<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CELLPRO, 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 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CELLPRO, INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 1, 1997
TO THE STOCKHOLDERS OF CELLPRO, INCORPORATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of CellPro, Incorporated (the "Company"), a Delaware corporation, will be held
on Friday, August 1, 1997, at 9:30 a.m. local time, at the Company's corporate
headquarters located at 22215 26th Avenue S.E., Bothell, Washington 98021, for
the following purposes:
1. To elect directors to serve for the ensuing year or until
their successors are duly elected and qualified.
2. To approve an amendment to the Company's Restated 1989
Stock Option Plan which will increase the number of shares of the Company's
Common Stock reserved for issuance thereunder by 1,000,000 shares.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as
independent accountants of the Company for the fiscal year ending March 31,
1998.
4. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on June
23, 1997 are entitled to notice of and to vote at the annual meeting.
All stockholders are cordially invited to attend the meeting
in person. However, to ensure your representation at the meeting, you are urged
to sign and return the enclosed Proxy as promptly as possible in the envelope
enclosed for that purpose.
Any stockholder attending the meeting may vote in person even
if he or she has returned a Proxy.
Sincerely,
Richard D. Murdock,
President and Chief Executive Officer
July 1, 1997
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE> 3
CELLPRO, INCORPORATED
22215 26TH AVENUE, S.E.
BOTHELL, WASHINGTON 98021
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 1, 1997
GENERAL
The enclosed proxy ("Proxy") is solicited on behalf of the
Board of Directors of CellPro, Incorporated, a Delaware corporation (the
"Company"), for use at the Company's Annual Meeting of Stockholders to be held
on August 1, 1997 (the "Annual Meeting"). The Annual Meeting will be held at
9:30 a.m. at the Company's corporate headquarters located at 22215 26th Avenue,
S.E., Bothell, Washington 98021.
These proxy solicitation materials were mailed on or about
July 1, 1997 to all stockholders entitled to vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any person giving a Proxy has the power to revoke it at any
time before its exercise. It may be revoked by filing with the Chief Operating
Officer of the Company at the Company's principal corporate offices, CellPro,
Incorporated, 22215 26th Avenue, S.E., Bothell, Washington 98021, a notice of
revocation or another signed Proxy with a later date. You may also revoke your
Proxy by attending the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation,
including the preparation, assembly, printing and mailing of this Proxy
Statement, the Proxy and any additional soliciting materials furnished to
stockholders. Copies of solicitation materials will be furnished to brokerage
houses, fiduciaries, and custodians holding shares in their names that are
beneficially owned by others so that they may forward this solicitation material
to such beneficial owners. In addition, the Company may reimburse such persons
for their costs in forwarding the solicitation materials to such beneficial
owners. The original solicitation of proxies by mail may be supplemented by
solicitation by telephone, telegram, or other means by Directors, officers,
employees or agents of the Company. No compensation will be paid to these
individuals for any such services. The Company also reserves the right to have
an outside solicitor conduct the solicitation of proxies and to pay such
solicitor for its services. Except as described above, the Company does not
presently intend to solicit proxies other than by mail.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to
be presented by such stockholders at the Company's 1998 Annual Meeting must be
received by the Company no later than February 20, 1998 to be included in the
Company's proxy statement and form of proxy relating to that meeting.
<PAGE> 4
RECORD DATE, VOTING AND SHARE OWNERSHIP
Stockholders of record on June 23, 1997 are entitled to notice
of and to vote at the Annual Meeting. At such record date, 14,499,738 shares of
the Company's Common Stock, $.001 par value, were issued and outstanding. No
shares of the Company's preferred stock were outstanding. All votes will be
tabulated by the inspector of election appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted towards the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes, whereas broker non-votes will not be counted for purposes of
determining whether a proposal has been approved or not. Each stockholder is
entitled to one vote for each share of Common Stock held by such stockholder.
The following table sets forth information known to the
Company regarding the ownership of the Company's Common Stock as of March 31,
1997, for (i) each Director and nominee, (ii) all persons or entities who were
known by the Company to be beneficial owners of five percent (5%) or more of the
Company's Common Stock, (iii) each executive officer named in the Summary
Compensation Table on page 7, and (iv) all executive officers and Directors of
the Company as a group. Unless otherwise indicated, each of the following
stockholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
Number of Percent of Total
Name and Address Shares Shares Outstanding
---------------- ------ ------------------
<S> <C> <C>
Corange International Limited (1) ................................... 2,160,362 14.9%
c/o Boehringer Mannheim
420 Lexington Avenue
New York, NY 10170
Amerindo Investment Advisors, Inc. (2) .............................. 1,027,500 7.1%
399 Park Avenue, 18th Floor
New York, NY 10122
J. P. Morgan & Co., Inc. (3) ........................................ 1,021,080 7.0%
500 Sparton Christiana Road
Newark, DE 19713-2107
Richard D. Murdock (4) .............................................. 268,248 1.9%
Larry G. Culver (5) ................................................. 135,749. *
Joseph S. Lacob (6) ................................................. 97,147 *
S. Joseph Tarnowski, Ph.D. (7) ...................................... 98,844 *
Cindy A. Jacob (8) .................................................. 25,402 *
Charles P. Waite, Jr. (9) ........................................... 21,165 *
Joshua L. Green (10) ................................................ 5,841 *
Kenneth W. Anstey (11) .............................................. 5,000 *
All directors and executive
officers as a group (8 people) (12) ................................ 657,396 4.5%
- - -----------------------------
* Less than 1.0%
</TABLE>
2
<PAGE> 5
(1) Based on the Company's knowledge after investigation but
without verification from Corange International Limited.
(2) Based on a March 1997 13(f ) filing but without verification
from Amerindo Investment Advisors, Inc.
(3) Based on written communications with J. P. Morgan & Co., Inc.
who holds sole power to vote 729,700 of such shares, shared
power to vote 5,000 of such shares, sole power to dispose of
1,016,080 of such shares and shared power to dispose of 5,000
of such shares. Ownership was confirmed by J.P. Morgan & Co.
as of June 2, 1997.
(4) Represents options to purchase 268,248 shares granted under
the Restated 1989 Stock Option Plan (the "Stock Option Plan")
that may be exercised within 60 days of March 31, 1997.
Excludes options to purchase 325,000 shares granted under the
Stock Option Plan on June 20, 1997.
(5) Includes options to purchase 125,749 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997. Excludes options to purchase 200,000 shares
granted under the Stock Option Plan on June 20, 1997.
(6) Includes options to purchase 80,000 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997.
(7) Includes options to purchase 97,744 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997. Excludes options to purchase 75,000 shares
granted under the Stock Option Plan on June 20, 1997.
(8) Represents options to purchase 25,402 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997. Excludes options to purchase 50,000 shares
granted under the Stock Option Plan on June 20, 1997.
(9) Includes options to purchase 20,000 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997.
(10) Includes options to purchase 5,000 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997 and also includes 841 shares held by a
revocable trust of which Mr. Green is a trustee, as to which
shares Mr. Green has shared voting and investment power with
his spouse as co-trustee.
(11) Represents options to purchase 5,000 shares granted under the
Stock Option Plan that may be exercised within 60 days of
March 31, 1997.
(12) Includes options to purchase an aggregate of 627,143 shares
granted under the Stock Option Plan held by directors and
executive officers that may be exercised within 60 days of
March 31, 1997.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE -- ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors
shall be comprised of not less than five nor more than nine Directors, with the
exact number to be fixed by the Board. The currently authorized number of
Directors is six. At the Annual Meeting, six Directors are to be elected to
serve until the Company's next Annual Meeting or until their successors are duly
elected and qualified. The Board of Directors has selected six nominees, all of
whom are current Directors of the Company. Each person nominated for election
has agreed to serve if elected and management is not aware of any nominee who is
unable to serve. UNLESS OTHERWISE INSTRUCTED, THE PROXY HOLDERS WILL VOTE THE
PROXIES RECEIVED BY THEM FOR THE NOMINEES NAMED BELOW. The six candidates
receiving the highest number of affirmative votes in person or by proxy at the
Annual Meeting will be elected Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE ELECTION OF EACH OF THE FOLLOWING NOMINEES TO SERVE AS DIRECTORS OF THE
COMPANY UNTIL THE NEXT ANNUAL MEETING OR UNTIL THEIR SUCCESSORS HAVE BEEN
ELECTED AND QUALIFIED.
NOMINEES
Set forth below is information regarding the nominees,
including information furnished by them as to principal occupations, certain
other directorships held by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of June 15, 1997.
3
<PAGE> 6
<TABLE>
<CAPTION>
Year First
Name Age Elected Director
---- --- ----------------
<S> <C> <C>
Kenneth W. Anstey................................. 51 1996
Larry G. Culver................................... 47 1995
Joshua L. Green................................... 41 1995
Joseph S. Lacob................................... 41 1989
Richard D. Murdock................................ 50 1992
Charles P. Waite, Jr.............................. 42 1989
</TABLE>
BACKGROUND OF DIRECTORS
MR. ANSTEY has served as a Director of the Company since
February 1996. He served as President and Chief Executive Officer of Biofield
Corporation, an early stage medical device company which is developing breast
cancer detection technologies, from 1995 to 1997. From 1991 until he joined
Biofield in 1995, Mr. Anstey was President and CEO of Mitek Surgical Products,
Inc., a suture anchoring device company. In addition to his membership on the
Board of Directors of the Company, Mr. Anstey serves as a Director for the
following public companies: Vision-Sciences, Inc., which develops and markets an
innovative sheath for various endoscopes; and SpineTech Corp., which develops
and manufactures spinal implants and instruments for surgical treatment of
spinal conditions. Mr. Anstey received an M.B.A. in 1970 from Michigan State
University.
MR. CULVER has served as a Director of the Company since May
1995. He joined the Company as Vice President of Finance and Administration and
Chief Financial Officer in March 1991, became Senior Vice President in August
1993 and Executive Vice President and Chief Operating Officer in February 1996.
He was named Assistant Secretary in August 1991. Mr. Culver has also served in
the following capacities for the following subsidiaries of the Company: as a
Director of CellPro Europe N.V./S.A. since April 1992, of CellPro France
S.A.R.L. since April 1993, of CellPro Italia s.r.l. since December 1994, of
CellPro Biotech Iberica S.L. since May 1995, of CellPro Deutschland GmbH since
January 1994, of CellPro Asia-Pacific Pty. Ltd. since November 1996 and as
Senior Vice President, Chief Financial Officer and Assistant Secretary of
CellPro II, Inc. since October 1993. Mr. Culver received an M.B.A. in 1977 from
the University of Wisconsin.
MR. GREEN has served as a Director of the Company since June
1995. He has been a director with the law firm Venture Law Group since August
1995. From 1986 until he joined Venture Law Group, Mr. Green had been a partner
with the law firm of Brobeck, Phleger & Harrison L.L.P. He had been with the
firm since 1980. Mr. Green has served as Secretary of the Company since 1989.
Mr. Green received a J.D. in 1980 from the University of California at Los
Angeles.
MR. LACOB, a co-founder of the Company, has been Chairman of
the Board since 1990. He has served as a Director of the Company since March
1989 and served as its Acting President from March 1989 to November 1989. Mr.
Lacob has been a general partner of Kleiner Perkins Caufield & Byers, a venture
capital firm, since May 1992. Mr. Lacob serves as a Director for the following
public companies: Heartport, Inc., which develops systems and procedures for
minimally invasive cardiac surgery; Microcide Pharmaceuticals, Inc., which
develops antibiotics for treatment of serious bacterial infections;
Pharmacyclics, Inc., which develops macrocyclic chemistry for treatment of
diseases such as cancer and atherosclerosis, and for diagnostic imaging
procedures and Cardima, Inc., which develops and markets diagnostic and
therapeutic catheters. Mr. Lacob holds an M.P.H. from the University of
California, Los Angeles and received an M.B.A. in 1983 from Stanford University.
4
<PAGE> 7
MR. MURDOCK has served as President of the Company since
December 1991 and Chief Executive Officer and a Director of the Company since
June 1992. From August 1991 to December 1991, he served as Vice President of
Marketing and Corporate Development. Mr. Murdock has also served in the
following capacities for the following subsidiaries of the Company: as a
Director of CellPro Europe N.V./S.A. since April 1992, of CellPro France
S.A.R.L. since April 1994, of CellPro Deutschland GmbH since January 1994, of
CellPro Italia s.r.l. since December 1994, of CellPro Biotech Iberica S.L. since
May 1995, of CellPro Asia-Pacific Pty. Ltd. since November 1996 and as a
Director, President and Chief Executive Officer of CellPro II, Inc. since
October 1993. Mr. Murdock is also a member of the Board of Directors of SangStat
Medical Corporation, which is developing medical products related to organ
transplantation. Mr. Murdock received a B.S. in Zoology in 1969 from the
University of California at Berkeley.
MR. WAITE has served as a Director of the Company since March
1989. Mr. Waite has been a general partner of Olympic Venture Partners II, a
venture capital firm, since 1987. Mr. Waite is also a member of the Board of
Directors for Verity, Inc, which develops and markets tools for locating
information on the Internet and other databases and Cardima, Inc., which
develops and markets diagnostic and therapeutic catheters. He received an M.B.A.
in 1983 from Harvard University.
There are no family relationships among executive officers or
directors of the Company.
OTHER EXECUTIVE OFFICERS
CINDY A. JACOBS, PH.D., M.D. was named Vice President of
Clinical Research in April 1996. Dr. Jacobs joined the Company in October 1993
as Director of Clinical Research and was subsequently named Director of
Worldwide Clinical Research. From 1985 until October 1993 Dr. Jacobs served in
various research and management positions including Associate Director, Clinical
Research, for Immunex Corporation, a biopharmaceutical company involved in the
development, manufacture and sale of products to treat cancer, autoimmune
disorders and infectious diseases. Dr. Jacobs received a B.S. from Montana State
University in 1979, a Ph.D. from Washington State University in 1984, and an
M.D. from the University of Washington Medical School in 1989.
S. JOSEPH TARNOWSKI, PH.D. joined the Company as Vice
President of Operations in June 1992. He was appointed to the position of Vice
President of Research and Development in June 1995 and became Senior Vice
President and Chief Technical Officer in December 1996. From November 1986 to
May 1992, Dr. Tarnowski was Director, Process and Product Development of Scios
Nova Inc. (formerly California Biotechnology Inc.), a company that develops
recombinant human proteins for therapeutic uses. Dr. Tarnowski received a Ph.D.
in Biochemistry from the University of Tennessee in 1979 and was a Postdoctoral
Fellow at the Roche Institute of Molecular Biology from 1979 to 1981.
EDWARD F. KENNEY joined the Company as Vice President of
Marketing and Sales in February 1997. From 1987 to 1996 he served in various
sales, marketing and business development positions at Cetus Corporation and
Chiron Corporation (these two companies merged in 1991). From 1991 to 1996, Mr.
Kenney was Vice President, Marketing and Sales for Chiron Therapeutics, and in
1995 and 1996, he served as general manager of that division's North American
business. In 1986 and 1987, Mr. Kenney was a marketing manager in the
cardiovascular therapy area at Boehringer Ingelheim, and from 1978 to 1986, he
served in various sales, marketing and business development capacities at
Bristol Myers Corporation. Mr. Kenney received a B.S. degree in Zoology in 1974
and an M.S. degree in Natural Resources in 1977 from Ohio State University.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 1997 ("Fiscal 1997"),
the Board of Directors held ten meetings. The Board of Directors has an Audit
Committee, a Compensation Committee and a Stock Option Committee, and does not
have a Nominating Committee.
The Audit Committee consists of two directors, Mr. Green and
Mr. Waite, and is primarily responsible for approving the services performed by
the Company's independent accountants and reviewing their reports regarding the
5
<PAGE> 8
Company's accounting practices and systems of internal accounting controls. The
Audit Committee held one meeting during Fiscal 1997.
The Compensation Committee consists of two directors, Mr.
Lacob and Mr. Waite. During Fiscal 1997, the Compensation Committee held no
meetings and acted by unanimous written consent on 12 occasions. It reviews and
approves the Company's general compensation policies, sets compensation levels
for the Company's executive officers and administers the Company's Restated 1989
Stock Option Plan.
The Stock Option Committee consists of one director, Mr.
Murdock, and has authority to grant options under the Discretionary Option Grant
Program of the Company's Restated 1989 Stock Option Plan to optionees other than
officers and director-level employees of the Company. During Fiscal 1997, the
Stock Option Committee acted by unanimous written consent on 75 occasions.
No director serving for the full fiscal year attended fewer
than 75% of the aggregate number of meetings of the Board of Directors and
meetings of the Committees of the Board on which he serves.
DIRECTORS' COMPENSATION
Outside Directors receive cash compensation in the amount of
$15,000 per year for service on the Board. This fee is conditioned upon
attendance at 75% of all Board meetings held during each year of Board service,
measured from the date of the Annual Meeting at which the Director is elected by
the stockholders, and is pro-rated for any year in which such Director serves
for less than one full year. In addition, outside Board members receive options
on shares of the Company's Common Stock pursuant to the automatic grant program
of the Company's Restated 1989 Stock Option Plan. Board members are reimbursed
for their expenses for each meeting attended. In accordance with the automatic
option grant program, on August 1, 1996, each of Messrs. Lacob, Waite, Green and
Anstey received an automatic option grant to purchase 10,000 shares of Common
Stock at the exercise price of $13.50 per share. Each option will become
exercisable for all of the option shares one year after the grant date, provided
that the individual continues as a member of the Board and participates in 75%
of all Board meetings held during such one-year period. Each option has a
maximum term of 10 years measured from the grant date, subject to earlier
termination upon the individual's cessation of Board service. However, the
option will become exercisable earlier for all of the option shares upon an
acquisition of the Company or its business, whether by merger or asset sale.
Directors who are employees of the Company will not receive any automatic option
grants but are eligible to receive options or stock appreciation rights under
the Company's Restated 1989 Stock Option Plan at the discretion of the
Compensation Committee.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information
concerning compensation earned, for services rendered in all capacities to the
Company and its subsidiaries for each of the last three fiscal years, by the
Company's Chief Executive Officer and each of the four highest-paid executive
officers of the Company who earned more than $100,000 in salary and bonus
(hereafter referred to as the "named executive officers") for the fiscal year
ended March 31, 1997:
<TABLE>
<CAPTION>
Long-term
------------------- Compensation
Annual Compensation Awards
------------------- ---------
Securities
Name and Year Underlying All Other
Principal Ended Options Compensation
Position (1) March 31, Salary ($ ) (2) Bonus ($) (#)
------------ -------- --------------- --------- ----------- ------
<S> <C> <C> <C> <C> <C>
Richard D. Murdock 1997 $270,000 $40,500 - --
President and Chief Executive 1996 $236,250 $56,288 174,500 (3) --
Officer 1995 $225,000 $18,000 0
--
Larry G. Culver 1997 $200,000 $30,000 15,000 --
Executive Vice President, Chief 1996 $179,000 $41,888 140,000 (3) --
Operating Officer, Chief Financial 1995 $165,000 $13,200 0 --
Officer and Assistant Secretary
S. Joseph Tarnowski, Ph.D. 1997 $173,017 $24,466 35,000 --
Senior Vice President and Chief 1996 $157,500 $35,438 50,000 --
Technical Officer 1995 $150,000 $12,000 - --
Cindy A. Jacobs, M.D, Ph.D. 1997 $143,269 $20,845 15,000 --
Vice President of Clinical 1996 $130,245 $20,000 - --
Research 1995 $123,000 $00,000 - --
</TABLE>
(1) The Company has one executive officer in addition to the named executive
officers, Edward Kenney who was named Vice President of Marketing and Sales
effective February 17, 1997.
(2) Salary includes amounts deferred under the Company's Employees' Retirement
Plan.
(3) Includes certain options that were granted prior to the fiscal year ended
March 31, 1996, then subsequently cancelled and partially replaced with
lower priced options during such fiscal year.
STOCK OPTIONS
The following table contains information concerning the grant
of stock options under the Company's Restated 1989 Stock Option Plan to the
named executive officers:
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------
% of Total
Options Potential Realizable Value at Assumed
Options Granted to Annual Rates of Stock Price
Granted in Employees in Appreciation for Option Term (4)
Last Fiscal Fiscal -------------------------------------
Year Year Exercise Expiration
Name (#) (1) Price ($) (2) Date (3) 0% ($) 5% ($) 10% ($)
---- ------- --------- ------------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry G. Culver 15,000 2.9 12.75 12/1/06 0 120,276 304,803
Executive Vice President, Chief
Operating Officer, Chief Financial
Officer and Assistant Secretary
S. Joseph Tarnowski, Ph.D 35,000 6.8 12.75 12/1/06 0 280,644 711,207
Senior Vice President and Chief
Technical Officer
Cindy A. Jacobs, Ph.D., M.D 15,000 2.9 6.48 3/30/07 0 61,128 154,911
Vice President of Clinical
Research
</TABLE>
- - -------------------------------------------
(1) Each option granted to an employee of the Company becomes exercisable for
25% of such option one year after the employee's hire date ("Anniversary Date")
with the balance becoming exercisable in a series of 36 equal monthly
installments thereafter. Options granted after the Anniversary Date become
exercisable in a series of 48 equal monthly installments measuring from the
grant date. Each option granted is an incentive stock option (ISO) to the extent
it does not exceed applicable limits set by the tax laws. For each option that
exceeds such limits, the number of shares underlying the option grant is
allocated between two options, the first an incentive stock option up to the
applicable limits and the second a non-statutory option for the balance of the
shares. In each case, vesting continues only so long as employment with the
Company or one of its subsidiaries continues. To the extent not already
exercisable, the options generally become exercisable upon a sale, transfer or
other disposition of all of the assets of the Company or a merger or
consolidation pursuant to which either (i) the Company does not survive or (ii)
ownership of more than 50% of the voting power of the Company's stock is
transferred to different holders, unless the option is assumed or replaced with
a comparable option by the surviving entity or the option is replaced with a
comparable cash incentive program of the successor corporation based on the
value of the option. In addition, the Compensation Committee of the Board of
Directors may accelerate the vesting, upon such conditions as it may impose, in
the event of (i) the acquisition by one or more related parties of more than 50%
of the voting power of the Company's stock pursuant to a tender or exchange
offer not recommended by the Board of Directors or (ii) a change in the
composition of the Board of Directors over a period of not less than two years
pursuant to which persons who were directors at the beginning of the period (or
nominated by a majority of the continuing directors) cease to represent a
majority of the Board of Directors. Options granted to outside Directors are
described on page 19.
(2) The exercise price may be paid in cash or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable instructions to a
brokerage firm to sell the purchased shares and to remit to the Company, out of
the sale proceeds, an amount equal to the exercise price plus all applicable
withholding taxes. The Compensation Committee may also assist an optionee in the
exercise of an option by (i) authorizing a loan from the Company in a principal
amount not exceeding the aggregate exercise price plus any tax liability
incurred in connection with the exercise or (ii) permitting the optionee to pay
the option price in installments over a period of years upon terms established
by the Compensation Committee.
(3) The options are also subject to "limited stock appreciation rights" pursuant
to which the options, to the extent exercisable and outstanding for at least six
months at the time of a "Hostile Takeover" in which more than 50% of the shares
acquired are acquired from parties other than directors and executive officers
of the Company, will automatically be canceled in return for cash payment to the
optionee equal to the difference between the then market price of the
8
<PAGE> 11
stock subject to the option (or, if higher, the highest price paid per share for
stock by the acquirer in the Hostile Takeover) and the exercise price.
(4) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock does in fact
appreciate over the option term, no value will be realized from the option
grants made to the executive officers.
The following table provides information, with respect to the
named executive officers, concerning the exercise of options during the last
fiscal year and unexercised options held as of the end of the last fiscal year:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997 FISCAL YEAR AND 1997 FISCAL YEAR END OPTION VALUES
- - ----------------------------------------------------------------------------------------------------------------------------------
Value
Realized Value of Unexercised in-the-Money
(Market Options at FY-End (Market price of
price at shares at FY-end ($15.75) less
exercise Number of Unexercised Options at exercise price)
Shares less Fiscal Year-End (#) ($)
acquired on exercise -------------------------------------------------------------------
Name exercise (#) price) ($) Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Murdock 0 0 264,081 35,419 0 0
President and Chief
Executive Officer
- - ----------------------------------------------------------------------------------------------------------------------------------
Larry G. Culver 15,000 215,495 119,916 60,834 69,660 0
Executive Vice President,
Chief Operating Officer,
Chief Financial Officer and
Assistant Secretary
- - ----------------------------------------------------------------------------------------------------------------------------------
S. Joseph Tarnowski, Ph.D 4,000 37,284 94,203 62,797 0 0
Senior Vice President and
Chief Technical Officer
- - ----------------------------------------------------------------------------------------------------------------------------------
Cindy A. Jacobs, Ph.D., M.D 0 0 22,589 52,511 0 0
Vice President of Clinical
Research
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
The following table provides information regarding the
repricing of certain options held by the Company's executive officers which were
granted prior to or during the fiscal year ended March 31, 1997, but were
repriced during the fiscal year ending March 31, 1998.
OPTION REPRICINGS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Securities Market Price Exercise Length of
Underlying of Stock at Price Original
options Time of at Time of New Option Term
Repriced or Repricing or Exercise Remaining at Date
Amended Amendment Amendment Price of Repricing or
Name Date (#) ($) ($) ($) Amendment
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Murdock 6/20/97 50,000 5.32 10.75 5.32 4.86
President and Chief Executive 6/20/97 174,500 5.32 10.50 5.32 7.99
Officer
- - ------------------------------------------------------------------------------------------------------------------------------------
Larry G. Culver 6/20/97 25,000 5.32 8.00 5.32 4.15
Executive Vice President, Chief 6/20/97 90,000 5.32 10.50 5.32 7.99
Operating Officer,Chief Secretary 6/20/97 50,000 5.32 14.50 5.32 8.66
Financial Officer and 6/20/97 15,000 5.32 12.75 5.32 4.15
Assistant
- - ------------------------------------------------------------------------------------------------------------------------------------
S. Joseph Tarnowski, Ph.D 6/20/97 100,000 5.32 10.75 5.32 4.86
Senior Vice President and Chief 6/20/97 50,000 5.32 13.50 5.32 8.28
Technical Officer 6/20/97 35,000 5.32 12.75 5.32 9.46
- - ------------------------------------------------------------------------------------------------------------------------------------
Cindy A. Jacobs, Ph.D., M.D 6/20/97 100 5.32 29.75 5.32 6.55
Vice President of Clinical 6/20/97 30,000 5.32 10.50 5.32 7.99
Research 6/20/97 30,000 5.32 16.50 5.32 8.78
6/20/97 15,000 5.32 6.48 5.32 9.78
- - ------------------------------------------------------------------------------------------------------------------------------------
Edward F. Kenney
Vice President of Marketing and 6/20/97 80,000 5.32 10.50 5.32 9.66
Sales (1)
====================================================================================================================================
</TABLE>
(1) Mr. Kenney is an executive officer who is not included in the named
executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors sets the
base salary of the Company's executive officers, approves individual bonus
programs for executive officers, and administers the Company's Restated 1989
Stock Option Plan under which grants may be made to executive officers and other
key employees. The following is a summary of policies of the Committee that
affect the compensation paid to executive officers, as reflected in the tables
and text set forth elsewhere in this Proxy Statement.
GENERAL COMPENSATION POLICY. The Committee's overall policy is
to offer the Company's executive officers competitive compensation opportunities
based upon their personal performance, the financial performance of the Company
and their contribution to that performance. One of the Committee's primary
objectives is to have a substantial portion of each officer's compensation
contingent upon the Company's performance as well as upon his or her own level
of performance. Each executive officer's compensation package is comprised of
three elements: (i) base salary that reflects individual performance and is
designed primarily to be competitive with salary levels in the industry, (ii)
annual variable performance awards payable in cash and tied to the achievement
of annual goals for each functional area established by the Committee, and (iii)
stock-based incentive awards designed to strengthen the mutuality of interests
between the executive officers and the Company's stockholders. Generally, as an
officer's level of responsibility increases, a greater portion of his or her
total compensation will be dependent upon Company performance and stock price
appreciation rather than base salary.
10
<PAGE> 13
FACTORS. Several important factors considered in establishing
the components of each executive officer's compensation package for the 1997
fiscal year are summarized below. Additional factors were taken into account to
a lesser degree. The Committee may in its discretion apply entirely different
factors, such as different measures of financial performance, for future fiscal
years. However, it is presently contemplated that all compensation decisions
will be designed to further the overall compensation policy described above.
* BASE SALARY. The base salary for each officer is set on the
basis of personal performance, the salary levels in effect for comparable
positions in similarly situated companies within the biotechnology industry, and
internal comparability considerations. The Committee believes that the Company's
most direct competitors for executive talent are not limited to the companies
that the Company would use in a comparison for stockholder returns. Therefore,
the compensation comparison group is not the same as the industry group index in
the Performance Graph on page 13.
* ANNUAL INCENTIVE COMPENSATION. Annual bonuses, set as a
targeted percentage of salary, are earned by each executive officer on the basis
of the Company's achievement of corporate performance targets established by the
Committee at the start of the fiscal year and on achievement of personal
performance objectives set for each officer. For fiscal 1997, these performance
targets included a combination of factors including the achievement of the
Company's annual financial objectives plus key functional performance objectives
related to the development and commercialization of products. For all executive
officers, including the Chief Executive Officer, a bonus ranging from 14.1% to
15% of base salary was earned as a result of the Company's and each officer's
achievement of established targets. Bonuses were weighted 65% on achievement of
corporate objectives, and 35% on achievement of individual objectives.
* STOCK-BASED INCENTIVE COMPENSATION. The Committee approves
periodic grants of stock options to each of the Company's executive officers
under the Company's Restated 1989 Stock Option Plan. The grants are designed to
align the interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire shares of the Company's Common Stock at
a fixed price per share (the market price on the grant date) over a specified
period of time (up to 10 years), thus providing a return to the executive
officer only if the market price of the shares appreciates over the option term.
The size of the option grant to each executive officer is set at a level that
the Committee deems appropriate in order to create a meaningful opportunity for
stock ownership based upon the individual's current position with the Company,
but also takes into account comparable awards to individuals in similar
positions in the industry as reflected in external surveys, the individual's
potential for future responsibility and promotion over the option vesting
period, and the individual's personal performance in recent periods.
CEO COMPENSATION. In setting the compensation payable during
fiscal 1997 to the Company's Chief Executive Officer, Richard D. Murdock, the
Committee used the same factors as described above for the executive officers.
The Committee established a combination compensation package for Mr. Murdock
including a base salary and a cash bonus of a maximum of 25% of base salary
based on the successful achievement of the Company's annual financial objectives
and key commercialization milestones.
COMPENSATION COMMITTEE REPORT ON REPRICED OPTIONS
In June 1997, the Compensation Committee determined that it
was in the best interest of the Company to cancel and replace the then-existing
stock option grants to the officers and other full-time employees of the Company
with exercise prices in excess of the then-current fair market value of the
Company's Common Stock. This decision was made after the Company received an
adverse ruling from the Court in a patent infringement case against plaintiffs
Baxter Healthcare Corporation, Becton Dickinson and Company and Johns Hopkins
University involving an antibody used by the Company in its CEPRATE(R) SC Stem
Cell Concentration System. This led to, among other things, a significant
decrease in the price of the Company's Common Stock. (See the Company's Annual
Report on Form 10-K for a more detailed discussion of this patent infringement
litigation.)
The objectives of the Company's Restated 1989 Stock Option
Plan (the "Stock Option Plan") are to promote the interests of the Company by
providing employees and certain consultants or independent contractors an
11
<PAGE> 14
incentive to acquire a proprietary interest in the Company and to continue to
render services to the Company. It was the view of the Compensation Committee
that stock options with exercise prices substantially above the current market
price of the Company's Common Stock were viewed negatively by Company employees
and provided little, if any, equity incentive to such employees. The
Compensation Committee concluded that such option grants seriously undermined
the specific objectives of the Stock Option Plan and should properly be canceled
and replaced. In making this decision, the Compensation Committee also
considered the fairness of such a determination in relation to other
shareholders. In the opinion of the Committee, the stockholders' long-term best
interests were clearly served by the retention and motivation of the employees
and officers who remained at the Company following receipt of the Court's
ruling.
For these reasons, the Committee decided that effective June
20, 1997 (the "Grant Date") all Company employees holding stock options with
exercise prices in excess of the fair market value of the Company's Common Stock
could receive a one-for-one replacement of their then-existing unexercised stock
options with a new exercise price set at $5.32 per share, the fair market value
of the Company's Common Stock on the Grant Date. The new lower-priced options
were subject to the same terms and vesting schedule as the associated
higher-priced options.
All replacement options for the Company's executive officers
were subject to a six-month waiting period before any repriced options could be
exercised. None of the Company's consultants, independent contractors or
non-employee members of the Board of Directors received any repriced stock
options.
Submitted by the Compensation Committee of the Company's Board of Directors:
Joseph S. Lacob, Chairperson
Charles P. Waite, Member
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company presently has no employment contracts, plans or
arrangements in effect for executive officers in connection with their
resignation, retirement or termination of employment or following a change in
control or ownership of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Mr. Lacob and
Mr. Waite. Neither Mr. Lacob nor Mr. Waite was at any time during the year ended
March 31, 1997, or any other time an officer or employee of the Company, except
that Mr. Lacob served as Acting President from March to November 1989.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total
stockholder returns for the Company, the Standard & Poor's SmallCap 600 Index
and the Hambrecht & Quist Healthcare Index for the period from September 24,
1991, the day on which the Company's Common Stock commenced trading on the
NASDAQ National Market, through March 31, 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CELLPRO, INC., THE S & P SMALLCAP 600 INDEX
AND HAMBERCHT & QUIST HEALTHCARE INDEX
<TABLE>
<CAPTION>
3/92 3/93 3/94 3/95 3/96 3/97
$ $ $ $ $ $
- - - - - -
<S> <C> <C> <C> <C> <C> <C>
CELLPRO, INC. 100 147 219 105 147 60
S & P SMALLCAP 600 100 117 128 134 176 191
HAMBERCHT & QUIST HEALTHCARE 100 74 71 91 141 136
</TABLE>
* $100 invested on March 31, 1992, in CellPro Common Stock, the Standard &
Poor's SmallCap 600 Index and the Hambrecht & Quist Healthcare Index -- assuming
reinvestment of dividends. Fiscal year ending March 31.
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the preceding
Compensation Committee Report on Executive Compensation and the preceding
Performance Graph shall not be incorporated by reference into any such filings,
nor shall such Report or graph be incorporated by reference into any future
filings.
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended March 31, 1997, the Company
granted options to purchase shares of its Common Stock to its outside directors
pursuant to the automatic grant program of its Restated 1989 Stock Option Plan.
Joshua L. Green, a member of the Board of Directors of the
Company, is a director in the law firm Venture Law Group, which acts as
corporate counsel to the Company.
The Company's Restated Certificate of Incorporation and
Restated Bylaws provide for indemnification of directors, officers and other
agents of the Company. Each of the current directors, and certain officers and
agents of the Company have entered into separate indemnification agreements with
the Company.
PROPOSAL TWO -- AMENDMENT TO RESTATED 1989 STOCK OPTION PLAN
Stockholders are being asked to vote on a proposal to approve
and ratify an amendment to the Company's Restated 1989 Stock Option Plan (the
"Stock Option Plan"), in order to increase the number of shares of Common Stock
available for issuance thereunder by 1,000,000 shares to 4,155,000 shares in the
aggregate. The Board of Directors approved this amendment on June 4, 1997
subject to stockholder approval.(1)
The affirmative vote of a majority of the voting shares
represented and voting at the Annual Meeting is required for approval of the
amendment to the Stock Option Plan. The Board of Directors believes that the
amendment to the Stock Option Plan is necessary in order to continue to provide
equity incentives to attract and retain the services of key employees,
consultants and non-employee Board members. FOR THIS REASON, THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
INTRODUCTION
The Stock Option Plan was originally adopted by the Board on
May 4, 1989, and was approved by the Company's stockholders on June 5, 1989. The
Board of Directors has previously approved amendments increasing the number of
shares authorized for issuance under the Stock Option Plan by 200,000 shares,
600,000 shares, 780,000 shares and 500,000 shares on May 18, 1990, March 25,
1992, March 31, 1993 and February 1, 1996 respectively, and the stockholders
approved such amendments on July 6, 1990, August 21, 1992, August 27, 1993 and
August 1, 1996, respectively. A restatement of the Stock Option Plan, which
increased the number of shares authorized for issuance by 355,000 shares and
originally authorized the Automatic Option Grant Program for non-employee
directors, was adopted by the Board on August 12, 1991, and approved by the
stockholders on August 15, 1991. The Board amended the Stock Option Plan on
August 26, 1993 to permit the establishment of a secondary committee to
administer the Stock Option Plan and on December 1, 1993 to modify the
eligibility provisions for non-employee directors. Amendments to the Stock
Option Plan to (i) increase the number of shares issuable under the Automatic
Option Grant Program to newly-elected directors from 10,000 to 20,000 shares of
Common Stock, subject to a four-year vesting schedule, (ii) increase the number
of shares issuable in certain subsequent years to re-elected non-employee
directors from 5,000 to 10,000 shares of Common Stock, (iii) limit the maximum
number of shares for which any one participant in the Stock Option Plan may be
granted stock options and stock appreciation
(1) On June 20, 1997, the Company granted options to the executive
officers to purchase an aggregate of 675,000 shares of Common Stock,
including options to purchase 325,000, 200,000, 75,000, 50,000 and 25,000
shares of Common Stock, granted to Richard D. Murdock, Larry G. Culver,
S. Joseph Tarnowski, Ph.D., Cindy A. Jacobs, M.D., Ph.D. and Edward F.
Kenney, respectively. Such options will be 25% vested upon receipt, with
the remainder vesting in equal monthly increments over the following
three years. If the shareholders do not approve the amendment to the
Stock Option Plan to increase the number of shares of Common Stock
available for issuance, these options granted to the executive officers
on June 20, 1997 will terminate.
14
<PAGE> 17
rights over the remaining term of the Stock Option Plan to 500,000 shares and
(iv) extend the term of the Stock Option Plan from May 3, 1999 to June 1, 2005
were approved by the Board on June 2, 1995, and by the stockholders on July 28,
1995.
STRUCTURE
The Stock Option Plan is divided into two separate components:
the Discretionary Option Grant Program and the Automatic Option Grant Program.
Under the Discretionary Option Grant Program, options may be issued to key
employees (including officers), consultants and independent contractors of the
Company (or its parent or subsidiary companies) who contribute to the
management, growth and financial success of the Company (or its parent or
subsidiary companies). Under the Automatic Option Grant Program, current and
future non-employee Board members receive an initial automatic option grant and
subsequent annual automatic option grants as long as they continue in service as
non-employee Board members.
The terms and provisions of the Stock Option Plan, as amended,
are described more fully below. The description, however, is not intended to be
a complete exposition of all the terms of the Stock Option Plan. A copy of the
Stock Option Plan will be furnished by the Company to any stockholder upon
written request to the Director of Investor Relations of the Company at the
corporate offices in Bothell, Washington.
As of May 31, 1997, approximately 173 employees (including
five executive officers) were eligible to participate in the Discretionary
Option Grant Program, and four non-employee Board members were eligible to
participate in the Automatic Option Grant Program.
ADMINISTRATION
The Stock Option Plan is administered by the Compensation
Committee of the Board of Directors, which is comprised of two non-employee
Board members (the "Committee"). No Board member is eligible to serve on the
Committee if such individual has, within the 12-month period immediately
preceding the date he or she is to be appointed thereto, received any option
grant or stock appreciation right under this Stock Option Plan or any other
stock plan of the Company (or any parent or subsidiary corporation), other than
pursuant to the Automatic Option Grant Program. Stock options may also be
granted under the Discretionary Option Grant Program to eligible employees who
are not officers and consultants by a secondary committee comprised of one or
more Board members. Except where otherwise noted, references to the Committee
include the secondary committee.
The Committee has full authority to determine which eligible
individuals are to receive option grants, the number of shares to be covered by
each granted option, the date or dates on which the option is to become
exercisable and the maximum term for which the option is to be outstanding. The
Committee also has the discretion to determine whether the granted option is to
be an incentive stock option under the Federal tax laws, or a nonstatutory
option. In addition, the Committee has full authority to accelerate the
exercisability of outstanding options upon such terms and conditions as it deems
appropriate. All expenses incurred in administering the Stock Option Plan will
be paid by the Company.
Option grants under the Automatic Option Grant Program will be
made in strict compliance with the express provisions of that program, and the
Committee shall not have any discretionary authority with respect to such option
grants.
PRICE AND EXERCISABILITY
The exercise price of shares issued under the Discretionary
Option Grant Program may not be less than 50% of the fair market value of the
Common Stock on the grant date and no option may be outstanding for more than a
10-year term. If the granted option is intended to be an incentive stock option
under the Federal tax laws, the option price must not be less than 100% of the
fair market value per share of the Common Stock on the grant date. Options
issued under the Discretionary Option Grant Program may become exercisable in
installments over a period of months or years as determined by the Committee.
The aggregate fair market value (as of the date or respective dates of grant) of
15
<PAGE> 18
shares of Common Stock for which options granted to any employee under the Stock
Option Plan may initially become exercisable as incentive stock options under
the Federal tax laws, may not exceed $100,000 per optionee in a single year.
Upon exercise, the option price may be paid in cash or in
shares of the Common Stock. Outstanding options may also be exercised through a
cashless exercise procedure pursuant to which a designated brokerage firm is to
effect an immediate sale of the shares purchased under the option and pay over
to the Company, out of the sales proceeds available on the settlement date,
sufficient funds to cover the option price for the purchased shares plus all
applicable withholding taxes. The Committee may also assist any optionee
(including an officer) in the exercise of outstanding options under the
Discretionary Option Grant Program by authorizing a loan from the Company or
permitting the optionee to pay the option price in installments over a period of
years. The terms and conditions of any such loan or installment payment will be
established by the Committee in its sole discretion, but in no event may the
maximum credit extended to the optionee exceed the aggregate option price
payable for the purchased shares (less the par value), plus any Federal and
state income or employment taxes incurred in connection with the purchase.
No optionee is to have any stockholder rights with respect to
the option shares until such optionee has exercised the option, paid the option
price for the purchased shares and such shares have been effectively transferred
by the Company's transfer agent. Options are not assignable or transferable
other than by will or the laws of inheritance and, during the optionee's
lifetime, the option may be exercised only by such optionee.
VALUATION
The fair market value per share of Common Stock on any
relevant date will be the closing selling price per share on such date as
reported on the Nasdaq National Market. As of May 31, 1997, the closing selling
price of the Common Stock was $6.50 per share.
SECURITIES SUBJECT TO PLAN
The total number of shares of the Common Stock issuable over
the term of the Stock Option Plan may not exceed 4,155,000 shares. Such shares
will be made available either from the Company's authorized but unissued Common
Stock or from Common Stock reacquired by the Company. Should an option be
terminated or canceled for any reason prior to exercise or surrender in full,
the shares subject to the portion of the option not so exercised or surrendered
will be available for subsequent grant. Shares subject to any option or portion
thereof canceled in accordance with the stock appreciation rights (as discussed
below) provisions or the Corporate Transaction (as defined below) provisions of
the Stock Option Plan shall not be available for subsequent grants.
As of May 31, 1997, approximately 1,002,127 shares of Common
Stock had been issued under the Stock Option Plan, 1,764,785 shares of Common
Stock were subject to outstanding options, and 388,088 shares of Common Stock
were available for future option grants.
In no event may any one individual participating in the Stock
Option Plan be granted stock options, separately-exercisable stock appreciation
rights or direct stock issuances for more than 500,000 shares of Common Stock in
the aggregate over the term of the Stock Option Plan. For purposes of such
limitation, any options granted prior to January 1, 1995 will not be taken into
account.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable
under the Stock Option Plan (by reason of any stock split, stock dividend,
combination of shares, exchange of shares or other similar change in the
corporate structure of the Company effected without receipt of consideration),
then unless such change results in the termination of all outstanding options
pursuant to the Corporate Transaction provisions of the Stock Option Plan (as
discussed below), appropriate adjustments will be made to (i) the aggregate
number of shares available for issuance under the Stock Option Plan, (ii) the
number of shares and price per share in effect under each outstanding option
under the Stock Option Plan and (iii) the number of shares per non-employee
Board member for which automatic option grants are
16
<PAGE> 19
subsequently to be made under the Automatic Option Grant Program. The purpose of
such adjustments to the outstanding options is to preclude the enlargement or
dilution of rights and benefits under such options.
TERMINATION OF SERVICE
All options granted under the Discretionary Option Grant
Program must generally be exercised within three months after the optionee
ceases to be in the employ or service of the Company or its parent or subsidiary
corporations, subject to earlier expiration in the event the optionee's
employment or service is terminated for misconduct. Should the optionee's
cessation of service occur due to permanent disability or death, or should the
optionee die within three months after cessation of service, the optionee (or,
in the case of the optionee's death, the personal representative of the
optionee's estate or the person inheriting the option) has 36 months (or such
shorter period as the Committee may establish at the time of grant) from the
date of such cessation of service to exercise the option. The Committee will,
however, have complete discretion to extend the period of time for which any
option is to remain exercisable following the optionee's cessation of employment
or service, but under no circumstances may an option be exercised after the
specified expiration date of the option term.
Each option under the Discretionary Option Grant Program will
be exercisable only to the extent of the number of shares for which such option
is exercisable at the time of the optionee's cessation of employment or service,
unless the Committee determines at such time to accelerate the exercisability of
the option in whole or in part.
CORPORATE TRANSACTION
Each outstanding option under the Discretionary Option Grant
Program will become immediately exercisable for all of the shares of Common
Stock subject to such option in the event of a Corporate Transaction (as defined
below), unless (i) such option is assumed by the successor corporation (or its
parent corporation) or replaced with a comparable option to purchase shares of
stock of the successor corporation (or its parent corporation), (ii) such option
is to be replaced by a comparable cash incentive program of the successor
corporation based on the value of the option at the time of the Corporate
Transaction, or (iii) the acceleration of such option is precluded by other
limitations imposed by the Committee at the time of grant. A Corporate
Transaction includes certain mergers, reverse mergers or consolidations and the
sale, transfer or other disposition of all or substantially all of the assets of
the Company.
Upon the consummation of the Corporate Transaction, all
outstanding options will, to the extent not previously exercised by the
optionees or assumed by the successor corporation (or its parent company),
terminate and cease to be outstanding.
CHANGE IN CONTROL
In the event of a Change in Control (as defined below), the
Committee may, in its discretion, provide that one or more outstanding options
will become immediately exercisable for all of the shares of Common Stock at the
time subject to such options. The Committee will also have the discretion to
condition such acceleration upon the subsequent termination of the optionee's
service with the Company. A Change in Control will be deemed to occur under the
Stock Option Plan in the event:
(a) any person or related group of persons (other than the
Company or any affiliate) acquires beneficial ownership of securities possessing
more than 50% of the Company's outstanding Common Stock pursuant to a tender or
exchange offer which the Board does not recommend the Company's stockholders to
accept; or
(b) there is a change in the composition of the Board over a
period of 24 consecutive months or less such that a majority of the Board
members cease to be comprised of individuals who are continuing Board members or
were nominated by continuing Board members.
17
<PAGE> 20
STOCK APPRECIATION RIGHTS
At the discretion of the Committee, options with stock
appreciation rights may be granted under the Discretionary Option Grant Program.
A stock appreciation right grants the holder the right to surrender all or part
of an unexercised option in exchange for a distribution from the Company equal
in amount to the excess of (i) the fair market value (on the date of surrender)
of the shares of Common Stock in which the optionee is at the time vested under
the surrendered option over (ii) the aggregate option price payable for such
shares. The appreciation distribution may be made, at the discretion of the
Committee, either in shares of Common Stock valued at fair market value on the
date of surrender, in cash or in a combination of cash and Common Stock. No
surrender of an option will be effective unless it is approved by the Committee.
One or more officers of the Company subject to the short-swing
profit restrictions of the Federal securities laws may, in the Committee's
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options. Any option with such a limited stock appreciation right in
effect for at least six months will automatically be canceled upon the
occurrence of a Hostile Takeover (as defined below), and the optionee will in
return be entitled to a cash distribution from the Company in an amount based on
the highest reported price per share paid by the acquiring entity in effecting
the Hostile Takeover.
For purposes of such option cancellation provisions, Hostile
Takeover means the acquisition by any person or related group of persons (other
than the Company or its affiliates) of securities possessing more than 50% of
the Company's outstanding Common Stock pursuant to a tender or exchange offer
which the Board does not recommend the Company's stockholders to accept,
provided at least 50% of the securities so acquired in such tender or exchange
offer are obtained from holders other than the officers and directors of the
Company participating in the Stock Option Plan.
The acceleration of options in the event of a Corporate
Transaction or Change in Control and the cash-out of options upon a Hostile
Takeover may be seen as anti-takeover provisions and may have the effect of
discouraging a merger proposal, takeover attempt or other effort to gain control
of the Company.
SPECIAL TAX WITHHOLDING ELECTION
The Committee may, in its discretion and upon such terms and
conditions as it may deem appropriate, provide one or more optionees with the
election to have the Company withhold, from the shares of Common Stock purchased
under the Stock Option Plan upon the exercise of nonstatutory options, that
number of shares with an aggregate fair market value equal to the designated
percentage (any multiple of 5% as specified by the optionee) of the Federal and
State income tax liability incurred by the optionee in connection with the
acquisition of such shares. Any election so made will be subject to the approval
of the Committee, and no shares will be accepted in satisfaction of such tax
liability except to the extent the Committee approves the election. One or more
participants may also be granted the alternative right, subject to Committee
approval, to deliver previously issued shares of Common Stock in satisfaction of
such tax liability. The withheld or delivered shares will be valued at fair
market value on the determination date for such tax liability.
CANCELLATION AND NEW GRANT OF OPTIONS
The Committee has the authority to effect, at any time and
from time to time, with the consent of the affected optionees, the cancellation
of any or all options outstanding under the Discretionary Option Grant Program
and to grant in substitution therefor new options covering the same or different
numbers of shares of Common Stock but having an exercise price per share not
less than 85% of the fair market value per share of the Common Stock on the new
grant date (or 100% of fair market value if the new option is to be an incentive
stock option). It is anticipated that the exercise price in effect under the new
grant will in all instances be less than the exercise price in effect under the
canceled option.
AUTOMATIC OPTION GRANT PROGRAM
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<PAGE> 21
Under the Automatic Option Grant Program, option grants are
made on a periodic basis to the non-employee Board members. These special grants
may be summarized as follows:
(a) Each individual who first becomes a non-employee Board
member, whether through election at an Annual Stockholders' Meeting or through
appointment by the Board, on or after June 2, 1995, will be automatically
granted, on the date of initial election or appointment, a nonstatutory stock
option to purchase 20,000 shares of Common Stock.
(b) Each individual who was serving as a non-employee Board
member on August 12, 1991, was automatically granted on that date a nonstatutory
stock option to purchase 5,000 shares of Common Stock and each individual who
first became a non-employee Board member after August 12, 1991, and before June
2, 1995, was automatically granted on the date of initial election, or
appointment, a nonstatutory stock option to purchase 10,000 shares of Common
Stock.
(c) Each individual who is re-elected as a non-employee Board
member will receive on the date of each Annual Stockholders' Meeting an
additional grant of a nonstatutory option to purchase 10,000 shares of Common
Stock, commencing with the 1995 Annual Stockholders' Meeting, provided such
individual has been a non-employee Board member for at least six months at the
time of the Annual Meeting.
Prior to the 1995 amendment, the Automatic Grant Program
provided for a second grant of a nonstatutory option to purchase 10,000 shares
of Common Stock at the first Annual Meeting occurring more than six months after
grant of the initial option and subsequent grants of a nonstatutory option to
purchase 5,000 shares of Common Stock each year thereafter.
Each option grant under the Automatic Option Grant Program is
subject to the following terms and conditions:
(a) The option price per share will be equal to the fair
market value per share of Common Stock on the automatic grant date and each
option is to have a maximum term of 10 years measured from the grant date.
(b) The initial options granted under the Automatic Option
Grant Program on or after June 2, 1995, will become exercisable as to 25% of the
option shares in each of the four years measured from the grant date, provided
that the optionee participates in at least 75% of the regularly-scheduled Board
meetings held during each of such one-year periods. The annual 10,000-share
automatic options granted on and after the date of the 1995 Annual Meeting will
become exercisable for all of the option shares as of the last day of such year,
provided that the optionee participates in at least 75% of the
regularly-scheduled Board meetings held during such year. The annual 5,000 and
10,000-share automatic options granted under the Automatic Option Grant Program
prior to June 2, 1995, become exercisable for all of the option shares one year
after the grant date provided the optionee continues to serve as a Board member
throughout such one-year period.
(c) The option will remain exercisable for a six-month period
following the optionee's termination of service as a Board member for any reason
other than death. Should the optionee die while holding an automatic option
grant, then such option will remain exercisable for a 12-month period following
such optionee's death and may be exercised by the personal representatives of
the optionee's estate or the person to whom the grant is transferred by the
optionee's will or the laws of inheritance. In no event, however, may the option
be exercised after the expiration date of the option term. During the applicable
exercise period, the option may not be exercised for more than the number of
shares (if any) for which it is exercisable at the time of the optionee's
cessation of Board service.
(d) The option will become immediately exercisable for all of
the shares of Common Stock at the time subject to such option in the event of a
Corporate Transaction (see "Corporate Transaction").
(e) Upon the consummation of the Corporate Transaction, all
automatic option grants will terminate and cease to be outstanding, unless
assumed by the successor corporation. Options granted prior to June 2, 1995,
terminate upon a Corporate Transaction.
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<PAGE> 22
(f) Each automatic option in effect for at least six months
will automatically be canceled upon the occurrence of a Hostile Takeover, and
the optionee will in return be entitled to a cash distribution from the Company
in an amount equal to the excess of (i) the takeover price of the shares of
Common Stock at the time subject to the canceled option (whether or not the
option is otherwise at the time exercisable for such shares) over (ii) the
aggregate exercise price payable for such shares.
The acceleration of options in the event of a Corporate
Transaction and the cash-out of options upon a Hostile Takeover may be seen as
anti-takeover provisions and may have the effect of discouraging a merger
proposal, a takeover attempt or other efforts to gain control of the Company.
(g) The remaining terms and conditions of the option will in
general conform to the terms described above for option grants made under the
Discretionary Option Grant Program and will be incorporated into the option
agreement evidencing the automatic grant.
EXCESS GRANTS
The Stock Option Plan permits the grant of options to purchase
shares of the Common Stock in excess of the number of shares then available for
issuance under the Stock Option Plan. Any option so granted cannot be exercised
prior to stockholder approval of an amendment increasing the number of shares
available for issuance under the Stock Option Plan.
AMENDMENT AND TERMINATION OF THE PLAN
The Company's Board may amend or modify the Stock Option Plan
in any or all respects whatsoever; provided, however, that (i) the rights of
existing optionees may not be adversely altered without their consent and (ii)
any amendments to the Automatic Option Grant Program (or any options outstanding
thereunder) may not occur at intervals more frequently than once every six
months, other than to the extent necessary to comply with applicable Federal tax
laws and regulations. Further, the Board may not amend the Stock Option Plan
without the approval of the stockholders of the Company if such amendment would
increase the maximum number of shares issuable under the Stock Option Plan
(other than in connection with certain changes in the Company's capital
structure), materially increase the benefits accruing to participants under the
Stock Option Plan, or materially modify the eligibility requirements for option
grants under the Stock Option Plan.
The Stock Option Plan will terminate upon the earlier of June
1, 2005, or the date all shares available for issuance under the Stock Option
Plan are issued or canceled pursuant to the exercise or surrender of options
granted under the Stock Option Plan. Any options outstanding at the time of the
termination of the Stock Option Plan will remain in force in accordance with the
provisions of the instruments evidencing such grants.
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<PAGE> 23
OPTIONS GRANTED/NEW PLAN BENEFITS
The table below shows, as to each of the executive officers
named in the Summary Compensation Table above, each of the directors and
nominees, and the various indicated groups, the following information with
respect to stock option transactions effected during the period from inception
of the Stock Option Plan to May 31, 1997: (i) the number of shares of Common
Stock subject to options granted under the Stock Option Plan during that period
and (ii) the weighted average exercise price payable per share under such
options.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE
NUMBER OF EXERCISE PRICE OF
NAME AND POSITION OPTION SHARES(1) GRANTED OPTIONS
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard D. Murdock 350,000 8.68
President and Chief
Executive Officer and Director
- - -----------------------------------------------------------------------------------------------------------------------------------
Larry G. Culver 240,000 8.66
Executive Vice President, Chief Operating Officer and Chief
Financial Officer and Director
- - -----------------------------------------------------------------------------------------------------------------------------------
S. Joseph Tarnowski, Ph.D. 185,000 11.87
Senior Vice President and Chief Technical Officer
V
Joseph S. Lacob 90,000 6.36
Director
- - -----------------------------------------------------------------------------------------------------------------------------------
Cindy A. Jacobs, Ph.D., M.D. 75,100 12.12
Vice President of Clinical Research
- - -----------------------------------------------------------------------------------------------------------------------------------
Charles P. Waite, Jr. 40,000 14.19
Director
- - -----------------------------------------------------------------------------------------------------------------------------------
Joshua L. Green 30,000 12.21
Director
- - -----------------------------------------------------------------------------------------------------------------------------------
Kenneth W. Anstey 30,000 16.09
Director
- - -----------------------------------------------------------------------------------------------------------------------------------
All current executive officers as a group (5 persons) 930,100 9.73
- - -----------------------------------------------------------------------------------------------------------------------------------
All current directors (other than executive officers) as a group 190,000 10.47
(4 persons)
- - -----------------------------------------------------------------------------------------------------------------------------------
All employees (other than current executive officers) as a 1,910,341 8.59
group (173 persons)
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes options to purchase 675,000 shares of Common Stock granted to the
executive officers under the Stock Option Plan on June 20, 1997.
During fiscal years 1989 through 1997, 1,002,127 shares were
issued pursuant to the exercise of options granted under the Stock Option Plan.
In addition, during such period, employees (other than executive officers) of
the Company were granted options under the Stock Option Plan to purchase
1,828,861 shares at a weighted average exercise price of $9.61 per share,
excluding shares for which options were granted and subsequently canceled or
terminated. As of May 31, 1997, options to purchase 1,764,785 shares at a
weighted average exercise price of $10.58 per share were outstanding under the
Stock Option Plan and 388,088 shares remained available for future option grants
under the Stock Option Plan.
21
<PAGE> 24
FEDERAL TAX CONSEQUENCES
Options granted under the Stock Option Plan may be either
incentive stock options, which satisfy the requirements of Section 422 of the
Internal Revenue Code, or nonstatutory options which are not intended to satisfy
such requirements. The Federal income tax treatment for the two types of options
differs as follows:
Incentive Options. No taxable income is recognized by the
optionee at the time of the option grant, and no taxable income is generally
recognized at the time the option is exercised, unless the optionee is subject
to the alternative minimum tax. Upon exercise, the difference between the fair
market value of the purchased shares and the exercise price is generally
included in alternative minimum taxable income for purposes of the alternative
minimum tax. The optionee will, however, recognize taxable income in the year in
which the purchased shares are sold, or otherwise made the subject of
disposition.
For Federal tax purposes, dispositions are divided into two
categories: qualifying and disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or disposition is made more than
two years after the grant date of the option and more than one year after the
exercise date. If the optionee fails to satisfy either of these two holding
periods prior to sale or disposition, then a disqualifying disposition of the
purchased shares will result.
Upon a qualifying disposition, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the option price paid for the shares. If there is a disqualifying disposition of
the shares, then the excess of (i) the fair market value of those shares on the
date of exercise over (ii) the option price paid for the shares will be taxable
as ordinary income. Any additional gain recognized upon the disposition will be
capital gain.
If the optionee makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income tax deduction,
for the taxable year in which such disposition occurs, equal to the excess of
(i) the fair market value of such shares on the date the option was exercised
over (ii) the option price paid for such shares. In no other instance will the
Company be allowed a deduction with respect to the optionee's disposition of the
purchased shares.
Nonstatutory Options. No taxable income is recognized by an
optionee upon the grant of a nonstatutory option. The optionee will in general
recognize ordinary income in the year in which the option is exercised equal to
the excess of the fair market value of the purchased shares at the date of
exercise over the exercise price, and the optionee will be required to satisfy
the tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the
acquisition of shares under a nonstatutory option if the purchased shares are
subject to substantial risk of forfeiture, such as the Company's right to
repurchase unvested shares at the original option exercise price. These special
provisions may be summarized as follows:
(a) If the shares acquired upon exercise of the nonstatutory
option are subject to a substantial risk of forfeiture, the optionee will not
recognize any taxable income at the time of exercise but will have to report as
ordinary income, as and when the risk of forfeiture lapses, an amount equal to
the difference between the fair market value of the shares on the date the risk
of forfeiture lapses and the option price paid for the shares.
(b) The optionee may, however, elect under Section 83(b) of
the Internal Revenue Code to include as ordinary income in the year of exercise
an amount equal to the difference between the fair market value of the purchased
shares on the date of exercise (determined as if the shares were not subject to
the risk of forfeiture) and the option price paid for the shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the risk of forfeiture lapses.
(c) The Company will be entitled to a business expense
deduction equal to the amount of ordinary income recognized by the optionee in
connection with the exercise of the nonstatutory option. The deduction will in
general be allowed for the taxable year of the employer corporation in which
such ordinary income is recognized by the optionee.
22
<PAGE> 25
Stock Appreciation Rights. If an option granted under the
Stock Option Plan is surrendered or canceled for an appreciation distribution
paid in cash, or if a limited stock appreciation right is exercised for cash,
the recipient will generally realize ordinary income on the date of the
surrender or exercise, equal in amount to the cash received. The Company will be
entitled to a deduction equal to the amount of ordinary income realized by the
recipient in connection with the surrender of the option or exercise of the
stock appreciation right.
Parachute Payments. If the exercisability of an option or
stock appreciation right is accelerated as a result of a Change in Control, all
or a portion of the value of the option or stock appreciation right at that time
may be a parachute payment for purposes of the excess parachute provisions of
the Internal Revenue Code. Those provisions generally provide that if parachute
payments exceed three times an individual's average compensation for the five
tax years preceding the Change in Control, the Company loses its compensation
deduction and the recipient is subject to a 20% excise tax for the amount of the
parachute payments in excess of one times such average compensation.
ACCOUNTING TREATMENT
Under present accounting rules, neither the grant nor the
exercise of options issued at fair market value under the Stock Option Plan will
result in any charge to the Company's earnings. However, the grant of options
with exercise prices less than the fair market value of the option shares at the
time of grant will result in a compensation expense for the Company equal to the
discount at the time of the grant. The Company will have to report such expense
over the vesting period in effect for the option shares. Whether or not granted
at a discount, the number of outstanding options under the Stock Option Plan may
be a factor in determining earnings per share on a fully-diluted basis. Also,
options granted after December 15, 1995 to individuals other than employees or
directors of the Company will result in expense recognition in the year granted.
Should one or more optionees be granted stock appreciation
rights which have no conditions upon exercisability other than a service or
employment requirement, then such rights will result in a compensation expense
to be charged against the Company's earnings. Accordingly, at the end of each
fiscal quarter, the amount (if any) by which the fair market value of the shares
of Common Stock subject to the right has increased from prior quarter-end will
be accrued as compensation expense, to the extent such amount is in excess of
the aggregate exercise price payable for such shares. In the event the fair
market value of such shares declines from quarter to quarter, appropriate
adjustments to current compensation expense will be made.
All stock options granted after April 1, 1995 will be subject
to footnote disclosure in the Company's financial statements. The footnote must
reflect the reduction to the Company's reported earnings which would have arisen
had the value of the option been recorded as a compensation expense.
Should one or more optionees be granted limited stock
appreciation rights exercisable upon a Hostile Takeover, then such rights will
generally not result in a compensation expense to be charged against the
Company's earnings unless it is deemed more probable that the option will be
surrendered rather than be exercised.
PROPOSAL THREE -- RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Coopers &
Lybrand L.L.P., independent accountants, to audit the financial statements of
the Company for the fiscal year ending March 31, 1998, and is asking the
stockholders to ratify this appointment.
In the event the stockholders fail to ratify the appointment,
the Board of Directors will reconsider its selection. Even if the selection is
ratified, the Board of Directors in its discretion may direct the appointment of
a different independent accounting firm at any time during the year if the Board
of Directors feels that such a change would be in the best interests of the
Company and its stockholders. The affirmative vote of the holders of a majority
of the Company's voting shares represented and voting at the Annual Meeting is
required to ratify the selection of Coopers & Lybrand L.L.P.
23
<PAGE> 26
Coopers & Lybrand L.L.P. has audited the Company's financial
statements annually since 1989. A representative of Coopers & Lybrand L.L.P. is
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if he desires to do so, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND L.L.P. TO SERVE AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 1998.
ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year
ended March 31, 1997, has been mailed concurrently with this Proxy Statement to
all stockholders entitled to notice of and to vote at the Annual Meeting. The
Annual Report is not incorporated into this Proxy Statement and is not
considered proxy soliciting material.
FORM 10-K
The Company files an Annual Report on Form 10-K with the
Securities and Exchange Commission. Stockholders may obtain a copy of this
report, without charge, by request to the Director of Investor Relations, at the
Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Officers, directors and
greater-than-ten-percent shareholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no Form 5s were required for such persons, the Company believes that all filing
requirements applicable to its officers, directors, and greater-than-10%
beneficial owners during the period from April 1, 1996 to March 31, 1997 were
complied with except as follows:
S. Joseph Tarnowski, Ph.D. filed a late report on Form 4
covering an open-market purchase of Company stock.
OTHER MATTERS
The Company knows of no matters that will be presented for
consideration at the Annual Meeting other than the matters set forth in this
Proxy Statement. If any other matters properly come before the Annual Meeting,
it is the intention of the persons named in the enclosed form of Proxy to vote
the shares they represent as the Board of Directors may recommend. Discretionary
authority with respect to such other matters is granted by the execution of the
enclosed Proxy.
THE BOARD OF DIRECTORS
DATED: JULY 1, 1997
24
<PAGE> 27
Please mark
[X] votes as in this
example
The Board of Directors recommends a vote FOR each of the directors listed below
and a vote FOR the other proposals. This Proxy, when properly executed, will be
voted as specified below. This Proxy will be voted FOR the election of the
directors listed below and FOR the other proposals if no specification is made.
1. To elect the following directors to serve until the next annual meeting of
stockholders or until their successors are elected and qualified: NOMINEES:
Kenneth W. Anstey, Larry G. Culver, Joshua L. Green, Joseph S. Lacob, Charles P.
Waite, Jr., Richard D. Murdock
FOR WITHHELD
[ ] [ ]
[ ] For all nominees except as noted above
2. To approve an amendment to the Company's Restated 1989 Stock Option Plan
which will increase the number of shares of the Company's Common Stock reserved
for issuance thereunder by 1,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the Board of Director's selection of Coopers & Lybrand L.L.P. to
serve as the Company's independent accountants for the fiscal year ending March
31, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 28
------------------------------
MARK HERE FOR ADDRESS CHANGE /__/
AND PROVIDE NEW ADDRESS ------------------------------
------------------------------
Please sign your name:
Signature: Date:
-------------------------- -------------------------
Signature: Date:
-------------------------- -------------------------
<PAGE> 29
CELLPRO INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 1, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CELLPRO, INCORPORATED
PROXY
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held August 1, 1997 and the
Proxy Statement and appoints Richard D. Murdock and Larry G. Culver and each of
them, the Proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of CellPro, Incorporated (the "Company") which the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities, at the Annual Meeting of Stockholders of the Company to
be held at the Company's offices at 22215 26th Avenue, S.E., Bothell, WA 98021,
on Friday, August 1, 1997 at 9:30 a.m. (the "Annual Meeting"), and at any
adjournment or postponement thereof, with the same force and effect as the
undersigned might or could do if personally present thereat. The shares
represented by this Proxy shall be voted in the manner set forth on the reverse
side.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE SIDE
