SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |_|
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 ss.240.14a-11(c) or ss.240.14a-12
COLUMBIA LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value transaction:
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5. Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by 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 number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
COLUMBIA LABORATORIES, INC.
2875 Northeast 191 Street
Aventura, Florida 33180
(305) 933-6089
---------------------------------
Notice of Annual Meeting of Stockholders
To Be Held On May 31, 2000
---------------------------------
To the Stockholders of Columbia Laboratories, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Columbia Laboratories, Inc. (the "Company") will be held at
the New York Helmsley Hotel, Murray Hill Room, 212 East 42nd Street, New York,
New York at 10:00 A.M. on May 31, 2000 for the following purposes:
1. To elect eight directors who will serve as the Board of Directors of
the Company until the next annual meeting of shareholders and the
election of their qualified successors;
2. To consider and act upon a proposal to amend the Certificate of
Incorporation of the Company to increase from 40,000,000 to
100,000,000 the aggregate number of authorized shares of the
Company's Common Stock, par value $.01 per share ("Common Stock");
3. To consider and act upon a proposal to amend to the Company's 1996
Long-Term Performance Plan in order to increase the number of
authorized shares available under such plan to 4,000,000 and to
amend certain other provisions of such plan; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 20, 2000
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment thereof.
By Order of the Board of Directors
David L. Weinberg
Secretary
April 28, 2000
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.
<PAGE>
COLUMBIA LABORATORIES, INC.
2875 Northeast 191 Street
Aventura, Florida 33180
------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 31, 2000
------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Columbia Laboratories, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Stockholders of the Company to be held on
May 31, 2000 and at any and all 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 April 28, 2000, 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 amendment of the Certificate of Incorporation increasing the number of
authorized shares of Common Stock and FOR the amendments of the Company's 1996
Long-Term Performance Plan. The mailing address of the Company's principal
office is 2875 Northeast 191 Street, Aventura, Florida 33180.
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 Common Stock, par value $.01 per share (the
"Common Stock"), Series A Convertible Preferred Stock (the "Series A Preferred
Stock") and Series B Convertible Preferred Stock (the "Series B Preferred
Stock"), of record as of the close of business on April 20, 2000, 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). The Series C Convertible Preferred Stock has no voting rights.
As of the record date, there were 30,432,926 shares of Common Stock outstanding,
33 shares of Series A Preferred Stock outstanding having voting power equal to
408 shares of Common Stock and 1,630 shares of Series B Preferred Stock
outstanding having voting power equal to 33,529 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, the "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 April 20, 2000, the last reported sale price of the Company's Common
Stock on the American Stock Exchange was $9.31.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the meeting, eight 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 eight 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 nine meetings during the year ended December
31, 1999. The Board of Directors also had three standing committees. The Audit
Committee, consisting of James J. Apostolakis, Jean Carvais, M.D., and Robert C.
Strauss, met twice during the year ended December 31, 1999. 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 Dr. Carvais and Mr. Strauss, met four times during the year ended
December 31, 1999. 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. The Finance Committee, consisting of William J. Bologna, Norman M.
Meier, Denis M. O'Donnell, M.D., Mr. Apostolakis and Mr. Strauss did not meet
during the year ended December 31, 1999. The Finance Committee is responsible
for reviewing the Company's finances and recommending potential sources of
capital. 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, 1999. The Company does not have a standing nominating
committee.
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.
Identification of Directors
The following information is provided for each nominee.
William J. Bologna (Age 57) has been a director of the Company since
inception, Chairman of the Company's Board of Directors since January 1992 and
Chief Executive Officer since January 2000. From December 1988 to January 1992,
Mr. Bologna served as Vice Chairman of the Company's Board of Directors. In
addition, from 1980 to 1991, he was Chairman of Bologna & Hackett ("B&H"), an
advertising agency specializing in pharmaceutical products which in the past
performed services for various international pharmaceutical companies. B&H
ceased operations in May 1991. 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.
James J. Apostolakis (Age 57) has been a director and Vice Chairman of the
Company's Board of Directors since January 1999 and President since January
2000. Mr. Apostolakis has been a Managing Director at Poseidon Capital
Corporation, an investment banking firm, since February of 1998. Mr. Apostolakis
has also served as President of Lexington Shipping & Trading Corporation, a
company engaged in shipping operations, since 1973. From 1989 until 1992, Mr.
Apostolakis served as a director on the Board of Directors of Grow Group, a
paint and specialty chemicals company. From 1982 to 1988, he served as a
director for Macmillan, Inc., a publishing and
2
<PAGE>
information services company. Mr. Apostolakis received an A.B. in Economics from
the University of Pennsylvania in 1962 and an LL.B from Harvard University Law
School in 1965.
Dominique de Ziegler, M.D. (Age 52) has been Vice
President--Pharmaceutical Development of the Company since January 1996 and a
director since January 1998. Dr. de Ziegler has been employed by the Company
since 1992 as Director of Research Development. In addition, from 1988 through
1991, Dr. de Ziegler was an Associate Professor at the Department of Obstetrics
and Gynecology, Hospital A. Beclere in Clamart, France. In 1990, Dr. de Ziegler
became a Diplomat of the American Board of Obstetrics and Gynecology,
Reproductive Endocrinology and Infertility. Dr. de Ziegler is a member of the
American Fertility Society, the American Society for Reproductive
Endocrinogolists, The American Endocrine Society, the Society of Gynecologic
Investigation and the Association Francaise pour l'Etude de la Menopause. Dr. de
Zeigler has also been a journal editor and an "ad hoc" reviewer for Fertility
Sterility, Human Reproduction, The Journal of In Vitro Fertilization and Embryo
Transfer, Contraception Fertilite Sexualite and Reproduction Humaine et Hormone.
Jean Carvais, M.D. (Age 72) has been a director of the Company since
October 1996. 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-Poulenc 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
quinolones. Following the acquisition of Roger Bellon, S.A., Dr. Carvais became
a member of Rhone-Poulenc's central research committee which directs the
company's worldwide research and development activities.
Norman M. Meier (Age 61) has been a director of the Company since
inception and served as President and Chief Executive Officer from inception
until January 2000. Beginning in January 2000, Mr. Meier will serve in a
non-executive position as Chairman Emeritus. 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.
Denis M. O'Donnell, M.D. (Age 46) has been a director of the Company since
January 1999. Dr. O'Donnell has been a Managing Director at Seaside Advisors
LLC, a small cap investment fund, since 1997. From 1995 to 1997, Dr. O'Donnell
served as President of Novavax, Inc., a pharmaceutical and drug delivery
company. From 1991 to 1995, he was Vice President of IGI, Inc., a company
engaged in the marketing of human and animal pharmaceuticals. Currently, Dr.
O'Donnell serves on the Board of Directors and the audit committees of both
Novavax, Inc. and ELXSI, Inc., a restaurant and water inspection services
company, and also serves on the Board of Directors of Ampersand Medical
Corporation, a medical diagnostics company.
Selwyn P. Oskowitz, M.D. (Age 53) has been a director of the Company since
January 1999. Dr. Oskowitz has been a clinical professor of obstetrics,
gynecology and reproductive biology at Harvard Medical School since 1993. He is
a reproductive endocrinologist at, and the Director of, Boston IVF, a fertility
clinic with which he has been associated since 1986. Dr. Oskowitz is also a
former President of the Boston Fertility Society.
Robert C. Strauss (Age 58) has been a director of the Company since
January 1997. Since December 1997, Mr. Strauss has been the President & Chief
Executive Officer of Noven Pharmaceuticals, Inc. Prior to joining Noven, Mr.
Strauss was President, Chief Executive Officer and Chairman of the Board of
Cordis Corporation. In the past he has held senior positions at Ivax
Corporation, Touche-Ross & Company and Food Fair, Inc. Mr. Strauss received
undergraduate and graduate degrees in physics and serves on the Board of
Trustees for the University of Miami. Mr. Strauss holds a position on the Board
of Directors of several companies including Procarda Corporation and Eclipse
Surgical Corporation. Mr. Strauss also devotes his time to many civic duties,
namely, the United Way of Miami-Dade County.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of April 20, 2000, certain information
concerning ownership of shares of the Common Stock: (i) by persons who are known
by the management of the Company to be beneficial owners of more than 5% of the
outstanding shares of the Common Stock; (ii) by each director of the Company and
each named executive officer; and (iii) by all directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
Name of Shares, Nature of Interest
Beneficial Owner and Percentage of Equity Securities(1)
---------------- --------------------------------------
<S> <C> <C>
Norman M. Meier (2) .......................... 1,837,850 5.8%
William J. Bologna (3) ....................... 3,035,290 9.6%
James J. Apostolakis (4) ..................... 1,317,078 4.3%
David L. Weinberg (5) ........................ 104,000 *
Dominique de Ziegler (5) ..................... 120,000 *
Annick Blondeau (5) .......................... 135,000 *
Howard L. Levine (5) ......................... 285,000 *
Jean Carvais (5) ............................. 46,000 *
Denis M. O'Donnell ........................... 22,000 *
Selwyn P. Oskowitz ........................... 20,000 *
Robert C. Strauss (5) ........................ 51,000 *
The James J. Apostolakis Group (6) ........... 1,524,900 5.0%
c/o Lexington Shipping and Trading Corp.
950 Third Avenue, 27th Floor
New York, New York 10022
The David M. Knott Group (7) ................. 1,397,828 4.6%
485 Underhill Boulevard, Ste. 205
Syosset, New York 11791-3419
Anthony R. Campbell (8) ...................... 1,412,600 4.6%
c/o TC Management
237 Park Avenue, Suite 800
New York, New York
Officers and directors as a group (11 people) 6,973,218 20.5%
</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, Series B and Series C
Preferred Stock (12.36 for the Series A Preferred Stock, 20.57 for the
Series B Preferred Stock and 285.71 for the Series C Preferred Stock).
(2) Includes 1,172,250 shares issuable upon exercise of options and warrants,
which are currently exercisable or which may be acquired within 60 days.
(3) Includes 20,570 shares issuable upon conversion of 1,000 shares of Series
B Preferred Stock and 71,428 shares issuable upon conversion of 250 shares
of Series C Preferred Stock. Includes 1,168,750 shares issuable upon
exercise of options and warrants, which are currently exercisable or which
may be acquired within 60 days. Includes 198,062 shares beneficially owned
by Mr. Bologna's spouse.
(4) Includes 71,428 shares issuable upon conversion of 250 shares of Series C
Preferred Stock. Includes 303,750 shares issuable upon exercise of options
and warrants which are currently exercisable or which may be acquired
within 60 days. Additionally, Mr. Apostolakis has filed a schedule 13D as
he may be deemed to have acted as a member of a group with other
shareholders (see footnote 6 herein).
(5) Includes shares issuable upon exercise of options, which are currently
exercisable or which may be acquired within 60 days, to purchase 100,000
shares with respect to Mr. Weinberg, 120,000 shares with respect to Dr. de
Ziegler, 135,000 shares with respect to Dr. Blondeau, 285,000 shares with
respect to Dr. Levine, 46,000 shares with respect to Dr. Carvais, 22,000
shares with respect to Dr. O'Donnell, 20,000 shares with respect to Dr.
Oskowitz and 50,000 shares with respect to Mr. Strauss.
(6) Based on a Schedule 13D dated July 6, 1998, as amended by an Amendment No.
1 to Schedule 13D dated July 16, 1998, an Amendment No. 2 dated October 2,
1998, an Amendment No. 3 dated November 4, 1998 and an Amendment No. 4
dated December 14, 1998, Messrs. James J. Apostolakis, David Ray and
Bernard Marden and, by reference to a Schedule 13D separately filed by
David M. Knott, Mr. Knott and certain affiliated entities and, by
reference to a Schedule 13D dated
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<PAGE>
separately filed by Mr. Campbell, Mr. Campbell may be deemed to have acted
together as a group for certain purposes. The information contained in the
Schedule 13D reflects that Messrs. Apostolakis, Ray and Marden
beneficially own 935,900, 214,000 and 375,700 shares of the Company's
Common Stock, respectively. And each has sole voting and dispositive power
with respect to all shares beneficially owned by such person. Such persons
have indicated that their filings do not constitute an admission that they
are members of a "group" for any purpose.
(7) Based on a Schedule 13D dated July 6, 1998, as amended by an Amendment No.
1 to Schedule 13D dated October 2, 1998, an Amendment No. 2 dated November
23, 1998 and an Amendment No. 3 dated December 14, 1998, an Amendment No.
4 dated January 19, 1999 and an Amendment No. 5 dated January 27, 1999,
Mr. Knott, Knott Partners, L.P., Dorset Management Corporation and
Matterhorn Offshore Fund Limited, along with Messrs. Apostolakis, Ray,
Marden and Campbell, may be deemed to have acted together as a group for
certain purposes. Such persons have indicated, however, that their filings
do not constitute an admission that they are members of a "group" for any
purpose. The information contained in the Schedule 13D reflects that Mr.
Knott beneficially owns 1,397,828 shares of the Company's Common Stock and
(a) individually (i) has the sole power to vote and to dispose of (1)
52,120 shares of the Company's Common Stock held in his and his IRA's
accounts and (2) 801,008 shares held in the account of Knott Partners,
L.P., and (ii) shares with the respective account owners the power to
dispose of (but not to vote) 600 shares held by the accounts of Mrs. Knott
and her IRA, and (b) as President of Dorset Management Corporation (i) has
the sole power to vote and dispose of 448,100 shares of the Company's
Common Stock and (ii) shares with the respective account owner the power
to vote and dispose of 96,100 shares held in the account of Matterhorn
Offshore Fund Limited.
(8) Based on a Schedule 13D dated November 4, 1998, as amended by an Amendment
No. 1 dated December 14, 1998, and an Amendment No. 2 dated December 18,
1998, Mr. Campbell, and Messrs. Apostolakis, Ray, Marden and Knott and
certain affiliated entities may be deemed to have acted together as a
group for certain purposes. The information contained in the Schedule 13D
reflects that Mr. Campbell beneficially owns 1,412,600 shares of the
Company's Common Stock and has sole voting and dispositive power with
respect to all shares beneficially owned by such person. Additionally, Mr.
Campbell individually owns 42,500 shares of Common Stock and a trust
estate for the benefit of Mr. Campbell's children owns 30,000 shares of
Common Stock (as to which Mr. Campbell disclaims beneficial ownership).
Mr. Campbell expressly disclaims beneficial ownership of any Common Stock
beneficially owned by Messrs. Apostolakis, Ray, Marden or any other
person. Such persons have also indicated that their filings do not
constitute an admission that they are members of a "group" for any
purpose. TC Management, as the general partner of Windsor LP and manager
of the TC Managed Account, may be deemed to beneficially own the shares
directly owned by Windsor LP and the TC Managed Account. TC Management,
Windsor LP and TC Managed Account own 1,382,600, 1,238,800 and 101,300
shares of the Company's Common Stock, respectively.
As of April 20, 2000, the Company knows of no persons other than shown
above who beneficially own or exercise voting or dispositive control over 5% or
more of the Company's outstanding Common Stock.
EXECUTIVE COMPENSATION
The tables, graph and descriptive information set forth below are intended
to comply with the Securities and Exchange Commission compensation disclosure
requirements applicable to, among other reports and filings, annual reports on
Form 10-Ks. This information is being furnished with respect to the Company's
Chief Executive Officer ("CEO") and its four other executive officers, other
than the CEO, whose salary and bonus exceeded $100,000 for the most recent
fiscal year (collectively, the "Executive Officers").
5
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------ ---------------------------------------
Awards Payouts
----------- -----------
Securities LTIP All Other
Salary Bonus Underlying Payouts Compensation
Name and Principal Position Year ($) ($) Options(4) ($) ($)
- --------------------------- ---- -------- ----- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Norman M. Meier (1) 1999 $350,000 0 20,000 0 0
President and Chief 1998 400,000 0 250,000 0 0
Executive Officer 1997 301,000 0 250,000 0 0
William J. Bologna 1999 350,000 0 20,000 0 0
Chairman of the Board 1998 400,000 0 250,000 0 0
1997 294,000 0 250,000 0 0
Dominique de Ziegler 1999 221,800 0 25,000 0 0
Vice President- 1998 221,800 0 25,000 0 0
Pharmaceutical 1997 221,800 0 25,000 0 0
Development
Howard L. Levine (2) 1999 250,000 0 60,000 0 0
Vice President- 1998 279,198 0 50,000 0 0
Research and Development 1997 82,500 0 -- 0 0
David L. Weinberg (3) 1999 189,000 0 25,000 0 0
Vice President-Finance 1998 182,000 0 50,000 0 0
and Administration, 1997 51,000 0 25,000 0 0
Chief Financial Officer,
Secretary and Treasurer
</TABLE>
- ----------
(1) Norman M. Meier served as President and Chief Executive Officer until
January 2000.
(2) Howard L. Levine was elected Vice President - Research and Development on
September 29, 1997.
(3) David L. Weinberg was elected Vice President - Finance and Administration,
Chief Financial Officer, Secretary and Treasurer on September 29, 1997.
(4) These amounts reflect the grant of options under the 1996 Long-Term
Performance Plan.
Option Grants During 1999
Number of % of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees Price Expiration Present
Name Granted in 1999 ($/Share) Date Value(1)
- -------------------- -------- --------- -------- --------- ---------
Norman M. Meier .... 10,000 2.4% $5.75 3/24/09 $ 33,716
10,000 2.4% 8.25 6/2/09 48,375
William J. Bologna . 10,000 2.4% 5.75 3/24/09 33,716
10,000 2.4% 8.25 6/2/09 48,375
Dominique de Ziegler 15,000 3.6% 5.75 3/24/09 50,574
10,000 2.4% 8.25 6/2/09 48,375
Howard L. Levine ... 50,000 12.0% 5.75 3/24/09 168,580
10,000 2.4% 8.25 6/2/09 48,375
David L. Weinberg .. 15,000 3.6% 5.75 3/24/09 50,574
10,000 2.4% 8.25 6/2/09 48,375
6
<PAGE>
- ----------
(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 equal to the fair market value of the underlying
stock on the date of grant, (ii) an option term of three years, (iii) an
interest rate of 6% that represents the interest rate on a U.S. Treasury
security with a maturity date corresponding to that of the expected option
term, (iv) volatility of 86.7% calculated using daily stock prices for the
one-year period ending on December 31, 1999 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.
Aggregated Option Exercises During 1999 and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares Acquired Value December 31, 1999 December 31, 1999
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman M. Meier .... -- $ -- 1,122,250 80,000 $1,527,900 $ 17,500
William J. Bologna . -- -- 1,118,75 080,000 1,513,900 17,500
Dominique de Ziegler -- -- 145,000 25,000 119,250 26,250
Howard L. Levine ... -- -- 250,000 60,000 -- 87,500
David L. Weinberg .. -- -- 75,000 25,000 -- 26,250
</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 was 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. 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. The employment
agreements were amended effective September 15, 1997 to increase the base salary
to $400,000. Messrs. Bologna and Meier agreed to a voluntary 25% reduction in
base salary for the six month period ending June 30, 1999. Effective January 1,
2000, Mr. Bologna's employment agreement was amended. Under the terms of the
amendment, the term of Mr. Bologna's agreement was extended by one year. In
January 2000, Mr. Meier's employment agreement was amended. Under the terms of
the amendment, Mr. Meier will be employed by the Company for two years beginning
January 1, 2000 in a non-executive position with the title Chairman Emeritus at
a salary of $200,000 per year.
In January 2000, the Company entered into a two-year employment agreement
with James J. Apostolakis to serve as Vice Chairman and President of the
Company. Pursuant to his employment agreement, Mr. Apostolakis is entitled to a
base salary of $200,000 per year.
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 was 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. Dr. de Ziegler's contract expired in July 1998. For the calendar years
1997, 1998 and 1999, Dr. de Ziegler's salary was increased to $221,800. On
December 30, 1999, the Company entered into a one-year employment agreement with
Dr. de Ziegler to serve as Director of Research Development. Pursuant to this
agreement, Dr. de Ziegler will receive an annual salary of $210,000 plus a
housing allowance of approximately $36,000.
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The exercise price of all of the options granted pursuant to the
aforementioned employment agreements were based on the closing price of the
Company's Common Stock on the American Stock Exchange on the day of grant.
Compensation/Stock Option Committee Report
The principal elements of the Company's executive compensation program
include base salary, annual incentive compensation and long-term incentive
compensation. Historically, as a result of the size and development 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.
Under the supervision of the Compensation/Stock Option Committee, the
Company is continuing to develop 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 stockholders, as well as to retain, motivate and
reward talented executives who are essential to the Company's long term success
within a highly competitive industry. In this regard, the Compensation/Stock
Option Committee has from time to time engaged outside consultants to help it
analyze 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.). Based upon the recommendation of these
consultants and upon its own internal discussion and review, the
Compensation/Stock Option Committee has established a compensation program which
is designed to provide executives with base salaries competitive with comparable
companies in the pharmaceutical industry, as well as incentive based
compensation to be awarded upon the achievement of strategic and financial goals
of the Company. The Compensation/Stock Option Committee reviews periodically
compensation criteria to ensure that they are consistent with the Company's
ultimate objective of enhancing stockholder value.
Base Salary. The base salaries of each of the named executive officers are
as stated in their individual employment contracts. In 1997, the employment
agreements of Messrs. Bologna and Meier were amended to increase their base
salary compensation to $400,000. For the first six months of 1999, Messrs.
Bologna and Meier each voluntarily agreed to reduce their base salary by 25%,
therefore, earning $350,000 in 1999. Effective January 1, 2000, Mr. Meier's
employment contract was amended under which terms Mr. Meier will be employed by
the company for two years in a non-executive position at a salary of $200,000
per year.
Annual Incentive Compensation. During 1993, the Company's stockholders
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 1999,
no amounts were awarded for 1999.
Long-term Performance Compensation. Under the 1996 Long-term Performance
Plan 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 stockholders are met by
providing the executive officers with the opportunity to continue to build a
meaningful stake in the Company.
As additional compensation, in March 1999, Messrs. Meier, Bologna, de
Ziegler, Levine and Weinberg were granted options to purchase 10,000, 10,000,
15,000, 50,000 and 15,000 shares of Common Stock, respectively at $5.75 per
share. In June 1999, Messrs. Meier, Bologna, de Ziegler, Levine and Weinberg
were each granted options to purchase 10,000 shares of Common Stock at $8.25 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 Stock Option 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. 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
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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 1996 Long-term Performance Plan qualify for the Exemption.
COMPENSATION AND STOCK OPTION COMMITTEE
Dr. Jean Carvais & Robert S. Strauss, Chairman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation/Stock Option Committee serving at any time
during 1999 were Dr. Jean Carvais, Director and Robert S. Strauss,
Chairman/Director. There were no interlocks during 1999 between any member of
the Compensation/Stock Option Committee and any other company.
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COMPARATIVE PERFORMANCE BY THE COMPANY
Comparison of Five-Year Cumulative Total Return*
Columbia Laboratories, Inc., Russell 2000 Index And Value Line Drugs Index
(Performance Results Through 12/31/99)
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock with
the cumulative total stockholder 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, 1995 in each of the
Common Stock, the stocks comprising the Russell Index and the stocks of the
pharmaceutical companies.
[The following table was represented by a line graph in the printed material]
Columbia Russell
Laboratories, Inc. 2000 Index Drugs
----------------- ---------- ---------
1994 100 100 100
1995 175.61 128.44 178.96
1996 282.93 149.55 236.68
1997 341.46 182.75 406.34
1998 59.77 177.76 605.3
1999 146.34 209.46 730.51
- ----------
Assumes $100 invested at the close of trading 12/94 in Columbia Laboratories,
Inc. common stock, Russell 2000 Index, and Drugs.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
(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., Barr Labs, Biogen Inc., Block Drug, Bristol-Myers Squibb, Chiron
Corp., Covance, Cygnus, Dura Pharmaceuticals, Elan, Forest Labs, Genzyme,
Glaxo Wellcome, Human Genome Sciences, ICN Pharmaceutical, IDEC
Pharmaceuticals, Immunex, Inhale Therapeutic Services, IVAX Corp., Jones
Pharma, Lilly, Medimmune, Merck, Monsanto, Mylan Labs, PAREXEL
International, Perrigo, Pfizer, Pharmaceut. Product Development, Pharmacia
& Upjohn, Quintiles Transnational, Smith Kline Beecham, Schering-Plough,
SICOR, Warner-Lambert and Watson.
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ADDITIONAL INFORMATION
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, were due on or before December 7, 1996. The
due dates of these notes were extended through December 7, 1999. At December 31,
1999 the balances including interest were $128,667 and $178,017, respectively.
At April 20, 2000, the above notes remain outstanding.
In January 1999, the Company raised approximately $6.4 million, net of
expenses from the issuance and sale of Series C Convertible Preferred Stock
("Preferred Stock"). The Preferred Stock, sold to twenty-four accredited
investors, has a stated value of $1,000 per share. The Preferred Stock is
convertible into common stock at the lower of: (i) $3.50 per share of common
stock or (ii) 100% of the average of the closing prices during the three trading
days immediately preceding the conversion notice. If conversion is based on the
$3.50 conversion price, conversion may take place after the underlying common
stock is registered. If conversion is based on the alternative calculation,
conversion cannot take place for fifteen months. The Preferred Stock pays a 5%
dividend, payable quarterly in arrears on the last day of the quarter. In
addition, each investor received warrants to purchase 35 shares of stock at
$3.50 per share for each $1,000 invested.
Investors in the Preferred Stock transaction included Norman M. Meier, a
director, William J. Bologna, the Company's Chairman of the Board and Chief
Executive Officer and James J. Apostolakis, the Company's Vice Chairman of the
Board and President who invested $350,000, $250,000 and $250,000, respectively.
In addition, Mr. Apostolakis was issued a warrant to purchase 100,000 shares of
the Company's common stock at $4.81 per share for his assistance in the
placement of the Preferred Stock. In September 1999, Mr. Apostolakis was issued
a warrant to purchase 75,000 shares of the Company's common stock at $7.50 per
share in exchange for services provided to the Company. In connection with the
issuance of the Preferred Stock, the Company received two notes receivable from
Messrs. Meier and Bologna for $350,000 and $250,000 respectively. The notes bear
interest at 5% per annum and were due on July 28, 1999. Mr. Meier's note was
paid in December 1999 with interest through the date of payment and Mr.
Bologna's note was paid in January 2000 with interest through the date of
payment.
There are no interlocks between the Company and any other companies.
Certain Other Transactions
In December 1998, the Company, along with Messrs. Bologna and Meier,
entered into an Agreement (the "Agreement") with Messrs. Apostolakis, Ray,
Marden, Campbell, Knott and Knott Partners, L.P. (collectively, the "Signing
Stockholders") pursuant to which the Company agreed to take certain actions with
respect to the nomination of directors to the Board of Directors, the
composition of committees of the Board of Directors and certain other matters
during the period from the date of the Agreement until immediately preceding the
2000 Annual Meeting of Stockholders (the "Term"). In addition, the Signing
Stockholders agreed that they will not engage in proxy contests and certain
other stockholder actions during the Term and will vote their Common Stock
consistent with the terms of the Agreement, as more fully described below.
Pursuant to the Agreement, the Board of Directors initially consisted of
eight persons, five persons designated by the Company (referred to as the
"Incumbent Designees") and three persons designated by the Signing Stockholders
(referred to as the "New Designees"). Under the terms of the Agreement, the
Company may increase the Board by one member to include as a member one
additional person designated by the Company. In addition, the Company will
increase the Board by one additional member if the Signing Stockholders
designate a fourth person within a specified time period after the date of the
Agreement, which person is subject to the approval of a majority of the
Incumbent Designees, such approval not to be unreasonably withheld. The Company
has agreed not to otherwise change the size of the Board of Directors without
the consent of a majority of the New Designees.
If, however, the aggregate number of shares of the Company's Common Stock
beneficially owned by the Signing Stockholders: (a) falls below 9% of the
outstanding shares of Common Stock, the Signing Stockholders will have the right
to designate only two (2) persons for nomination to the Board of Directors at
the next annual
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meeting of stockholders; (b) falls below 6% of the outstanding shares of Common
Stock, the Signing Stockholders will have the right to designate only one (1)
person for nomination to the Board of Directors at the next annual meeting of
stockholders; and (c) falls below 5% of the outstanding shares of Common Stock,
the Signing Stockholders will not have the right to designate any persons for
nomination to the Board of Directors at the next annual meeting of stockholders.
The number of persons that the Signing Stockholders have the right to designate
pursuant to clause (a) and clause (b) above will be increased by one (1) person
if the Company has increased the size of the Board to include the person
designated as the additional designee by the Signing Stockholders. Should a
vacancy arise on the Board of Directors, the vacancy will be filled by the group
which originally designated for nomination the person who has ceased to be a
director.
Notwithstanding the above, if Mr. Strauss resigns from the Board of Directors at
any time when the Company's additional designee is on the Board of Directors or
the Signing Stockholders' additional designee is not on the Board of Directors,
no action will be taken to replace Mr. Strauss, and the number of members of the
Board of Directors will be reduced by one member. If, however, Mr. Strauss
resigns from the Board of Directors at any time when the Company's additional
designee is not a member of the Board of Directors and the Signing Shareholders'
additional designee is on the Board of Directors, a vote of the majority of the
entire Board of Directors will be required to fill the vacancy caused by Mr.
Strauss's resignation, and thereafter the same vote will be required to approve
and elect any successor to the person so elected to replace Mr. Strauss, or any
of such person's immediate or subsequent successors.
Pursuant to the Agreement, the Signing Stockholders have agreed they will
vote (a) in favor of the election of the Incumbent Designees to the Board of
Directors at the 1998 Annual Meeting and the 1999 Meeting, and any other persons
nominated and recommended by the Board of Directors of the Company in any other
election of directors and (b) in a manner consistent with the recommendation of
the Board of Directors with respect to any other matter brought before
stockholders of the Company (whether at a meeting or by written consent) other
than a vote with respect to a business combination, sale, lease or exchange of
property and assets, recapitalization, authorization or issuance of securities
or dissolution involving the Company.
In addition, for a period of twelve (12) months following the succession
to office of the New Designees, the Signing Stockholders will not take any
action to remove or seek the removal of Bologna as Chairman of the Board of
Directors and Meier as President and Chief Executive Officer. The Signing
Stockholders have also agreed that they will not (a) participate in any proxy
contests or in any other 13D group, (b) make any proposal or bring any business
before any meeting of Stockholders, or (c) call or seek to call any special
meeting of stockholders.
The Company has agreed that during the Term, the Audit Committee and the
Compensation Committee will each consist of one of the Incumbent Designees, one
of the New Designees and Mr. Strauss (or his successor). There will be no
executive committee of the Board of Directors or other committee to which the
Board of Directors may otherwise delegate all or any substantial portion of its
authority.
Effective at the 1998 Annual Meeting, the By-Laws of the Company were
amended and restated to provide that (a) a supermajority (75%) vote of whole
board is required to elect anyone other than Bologna as Chairman and Meier as
President and/or Chief Executive Officer for the duration of the Term, (b) a
supermajority (75%) vote of whole board is required to remove the Chairman or
President for cause and supermajority (66.7%) vote is required to remove
Chairman or President without cause, (c) not less than six (6) regular board
meetings are to be called by the Chairman or President annually, and (d) no
executive or similar committee will be formed.
The Company paid $60,000 of the Signing Stockholders' reasonable and
documented legal fees and expenses incurred by it in connection with the
negotiation of the Agreement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons who own more than ten percent
of the Company's Common Stock, to file reports of initial ownership of the
Company's Common Stock and subsequent changes in that ownership with the
Securities and Exchange Commission and the American Stock Exchange, Inc.
Officers, directors and greater than ten-percent beneficial owners are also
required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely
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upon a review of the copies of the forms furnished to the Company, the Company
believes that during the 1999 fiscal year all filings of Forms 3, 4 and 5 were
made on a timely basis.
PROPOSAL 2
Amendment to Certificate of Incorporation to Increase Authorized Common Stock
The Board of Directors has approved, and recommends to the stockholders
for approval at the Annual Meeting, an amendment to the Certificate of
Incorporation of the Company to increase from 40,000,000 to 100,000,000 the
aggregate number of authorized shares of the Company's Common Stock.
The proposed amendment would revise Article FOURTH of the Certificate of
Incorporation to read in its entirety as follows:
"The total number of shares of capital stock which the Corporation is
authorized to issue is one hundred one million (101,000,000) shares, of which
one hundred million (100,000,000) shares shall be denominated Common Stock, $.01
par value per share ("Common Stock"), and one million (1,000,000) shares shall
be denominated preferred stock, $.01 par value per share ("Preferred Stock").
The rights, preferences and limitations of the preferred class of stock of
the Corporation, as defined above, are set forth as follows:
(1) The Preferred Stock may be issued from time to time in one or more
series, with such distinctive designations as may be stated in the resolution or
resolutions providing for the issue of such stock from time to time adopted by
the Board of Directors. The resolution or resolutions providing for the issue of
shares of a particular series shall fix, subject to applicable laws and
provisions of Article FOURTH hereof, the designations, rights, preferences and
limitations of the shares of each such series. The authority of the Board of
Directors with respect to each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting such series, including the
authority to increase or decrease such number, and the distinctive designation
of such series;
(b) The dividend rate of the shares of such series, whether the
dividends shall be cumulative and, if so, the date from which they shall be
cumulative, and the relative rights of priority, if any, of payment of dividends
on shares of such series;
(c) The right, if any, of the Corporation to redeem shares of such
series and the terms and conditions of such redemption;
(d) The rights of the shares in case of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, and the relative
rights of priority, if any, of payment of shares of such series;
(e) The voting power, if any, for such series and the terms and
conditions under which such voting power may be exercised;
(f) The obligation, if any, of the Corporation to retire shares of
such series pursuant to a retirement or sinking fund or funds of a similar
nature or otherwise, and the terms and conditions of such obligation;
(g) The terms and conditions, if any, upon which shares of such
series shall be convertible into or exchangeable for shares of stock of any
other classes, including the price or prices or the rate or rates of conversion
or exchange and the terms of adjustments, if any; and
(h) Any other rights, preferences or limitations of the shares of such
series."
As of April 20, 2000, an aggregate of 30,429,926 shares of Common Stock
were issued and outstanding, 2,201,143 shares remain reserved for issuance under
the Company's 1988 Stock Option Plan, 2,883,500 shares remain reserved for
issuance under the Company's 1996 Long-term Performance Plan, 536,478 shares
were reserved for issuance under the Company's outstanding stock purchase
warrants and 2,217,398 shares were
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reserved for issuance upon the conversion of the Company's Series A, Series B
and Series C Preferred Stock and for a convertible note. Accordingly, only
1,731,555 shares of Common Stock were available for issuance in connection with
other corporate purposes.
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to have available an adequate number of additional
shares of Common Stock for potential future transactions, including such
purposes as asset and stock acquisitions of other companies, equity financings
or lease or debt financings in which part of the consideration would likely be
warrants to purchase Common Stock, and equity-based compensation for employees.
In addition, additional authorized shares will be necessary for the Company to
implement the Amendment to the 1996 Long-term Performance Plan being proposed
for adoption at the Annual Meeting (see "Amendment to the 1996 Long-term
Performance Plan").
The Authorization of additional Common Stock will not, by itself, have any
effect on the rights of holders of the currently outstanding Shares. However,
any issuance of additional Common Stock could, depending on the circumstances,
affect the existing holders of Shares by diluting per share earnings and voting
power of the outstanding Common Stock. The availability of additional Common
Stock could also enable the Company to dilute the interests of others that might
seek to acquire the Company, thereby rendering such an acquisition less likely
and impairing the ability of stockholders of the Company to realize any premium
over the market value of their shares that might otherwise be offered in an
acquisition transaction.
Adoption of this proposed amendment requires the affirmative vote of the
holders of a majority of all outstanding Shares entitled to vote at the Annual
Meeting.
The Board of Directors believes that the proposed amendment of the
Articles of Incorporation is in the best interests of the stockholders and the
Company for the reasons stated above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL.
PROPOSAL 3
Amendment of the 1996 Long-Term Performance Plan
General
The Board of Directors has approved and recommends to the stockholders a
proposal to amend and restate the 1996 Long-term Performance Plan ("Plan") with
such amended Plan to incorporate the following amendments: (i) an increase in
the number of authorized shares available for issuance under the Plan from
3,000,000 to 4,000,000; (ii) a restriction on the life of options upon the
termination of employees to the lesser of 90 days or the life of the option and
(iii) an extension of the termination date of the 1996 Long-term Performance
Plan to March 8, 2010.
The foregoing amendments incorporated in the Plan are summarized below,
and the complete text of the Plan is included in this Proxy Statement as Annex
A. The summary of the amendments is not intended to be a complete description of
the amendments, and the summary is qualified in its entirety by the actual text
of the Plan to which reference is made.
The amendments included within this Proposal 3 described below will not be
effective unless and until stockholder approval is obtained.
Summary of the Proposed Amendments and Reasons for the Amendments
This section summarizes the proposed amendments to the Plan, and also
describes the Board's reasons for adopting such amendments.
(1) Increase in Number of Authorized Shares under the Plan. The
Board has approved an increase in the number of common stock authorized under
the Plan from 3,000,000 to 4,000,000.
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As of April 20, 2000, option grants for 2,649,000 shares were granted and
outstanding, and options for 116,500 shares have been exercised. In the absence
of an amendment to increase the number of shares authorized under the Plan,
there would be only 234,500 shares remaining available for grant under the Plan.
If Proposal 3 is adopted, there will be 1,234,500 shares of common stock
available for grant under the Plan.
The Company uses stock option grants as an integral part of its
compensation program for executives and employees. By doing so, the Company
believes it links compensation throughout the organization to the Company's
performance. The Board believes that this program has been an important factor
in the Company's attracting and retaining employees of outstanding ability and
promoting the identification of such employees' interests with those of the
Company's stockholders. For these reasons, the Board believes that it is
appropriate to continue such practice in the future through the use of stock
options.
(2) Inserting a New Section "Termination of Employment". The Board
has approved the addition of a new section that would limit the life of
exercisable options to the earlier of 90 days from the date of termination of
employment or the life of the option for employees terminated without cause and
would forfeit any non-exercisable options on the date of termination.
Currently, all options once granted remain alive for a period of ten years
even if employees resign or are terminated without cause. The Board believes
that the addition of this new section will help to retain valuable employees
because they will understand that they will retain their stock option grants for
the entire ten year life of the grant only if they remain with the Company.
(3) Extension of Termination Date to March 8, 2010. The Board has
approved an amendment extending the termination date of the Plan to March 8,
2010, which is ten years from the date the Board adopted such amendment. The
Board believes that it is prudent and appropriate to extend the Plan's
termination date for ten years, to March 8, 2010, to avoid interruptions or
complications that might arise in 2006, the current termination date, in the
absence of stockholder approval to extend the Plan's termination date at that
time.
Summary of the Option Plan
Set forth below is a summary of the principal terms of the Plan, as
proposed for amendment. The complete text of the Plan is included as Annex A.
The Summary set forth below is not intended to be a complete description of the
Plan, and the summary is qualified in its entirety by the actual text of the
Plan to which reference is made.
Unless earlier terminated by the Board, the Plan will expire on March 8,
2010. Such termination will not affect the validity of any option grant or stock
award outstanding on the date of termination.
The Plan is administered by the Compensation/Stock Option Committee of the
Board of Directors (the "Committee"). The Committee, by majority action thereof,
is authorized, in 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 Plan; to prescribe, amend and resign
rules and regulations relating to the Plan; to provide for conditions and
assurances deemed necessary or advisable to protect the interest 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.
Under the terms of the 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 NSOs may be granted under the 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,
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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 day of grant. The "Fair Market
Value" is defined for purposes of the Plan as the closing price on the principle
market for the stock (currently, the American Stock Exchange) on the day of
grant. In order to obtain the underlined 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 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 NSOs 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 day 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 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 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 Plan may be granted in a 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 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.
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Termination of Employment
(a) Termination of Participant's Services Other Then For Cause. In
the event of any termination of a Participant's services with the Company other
than the death or Disability of the Participant, or if the Participant's
services are terminated by the Company or any Subsidiary without Cause, or by
the Participant for any reason:
(1) all unexercisable Stock Options held by the Participant on
the date of death or termination of services, as the case may be, shall be
immediately forfeited by the Participant; and
(2) all exercisable Stock Options held by the Participant on
the date of termination of services, shall remain exercisable until the earlier
of (i) the end of the 90-day period following the Participant's termination of
services, or (ii) the date the Stock Option expires.
(b) Termination of Participant's Services by the Company or Any
Subsidiary for Cause. In the event the Participant's services are terminated by
the Company or any Subsidiary for Cause all exercisable and unexercisable Stock
Options held by the Participant, and all exercised Stock Options as to which
Common Stock has not yet been delivered, at the time of termination of services
shall be immediately forfeited by the Participant.
(c) Committee Discretion. Notwithstanding anything herein to the
contrary, in the event of a termination of a Participant's services for any
reason, the Committee may, in its sole discretion, provide that:
(1) any or all unexercisable Stock Options held by the
Participant on the date of termination of services become exercisable and remain
exercisable until a date that occurs on or prior to the date the Stock Options
expires; and/or
(2) any or all exercisable Stock Options held by the
Participant on the date of termination of services remain exercisable until a
date that occurs on or prior to the date the Stock Option expires.
Change of Control of the Company
In the event of a "Change of Control" (as defined in the Plan), the
following shall occur: (a) Stock Options, if not otherwise exercisable, become
immediately exercisable; (b) SARs become, if not otherwise then exercisable,
become 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 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 Plan is to remain in effect until (a) all Common Stock reserved under
the Plan shall have been purchased or acquired, (b) the Board terminates the
Plan or (c) the tenth anniversary of the date on which the Plan was first
approved or extended 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
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, the amount or type of awards, or the limit on total grants to any person,
that may be issued under the Plan; (ii) change the provisions of the Plan
regarding the minimum price, if any, of awards; or (iii) change the class of
persons entitled to participate in the Plan. No amendment, modification or
termination of the Plan may in any manner adversely affect any awards therefore
granted under the Plan without the consent of the Participant affected thereby.
In addition,
17
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awards may be substituted or exchanged for other awards under the 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 Plan are based on statutory authority and
judicial and administrative interpretations, as of the date of this Proxy
Statement, and are 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 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 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 as 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.
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<PAGE>
The ordinary income recognized with respect to the receipt of shares or
cash upon exercise of an 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 an 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 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 and 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 Plan that vest upon a "change in control," or 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
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<PAGE>
Stock Options and SARs as well as Restricted Stock awards that constitute
Performance Based Awards granted under the Plan will qualify for the Exemption.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL
GENERAL
The Board of Directors of the Company knows of no other matters other than
those stated in this Proxy Statement that 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 judgment 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 Investors Communications, Inc.
("CIC") to aid in the solicitation of proxies. For their services CIC will
receive a fee estimated at $6,000, 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 by 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 10K for the year ended December 31,
1999 (as filed with the Securities and Exchange Commission), including the
financial statements and schedules thereto. All such requests should be directed
to David L. Weinberg, Vice President-Finance and Administration, 2875 Northeast
191 Street, Aventura, Florida 33180.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be included in the proxy
statement in reliance on Rule 14a-8 of the Exchange Act and presented at the
2001 Annual Meeting of Stockholders must be received by the Company not later
than December 31, 2000, in such form as is required by the rules and regulations
promulgated by the Securities and Exchange Commission. A proposal submitted by a
stockholder outside of the process of Rule 14a-8 for the 2001 Annual Meeting of
Stockholders will not be considered timely unless notice of such proposal is
received by the Company prior to January 31, 2001. The proxy to be solicited on
behalf of the Company's Board of Directors for the 2001 Annual Meeting of
Stockholders may confer discretionary authority to vote on any such proposal not
considered to have been timely received that nonetheless properly comes before
the 2001 Annual Meeting.
By Order of the Board of Directors
David L. Weinberg
Secretary
Date: April 28, 2000
20
<PAGE>
Annex A
COLUMBIA LABORATORIES, INC.
1996 LONG-TERM PERFORMANCE PLAN
As Amended To Be Effective May 31, 2000
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.
(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, $.0l par value per share,
of the Company.
(k) Company means Columbia Laboratories, Inc., a Delaware
corporation, and its subsidiaries, if any.
(I) 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.
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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.
(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.
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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 deteminations 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.
Section 4. Shares Reserved; Calculation of Share Availability.
(a) There is hereby reserved for issuance under the Plan an
aggregate of 4,000,000 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: (1)
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
A-3
<PAGE>
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 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 I00% 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.
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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 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 Option.s 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.
(e) The Committee shall determine whether Restricted Stock is to be
delivered to the Participant with an appropriate legend imprinted on the
certificate of if the shares are to be deposited in escrow pending removal of
the restrictions.
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Section 12. Termination of Employment
a) Termination of Participant's Services Other Than for Cause. In
the event of any termination of a Participant's services with the Company other
than the death or Disability of the Participant, or if the Participant's
services are terminated by the Company or any Subsidiary without Cause, or by
the Participant for any reason.
1) all unexercisable Stock Options held by the Participant on
the date of death or termination of services, as the case may be, shall be
immediately forfeited by the Participant; and
2) all exercisable Stock Options held by the Participant on
the date of termination of services, shall remain exercisable until the earlier
of(i) the end of the 90-day period following the Participant's termination of
services, or (ii) the date of the Stock Option expires.
b) Termination of Participant's Services by the Company or any
Subsidiary for Cause. In the event the Participant's services are terminated by
the Company or any Subsidiary for Cause all exercisable and unexercisable Stock
Options held by the Participant, and all exercised Stock Options as to which
Common Stock has not yet been delivered, at the time of termination of services
shall be immediately forfeited by the Participant.
c) Committee Discretion. Notwithstanding anything herein to the
contrary but subject to the provisions contained in Section 9(d) below, in the
event of a termination of a Participant's services for any reason, the Committee
may, in its sole discretion, provide that:
1) any or all unexercisable Stock Options held by the
Participant on the date of termination of services to become exercisable and to
remain exercisable until a date that occurs on or prior to the date the Stock
Option expires; and/or
2) any or all exercisable Stock Options held by the
Participant on the date of termination of services to remain exercisable until a
date that occurs on or prior to the date the Stock Option expires.
Section 13. 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 14. 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
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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 Maitet 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.
(d) Any Restricted Stock granted pursuant to Section II (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 15. 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 16. 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 17. 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 18. Duration, Amendment and Termination.
No Award shall be granted after March 8, 2010; provided, however, that,
subject to applicable law, the terms and conditions applicable to any Award
granted within such period may ther after 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 maybe 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
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Stock Option 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) 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 18 shall reduce the amount of any existing
Award or change the terms and condition 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 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 19. 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 20. Stockholder Approval.
The Plan has an effective amendment date of May 31, 2000, subject to
approval by the stockholders of the Company at the Annual Meeting of
Stockholders in 2000.
Section 21. 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.
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Section 22. 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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V FOLD AND DETACH HERE V
- --------------------------------------------------------------------------------
COLUMBIA LABORATORIES, INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 31, 2000
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 James J.
Apostolakis 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 or Series B Convertible Preferred Stock,
$.01 par value per share, of Columbia Laboratories, Inc. (the "Company") held of
record by the undersigned on April 20, 2000 at the Company's Annual Meeting of
Stockholders to be held on May 31, 2000, or at any adjournment or adjournments
thereof.
1. Election of Directors:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below). listed below.
--------------------------------------------------------------------------
(INSTRUCTIONS: to withhold authority to vote for any individual nominee,
write that nominee's name in the space provided above.)
NOMINEES:
James J. Apostolakis, William J. Bologna, Jean Carvais, M.D., Dominique de
Ziegler, M.D., Norman M. Meier, Denis M. O'Donnell, M.D., Selwyn P.
Oskowitz, M.D., and Robert C. Strauss.
2. Amend Certificate of Incorporation to increase the number of authorized
shares of Common Stock to 100,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Amend Company's 1996 Long-Term Performance Plan to increase authorized
shares to 4,000,000 and to amend certain other provisions of such plan
|_| FOR |_| AGAINST |_| ABSTAIN
(continued and to be signed, on the reverse side.)
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V FOLD AND DETACH HERE V
- --------------------------------------------------------------------------------
(continued from other side)
This Proxy, when properly executed will be in the manner directed herein by the
undersigned stockholder. If no direction is made, the Proxy will be voted "For"
Items 1-3.
DATED: _____________________________________
____________________________________________
(Signature)
____________________________________________
(Signature, if held jointly)
When shares are held jointly, each
Stockholder 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 Stockholder
is a corporation, the President or Vice
President should sign in his or her own name,
indicating title. If the Stockholder is a
partnership, a partner should sign his or her
own name, indicating that he or she is a
"Partner."
PLEASE MARK, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY USING
THE ENVELOPE PROVIDED.
