<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section[nb]14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Vertex Pharmaceuticals Incorporated
- ------------------------------------------------------------------------
(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[nb]14a[cad 220]6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
April 14, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Vertex Pharmaceuticals Incorporated to be held on Wednesday, May 27, 1998, at
9:30 a.m. at the Company's headquarters at 130 Waverly Street, Cambridge,
Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the matters that will be presented at the meeting. This year,
in addition to the election of three directors and approval of the Company's
accountants, stockholders are being asked to approve an amendment to the
Company's 1996 Stock and Option Plan to increase the number of shares of common
stock, $.01 par value, authorized for issuance under that plan by 1,250,000.
Regardless of the number of shares of Common Stock you may own, your votes
are important. YOU ARE URGED TO VOTE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD PROMPTLY, whether or not you plan to attend the meeting in person. This
will ensure your proper representation at the meeting.
Thank you for giving these materials your careful consideration.
Sincerely,
/s/ JOSHUA BOGER
Chairman, President and
Chief Executive Officer
VERTEX PHARMACEUTICALS INCORPORATED, 130 WAVERLY STREET,
CAMBRIDGE, MASSACHUSETTS 02139-4242
TELEPHONE (617) 577-6000, FAX (617) 577-6680
<PAGE>
VERTEX PHARMACEUTICALS INCORPORATED
130 WAVERLY STREET
CAMBRIDGE, MA 02139-4242
(617) 577-6000
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1998
Notice is hereby given that the 1998 Annual Meeting of Stockholders of
Vertex Pharmaceuticals Incorporated (hereinafter referred to as the "Company")
will be held on Wednesday, May 27, 1998, at 9:30 a.m. at the Company's
headquarters, 130 Waverly Street, Cambridge, Massachusetts, for the following
purposes:
(1) To elect three (3) directors to the class of directors whose term
expires in 2001;
(2) To approve an amendment to the 1996 Stock and Option Plan to
increase the number of shares of common stock, $.01 par value per share
("Common Stock"), authorized for issuance under the Plan by 1,250,000;
(3) To approve the appointment of independent accountants for the year
ending December 31, 1998; and
(4) To consider and act upon such other business as may properly come
before the meeting.
Reference is hereby made to the accompanying Proxy Statement for more
complete information concerning the matters to be acted upon at the meeting.
Holders of record of the Company's Common Stock at the close of business on
March 30, 1998 (the "Record Date") are entitled to vote at the Annual Meeting or
at any adjournments thereof. All stockholders are invited to attend the meeting
in person.
HOLDERS OF RECORD OF COMMON STOCK AS OF THE RECORD DATE ARE URGED TO VOTE,
SIGN, DATE, AND RETURN THEIR PROXIES IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES. HOLDERS OF RECORD OF THE COMMON STOCK
AS OF THE RECORD DATE WHO DO ATTEND THE MEETING AND WISH TO VOTE IN PERSON MAY
REVOKE THEIR PROXIES.
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD H. ALDRICH
Clerk
April 14, 1998
<PAGE>
VERTEX PHARMACEUTICALS INCORPORATED
130 Waverly Street
Cambridge, MA 02139-4242
(617) 577-6000
PROXY STATEMENT
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
This Proxy Statement, with the enclosed proxy card, is being furnished to
stockholders of Vertex Pharmaceuticals Incorporated ("Vertex" or the "Company"),
a Massachusetts corporation, in connection with the solicitation by the
Company's Board of Directors (the "Board") of proxies to be voted at the
Company's 1998 Annual Meeting of Stockholders to be held on May 27, 1998 at 9:30
a.m. at the Company's headquarters, 130 Waverly Street, Cambridge,
Massachusetts, and at any adjournments thereof (the "Meeting").
This Proxy Statement and the enclosed proxy card are first being mailed or
otherwise furnished to stockholders of the Company on or about April 14, 1998.
The Annual Report to Stockholders for the fiscal year ended December 31, 1997 is
being mailed to the stockholders with this Proxy Statement, but does not
constitute a part hereof.
The Company has retained D. F. King & Co., Inc. to assist in the
solicitation of proxies at an estimated cost of approximately $3,000. Proxies
may also be solicited by regular employees of the Company by mail, by telephone,
in person, or otherwise. No such person will receive additional compensation for
such solicitation. In addition, the Company will request banks, brokers, and
other custodians, nominees, and fiduciaries to forward proxy material to the
beneficial owners of Common Stock and to obtain voting instructions from such
beneficial owners. The Company will reimburse such firms for their reasonable
expenses in forwarding proxy materials and obtaining voting instructions.
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no such voting
instructions are given on a proxy card with respect to one or more proposals,
the shares represented by that proxy card will be voted, in the election of
directors, for the nominees named herein, and with respect to other proposals,
in accordance with the recommendations of the Board. Stockholders may revoke
their proxies at any time prior to any vote at the Meeting by written notice to
the Clerk of the Company at or before the Meeting, by submission of a duly
executed proxy card bearing a later date, or by voting in person by ballot at
the Meeting.
VOTING SECURITIES
Holders of Common Stock of record on the books of the Company at the close
of business on March 30, 1998 (the "Record Date") are entitled to notice of and
to vote at the Meeting. At the Record Date, there were issued and outstanding
25,270,005 shares of Common Stock, each of which entitles the holder to one vote
on each matter submitted to a vote at the Meeting.
1
<PAGE>
The proxy card provides space for a stockholder to withhold voting for any
or all nominees for the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so. The holders of a majority of all
shares of Common Stock issued and outstanding and entitled to vote at the
Meeting shall constitute a quorum for the transaction of business. Other than
the election of directors, which requires a plurality of the votes cast in
person or by proxy, each matter to be submitted to the stockholders requires the
affirmative vote of a majority of the votes cast in person or by proxy at the
Meeting. Abstentions and broker non-votes are not counted in determining the
number of votes cast in connection with any voting matter.
PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE
The By-Laws of the Company provide for a Board consisting of such number of
directors, not less than three nor more than nine, as may be fixed from time to
time by the Board. The Board is divided into three classes, with each class
holding office for a term of three years and the term of office of one class
expiring each year. The Board has fixed the number of directors to constitute
the full Board for the ensuing year at seven, three of whom are to be elected at
the Meeting for a term expiring at the 2001 Annual Meeting, two whose terms
expire at the 2000 Annual Meeting, and two whose terms expire at the 1999 Annual
Meeting.
Joshua S. Boger, a director of the Company since 1989, Charles A. Sanders, a
director since 1996, and Elaine S. Ullian, a director since December 1997,
represent the class of directors whose term expires at the Meeting. The Board
has nominated Dr. Boger, Dr. Sanders and Ms. Ullian for election to the class of
directors whose term will expire in 2001.
Shares represented by proxies will be voted for the election as directors of
Dr. Boger, Dr. Sanders, and Ms. Ullian unless otherwise specified in the proxy.
If any of the nominees for election to the Board should, for any reason not now
anticipated, not be available to serve as such, proxies will be voted for such
other candidate as may be designated by the Board unless the Board reduces the
number of directors. The Board has no reason to believe that Dr. Boger, Dr.
Sanders, or Ms. Ullian will be unable to serve if elected.
The table below sets forth certain information with respect to the nominees
for election to the Board of Directors and those directors whose terms of office
will continue after the Meeting.
2
<PAGE>
<TABLE>
<CAPTION>
EXPIRATION
OF PRESENT
OR
PRINCIPAL OCCUPATION, BUSINESS FIRST PROPOSED
EXPERIENCE AND OTHER BUSINESS ELECTED TERM OF
NAME AND AGE AFFILIATIONS DIRECTOR OFFICE
- --------------------------------------- -------------------------------------------------- ----------- -------------
<S> <C> <C> <C>
Joshua S. Boger, Ph.D., 47 A founder of the Company and its President and 1989 2001
Chief Scientific Officer from its inception in
1989 until May 1992, when he became President and
Chief Executive Officer. In 1997 Dr. Boger became
Chairman, President and Chief Executive Officer.
From 1987 to 1989, Senior Director of Basic
Chemistry at Merck Sharp & Dohme Research
Laboratories. Also a director of Millennium
Pharmaceuticals, Inc.
Charles A. Sanders, M.D., 66 Retired in 1994 as Chief Executive Officer and in 1996 2001
1995 as Chairman of Glaxo Inc. From 1990 to 1995 a
member of the Board of Glaxo plc. From 1981 to
1989, held a number of positions at the Squibb
Corporation, including that of Vice Chairman. Has
served on the Boards of Merrill Lynch and Co.,
Reynolds Metals Co. and Morton International Inc.;
currently a director of Kendle International Inc.,
Magainin Pharmaceuticals Inc., Pharmacopeia, Inc.,
Scios Inc., Staffmark, Inc. and Trimeris, Inc.
Elaine S. Ullian, 50 (1) President and Chief Executive Officer of Boston 1997 2001
Medical Center since 1996. From 1994 to 1996,
President and Chief Executive Officer of Boston
University Medical Center Hospital. From 1987 to
1994, President and Chief Executive Officer of
Faulkner Hospital. Also a director of Hologics
Inc.
Barry M. Bloom, Ph.D., 69 (1) (3) Formerly with Pfizer Inc., as Executive Vice 1994 2000
President of Research and Development from 1992 to
1993, Senior Vice President from 1990 to 1992,
Vice President from 1971 to 1990, and a director
since 1973. Also a director of Catalytica
Pharmaceuticals, Cubist Pharmaceuticals, Inc.,
Incyte Pharmaceuticals Inc., Neurogen Corp. and
Southern New England Telecommunications Corp.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXPIRATION
OF PRESENT
OR
PRINCIPAL OCCUPATION, BUSINESS FIRST PROPOSED
EXPERIENCE AND OTHER BUSINESS ELECTED TERM OF
NAME AND AGE AFFILIATIONS DIRECTOR OFFICE
- --------------------------------------- -------------------------------------------------- ----------- -------------
<S> <C> <C> <C>
William W. Helman IV, 39 (2) A General Partner of Greylock, a venture capital 1989 2000
firm and an original investor in the Company. Also
a director of Millennium Pharmaceuticals, Inc. and
several private companies.
Roger W. Brimblecombe, Chairman of Vanguard Medica Ltd. since 1991, of 1993 1999
Ph.D., D.Sc., 68 (1) Core Group plc since 1997, and Non-Executive
Chairman of Oxford Asymmetry International plc
since 1997. Various Vice Presidential posts in
SmithKline & French Laboratories research and
development organization between 1979 and 1990.
Also a director of Ontogeny, Inc. and several
other companies located in the United Kingdom.
Donald R. Conklin, 61 (2) (3) Executive Vice President of Schering-Plough Corp. 1994 1999
from 1986 to 1996; retired from Schering-Plough at
the end of 1996. Also a director of AlfaCell Inc.
and BioTransplant Inc.
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1997, the Board held four meetings. Each
of the incumbent directors attended at least 75% of the Board meetings and
meetings of committees of the Board of which he was a member.
The Compensation Committee's functions are to recommend to the full Board
the amount, character, and method of payment of compensation of all executive
officers and certain other key employees and consultants of the Company and to
administer the Company's stock and option plans and Employee Stock Purchase
Plan. Barry M. Bloom, Roger W. Brimblecombe and Elaine S. Ullian are the members
of the Compensation Committee, which held one meeting during 1997. Ms. Ullian
was appointed to the Compensation Committee in December 1997 and did not
participate in the 1997 executive compensation decisions described in the
"Report on Executive Compensation" below.
The Audit Committee, which consists of Donald R. Conklin and William W.
Helman IV, met twice during 1997, to discuss the adequacy of internal accounting
controls and procedures, and to perform general oversight with respect to the
accounting principles applied in the financial reporting of the Company. It also
reviewed with the Company's independent accountants the results of the annual
audit.
4
<PAGE>
The members of the Nominating Committee, Barry M. Bloom and Donald R.
Conklin, met informally from time to time during the year to discuss and meet
with candidates for membership on the Board.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS. A PLURALITY OF THE VOTES
CAST IN PERSON OR BY PROXY AT THE MEETING IS REQUIRED TO ELECT EACH NOMINEE AS
DIRECTOR.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of
the Company's Common Stock as of March 30, 1998, by (i) each person known to the
Company to be the beneficial owner of more than 5% of the Company's Common Stock
on that date, (ii) each director, (iii) each executive officer listed in the
Summary Compensation Table below, and (iv) all directors and current executive
officers as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OWNED(1) OF TOTAL
- -------------------------------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Putnam Investments, Inc......................................................... 3,021,594(2) 12.0%
One Post Office Square
Boston, MA 02109
Trimark Investment Management Inc............................................... 2,522,300(3) 10.0%
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario M5X 1E5
Canada
Mackenzie Financial Corporation................................................. 1,351,200(4) 5.3%
150 Bloor Street West, Suite M111
Toronto, Ontario M5S 3B5
Barry M. Bloom.................................................................. 22,500(5) *
Joshua S. Boger................................................................. 710,245(5)(6)(7) 2.8%
Roger W. Brimblecombe........................................................... 16,500(5) *
Donald R. Conklin............................................................... 23,500(5) *
William W. Helman IV............................................................ 45,642(5) *
Charles A. Sanders.............................................................. 11,125(5) *
Elaine S. Ullian................................................................ 1,550(5) *
Richard H. Aldrich.............................................................. 213,341(5)(7) *
Thomas G. Auchincloss, Jr....................................................... 33,910(5)(7) *
Iain P.M. Buchanan.............................................................. 53,898(5)(7) *
Vicki L. Sato................................................................... 246,583(5)(7) *
All directors and executive officers as a group (11 persons).................... 1,378,794(8) 5.3%
</TABLE>
- ------------------------
* Less than 1%
5
<PAGE>
(1) Beneficial ownership of shares for purposes hereof, as determined in
accordance with applicable Securities and Exchange Commission rules,
includes shares of Common Stock as to which a person has or shares voting
power and/or investment power.
(2) Information based solely upon Schedule 13G filed with the Securities and
Exchange Commission as of December 31,1997, which Schedule states that
Putnam Investments, Inc. has shared dispositive power as to such shares and
has shared voting power with respect to 34,600 shares.
(3) Information based solely upon Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1997, which Schedule states that
Trimark Financial Corporation owns 100% of the voting securities of Trimark
Investment Management Inc. and, consequently, may be deemed to have
beneficial ownership of such shares.
(4) Information based solely upon Schedule 13G filed with the Securities and
Exchange Commission on March 24, 1998.
(5) Includes shares which may be acquired upon the exercise of options
exercisable within 60 days after March 30, 1998, as follows: Dr. Bloom,
12,500 shares; Dr. Boger, 312,750 shares; Dr. Brimblecombe, 16,500 shares;
Mr. Conklin, 19,250 shares; Mr. Helman, 22,500 shares; Dr. Sanders, 8,125
shares; Ms. Ullian, 1,250 shares, Mr. Aldrich, 151,000 shares; Mr.
Auchincloss, 33,100 shares; Mr. Buchanan, 53,099 shares; and Dr. Sato,
240,500 shares.
(6) Includes 101,500 shares held in trusts for the benefit of Dr. Boger's
children. Dr. Boger disclaims beneficial ownership of such shares.
(7) Includes shares held in the Company's 401(k) Plan, as follows: Dr. Boger,
2,845 shares; Mr. Aldrich, 2,108 shares; Mr. Auchincloss, 482 shares; and
Dr. Sato, 1,681 shares.
(8) Includes an aggregate of 870,574 shares which may be acquired upon the
exercise of options exercisable on or within 60 days after March 30, 1997
and an aggregate of 7,116 shares held in the Company's 401(k) Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, officers, and persons
who are beneficial owners of more than ten percent of the Company's Common Stock
to file with the Securities and Exchange Commission (the "Commission") reports
of their ownership of the Company's securities and of changes in that ownership.
To the Company's knowledge, based upon a review of copies of reports filed with
the Commission with respect to the fiscal year ended December 31, 1997, all
reports required to be filed under Section 16(a) by the Company's directors and
officers and persons who were beneficial owners of more than ten percent of the
Company's Common Stock were timely filed.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation earned during the fiscal years ended December 31, 1997, 1996, and
1995 by the Company's Chief Executive Officer, and each other executive officer
of the Company whose salary and bonus for the fiscal year ended December 31,
1997 exceeded $100,000 (the Chief Executive Officer together with such other
persons being hereinafter referred to as the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
---------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (# OF SHARES) COMPENSATION
- --------------------------------------------------- --------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Joshua S. Boger,................................... 1997 $ 350,012 $ 105,000 100,000 $ 8,654(1)
Chairman, President and 1996 $316,524 $125,000 100,000 $ 8,693
Chief Executive Officer 1995 $300,014 $ 90,004 100,000 $ 8,795
Vicki L. Sato,..................................... 1997 $ 277,524 $ 70,000 65,000 $ 7,094(2)
Senior Vice President of 1996 $252,278 $ 88,297 75,000 $ 7,074
Research and Development and 1995 $239,122 $ 71,737 80,000 $ 6,924
Chief Scientific Officer
Richard H. Aldrich,................................ 1997 $ 231,036 $ 70,000 60,000 $ 7,081(2)
Senior Vice President and 1996 $210,028 $ 84,011 75,000 $ 7,109
Chief Business Officer 1995 $186,186 $ 55,856 80,000 $ 6,904
Iain P. M. Buchanan,............................... 1997 $ 191,877 $ 10,020 17,000 $ 19,188(3)
Vice President of European 1996 $170,951 -0- 15,000 $ 17,082
Operations 1995 $163,578 $ 7,968 15,000 $ 16,366
Thomas G. Auchincloss, Jr.,........................ 1997 $ 130,364 $ 16,500 17,000 $ 6,420(2)
Vice President of Finance and 1996 $116,376 $ 11,638 15,000 $ 5,720
Treasurer 1995 $110,292 $ 5,515 12,500 $ 22,256
</TABLE>
- ------------------------
(1) Includes $7,114 representing the value of the Company's matching
contributions under the Company's 401(k) Savings Plan and $1,540
representing certain insurance premiums paid by the Company on Dr. Boger's
behalf during 1997.
(2) Represents the value of the Company's matching contributions under the
Company's 401(k) Savings Plan.
(3) Represents the Company's contribution to Mr. Buchanan's personal pension
scheme account.
7
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table provides certain information with respect to options
under the Company's 1996 Stock and Option Plan granted to each of the Named
Executive Officers during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------------
NAME GRANTED (1) FISCAL YEAR PRICE DATE 5% 10%
- ------------------------------------------ ----------- ----------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Joshua S. Boger........................... 100,000 7.97% $ 27.34 12/11/07 $ 1,720,009 $ 4,358,265
Vicki L. Sato............................. 65,000 5.18% $ 27.34 12/11/07 $ 1,118,006 $ 2,832,872
Richard H. Aldrich........................ 60,000 4.78% $ 27.34 12/11/07 $ 1,032,005 $ 2,614,959
Iain P. M. Buchanan....................... 17,000 1.36% $ 27.34 12/11/07 $ 292,401 $ 740,905
Thomas G. Auchincloss, Jr................. 17,000 1.36% $ 27.34 12/11/07 $ 292,401 $ 740,905
</TABLE>
- ------------------------
(1) Options vest in twenty equal quarterly installments from the date of grant.
(2) As required by rules of the Securities and Exchange Commission, potential
values stated are on the prescribed assumption that the Company's Common
Stock will appreciate in value from the date of grant to the end of the
option term at annualized rates of 5% and 10%. These hypothesized values are
not intended to forecast possible future appreciation, if any, in the
Company's Common Stock.
FISCAL YEAR-END OPTION VALUES
The following table provides certain information with respect to the options
to purchase Common Stock exercised by the Named Executive Officers during 1997
and options held by such persons at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON OPTIONS IN-THE-MONEY OPTIONS AT
EXERCISE AT FISCAL YEAR-END FISCAL YEAR-END
------------- VALUE -------------------------- ---------------------------
NAME REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Joshua S. Boger....................... -0- -0- 286,000 304,000 $ 4,868,875 $ 2,806,500
Vicki L. Sato......................... -0- -0- 223,000 212,000 $ 4,143,563 $ 1,935,900
Richard H. Aldrich.................... 42,000 $ 1,460,358 134,000 206,000 $ 2,131,500 $ 1,889,975
Iain P. M. Buchanan................... -0- -0- 46,000 56,000 $ 827,500 $ 608,220
Thomas G. Auchincloss, Jr............. 3,000 $ 99,250 27,500 51,500 $ 455,344 $ 520,939
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has employment agreements with Dr. Boger, Dr. Sato, Mr. Aldrich
and Mr. Buchanan pursuant to which they are entitled to receive compensation as
determined by the Compensation Committee of the Board of Directors and will be
eligible to receive the benefits generally made available to executives of the
Company. The agreements with Dr. Boger, Dr. Sato and Mr. Aldrich require 18
months' notice in the event of termination by the Company without cause, and may
be terminated upon six months notice by the executive. Mr. Buchanan's agreement
requires six months' notice for termination by either
8
<PAGE>
the Company or Mr. Buchanan. In the event of certain terminations after a change
in control of the Company, the agreements also provide for a lump sum payment of
three years' salary and bonus, payable within ten days after the date of
termination, acceleration of all outstanding stock options, and continuation of
certain employee benefits for a period of three years after the date of
termination. The agreements also contain noncompetition provisions.
All outstanding options granted under the Company's 1991 Stock Option Plan
and 1994 and 1996 Stock and Option Plans provide that, in the event of certain
changes in control of the Company, either appropriate provision for the
continuation of all then outstanding options must be made, or the vesting of
such options will be accelerated and they will become fully exercisable
immediately prior to such change in control.
COMPENSATION OF DIRECTORS
During 1997, the Company paid a retainer of $8,000 per year, plus $2,000 for
each Board meeting attended and $250 for each Committee meeting attended (and an
additional $250 if the Committee meeting is not held on the same day as a
meeting of the full Board), to non-employee directors. In addition, under the
1996 Stock and Option Plan, each non-employee director, upon initial election or
appointment to the Board, receives a non-qualified option to purchase 20,000
shares of Common Stock at an exercise price equal to 85% of the then fair market
value thereof. Such options vest quarterly over a four-year period from the date
of grant, based on continued service on the Board. Each non-employee director in
office on June 1 of any year also receives a non-qualified option to purchase
5,000 shares of Common Stock under the 1996 Stock and Option Plan, exercisable
immediately at a price equal to 100% of the fair market value per share of the
Company's Common Stock on the date of grant.
REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). With the
oversight of the Committee, the Company has developed and implemented
compensation policies with the objectives of attracting and retaining top
quality management and encouraging them to contribute to the Company's growth,
while also adhering to a policy of keeping the Company's personnel costs
reasonable in relation to those of comparable companies and in relation to the
Company's other expenditures for its drug discovery and development programs.
For 1997, compensation paid to each of the Named Executive Officers consisted of
base salary, a cash bonus and long-term compensation in the form of stock
options.
The Committee's recommendations as to compensation for all employees of the
Company, including the Named Executive Officers, are subject to approval by the
full Board of Directors of the Company. Vertex's Chief Executive Officer, Dr.
Joshua S. Boger, does not participate in discussions of his compensation between
the Compensation Committee and the full Board, nor does he participate in the
full Board's vote on the Committee's recommendations as to his compensation.
BASE SALARIES
Base salaries for 1997 were determined by the Committee in late 1996. Salary
increases over 1996 salary levels were based on the Committee's subjective
evaluation of the individual Named Executive Officers' performance in 1996 and
its estimation of the salaries being offered to senior executives at
9
<PAGE>
companies with which Vertex competes in hiring and retaining qualified
executives and key scientists. In addition, the Committee considered the results
of the 1995 BIOTECHNOLOGY COMPENSATION SURVEY, a survey conducted by Radford
Associates (the "Radford Survey"). The Radford Survey included companies in the
biotechnology industry which voluntarily participated in the survey. In its
determination of compensation levels, the Committee did not consider the Nasdaq
Pharmaceuticals Stocks Index, included in the Performance Graph below. That
index tracks the stock performance of approximately two hundred companies with
stock quoted on Nasdaq, which are selected according to the broad Standard
Industrial Classification category "Drugs," and which include many categories of
companies with which Vertex does not generally compete for services of
executives.
The Committee believed that the 1997 raises approved for the Named Executive
Officers were generally slightly higher than the average raises that year for
executives of competing companies. These raises were intended to reflect the
Committee's judgment that Vertex's performance in 1996 was comparable with the
most successful of those companies with which it competes in hiring and
retaining executives. In addition, Mr. Auchincloss received a salary adjustment
in connection with his promotion to the position of Vice President of Finance.
The Committee believed that the resulting 1997 salary levels for the Named
Executive Officers were generally in the middle of the range of estimated 1997
salaries of executives serving comparable functions in other competing
companies. The Committee believed that setting salary levels in the middle range
of those offered by competing companies would allow for the possibility of
significant additional cash bonuses based on 1997 individual and Company
performance. In determining base salaries for Dr. Boger, Dr. Sato and Mr.
Aldrich, it was the Committee's intention that such incentive cash bonus
opportunities represent a larger proportion of their total compensation, as
compared with other Company employees.
CASH BONUSES
At the end of 1997, cash bonuses were awarded to the Named Executive
Officers, as well as to other Company employees who were deemed to have made
substantial contributions to the attainment of those accomplishments judged to
be most important to the Company in 1997. The amounts of the cash bonuses
awarded to Dr. Boger, Mr. Aldrich and Dr. Sato were approximately 25% to 30% of
their respective 1997 base salaries, reflecting the Committee's determination
that a larger proportion of the compensation to those three senior executives
should be performance-based, as discussed above. The amounts of the Named
Executive Officers' bonuses reflected the Committee's determination that the
Company made substantial progress during 1997, including successful completion
of a public stock offering, scientific advances in its research programs, and
progress in clinical trials of the Company's products, especially amprenavir,
the Company's leading drug candidate for the treatment of AIDS and HIV
infection. It was the Committee's judgment that each of such officers made
significant contributions within his or her area of responsibility to the
Company's performance during the year.
STOCK OPTIONS
Stock options under the Company's stock and option plans have been granted
to employees, including executive officers, to create a link between
compensation and stockholder return, and to enable executive officers and other
employees to develop and maintain a significant stock ownership position in the
Company which will vest over time and act as an incentive for the employee to
remain with the Company.
At the end of 1997, each of the Named Executive Officers was granted
ten-year options under the 1996 Stock and Option Plan to purchase a significant
number of shares of Common Stock, ranging from
10
<PAGE>
17,000 to 100,000 shares, at $27.34 per share, the average of the high and low
market prices on the date of grant, vesting in quarterly installments over a
five-year period. The amounts of these option awards were based on an evaluation
of individual contributions to the Company's success in 1997. Although the
Committee did not perform any comprehensive survey of equity compensation at
peer group companies, the Committee believed that, compared to the total number
of shares outstanding, the total number of options granted to its employees,
including the Named Executive Officers, as a group, was in the middle of the
range of the option grants awarded by other companies with which the Company
competes to attract and retain employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
Dr. Boger's 1997 base salary of $350,012 represented an increase of
approximately 10.6% over his 1996 salary. The Committee believed that Dr.
Boger's 1997 salary increase was slightly more than the average 1997 salary
increase granted to chief executive officers of the companies with which Vertex
competes to attract and retain senior executives, resulting in a 1997 salary
which the Committee believed to be near the middle of the range of base salaries
paid to chief executive officers of comparable companies. The Committee set the
1997 base salary at this level in order to provide opportunities for significant
incentive cash bonuses based on individual and Company performance.
The Committee's, and the full Board of Directors', subjective view of Dr.
Boger has consistently been that he is an outstanding scientist who has also
demonstrated exceptional ability to guide the Company and to manage well not
only the Company's scientific programs but its strategic business efforts as
well. This subjective view has been supported objectively in Dr. Boger's success
during 1997 in advancing the Company's scientific research and clinical
development, as described above. The amounts of Dr. Boger's 1997 cash bonus
(approximately 30% of his 1997 salary) and stock option award, for the purchase
of 100,000 shares of Common Stock, were determined in accordance with the
foregoing factors, among others, none of which was weighted more heavily than
any other. In setting the size of Dr. Boger's option award, the Committee also
considered its judgment that Dr. Boger's scientific and management leadership is
very important to the Company, and that it was therefore advisable for him to
maintain a substantial unvested option position, in order to continue his
incentive to remain with the Company.
INTERNAL REVENUE CODE LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits to
$1,000,000 per executive the amount of compensation paid in tax years after 1993
to the Company's Chief Executive Officer or any of the Company's other four most
highly compensated executive officers which may be deducted for corporate tax
purposes. Qualified performance-based compensation is not included in the
$1,000,000 limit. The Company believes that its 1994 and 1996 Stock and Option
Plans will qualify as performance-based compensation plans.
Submitted by the Compensation Committee
Barry M. Bloom
Roger W. Brimblecombe
Elaine S. Ullian
11
<PAGE>
PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on initial investment of $100 on December 31,
1992
with dividends reinvested
Vertex Pharmaceuticals NASDAQ Stock NASDAQ Pharm.
Incorporated Market (U.S.) Stocks
Dec-92 $100 $100 $100
Dec-93 $190 $115 $89
Dec-94 $154 $112 $67
Dec-95 $272 $159 $123
Dec-96 $413 $195 $123
Dec-97 $338 $240 $127
SOURCE: GEORGESON & COMPANY INC.
</TABLE>
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<PAGE>
PROPOSAL 2:
APPROVAL OF AMENDMENT TO 1996 STOCK AND OPTION PLAN
GENERAL
The Company's 1996 Stock and Option Plan (the "Plan") was adopted the Board
of Directors in December 1996. Under the Plan, stock rights may be granted which
are either (i) options intended to qualify as "incentive stock options" ("ISOs")
under Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), (ii) non-qualified stock options ("NQSOs"), or (iii)
awards of shares of Common Stock or the opportunity to make a direct purchase of
shares of Common Stock ("Stock Awards") (ISOs, NQSOs and Stock Awards, together,
being hereinafter referred to as "Stock Rights"). Stock Rights may be granted
under the Plan to employees (including officers and directors who are employees)
of the Company and its subsidiaries (257 persons, as of March 15, 1998), and to
consultants, advisors and non-employee directors of the Company and its
subsidiaries (NQSOs and Stock Awards only).
AMENDMENT
On December 12, 1997, the Company's Board of Directors adopted an amendment
to the Plan to increase the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the Plan by 1,250,000, from
2,000,000 to 3,250,000, plus, in each case, the number of shares of Common Stock
previously reserved for the granting of options under the Company's 1991 Stock
Option Plan and 1994 Stock and Option Plan which are not granted under those
plans or which are not exercised and cease to be outstanding by reason of
cancellation or otherwise.
As of March 15, 1998, 306,127 shares of Common Stock remained available for
the granting of options under the 1991 Stock Option Plan and 1,215,752 shares of
Common Stock were reserved for issuance under outstanding, unexercised options
under that plan, and 13,556 shares of Common Stock remained available for the
granting of options under the 1994 Stock and Option Plan and 1,868,108 shares of
Common Stock were reserved for issuance under outstanding, unexercised options
under that plan. The number of shares subject to the Plan is subject to
adjustment in the case of a stock split, stock dividend, combination,
recapitalization or similar transaction.
As of March 15, 1998, ISOs to purchase 814,683 shares of Common Stock were
outstanding under the Plan, with exercise prices ranging from $27.34 to $37.96.
NQSOs to purchase 730,017 shares of Common Stock were outstanding under the Plan
on that date, with exercise prices ranging from $23.24 to $39.56. Such options
have expiration dates ranging from December 12, 2006 to March 9, 2008. On March
30, 1998, the last sales price for the Company's Common Stock reported on the
Nasdaq National Market System was $32.125.
DESCRIPTION OF PLAN
The Compensation Committee of the Board administers the Plan. Subject to the
provisions of the Plan, the Committee has the authority to determine the persons
to whom Stock Rights will be granted, the number of shares to be covered by each
Stock Right, the exercise price per share and the manner of exercise, and the
terms and conditions upon which Stock Rights are granted, to accelerate the date
of exercise of any installment of any Stock Right, and to interpret the
provisions of the Plan.
ISOs granted under the Plan may not be granted at a price less than the fair
market value of the Common Stock on the date of grant (or less than 110% of fair
market value in the case of employees or officers holding 10% or more of the
voting stock of the Company). NQSOs may be granted at an exercise price
established by the Committee, which may not be less than the par value of the
Common Stock. ISOs
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<PAGE>
granted under the Plan must expire not more than ten years from the date of
grant, and not more than five years from the date of grant in the case of ISOs
granted to an employee or officer holding 10% or more of the voting stock of the
Company. No participant may be granted options in any calendar year for the
purchase of more than 200,000 shares. Stock Awards may be granted on such terms
and conditions as are approved by the Committee, provided that the purchase
price per share cannot be less than the par value per share of the Common Stock.
ISOs granted under the Plan are exercisable during the optionholder's
lifetime only by the optionholder and are not transferable except by the laws of
descent and distribution or pursuant to qualified domestic relations orders or
Title I of the Employee Retirement Income Security Act.
Each newly elected non-employee director is automatically granted a
non-qualified stock option on the date of initial election to the Board to
purchase 20,000 shares of Common Stock, at a purchase price equal to 85% of the
fair market value per share of the Company's Common Stock on the date of grant,
vesting in equal quarterly installments over a period of four years from the
date of grant. In addition, each non-employee director serving in office on June
1 of any year is granted a NQSO to purchase 5,000 shares, at an exercise price
equal to 100% of the fair market value per share of the Company's Common Stock
on the date of grant. Those options are fully exercisable immediately and have a
term of ten years.
In the event of certain consolidations or acquisitions or a sale of
substantially all of the Company's assets, either (i) the Committee or the
entity assuming the Company's obligations under the Plan shall make appropriate
provision for the continuation of all outstanding options under the Plan by
substituting on an equitable basis for the shares then subject to such options
either the consideration payable with respect to the outstanding shares of
Common Stock in connection with such consolidation, acquisition or sale or
securities of any successor or acquiring company, or (ii) the vesting of all
outstanding options under the Plan will be accelerated and such options will
become fully exercisable immediately prior to such consolidation, acquisition or
sale.
The Plan may be amended by the stockholders or by the Board of Directors or
the Committee. Any amendment approved by the Board of Directors or the Committee
which is of a scope that requires stockholder approval in order to ensure
favorable federal income tax treatment for any ISOs or requires stockholder
approval in order to ensure the compliance of the Plan with Rule 16b-3 under the
Exchange Act or Section 162(m) of the Code will be subject to stockholder
approval. No amendment may adversely affect the rights of any participant to
whom Stock Rights have previously been granted without that participant's
consent.
FEDERAL INCOME TAX CONSEQUENCES
The discussion of federal income tax consequences that follows is based on
an analysis of the Internal Revenue Code as currently in effect, existing law,
judicial decisions and administrative regulations and rulings, all of which are
subject to change.
INCENTIVE STOCK OPTIONS. No taxable income is realized by the optionholder
upon the grant or exercise of an ISO under the Plan if no disposition of shares
issued to an optionholder pursuant to the exercise of an ISO is made by the
optionholder within two years from the date of grant or within one year after
the transfer of such shares to the optionholder. Upon sale of such shares
thereafter, the amount realized in excess of the option price (the amount paid
for the shares) will be taxed to the option holder as a mid-term capital gain
(taxed at a 28% rate) if the shares have been held for more than one year but
less than 18 months, and as a long-term capital gain (20% rate) if the shares
have been held for more than 18 months. Any loss sustained on shares held more
than one year but less than 18 months is applied first
14
<PAGE>
against any mid-term capital gain and then against any long-term capital gain.
Any loss sustained on shares held more than 18 months is applied first against
any long-term capital gain and then against any mid-term capital gain. No
deduction will be allowed to the Company for Federal income tax purposes. The
exercise of ISOs will give rise to an item of tax preference that may result in
alternative minimum tax liability for the optionholder.
If shares of Common Stock acquired upon the exercise of an ISO are disposed
of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition"), generally (a) the optionholder
will realize ordinary income in the year of disposition in an amount equal to
the excess (if any) of the fair market value of the shares at exercise (or, if
less, the amount realized on a sale of such shares) over the option price
thereof, and (b) the Company will be entitled to deduct such amount, subject to
applicable withholding requirements and subject to certain limits on the
deductibility of compensation set forth in Section 162(m) of the Internal
Revenue Code. Any further gain realized will be taxed as capital gain and will
not result in any deduction by the Company. Special rules apply where all or a
portion of the exercise price of the ISO is paid by tendering shares of Common
Stock. A disqualifying disposition will eliminate the item of tax preference
associated with the exercise of the ISO.
In order for options granted under the amendment to the Plan to qualify as
ISOs, the amendment must be approved by the stockholders within twelve months
after its adoption by the Board of Directors. If the amendment is not approved
on or before December 12, 1999, all options granted under the Plan in excess of
the number originally authorized will be NQSOs.
Non-Qualified Stock Options. No taxable income is realized by the
optionholder at the time the NQSO is granted. Generally, (a) at exercise,
ordinary income is realized by the optionholder in an amount equal to the
difference between the option price and the fair market value of the shares on
the date of exercise, and the Company receives a tax deduction for the same
amount, subject to applicable withholding requirements and subject to certain
limits on the deductibility of compensation set forth in Section 162(m) of the
Internal Revenue Code, and (b) at disposition, appreciation or depreciation
after the date of exercise is treated as either short-term or long-term capital
gain or loss depending on how long the shares have been held.
LIMITATIONS ON COMPANY DEDUCTIONS. As a result of Section 162(m) of the
Code, the Company's deduction for NQSOs and Stock Awards granted under the Plan
may be limited to the extent that a "covered employee" (i.e., the chief
executive officer or one of the four highest compensated officers who is
employed on the last day of the Company's taxable year and whose compensation is
reported in the summary compensation table in the Company's proxy statement)
receives compensation in excess of $1,000,000 in such taxable year of the
Company. Excluded from this limitation of deductibility is performance-based
compensation that meets specified requirements of Section 162(m) of the Code.
NEW PLAN BENEFITS
Options for 5,000 shares each will be granted under the Plan during 1998 to
all non-employee directors who continue to serve as directors on June 1, 1998
(currently 6 persons). The number of additional shares or options, if any, that
will be granted to executive officers and directors under the Plan is
indeterminable at this time, since any such grants are subject to the discretion
of the Committee.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE 1996 STOCK AND OPTION PLAN AS DESCRIBED ABOVE. A MAJORITY OF THE VOTES
CAST IN PERSON OR BY PROXY AT THE MEETING IS REQUIRED FOR SUCH APPROVAL.
15
<PAGE>
PROPOSAL 3:
APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as the
Company's independent accountants for the 1998 fiscal year. Coopers & Lybrand
L.L.P. has served as the Company's independent accountants since 1989.
Representatives of Coopers & Lybrand L.L.P. will be present at the Meeting to
respond to questions and will be given the opportunity to make a statement
should they desire to do so.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE CURRENT FISCAL YEAR. A MAJORITY OF THE VOTES CAST IN PERSON
OR BY PROXY AT THE MEETING IS REQUIRED FOR SUCH APPROVAL. IF THE APPOINTMENT IS
NOT APPROVED, THE BOARD WILL SELECT OTHER INDEPENDENT ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
In order to be considered for inclusion in the Proxy Statement for the
Company's 1999 Annual Meeting of Stockholders, stockholder proposals must be
received by the Company no later than December 27, 1998. Proposals should be
sent to the attention of the Clerk at the Company's offices at 130 Waverly
Street, Cambridge, MA 02139-4242.
Stockholder nominations for election to the Board at the 1999 Annual Meeting
of Stockholders may be submitted to the Clerk of the Company and must include
(i) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (ii) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (iii) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (iv) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Commission; and (v) the consent of each nominee to serve as a director of
the Company if so elected.
OTHER MATTERS
The Meeting is called for the purposes set forth in the notice. The Board of
Directors does not know of any matter for action by the stockholders at the
Meeting other than the matters described in the notice. However, the enclosed
proxy confers discretionary authority on the persons named therein with respect
to matters which are not known to the directors at the date of printing hereof
and which may properly come before the Meeting. It is the intention of the
persons named in the proxy to vote in accordance with their best judgment on any
such matter.
By order of the Board of
Directors
Richard H. Aldrich
Clerk
April 14, 1998
16
<PAGE>
1071PS98
<PAGE>
DETACH HERE
PROXY
VERTEX PHARMACEUTICALS INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS - MAY 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint Joshua S. Boger and
Richard H. Aldrich, or either one of them, the attorney(s) of the undersigned,
with full power of substitution, with all the powers which the undersigned would
possess if personally present, to vote all stock of Vertex Pharmaceuticals
Incorporated which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Vertex Pharmaceuticals Incorporated to be held at 130 Waverly
Street, Cambridge, Massachusetts, on Wednesday, May 27, 1998 at 9:30 A.M. and at
any adjournment thereof, hereby acknowledging receipt of the Proxy Statement for
such meeting and revoking all previous proxies.
This Proxy, when properly executed, will be voted as directed. If no
direction is made, this Proxy will be voted FOR the proposals listed on the
reverse side and, in the case of other matters that legally come before the
meeting, as said attorney(s) may deem advisable.
(Continued and to be signed on reverse side)
SEE REVERSE SIDE
<PAGE>
[_X_] Please mark votes
as in this example.
Please vote, sign, date, and return the proxy card promptly using the enclosed
envelope.
1. Election of three (3) directors to the class of directors whose term
expires in 2001.
Nominees: Joshua S. Boger, Charles A. Sanders
and Elaine S. Ullian
[__] FOR ALL NOMINEES [__] WITHHELD FROM
ALL NOMINEES
[__]
________________________________________________
For all nominees except as noted above
2. Approval of amendment to 1996
Stock and Option Plan, authorizing
the addition of 1,250,000 shares to the Plan.
[__]FOR [__]AGAINST [__]ABSTAIN
3. Approval of the appointment of
Coopers & Lybrand L.L.P. as
Independent Accountants.
[__]FOR [__]AGAINST [__]ABSTAIN
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [__]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [__]
Please sign name exactly as name appears. When signing in a fiduciary
capacity, please give full title. Co-fiduciaries and joint owners should
each sign.
Signature:___________ Date:___________ Signature:___________ Date:___________
