Participants who are
members of the Committee. The Board of Directors shall be authorized to exercise
all rights of the Committee under this Plan with respect to such grants.
A-3
<PAGE>
SECTION 4. SHARES RESERVED; CALCULATION OF SHARE
AVAILABILITY.
(a) There is hereby reserved for issuance under the Plan an
aggregate of 3,000,000 shares of Stock, which may be
authorized but unissued or treasury shares.
(b) Calculation of the number of shares remaining available
for issuance under the Plan shall be by those methods
permissible under the Securities and Exchange Commission's
interpretations which result in the greatest number of shares
remaining available for issuance, including any permissible
methods less restrictive than those set forth in the remainder
of this paragraph 4(b). Shares underlying expired, canceled or
forfeited Awards (except Restricted Stock) may be restored to
the Plan maximum. When SARs are exercised for cash, the number
of shares covered by such SARs may be restored to the Plan
maximum. When the exercise price of Options is paid by
delivery or withholding of shares of Common Stock, the number
of shares so delivered may be restored to the Plan maximum to
be available solely for the grants to non-Reporting Persons.
Restricted Stock issued pursuant to the Plan will be counted
against the Plan maximum while outstanding even while subject
to restrictions. Shares of Restricted Stock shall not be
restored to the Plan maximum if such Restricted Stock is
forfeited.
SECTION 5. PARTICIPANTS.
Participants will consist of such employees and non employee directors
of the Company and certain other persons performing significant services for the
Company as designated by the Committee in its sole discretion. Designation as a
Participant in any year shall not require the Committee to designate such person
to receive an Award in any other year or to receive the same type or amount of
Award (or on the same terms) as granted to the Participant in any other year or
as granted to any other Participant in any year. The Committee shall consider
such factors as it deems pertinent in selecting Participants and in determining
the type and amount of their respective Awards. Notwithstanding the foregoing,
Performance-Based Awards (as defined in Section 20) shall be granted only to key
employees selected by the Committee in its sole discretion.
SECTION 6. TYPES OF AWARDS; LIMITATION ON GRANTS.
(a) The following Awards may be granted under the Plan: (i)
Incentive Stock Options, (ii) Nonqualified Stock Options,
(iii) Stock Appreciation Rights or (iv) Restricted Stock,
which may or may not qualify as Performance Based Awards, or
any combination thereof, all as described below. Except as
specifically limited herein, the Committee shall have complete
discretion in determining the type and number of Awards to be
granted to any Participant, and the terms and conditions which
attach to each Award, which terms and conditions need not be
uniform as between different Participants. Not with standing
the foregoing, only Employees of the Company shall be eligible
to receive grants of Incentive Stock Options. All Awards shall
be in writing.
(b) During the ten-year term of the Plan (as defined in
Section 17 below), no Participant shall be granted (i) Options
and SARs with respect to more than 1,000,000 shares of Stock
and (ii) more than 500,000 shares of Restricted Stock (in each
case, subject to adjustment pursuant to Section 12).
SECTION 7. AWARD DATE AND AWARD AGREEMENT.
All Awards granted under the Plan shall be granted as of an Award Date.
Promptly after each Award Date, the Company shall notify the Participant of the
grant of the Award, and shall hand deliver or mail to the Participant an Award
Agreement, duly executed by and on behalf of the Company, with the request that
the Participant execute and return the Agreement within 30 days after the date
of mailing or delivery by the Company of the Agreement to the Participant. The
Award Agreement shall set forth the
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terms of the Award, including without limitation (to the extent applicable to
the particular Award), the amount and type of Award, exercise period, term,
restrictions, Vesting schedule and conditions, transferability, and procedures
to be followed to exercise the Award. If the Participant shall fail to execute
and return the written Award Agreement within said 30-day period, his or her
Award may be terminated at the discretion of the Committee, except that if the
Participant dies within said 30-day period such Award Agreement shall be
effective notwithstanding the fact that it has not been signed prior to death.
SECTION 8. INCENTIVE STOCK OPTIONS.
Incentive Stock Options shall consist of Options to purchase shares of
Stock at purchase prices not less that 100% of the Fair Market Value of the
shares on the Award Date. Said purchase price may be paid by check or, in the
discretion of the Committee determined as of an Award Date, by the delivery of
shares of Common Stock then owned by the Participant or receivable upon exercise
of the Incentive Stock Option. The applicable Award Agreement shall set forth
the Vesting schedule, exercise terms and expiration date of the Incentive Stock
Option, provided that no Incentive Stock Options shall be exercisable earlier
than one year after the date they are granted, and no Incentive Stock Option
shall be exercisable after the tenth anniversary of the Award Date. The
aggregate Fair Market Value, determined as of the date an Incentive Stock Option
is granted, of the Common Stock for which any Participant may be awarded
Incentive Stock Options which are first exercisable by the Participant during
any calendar year under the Plan or any other stock option plan maintained by
the Company shall not exceed $100,000. Notwithstanding any contrary provisions
of the Plan, no Incentive Stock Option shall be granted to any Participant who,
at the time such Incentive Stock Option is granted, owns (directly, or within
the meaning of section 424(d) of the Code) more than ten percent of the total
combined voting power of all classes of stock of the Company, unless (a) the
exercise price under such Incentive Stock Option is at least 110 percent of the
Fair Market Value of a share of Common Stock on the date such Incentive Stock
Option is granted and (b) such Incentive Stock Option is not exercisable after
the expiration of five years from the date granted. The Participant shall notify
the Company in writing, within 30 days, of any disposition (whether by sale,
exchange, gift or otherwise) of shares of Common Stock acquired by the
Participant pursuant to the exercise of an Incentive Stock Option, within two
years from the date of the granting of such Option or within one year of the
transfer of such shares to the Participant.
SECTION 9. NONQUALIFIED STOCK OPTIONS.
Nonqualified Stock Options shall consist of Options to purchase shares
of Stock at purchase prices not less than 100% of the Fair Market Value of the
shares on the date the Options are granted. Said purchase price may be paid by
check or, at the discretion of the Committee determined as of an Award Date, by
the delivery of shares of Common Stock then owned by the Participant or
receivable upon exercise of the Nonqualified Stock Option. The terms of the
applicable Award Agreement shall set forth the Vesting schedule, exercise terms
and expiration date of the Nonqualified Stock Option, provided that no
Nonqualified Stock Options shall be exercisable earlier than one year after the
date they are granted, and no Nonqualified Stock Option shall be exercisable
after the tenth anniversary of the Award Date.
SECTION 10. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted which, at the discretion of
the Committee, may be exercised (1) in lieu of exercise of an Option, (2) in
conjunction with the exercise of an Option, (3) upon lapse of an Option, (4)
independent of an Option, or (5) each of the above in connection with a
previously awarded Option under the Plan. If the Option referred to in (1), (2),
or (3) above qualified as an Incentive Stock Option pursuant to Section 422 of
the Code, the related SAR shall comply with the applicable provisions of the
Code and the regulations issued thereunder. At the time of grant, the Committee
may establish, in its sole discretion, a maximum amount per share which will be
payable upon exercise of a SAR, and may impose such conditions on exercise of a
SAR (including, without
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limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Rule 16b-3
(or any successor rule) under the Act. SARs granted to Reporting Persons shall
be exercisable not earlier than one year after the date they are granted. At the
discretion of the Committee, payment for SARs may be made in cash or Common
Stock, or in a combination thereof, provided, however, that payment may be made
in cash for SARs exercised by Reporting Persons only upon the condition that
such exercise is made during a Window Period. The following will apply upon
exercise of a SAR:
(a) EXERCISE OF SARS IN LIEU OF EXERCISE OF OPTIONS. SARs
exercisable in lieu of Options may be exercised for all or
part of the shares of Stock subject to the related Option upon
the exercise of the right to exercise an equivalent number of
Options. A SAR may be exercised only with respect to the
shares of Stock for which its related Option is then
exercisable.
(b) EXERCISE OF SARS IN CONJUNCTION WITH EXERCISE OF OPTIONS. SARs
exercisable in conjunction with the exercise of Options shall
be deemed to be exercised upon the exercise of the related
Options.
(c) EXERCISE OF SARS UPON LAPSE OF OPTIONS. SARs exercisable upon
lapse of Options shall be deemed to have been exercised upon
the lapse of the related Options as to the number of shares of
Stock subject to the Options.
(d) EXERCISE OF SARS INDEPENDENT OF OPTIONS. SARs exercisable
independent of Options may be exercised upon whatever terms
and conditions the Committee, in its sole discretion, imposes
upon the SARs.
SECTION 11. RESTRICTED STOCK.
Restricted Stock shall consist of Stock issued or transferred under the
Plan (other than upon exercise of Stock Options or SARs) at any purchase price
less than the Fair Market Value thereof on the date of issuance or transfer, or
as a bonus. The terms and conditions of the Vesting of such Restricted Stock
shall be set forth in the applicable Award Agreement. As determined by the
Committee, Restricted Stock granted under the Plan may be granted in such a
manner as to constitute a Performance Based Award. In the case of any Restricted
Stock:
(a) The purchase price, if any, and the conditions to Vesting
will be determined by the Committee.
(b) Restricted Stock may be subject to (i) restrictions on the
sale or other disposition thereof, provided, however, that
Restricted Stock granted to a Reporting Person shall, in
addition to any other restrictions thereon, not be sold or
disposed of for one year following the date of grant;
(ii) rights of the Company to reacquire such Restricted Stock
from a Participant at the purchase price, if any, originally
paid therefor upon termination of the Participant's service
with the Company within specified periods; (iii)
representation by the Participant that he or she intends to
acquire Restricted Stock for investment and not for resale;
and (iv) such other restrictions, conditions and terms as the
Committee deems appropriate.
(c) The Participant shall be entitled to all dividends paid with
respect to Restricted Stock during the Period of Restriction
and shall not be required to return any such dividends to the
Company in the event of the forfeiture of the Restricted
Stock.
(d) The Participant shall be entitled to vote the Restricted
Stock during the Period of Restriction.
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(e) The Committee shall determine whether Restricted Stock is to
be delivered to the Participant with an appropriate legend
imprinted on the certificate or if the shares are to be
deposited in escrow pending removal of the restrictions.
SECTION 12. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of issued
shares of Common Stock without new consideration to the
Company (such as by stock dividends or stock splits), the
total number of shares reserved for issuance under this Plan,
the maximum number of shares available to a particular
Participant (whether as Performance-Based Awards or
otherwise), and the number of shares covered by each
outstanding Award, shall be adjusted so that the aggregate
consideration payable to the Company, if any, and the value
of each such Award shall not be changed, provided, however,
that (a) each such adjustment with respect to an Incentive
Stock Option shall comply with the rules of Section 424(a) of
the Code (or any successor provision) and (b) in no event
shall any adjustment be made that would render any Incentive
Stock Option granted hereunder other than an "incentive stock
option" as defined in Section 422 of the Code. Awards may
also contain provisions for their continuation or for other
equitable adjustments after changes in the Common Stock
resulting from reorganization, sale, merger, consolidation,
issuance of stock rights or warrants or similar occurrence.
(b) Notwithstanding any other provision of this Plan, and without
affecting the number of shares reserved or available
hereunder, the Committee may authorize the equitable
adjustment of benefits in connection with any merger,
consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem
appropriate.
SECTION 13. CHANGE OF CONTROL.
Notwithstanding any other provision of this Plan, upon a Change of
Control, outstanding Awards shall become immediately and fully exercisable or
payable according to the following terms:
(a) Any outstanding and unexercised Options shall become
immediately and fully exercisable, and shall remain
exercisable until it would otherwise expire by reason of lapse
of time.
(b) The Committee, in its discretion, may determine that, upon
the occurrence of a Change of Control of the Company, each
Option and Stock Appreciation Right outstanding hereunder
shall terminate within a specified number of days after
notice to the holder, and such holder shall receive, with
respect to each share of Common Stock subject to such Option
or Stock Appreciation Right, an amount equal to the excess of
the Fair Market Value of such shares of Common Stock
immediately prior to the occurrence of such Change in Control
over the Base Price per share of such Option or Stock
Appreciation Right; such amount to be payable in cash, in one
or more kinds of property (including the property, if any,
payable in the transaction) or in a combination thereof, as
the Committee, in its discretion, shall determine. The
provisions contained in the preceding sentence shall be
inapplicable to an Option or Stock Appreciation Right granted
within six months before the occurrence of a Change in
Control if the holder of such option or Stock Appreciation
Right is a Reporting Person.
(c) Any outstanding and unexercised Stock Appreciation Rights
(other than such rights which arise pursuant to Section 13(d)
hereof) shall become immediately and fully exercisable.
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(d) Any Restricted Stock granted pursuant to Section 11 (and not
forfeited prior to the Change in Control) shall become
immediately and fully Vested, and the Committee shall have
sole discretion to waive any automatic forfeitures provided
with respect to such Restricted Stock arising from the Change
in Control. Any shares held in escrow shall be delivered to
the Participant, and the share certificates shall not contain
the legend referred to in Section 11(e) hereof.
SECTION 14. TRANSFERABILITY.
Except as otherwise expressly provided in the applicable Award
Agreement, each Award granted under the Plan to a Participant shall not be
transferable otherwise than by will or the laws of descent and distribution and
shall be exercisable, during the Participant's lifetime, only by the
Participant. In the event of the death of a Participant, exercise or payment
shall be made only:
(a) By or to the persons named as beneficiaries pursuant to
Section 18(a) hereof, or, if none, by or to the executor or
administrator of the estate of the deceased Participant or the
person or persons to whom the deceased Participant's rights
under the Award shall pass by will or the laws of descent and
distribution; and
(b) To the extent that the deceased Participant was entitled
thereto at the date of his death.
SECTION 15. TAXES.
The Company shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares of Stock deliverable under the
Plan after giving the person entitled to receive such payment or delivery notice
as far in advance as practicable, and the Company may defer making payment or
delivery as to any Award if any such tax is payable until indemnified to its
satisfaction. The person entitled to any such delivery, whether due to exercise
of an Option or SAR, or lapse of restrictions on Restricted Stock, or any other
taxable event may, by notice to the Company at the time the requirement for such
delivery is first established, elect to have such withholding satisfied by a
reduction of the number of shares otherwise so deliverable (a "Stock Withholding
Election"), or by delivery of shares of Stock already owned by the Participant,
with the amount of shares subject to such reduction or delivery to be calculated
based on the Fair Market Value on the date of such taxable event.
SECTION 16. NO RIGHT TO EMPLOYMENT.
A Participant's right, if any, to continue to serve the Company as an
officer, employee, or otherwise, shall not be enlarged or otherwise affected by
his or her designation as a Participant under the Plan.
SECTION 17. DURATION, AMENDMENT AND TERMINATION.
No Award shall be granted more than ten years after July 23, 1996;
provided, however, that, subject to applicable law, the terms and conditions
applicable to any Award granted within such period may thereafter be amended or
modified by mutual agreement between the Company and the Participant or such
other person as may then have an interest therein. Also, by mutual agreement
between the Company and a Participant hereunder, Stock Options or other Awards
may be granted to such Participant in substitution and exchange for, and in
cancellation of, any Awards previously granted such Participant under this Plan.
To the extent that any Stock Options or other Awards which may be granted within
the terms of the Plan would qualify under present or future laws for tax
treatment that is beneficial to a recipient, then any such beneficial treatment
shall be considered within the intent, purpose and operational purview of the
Plan and the discretion of the Committee, and to the extent that any such Stock
Options or other Awards would so qualify within the terms of the Plan, the
Committee shall have full and complete authority to grant Stock Options or other
Awards that so qualify (including the authority to grant, simultaneously or
otherwise, Stock Options or other Awards which do not so qualify)
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and to prescribe the terms and conditions (which need not be identical as among
recipients) in respect to the grant or exercise of any such Stock Option or
other Award under the Plan. The Board may amend the Plan from time to time or
terminate the Plan at any time. However, no action authorized by this Section 17
shall reduce the amount of any existing Award or change the terms and conditions
thereof without the Participant's consent. No amendment of the Plan shall,
without approval of the stockholders of the Company, (a) increase the total
number of shares of Stock which may be issued under the Plan, the amount or type
of Awards that may be granted under the Plan or the individual limit set forth
in Section 6(b) hereof; (b) reduce the minimum purchase price, if any, of shares
of Stock which may be made subject to Awards under the Plan; or (c) modify the
requirements as to eligibility for Awards under the Plan.
SECTION 18. MISCELLANEOUS PROVISIONS.
(a) In connection with an Award, a Participant may name one or
more beneficiaries to receive the Participant's benefits, to
the extent permissible pursuant to the various provisions of
the Plan, in the event of the death of the Participant.
(b) All obligations of the Company under the Plan with respect to
Awards issued hereunder shall be binding on any successor to
the Company.
SECTION 19. STOCKHOLDER APPROVAL.
The Plan has an effective date of October 2, 1996, subject to approval
by the stockholders of the Company at the Annual Meeting of Stockholders in
1996.
SECTION 20. PERFORMANCE-BASED AWARDS.
Restricted Stock granted under the Plan may be granted in a manner such
that the Restricted Stock constitutes "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code. As determined by the
Committee, either the granting or vesting of such Restricted Stock (the
"Performance-Based Awards") are to be based upon one or more of the following
factors: net sales, pretax income before allocation of corporate overhead and
bonus, budget, earnings per share, net income, division, group or corporate
financial goals, return on stockholders' equity, return on assets, attainment of
strategic and operational initiatives, appreciation in and/or maintenance of the
price of Common Stock or any other publicly-traded securities of the Company,
market share, gross profits, earnings before interest and taxes, earnings before
interest, taxes, dividends and amortization, economic value-added models and
comparisons with various stock market indices. With respect to Performance-Based
Awards, (i) the Committee shall establish in writing the objective
performance-based goals applicable to a given fiscal period and the specific
employees or class of employees granted such Performance Based Awards no later
than 90 days after the commencement of such fiscal period (but in no event after
25% of such period has elapsed) and (ii) no Awards shall be payable to any
Participant for a given fiscal period until the Committee certifies in writing
that the objective performance goals (and any other material terms) applicable
to such period have been satisfied. With respect to Restricted Stock intended to
qualify as Performance-Based Awards, after establishment of a performance goal,
the Committee shall not revise such performance goal or increase the amount of
compensation payable thereunder (as determined in accordance with Section 162(m)
of the Code) upon the attainment of such performance goal. Notwithstanding the
preceding sentence, the Committee may reduce or eliminate the number of shares
of Common Stock granted or the number of shares of Common Stock vested upon the
attainment of such performance goal.
SECTION 21. GOVERNING LAW.
The Plan and all rights thereunder shall be governed by and construed
in accordance with the laws of the State of Florida, without giving effect to
the choice-of-law principles thereof.
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PROXY
COLUMBIA LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--OCTOBER 2, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF COLUMBIA LABORATORIES, INC.
The undersigned hereby appoints each of William J. Bologna and Norman M.
Meier as Proxies, each with the power to appoint a substitute, to represent and
to vote, with all the powers the undersigned would have if personally present,
all the shares of Common Stock $.01 par value per share, or, as the case may be,
shares of Series A and Series B Convertible Preferred Stock, $.01 par value per
share, of Columbia Laboratories, Inc. (the 'Company') held of record by the
undersigned on August 19, 1996, at the Annual Meeting of Stockholders to be held
on October 2, 1995 or any adjournment or adjournments thereof.
Item 1. ELECTION OF DIRECTORS
/ / FOR ALL THE NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
(INSTRUCTIONS: To withhold authority for any individual nominee, write that
nominee's name in the space provided below.
William J. Bologna, Nicholas A. Buoniconti, Norman M. Meier, Jean Carvais,
Irwin L. Kellner, John E.A. Kidd, Lila E. Nachtigall
Item 2. To ratify the selection of Arthur Andersen LLP as the independent public
accountants for the fiscal year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
Item 3. To approve the Columbia Laboratories, Inc. 1996 Long-term Performance
Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the Proxies are authorized to vote upon other business
as may come before the meeting.
(Continued and to be signed on the other side)
<PAGE>
(Continued from other side)
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, the Proxy will be voted
FOR Items 1, 2 and 3.
_______________________________________________________
(Signature)
_______________________________________________________
(Signature if held jointly)
Dated:_________________________________________________
When shares are held jointly, each Shareholder
named should sign. If only one signs, his or her
signature will be binding. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If the
Shareholder is a corporation, the President or a
Vice President should sign in his or her own name,
indicating title. If the Shareholder is a
partnership, a partner should sign in his or her
own name, indicating that he or she is a 'Partner.'
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY
USING THE ENVELOPE PROVIDED.
