SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
SCICLONE PHARMACEUTICALS, INC.
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(Name of Registrant as Specified in Its Charter)
SCICLONE PHARMACEUTICALS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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SCICLONE PHARMACEUTICALS, INC.
Notice of Annual Meeting of Shareholders
To Be Held July 25, 1996
The Annual Meeting of Shareholders (the "Annual Meeting") of SciClone
Pharmaceuticals, Inc., a California corporation (the "Company"), will be held at
the Holiday Inn Select, 1221 Chess Drive, Foster City, California 94404, on
Thursday, July 25, 1996, at 10:00 a.m., local time, for the following purposes:
1. To elect five (5) directors of the Company to serve until the 1997
Annual Meeting of Shareholders or until their respective
successors are elected and qualified;
2. To approve the adoption of the Company's 1996 Employee Stock
Purchase Plan and the reservation of 500,000 shares of Common
Stock for issuance thereunder;
3. To ratify the appointment of Ernst & Young LLP as the independen
auditors for the Company for the year ending December 31, 1996;
and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors,
are more fully described in the Proxy Statement which is attached and made a
part of this Notice.
The Board of Directors has fixed the close of business on June 19, 1996
as the record date for determining the shareholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, you are urged to mark, sign, date and return the enclosed proxy card as
promptly as possible in the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Annual Meeting. If you send
in your proxy card and then decide to attend the Annual Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ MARK A. CULHANE
MARK A. CULHANE
Secretary
San Mateo, California
June 28, 1996
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
901 Mariners Island Boulevard
San Mateo, California 94404
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of SciClone Pharmaceuticals, Inc., a
California corporation (the "Company"), of proxies in the enclosed form for use
in voting at the Annual Meeting of Shareholders (the "Annual Meeting") to be
held at the Holiday Inn Select, 1221 Chess Drive, Foster City, California 94404,
on Thursday, July 25, 1996, at 10:00 a.m., local time, and any adjournment or
postponement thereof.
This Proxy Statement, the enclosed proxy card and the Company's Annual
Report to Shareholders are being mailed to shareholders on or about June 28,
1996.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Mark A. Culhane) a written notice of revocation or a duly executed
proxy bearing a later date, or by attending the Annual Meeting and voting in
person.
Record Date
The close of business on June 19, 1996 has been fixed as the record
date (the "Record Date") for determining the holders of shares of Common Stock
of the Company entitled to notice of and to vote at the Annual Meeting. At the
close of business on the Record Date, the Company had approximately 17,460,474
shares of Common Stock outstanding.
Voting and Solicitation
Each outstanding share of Common Stock on the Record Date is entitled
to one vote on all matters and is entitled to cumulate votes for the election of
directors, subject to the conditions described below.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspector of Elections with the assistance of the Company's
transfer agent. The Inspector of Elections will also determine whether or not a
quorum is present. Except with respect to the election of directors and except
in certain other specific circumstances, the affirmative vote of a majority of
shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a majority
of the required quorum) is required under California law for approval of
proposals presented to shareholders. In general, California law also provides
that a quorum consists of a majority of the shares entitled to vote, represented
either in person or by proxy. The Inspector of Elections will treat abstentions
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as not voting for purposes of determining the approval
of any matter submitted to the shareholders for a vote.
The shares represented by the proxies received, properly marked,
signed, dated and not revoked will be voted at the Annual Meeting. Where such
proxies specify a choice with respect to any matter to be acted upon, the shares
will be voted in accordance with the specifications made. Any proxy in the
enclosed form which is returned but is not marked will be voted FOR the election
of directors, FOR the adoption of the
<PAGE>
Company's 1996 Employee Stock Purchase Plan and the reservation of shares
for issuance thereunder, FOR ratification of the appointment of the
designated independent auditors and as the proxy holders deem advisable on
other matters that may come before the meeting, as the case may be with
respect to the item not marked. If a broker indicates on the enclosed proxy or
its substitute that it does not have discretionary authority as to certain
shares to vote on a particular matter ("broker non-votes"), those shares will
not be considered as voting with respect to that matter. While there is n
definitive specific statutory or case law authority in California concerning
the proper treatment of abstentions and broker non-votes, the Company believes
that the tabulation procedures to be followed by the Inspector of Elections
are consistent with the general statutory requirements in California
concerning voting of shares and determination of a quorum.
The solicitation of proxies will be conducted by mail and the Company
will bear all attendant costs. These costs will include the expense of preparing
and mailing proxy solicitation materials for the Annual Meeting and
reimbursements paid to brokerage firms and others for their expenses incurred in
forwarding solicitation materials regarding the Annual Meeting to beneficial
owners of the Company's Common Stock. The Company may conduct further
solicitation personally, telephonically or by facsimile through its officers,
directors and employees, none of whom will receive additional compensation for
assisting with the solicitation.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the shareholders will elect five directors to
serve until the 1997 Annual Meeting of Shareholders or until their respective
successors are elected and qualified. In the event any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the proxies
may be voted for the balance of those nominees named and for any substitute
nominee designated by the present Board or the proxy holders to fill such
vacancy, or for the balance of the nominees named without nomination of a
substitute, or the Board may be reduced in accordance with the Bylaws of the
Company. The Board has no reason to believe that any of the persons named below
will be unable or unwilling to serve as a nominee or as a director if elected.
In voting for directors, each shareholder is entitled to cast that
number of votes equal to the number of directors to be elected multiplied by the
number of shares of Common Stock held by such shareholder. Such votes may be
cast for one candidate or distributed in any manner among the nominees for
directors. However, the right to cumulate votes in favor of one or more
candidates may not be exercised unless the candidate or candidates have been
nominated prior to the voting, and a shareholder has given notice at the Annual
Meeting, prior to the voting, of the shareholder's intention to cumulate such
shareholder's votes. If any one shareholder gives such notice, all shareholders
may cumulate their votes for candidates in nomination. The persons authorized to
vote shares represented by executed proxies in the enclosed form (if authority
to vote for the election of directors is not withheld) will have full discretion
and authority to vote cumulatively and to allocate votes among any or all of the
nominees as they may determine or, if authority to vote for a specified
candidate or candidates has been withheld, among those candidates for whom
authority to vote has not been withheld.
Assuming a quorum is present, the five nominees receiving the highest
number of affirmative votes of shares entitled to be voted for them will be
elected as directors of the Company for the ensuing year. Unless marked
otherwise, proxies received will be voted FOR the election of each of the five
nominees named below. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner in accordance with cumulative voting as will ensure the
election of
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<PAGE>
as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders.
<TABLE>
The names of the nominees, their ages as of May 31, 1996, and certain
other information about them are set forth below:
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- -----
<S> <C> <C> <C>
Donald R. Sellers.................... 51 President, Chief Executive Officer and 1996
Director
Thomas E. Moore...................... 51 Chairman of the Board of Directors of the 1990
Company
John D. Baxter, M.D.................. 55 Professor of Medicine 1991
Edwin C. Cadman, M.D................. 50 Professor of Medicine 1991
Jere E. Goyan, Ph.D.................. 65 President and Chief Operating Officer of 1992
Alteon, Inc.
</TABLE>
There are no family relationships among any of the directors or
executive officers of the Company.
Donald Sellers has served as the Company's President and a director
since January 1996 and as its Chief Executive Officer since April 1996. From May
1993 to present, he has also served as Managing Director, SciClone
Pharmaceuticals International Ltd., the international arm of the Company. From
1990 to 1993, Mr. Sellers was Corporate Vice President of Getz Bros., an Asian
trading company, as well as President of Getz Bros.' Japanese operations. From
1983 to 1990, Mr. Sellers was employed by Sterling Drug International, initially
as Vice President of Marketing and Operations in Asia and beginning in 1985 as
President of Sterling's Latin American Andina Group. Mr. Sellers began his
pharmaceutical career in 1973 with Pfizer, a pharmaceutical company, as Country
Manager, Vietnam and Hong Kong, and he later worked with the Revlon Healthcare
Group as Director of Worldwide Exports and Pacific Area Director.
Thomas E. Moore, a founder of the Company, has served as a director and
Chairman of the Board of Directors of the Company since its inception and as
Chief Executive Officer of the Company from August 1991 to April 1996. Since
February 1995, Mr. Moore has also served as Chairman of the Board of Cord Blood
Registry, Inc., a cord blood banking company. Since 1988, Mr. Moore has also
served as a principal in Sand Hill Management Group, a private investment and
management firm specializing in the computer software, medical and biotechnology
industries. From 1982 to 1988, Mr. Moore was the Chairman of the Board of
Directors of Synercom Technology, Inc. ("Synercom"), a software company. Prior
to Synercom, Mr. Moore was Vice President of Pacific Operations and Vice
President of Strategic Planning at Honeywell, Inc., an electronics company.
John D. Baxter, M.D. has served as a director and Chairman of the
Scientific Advisory Board of the Company since June 1991. Dr. Baxter has been
associated with the University of California, San Francisco since 1970. He has
been Professor of Medicine since 1979, Chief of the Endocrinology Section,
Parnassus Campus since 1980 and Director of the Metabolic Research Unit since
1981. Dr. Baxter was a founder and served as a director of Scios Nova Inc., a
biotechnology company, from its inception in 1982 to 1991.
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<PAGE>
Edwin C. Cadman, M.D. has served as a director and member of the
Scientific Advisory Board of the Company since November 1991. Since January
1994, Dr. Cadman has been Senior Vice President of Medical Affairs and Chief of
Staff at Yale New Haven Hospital, where he was Chief of the Medical Service from
1987 through December 1993. Since 1987, Dr. Cadman has also been Professor of
Medicine at Yale University, where he was Chairman of the Department of Medicine
from 1987 through December 1993. Prior to these positions, he was Director of
the Cancer Research Institute at the University of California, San Francisco.
Dr. Cadman also currently serves as a director of CytoTherapeutics, Inc., a
biotechnology company.
Jere E. Goyan, Ph.D. has been a director of the Company since January
1992. Since July 1993, Dr. Goyan has been President and Chief Operating Officer
and director of Alteon, Inc., a biotechnology company where he served as Senior
Vice President for Research and Development from January 1993 through July 1993
and as Acting Chief Executive Officer from July 1993 through May 1994. Dr. Goyan
was Dean of the School of Pharmacy and Professor of Pharmacy and Pharmaceutical
Chemistry at the University of California, San Francisco from 1967 through 1992,
and was a Professor there from 1965 through 1992. From 1979 to 1981, Dr. Goyan
was the Commissioner of the United States Food and Drug Administration. Dr.
Goyan also currently serves as a director of Emisphere Technologies, Inc. and
Atrix Laboratories, both biotechnology companies, and Boehringer Mannheim
(U.S.), a pharmaceutical company.
Meetings and Committees of the Board of Directors
During 1995, the Board met eight times and no director attended fewer
than 75% of the aggregate number of meetings of the Board and meetings of the
committees of the Board on which he serves. The Board has two committees: the
Audit Committee and the Compensation Committee. The Board does not have a
nominating committee or a committee performing the functions of a nominating
committee. Although there are no formal procedures for shareholders to nominate
persons to serve as directors, the Board will consider nominations from
shareholders, which should be addressed to Mark A. Culhane, at the Company's
address set forth above.
The Audit Committee consists of directors Cadman and Goyan, the
Company's two non-employee directors, and held two meetings during 1995. The
Audit Committee recommends the engagement of the firm of certified public
accountants to audit the financial statements of the Company, and monitors the
effectiveness of the audit effort, the Company's financial and accounting
organization and its system of internal accounting controls.
The Compensation Committee also consists of directors Cadman and Goyan,
and held one meeting during 1995. Its functions are to establish and administer
the Company's policies regarding annual executive salaries and cash incentives
and long-term equity incentives. The Compensation Committee administers the
Company's 1991 and 1992 Stock Plans, the Company's 1995 Equity Incentive Plan
and, to the extent necessary, the Company's 1995 Nonemployee Director Stock
Option Plan. The Compensation Committee is expected to administer the Company's
1996 Employee Stock Purchase Plan. See Proposal No. 2 "Adoption of the 1996
Employee Stock Purchase Plan."
Compensation of Directors
Directors who are employees of the Company do not receive any
compensation for their services as directors. Directors who are not employees of
the Company receive an annual retainer of $12,000, payable at the rate of $1,000
per month, plus payment of out-of-pocket expenses relating to their service as
Board members.
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<PAGE>
The Company has entered into a consulting agreement with Dr. Baxter
pursuant to which Dr. Baxter serves as Chairman of the Company's Scientific
Advisory Board and performs consulting services as requested by the Company.
Under the agreement, Dr. Baxter receives a fee of $6,000 per month. Dr. Baxter
received $72,000 under this agreement in 1995. The Company has retained Dr.
Cadman to perform consulting services, principally analysis of drug candidates
for licensing or acquisition. Dr. Cadman receives a fee of $6,250 per month for
these services. Dr. Cadman received $75,000 in such fees in 1995. In addition,
Dr. Cadman received a $2,000 honorarium from the Company during 1995. From time
to time, Dr. Goyan performs consulting services for the Company. The Company
compensates Dr. Goyan for these services at his then-effective rate for
consulting services. Dr. Goyan did not receive any consulting fees from the
Company in 1995.
Messrs. Baxter, Cadman and Goyan will each receive options to purchase
10,000 shares of the Company's Common Stock under the Company's 1995 Nonemployee
Director Stock Option Plan if they are reelected to the Board at the Annual
Meeting.
Recommendation of the Board
THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF ALL NOMINEES NAMED ABOVE.
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<PAGE>
PROPOSAL NO. 2
ADOPTION OF THE 1996 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, the Company's shareholders are being asked to
approve the adoption of the 1996 Employee Stock Purchase Plan (the "Purchase
Plan") and the reservation of 500,000 shares of Common Stock for issuance
thereunder. The summary of the Purchase Plan set forth below is qualified in its
entirety by the full text of such plan, which is attached hereto as Appendix A.
General
The Purchase Plan was adopted by the Board of Directors in June 1996. A
total of 500,000 shares of Common Stock have been reserved for issuance under
the Purchase Plan. At the Annual Meeting, the shareholders are being asked to
approve the adoption of the Purchase Plan with an effective date of July 1,
1996.
The purpose of the Purchase Plan is to provide employees (including
officers and employee directors) of the Company with an opportunity to purchase
Common Stock of the Company through payroll deductions. The Company currently
has approximately thirty-seven employees. The Purchase Plan will be implemented
by a series of offering periods of 24 months duration with new offering periods
beginning on or about July 1 of every second year commencing July 1, 1996 (i.e.,
the second offering period will commence on July 1, 1998), unless otherwise
determined by the Board of Directors or provided for under the terms of the
Purchase Plan. Each offering period shall consist of eight consecutive purchase
periods of three-months duration with the last day of each period being
designated a purchase date. The first offering period shall commence on July 1,
1996 and continue through June 30, 1998, with the first purchase date occurring
on September 30, 1996, and subsequent purchase dates to occur every three months
thereafter. The Purchase Plan is intended to qualify under Section 423 of the
Code.
Administration
The Purchase Plan is to be administered by the Board of Directors of
the Company or a committee appointed by the Board (the "Administrator"). The
Purchase Plan will be administered by the Compensation Committee. Members of the
Board receive no additional compensation for their services in connection with
the administration of the Purchase Plan. All questions of interpretation or
application of the Purchase Plan are determined by the Administrator and its
decisions are final, conclusive and binding upon all participants.
Eligibility and Participation
Employees (including officers and employee directors) who are employed
for at least twenty (20) hours per week and more than five months per calendar
year with the Company (including subsidiaries of the Company approved by the
Administrator) are eligible to participate in an offering under the Purchase
Plan, subject to certain limitations imposed by Section 423(b) of the Code and
limitations on stock ownership as set forth in the Purchase Plan. Eligible
employees become participants in the Purchase Plan by filing with the payroll
office of the Company a subscription agreement authorizing payroll deductions
prior to the applicable Offering Date, unless a later time for filing the
subscription agreement has been set by the Administrator.
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<PAGE>
Grant and Exercise of Option
At the beginning of an offering period or at each quarterly entry date
for an individual who joins the Purchase Plan after the first day of an offering
period (the "Offering Date"), each participant is granted an option to purchase,
at the end of each purchase period within the offering period up to that number
of shares determined by dividing such employee's payroll deductions accumulated
prior to the end of the purchase period and retained in the participant's
account as of the end of the purchase period by the lower of (i) 85% of the fair
market value of a share of the Company's Common Stock on the Offering Date or
(ii) 85% of the fair market value of a share of the Company's Common Stock at
the end of the purchase period (the "Purchase Date"); provided that in no event
shall a participant be permitted to purchase during each calendar year more than
a number of shares determined by dividing $25,000 by the fair market value of a
share of the Company's Common Stock on the Offering Date, and provided further
that such purchases shall be subject to the limitations set forth below. No
employee may be granted an option under the Purchase Plan (i) if, immediately
after the grant, such employee (or any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding options to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock of the Company
or of any subsidiary of the Company, or (ii) if such option would permit his or
her rights to purchase stock under all employee stock purchase plans (described
in Section 423 of the Code) of the Company and its subsidiaries to accrue at a
rate which exceeds $25,000 of fair market value of such stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding at any time. The Company may make a pro rata allocation of the
shares remaining available for option grant if the total number of shares which
would otherwise be subject to options granted at the beginning of an offering
period exceeds the number of remaining available shares in the Purchase Plan.
Unless an employee withdraws his or her participation in the Purchase Plan by
giving written notice to the Company of his or her election to withdraw all
accumulated payroll deductions prior to the end of an offering period, the
employee's option for the purchase of shares will be exercised automatically at
the end of the each purchase period, and the maximum number of full shares
subject to option which are purchasable with the accumulated payroll deductions
in his or her account will be purchased at the applicable purchase price
determined as provided below.
Purchase Price
The purchase price per share at which shares are sold to participating
employees under the Purchase Plan is the lower of (i) 85% of the fair market
value per share of the Common Stock at the time the option is granted on the
Offering Date, or (ii) 85% of the fair market value per share of the Common
Stock on a Purchase Date. The fair market value of the Common Stock on a given
date shall be determined by the Administrator in its discretion based on the
closing price of the Common Stock for such date as reported by The Nasdaq
National Market ("NASDAQ") or, if such price is not so reported, the mean of the
bid and asked prices reported by NASDAQ for such date, or if the stock is listed
on a stock exchange, the closing price on such exchange on such date as reported
in The Wall Street Journal. If the Common Stock is not traded on the specified
date, its fair market value per share shall be based on corresponding
information from the immediately preceding trading day. In the event that the
fair market value of the Common Stock on any Purchase Date of an offering
period, other than the final Purchase Date, is less than the fair market value
on the Offering Date, participants shall automatically be withdrawn from such
offering period after the purchase is made and then enrolled in a new offering
period commencing on the first business day subsequent to the Purchase Date.
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<PAGE>
Payroll Deductions
The purchase price of the shares to be acquired under the Purchase Plan
is accumulated by payroll deductions over the 24-month offering period. The
deductions may not be less than 1% or more than 15% of a participant's aggregate
compensation during the offering period. Subject to certain restrictions
applicable to employees who are reporting persons under Section 16 of the
Exchange Act, a participant may discontinue his participation in the Purchase
Plan or, on one occasion only during the offering period, may decrease his or
her rate of payroll deductions. Payroll deductions for a participant shall
commence on the first payroll following the Offering Date and shall end on the
last payroll period paid prior to the last day of the purchase period to which
the subscription agreement is applicable unless terminated by the participant as
provided in the Purchase Plan. Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and eligibility
requirements of the Plan, a participant's payroll deductions may be decreased to
0% if the aggregate of the participant's payroll deductions during the same
calendar year equals $21,250.
Termination of Employment
Termination of a participant's employment for any reason, including
retirement or death, or the failure of the participant to remain in the
continuous employ of the Company for at least twenty (20) hours per week during
the applicable offering period, cancels his option and his participation in the
Purchase Plan immediately. In such event, the payroll deductions credited to the
participant's account will be returned to him or, in the case of death, to the
person or persons entitled thereto as provided in the Purchase Plan, without
interest.
Adjustment Upon Changes in Capitalization
In the event any change is made in the Company's capitalization in the
middle of an offering period, such as a stock split or stock dividend, that
results in an increase or decrease in the number of shares of Common Stock
outstanding without receipt of consideration by the Company, appropriate
adjustment shall be made in the purchase price and in the number of shares
subject to options under the Purchase Plan.
In the event of a merger of the Company with or into another
corporation or a sale of substantially all of the Company's assets, each right
to purchase stock under the Purchase Plan will be assumed or an equivalent right
substituted by the successor corporation unless the Board of Directors shortens
the offering period so that employees' rights to purchase stock under the
Purchase Plan will be automatically exercised prior to the merger or sale of
assets. In the event of the proposed dissolution or liquidation of the Company,
the offering period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board.
Amendment and Termination
The Board of Directors may at any time amend or terminate the Purchase
Plan, except that such termination cannot affect options previously granted nor
may an amendment make any change in an option granted prior thereto which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 of the Exchange Act or Section 423 of the Code, no
amendment may be made to the Purchase Plan without approval of the shareholders
of the Company if such amendment would increase the number of shares reserved
under the Purchase Plan, change the standards of eligibility for participation
in the Purchase Plan or materially increase the benefits accruing to
participants in the Purchase Plan.
If not terminated earlier, the Purchase Plan will have a term of twenty
(20) years.
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Federal Income Tax Aspects of the 1996 Employee Stock Purchase Plan
There are no tax consequences to an eligible employee of becoming a
participant in the Purchase Plan or purchasing shares of Common Stock under the
Purchase Plan. If a participant disposes of his or her shares of Common Stock
within the later of two (2) years from the date the underlying option was
granted (which is the Offering Date) or within one year from the date the
underlying option was exercised (which is the last day of a Purchase Period),
this transaction is referred to as a "disqualifying disposition" and the
participant will realize ordinary income in the year of such disposition equal
to the amount by which the fair market value of the stock on the date the option
was exercised exceeded the purchase price. In such instances, the amount of such
ordinary income will be added to the participant's basis in the shares, and any
additional gain or resulting loss recognized on the disposition of the shares
after such basis adjustment will be a capital gain or loss. A capital gain or
loss will be long-term if the participant holds the shares of Common Stock for
more than twelve (12) months.
If the participant disposes of his or her shares of Common Stock more
than two (2) years after the date the underlying option was granted and more
than one year after the date the underlying option was exercised, the
participant will realize ordinary income in the year of such disposition equal
to the lesser of (i) the excess of the fair market value of the shares on the
date of disposition over the purchase price or (ii) 15% of the fair market value
of the shares on the date the option was granted. The amount of such ordinary
income will be added to the participant's basis in the shares, and any
additional gain recognized on the disposition of the shares after such basis
adjustment will be a capital gain. If the fair market value of the shares on the
date of disposition is less than the purchase price, there will be no ordinary
income and any loss recognized will be a capital loss.
If the participant still owns the shares of Common Stock at the time of
death, the lesser of (i) the excess of the fair market value of the shares on
the date of death over the purchase price or (ii) 15% of the fair market value
of the shares on the date the option was granted will constitute ordinary income
in the year of death.
The Company will be entitled to a deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disposition. In all other cases, no deduction
is allowed the Company.
The foregoing summary is intended only as a general guide to the
federal income tax consequences under current law with respect to participation
in the Purchase Plan and does not attempt to describe all possible federal or
other tax consequences of such participation. Furthermore, tax consequences are
subject to change and a taxpayer's particular situation may be such that some
variation of the described rules is applicable.
Required Vote
Approval of the adoption of the Purchase Plan and the reservation of
500,000 shares of the Common Stock for issuance thereunder requires the
affirmative vote of the holders of the majority of the outstanding shares of the
Company's Common Stock represented and voting at the Annual Meeting (which
shares voting affirmatively also constitute at least a majority of the required
quorum).
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PURCHASE PLAN AND THE RESERVATION OF 500,000 SHARES OF COMMON STOCK FOR ISSUANCE
THEREUNDER.
-9-
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors
since 1991 and has been appointed by the Board to continue as the Company's
independent auditors for the year ending December 31, 1996. In the event that
ratification of this selection of auditors is not approved by a majority of the
shares of Common Stock voting at the Annual Meeting in person or by proxy,
management will review its future selection of auditors.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting. This representative will have an opportunity to make a statement
and will be available to respond to appropriate questions.
Recommendation of the Board
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 1996.
-10-
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth information that has been provided to
the Company with respect to beneficial ownership of shares of the Company's
Common Stock as of May 31, 1996 for (i) each person who is known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
each of the Named Executive Officers, (iii) each director of the Company and
(iv) all directors and executive officers of the Company as a group.
<CAPTION>
Shares Beneficially Owned(1)
------------------------------
Name Number Percent
- --------------------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Thomas E. Moore(2)............................................................. 3,317,381 18.8%
John D. Baxter, M.D(3)......................................................... 415,506 2.4%
David L. Horwitz, M.D., Ph.D.(4)............................................... 225,478 1.3%
Philip H. Vander Werf(5)...................................................... 54,444 *
Mark A. Culhane(6)............................................................. 142,138 *
Donald R. Sellers(7)........................................................... 157,227 *
Edwin C. Cadman, M.D.(8)....................................................... 41,480 *
Jere E. Goyan, Ph.D.(9)........................................................ 40,000 *
All directors and executive officers as a group (7 persons)(10) 4,339,210 23.8%
<FN>
- ------------------
* Less than 1%.
1 Except pursuant to applicable community property laws, the Company believes
the persons named in the table have sole voting and investment power with
respect to all shares.
2 Includes 2,243,167 shares held of record by Sand Hill Management Group, a
sole proprietorship of which Mr. Moore is the principal, 308,616 shares
held of record by Moore Family Limited Partnership and 200,000 shares
issuable pursuant to options exercisable within 60 days of May 31, 1996.
3 Includes 10,000 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
4 Includes 188,811 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
5 Includes 52,034 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
6 Includes 128,971 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
7 Includes 153,227 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
8 Consists of 40,480 shares issuable pursuant to options exercisable within
60 days of May 31, 1996.
9 Includes 40,000 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
10 Includes 813,523 shares issuable pursuant to options exercisable within 60
days of May 31, 1996.
</FN>
</TABLE>
-11-
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
The following table sets forth certain information concerning
compensation of (i) the Company's Chief Executive Officer and (ii) the four
other most highly compensated executive officers of the Company serving at
December 31, 1995 (collectively, the "Named Executive Officers").
Summary Compensation Table
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary ($)(3) Bonus ($) Compensation ($) Options/SARs(#) Compensation ($)
- --------------------------- ---- ------------- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Moore 1995 367,500 206,719 * 0 1,848(8)
Chairman and Chief 1994 350,000 87,500 * 200,000 1,848(8)
Executive Officer 1993 185,000 100,000 * 0 1,799(8)
Philip H. Vander Werf(1) 1995 247,257 74,484 86,218(4) 24,000 1,848(8)
President and Chief 1994 234,960 95,000 110,631(4) 0
Operating Officer 1993 213,552 75,000 134,206(4) 39,000 2,609(8)
David L. Horwitz, M.D., Ph.D. 1995 218,795 76,639 67,028(5) 67,500 9,889(9)
Executive Vice President, 1994 205,056 120,000 36,190(5) 40,000 9,397(9)
Medical and Regulatory 1993 186,813 67,000 * 38,150 8,849(9)
Affairs
Donald R. Sellers(2) 1995 203,643 78,180 328,854(6) 60,000 13,522(10)
Managing Director, Pacific 1994 194,506 120,000 306,927(6) 40,000 10,428(10)
Rim Operations 1993 161,203 60,000 141,102(6) 76,000 1,000(10)
Mark A. Culhane 1995 190,000 67,000 48,000(7) 67,500 1,848(8)
Vice President, Finance 1994 175,000 75,000 * 125,000 1,720(8)
and Administration, Chief 1993 99,996 65,000 0 32,000 1,225(8)
Financial Officer and
Secretary
<FN>
- --------------------
* No disclosure required under Securities and Exchange Commission rules.
1 Mr. Vander Werf served as the Company's President and Chief Operating
Officer until January 1996.
2 Mr. Sellers was appointed to serve as the Company's President and as a
director of the Company in January 1996 and as its Chief Executive Officer
in April 1996.
3 Includes amounts deferred under the Company's 401(k) plan.
4 Includes $80,218 in 1995, $104,631 in 1994 and $104,620 in 1993 in mortgage
assistance payments under a housing relocation agreement.
5 Includes mortgage assistance payments of $62,800 in 1995 and $36,190 in
1994 under a housing relocation agreement. 6 Includes $274,427 in 1995,
$252,429 in 1994 and $121,979 in 1993 in cost-of-living assistance payments
under an expatriate benefit agreement.
7 Consists of $36,000 in cost-of-living assistance payments.
8 Includes matching contributions under the Company's 401(k) plan.
9 Consists of term life insurance premiums ($2,693 in 1995, $2,202 in 1994
and $1,704 in 1993), disability insurance premiums ($5,348 in 1995, $5,347
in 1994 and $5,346 in 1993) and matching contributions under the Company's
401(k) Plan ($1,848 in 1995 and 1994, $1,799 in 1993).
10 Consists of disability and life insurance premiums ($7,182 in 1995, $3,131
in 1994 and $1,000 in 1993) and medical insurance premiums ($6,340 in 1995
and $7,297 in 1994).
</FN>
</TABLE>
-12-
<PAGE>
<TABLE>
The following table provides certain information with respect to stock
options granted to the Named Executive Officers in 1995. In addition, as
required by Securities and Exchange Commission rules, the table set forth the
hypothetical gains that would exist for the options based on assumed rates of
annual compound stock price appreciation during the option term.
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Individual Grants
-------------------------------------------------------------
Potential Realizable
Value at Assumed
Number of Percent of Total Exercise Annual Rates of Stock
Securities Options/SARs or Base Price Appreciation
Underlying Granted to Price For Option Term(2)
Options/SARs. Employees in Per Share Expiration ------------------------
Name Granted (#)(1) Fiscal Year ($/sh) Date 5% 10%
- ------------------------------- ------------- ------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Moore ................ -0- N/A N/A N/A N/A N/A
Philip H. Vander Werf .......... 24,000 5.9% $5.50 4/18/2005 $ 83,040 $210,480
David L. Horwitz, M.D., Ph.D ... 67,500 16.6% $5.50 4/18/2005 $233,550 $591,975
Donald R. Sellers .............. 60,000 14.8% $5.50 4/18/2005 $207,600 $526,200
Mark A. Culhane ................ 67,500 16.6% $5.50 4/18/2005 $233,550 $591,975
<FN>
- -------------------
1 Options with respect to 25% of the shares covered become exercisable one
year from date of grant; thereafter, options with respect to the remaining
shares vest ratably on a monthly basis over three years. The options become
fully exercisable without regard to vesting in the event the Company is not
the surviving corporation in any merger or consolidation. The options have
a ten-year term, but are subject to earlier termination in connection with
termination of employment.
2 The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their terms, assuming the specified compounded rates
of appreciation of the market price per share from the date of grant to the
end of the option term. Actual gains, if any, on stock option exercise are
dependent upon a number of factors, including the future performance of the
Common Stock and the timing of option exercises, as well as the optionee's
continued employment through the vesting period. There can be no assurance
that the amounts reflected in this table will be achieved.
</FN>
</TABLE>
-13-
<PAGE>
<TABLE>
The following table sets forth certain information with respect to
stock options exercised by the Named Executive Officers during 1995. In
addition, the table sets forth the number of shares covered by stock options as
of December 31, 1995, and the value of "in-the-money" stock options, which
represents the positive spread between the exercise price of a stock option and
the market price of the shares subject to such option on December 31, 1995.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
Number of Value of
Unexercised Unexercised
Options/SARs at In-the-Money
Shares Fiscal Year End (#) Options/SARs at
Acquired Value Exercisable/ Fiscal Year End ($)
Name on Exercise (#) Realized ($) Unexercisable Exercisable/Unexercisable(1)
- ----------------------------- --------------- ------------ --------------- ----------------------------
<S> <C> <C> <C> <C>
Thomas E. Moore.................. -0- - 200,000/0 0/0
Philip H. Vander Werf............ 40,000 $150,020 104,524/151,810 $180,627/$230,208
David L. Horwitz, M.D., Ph.D..... -0- - 134,098/164,885 $212,500/$113,333
Donald R. Sellers................ -0- - 53,046/122,954 0/0
Mark A. Culhane.................. -0- - 81,831/169,502 $37,109/$56,641
<FN>
- -------------------
1 Based on the $5.125 per share closing price of the Company's Common Stock
on the Nasdaq National Market on December 31, 1995, less the exercise
prices.
</FN>
</TABLE>
Compensation Committee Report on Executive Compensation
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the following report and the Stock Performance Graph which
follows shall not be deemed to be incorporated by reference into any such
filings.
The Compensation Committee of the Board is composed of Messrs. Cadman
and Goyan, both of whom are non-employee directors. The Compensation Committee
is responsible for establishing and administering the Company's policies
regarding compensation and stock ownership programs. The Committee annually
evaluates the performance, and determines compensation and long-term equity
incentives, of the Chief Executive Officer ("CEO"), and reviews and approves the
CEO's compensation recommendation for other executive officers of the Company.
The CEO is not present during discussions of his compensation.
Compensation Policy
The overall objectives of the Company's compensation policy are to
attract and retain executives of outstanding ability and potential, to motivate
these individuals to achieve corporate goals to enhance long-term shareholder
value, to link executive compensation and shareholder interests, and to provide
a compensation package that recognizes individual contributions as well as
overall corporate results and is competitive with leading biopharmaceutical
companies with which the Company competes for talent.
In the biopharmaceutical industry, traditional measures of corporate
performance, such as earnings per share and sales growth, may not apply in
reviewing the performance of executive officers. At the Company's current stage
of development, in evaluating and determining the compensation of the Company's
CEO and other
-14-
<PAGE>
executive officers, the Compensation Committee looks to other performance
criteria, such as progress of the Company's clinical and regulatory
programs and corporate commercialization and development activities, as well as
the Company's success in securing capital resources that are necessary for the
Company to complete clinical, regulatory and commercialization programs and
achieve product revenues. As a result, in many instances these qualitative
factors involve a subjective assessment of corporate performance by the
Committee. The Committee does not base its considerations on any single
performance factor nor does it specifically assign relative weights to factors,
but rather considers a mix of factors and evaluates the Company's and individual
performance against that mix.
Compensation for individual executive officers is targeted to be
comparable to compensation packages paid to other executives of other
biopharmaceutical companies of comparable or larger size with which the Company
competes for talent. Each year the Compensation Committee reviews independent
survey data regarding compensation and benefits in the biopharmaceutical
industry as well as compensation and benefits in a comparative group of public
biopharmaceutical companies that represent a number of the Company's most direct
competitors for executive talent. The companies selected for comparison are
biopharmaceutical firms with market capitalizations comparable to or larger than
the Company's, several of which companies are included in the NASDAQ
Pharmaceutical/Biotechnology Index used in the Stock Performance Graph contained
herein. The Committee believes that inclusion of companies with larger market
capitalizations is necessary because the talent pool from which the Company
recruits is composed largely of executives employed by such companies.
The key elements of the Company's executive compensation program
consist of base salary, annual cash incentives and long-term equity incentives.
Base Salary
Base salaries for executive officers are initially determined by
evaluating the responsibilities of the position held and the base salaries paid
by biopharmaceutical companies generally and companies in the comparative group
described above. The Compensation Committee initially sets base salaries in the
mid to upper range of base salaries at other companies in such comparative
group. Using this general guideline, the Committee then considers other factors
such as the individual's contribution to achievement of corporate goals, the
attainment of specific individual objectives and the assumption of new
responsibilities. From year to year, the relative weighting of the individual
factors may differ from officer to officer, and can be expected to change over
time in response to the Company's development stage and the evolution of the
biopharmaceutical industry.
Annual Cash Incentives
The Company's annual cash incentives account for a significant
percentage of each executive officer's compensation. The Compensation Committee
establishes annual cash incentive targets for executive officers based upon cash
incentive programs of biopharmaceutical companies generally and companies in the
comparative group described above. The Committee generally sets such targets in
the mid to upper range of cash incentives paid by other companies in such
comparative group. The actual cash incentive award earned depends upon the
attainment of corporate performance goals established for the year by the
Committee as well as the attainment of individual performance objectives.
Corporate performance goals for 1995 were (i) achievement of clinical milestones
for thymosin alpha 1, (ii) advancement of pre-marketing and commercialization
objectives, (iii) establishment of manufacturing and distribution alliances,
(iv) achievement of certain financial and administrative objectives and (v)
advancement of business development activities. Following completion of the
year, the Committee reviewed the original plans and goals. The Committee
determined that, due to the significant efforts and accomplishments of the
Company's executive officers,
-15-
<PAGE>
many of the original goals had been achieved; however, certain goals deemed
significant by the Committee had not been achieved. As a result, the executive
officers received less than their targeted annual cash incentive and received
cash incentives ranging from 30% to 56% of base salary.
Long-Term Equity Incentives
The Company's long-term equity incentives currently consist of the
Company's 1991 and 1992 Stock Plans and the Company's 1995 Equity Incentive Plan
(collectively, the "Plans"), pursuant to which the Company grants options and
other rights to purchase shares of its Common Stock. The objective of each of
the Plans is to advance the long-term interests of the Company and its
shareholders and to complement incentives tied to annual performance. Stock
options granted under the Plans generally vest over a four year period,
providing incentive to create value for the Company's shareholders over the
long-term since the full benefit of the compensation package cannot be realized
unless the employee remains with the Company and stock price appreciation occurs
over a number of years. The Compensation Committee has typically granted options
to employees upon commencement of employment and has occasionally granted
additional options following a significant change in job responsibility, scope
or title or a particularly noteworthy corporate or individual achievement.
During 1995, certain executive officers and employees were granted stock options
based on their individual contribution to achievement of corporate performance
goals.
CEO Compensation
In 1995, Mr. Moore received a base salary of $367,500 and an annual
cash incentive payment of $206,719. In increasing Mr. Moore's base salary, the
Compensation Committee believed that a 5% increase was reflective of overall
increases in the biopharmaceutical industry, based on an independent survey.
With respect to Mr. Moore's cash incentive, the Committee noted that many of the
corporate performance objectives had been met and many of Mr. Moore's individual
performance objectives had been achieved; however, certain performance
objectives deemed significant by the Committee had not been achieved. Therefore,
the Committee awarded Mr. Moore an actual bonus less than his targeted incentive
resulting in a bonus equal to 56% of his base salary.
Special Deduction Limit
The Compensation Committee has considered the impact of Section 162(m)
of the Code adopted under the Omnibus Budget Reconciliation Act of 1993, which
section disallows a deduction for any publicly-held corporation for individual
compensation exceeding $1.0 million in any taxable year for the CEO and four
other most highly compensated executive officers, unless such compensation meets
the requirements for the "performance-based" exception to the general rule.
Since the cash compensation paid by the Company to each of its executive
officers is expected to be well below $1.0 million, and the Committee believes
that options granted under the 1995 Equity Incentive Plan prior to the Company's
Annual Meeting in 1996 will meet the requirements for performance-based
compensation under Section 162(m), the Compensation Committee believes that this
section will not affect the tax deductions available to the Company with respect
to such options. However, because a transition rule which permits the
Compensation Committee to qualify as a committee which may award
performance-based compensation will expire upon the Company's Annual Meeting in
1996 and the Compensation Committee may not thereafter so qualify, the Company
can provide no assurance that options granted under the 1995 Equity Incentive
Plan after that date will meet the requirements for performance-based
compensation.
The foregoing report has been provided by Messrs. Cadman and Goyan.
-16-
<PAGE>
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1995, Messrs. Cadman and Goyan
served on the Compensation Committee of the Board.
-17-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the quarterly percentage change in (i) the
cumulative total shareholder return on the Company's Common Stock since March
17, 1992, the effective date of the Company's initial public offering, with (ii)
the cumulative total return on (a) The Nasdaq Stock Market (U.S. and Foreign
Companies) and (b) the NASDAQ Pharmaceutical/Biotechnology Index. The comparison
assumes (i) an investment of $100 on March 17, 1992 in each of the foregoing
indices and (ii) reinvestment of dividends, if any. The stock price performance
shown on the graph below is not necessarily indicative of future stock price
performance.
COMPUTED INDEX
-------------------------------------------------------------------------
SciClone NASDAQ NASDAQ
Performance Common Stock Mkt Parm. Com.
Period Stock US & Frgn SIC 283
------ ----- --------- -------
03/17/92 100.000 100.000 100.000
03/31/92 097.143 096.913 094.355
06/30/92 095.714 090.485 080.212
09/30/92 110.000 093.936 075.618
12/31/92 197.143 108.894 092.495
03/31/93 188.571 109.918 066.844
06/30/93 175.714 112.567 070.420
09/30/93 211.429 121.935 076.354
12/31/93 262.857 123.713 083.673
03/31/94 175.714 118.540 067.461
06/30/94 081.429 112.532 058.882
09/30/94 084.286 122.029 066.344
10/31/94 070.000 124.133 064.122
11/30/94 074.286 119.813 064.400
12/30/94 077.143 119.674 062.372
03/31/95 071.429 132.902 067.179
06/30/95 071.429 151.164 078.105
09/29/95 097.143 169.395 097.287
12/29/95 058.571 170.014 113.660
-18-
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Company has entered into an employment agreement with Dr. Horwitz.
Under the agreement, Dr. Horwitz receives an annual salary and is eligible for
an annual cash incentive and other benefits that are generally provided to the
Company's executives. In the event the Company terminates its employment
relationship with Dr. Horwitz without cause, or if Dr. Horwitz's relationship or
responsibilities change without his consent, the Company will be required to
continue to pay Dr. Horwitz's normal salary and benefits for six months.
Pursuant to the agreement, the Company also granted Dr. Horwitz options to
purchase shares of the Company's Common Stock and reimbursed Dr. Horwitz for
certain moving costs and agreed to make certain cash payments to Dr. Horwitz
upon exercise of options granted pursuant to the agreement and to defray a
portion of his housing expenses.
The Company has entered into an employment agreement with Mr. Culhane.
Under the agreement, Mr. Culhane receives an annual salary and is eligible for
an annual cash incentive and other benefits that are generally provided to the
Company's executives. In the event the Company terminates its employment
relationship with Mr. Culhane without cause, the Company will continue to pay
Mr. Culhane's annual salary and benefits for twelve months, pay any cash
incentives as if Mr. Culhane had continued his employment through the end of the
calendar year, accelerate the vesting of all of Mr. Culhane's outstanding stock
options so they become fully vested, and extend the exercise period for such
options for one year, but within the original term of the option. The Company
has also agreed to make certain cash payments to Mr. Culhane upon exercise of
stock options granted to Mr. Culhane prior to 1994.
Prior to Mr. Vander Werf's departure from the Company in January 1996,
the Company had an employment agreement with Mr. Vander Werf. Under the
agreement, Mr. Vander Werf received an annual salary and was eligible for an
annual cash incentive and other benefits that are generally provided to the
Company's executives. As amended in 1993, the agreement also provided that the
Company would defray a portion of Mr. Vander Werf's monthly mortgage expenses
over a five-year period. Pursuant to the agreement, the Company granted Mr.
Vander Werf options to purchase shares of the Company's Common Stock and
reimbursed Mr. Vander Werf for certain moving costs. As amended in 1994, the
agreement also provided that Mr. Vander Werf's stock options would be
accelerated and become fully vested and that the exercise period for such
options would be extended for one year, but within the original term of the
option, in the event of a change in control of SciClone or the termination of
the employment relationship with Mr. Vander Werf without cause. The agreement
also provided that in the event of termination of the employment relationship
with Mr. Vander Werf without cause Mr. Vander Werf's existing salary, cash
incentives and benefits would be paid for one year following his termination and
his mortgage assistance would continue for two years. Upon Mr. Vander Werf's
departure from the Company in January 1996, the aforementioned provisions became
operative. In 1994, the Company loaned Mr. Vander Werf an aggregate of $380,000
at an interest rate of 6% per annum in exchange for two promissory notes
delivered by Mr. Vander Werf to the Company. The promissory notes were
originally due and payable on December 31, 1994, but were extended and were
ultimately forgiven upon Mr. Vander Werf's departure from the Company in January
1996. In accordance with its agreement with Mr. Vander Werf, the Company also
provided reimbursement for Mr. Vander Werf's tax obligations in connection with
the forgiveness of these obligations.
In June 1995, the Company extended a loan to Dr. David Horwitz with an
aggregate principal amount of $1,365,000 to be used to finance the purchase and
renovation of Dr. Horwitz's primary residence. The loan was secured by a first
deed of trust on the property and 20,000 shares of SciClone Common stock owned
by Dr. Horwitz, bears interest at 7.5% per annum and is payable in five years,
subject to renewal if Dr. Horwitz remains employed by the Company. Pursuant to
Dr. Horwitz's employment agreement, the Company will defray a portion of Dr.
Horwitz's monthly mortgage expenses over a five-year period.
-19-
In May 1995, the Company extended a short-term loan to Thomas Moore in
the principal amount of $245,000. The term of the loan was 20 days and the loan
had an interest rate of 7.375%. The loan was repaid in June 1995. In July 1995,
the Company extended another loan to Mr. Moore in the principal amount of
$95,000 which carries an interest rate of 7.375% and is being secured by a
second deed of trust on residential property owned by Mr. Moore. The term of the
loan is two years. In December 1995, the Company extended an additional loan to
Mr. Moore in the principal amount of $600,000. The loan is due and payable in
two years, carries an interest rate of 7.50% and is being secured by a second
deed of trust on residential property owned by Mr. Moore.
-20-
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's
1997 Annual Meeting of Shareholders must be received by Mark A. Culhane,
SciClone Pharmaceuticals, Inc., 901 Mariners Island Boulevard, San Mateo,
California 94404, no later than February 28, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file.
To the Company's knowledge, based solely on its review of the copies of
such reports received or written representations from certain Reporting Persons
that no other reports were required, the Company believes that during its fiscal
year ended December 31, 1995, all Reporting Persons complied with all applicable
filing requirements.
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, proxies in the enclosed form will be voted in respect
thereof as the proxy holders deem advisable.
It is important that the proxies be returned promptly and that your
shares be represented. Shareholders are urged to mark, date, sign and promptly
return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ MARK A. CULHANE
MARK A. CULHANE
Secretary
June 28, 1996
San Mateo, California
-21-
<PAGE>
APPENDIX A
SCICLONE PHARMACEUTICALS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of SciClone Pharmaceuticals, Inc..
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly,
be construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock of the
Company.
(d) "Company" shall mean SciClone Pharmaceuticals, Inc.,
a California corporation.
(e) "Compensation" shall mean all regular straight time gross
earnings, overtime and shift premium and shall not include payments for
incentive compensation, incentive payments, bonuses, commissions and other
compensation.
(f) "Continuous Status as an Employee" shall mean the absence
of any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(g) "Contributions" shall mean all amounts credited to
the account of a participant pursuant to the Plan.
(h) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(i) "Employee" shall mean any person, including an Officer,
who is customarily employed for at least twenty (20) hours per week and more
than five (5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(j) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(k) "Purchase Date" shall mean the last day of each
Purchase Period of the Plan.
<PAGE>
(l) "Offering Date" shall mean the first business day of each
Offering Period of the Plan, except that in the case of an individual who
becomes eligible after the first business day of an Offering Period, the term
"Offering Date" shall mean the first business day of the calendar quarter
coinciding with or next succeeding the day on which that individual becomes an
eligible Employee. Options granted after the first business day of an Offering
Period will be subject to the same terms as the options granted on the first
business day of such Offering Period except that they will have a different
grant date (thus, potentially, a different exercise price) and, because they
expire at the same time as the options granted on the first business day of such
Offering Period, a shorter term.
(m) "Offering Period" shall mean a period of twenty-four (24)
months commencing on July 1 of every second year commencing July 1, 1996 (i.e.,
the second Offering Period will commence on July 1, 1998), except as otherwise
determined under Section 11.
(n) "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Plan" shall mean this Employee Stock Purchase Plan.
(p) "Purchase Period" shall mean a period of three (3
months within an Offering Period.
(q) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
3. Eligibility.
(a) Any person who is an Employee as of the Offering Date of a
given Offering Period shall be eligible to participate in such Offering Period
under the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any subsidiary of the Company, or (ii) if
such option would permit his or her rights to purchase stock under all employee
stock purchase plans (described in Section 423 of the Code) of the Company and
its Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods and Purchase Periods.
(a) Offering Periods. The Plan shall be implemented by a
series of Offering Periods of twenty-four (24) months duration, with new
Offering Periods commencing on or about July 1 of alternating years (or at such
other time or times as may be determined by the Board of Directors). The first
Offering Period shall commence on July 1, 1996 and continue until June 30, 1998.
The Plan shall continue until terminated in accordance with Section 19 hereof.
The Board of Directors of the Company shall have the power to change the
duration and/or the frequency of Offering Periods with respect to
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<PAGE>
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected.
(b) Purchase Periods. Each Offering Period shall consist of
eight (8) consecutive purchase periods of three (3) months duration. The last
day of each Purchase Period shall be the "Purchase Date" for such Purchase
Period. A Purchase Period commencing on July 1 shall end on the next September
30. A Purchase Period commencing on October 1 shall end on the next December 31.
A Purchase Period commencing on January 1 shall end on the next March 31. A
Purchase Period commencing on April 1 shall end on the next June 30. The first
Purchase Period shall commence on July 1, 1996 and shall end on September 30,
1996. The Board of Directors of the Company shall have the power to change the
duration and/or frequency of Purchase Periods with respect to future purchases
without shareholder approval if such change is announced at least fifteen (15)
days prior to the scheduled beginning of the first Purchase Period to be
affected.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the participant's
Compensation (which shall be not less than 1% and not more than 15%) to be paid
as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll
following the Offering Date and shall end on the last payroll paid on or prior
to the last Purchase Period of the Offering Period to which the subscription
agreement is applicable, unless sooner terminated by the participant as provided
in Section 10.
6. Method of Payment of Contributions.
(a) The participant shall elect to have payroll deductions
made on each payday during the Offering Period in an amount not less than one
percent (1%) and not more than fifteen percent (15%) of such participant's
Compensation on each such payday. All payroll deductions made by a participant
shall be credited to his or her account under the Plan. A participant may not
make any additional payments into such account.
(b) A participant may discontinue his or her participation in
the Plan as provided in Section 10, or, on one occasion only during the Offering
Period, may decrease the rate of his or her Contributions during the Offering
Period by completing and filing with the Company a new subscription agreement.
The change in rate shall be effective as of the beginning of the next calendar
month following the date of filing of the new subscription agreement, if the
agreement is filed at least ten (10) business days prior to such date and, if
not, as of the beginning of the next succeeding calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) herein, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar year that
the aggregate of all payroll deductions accumulated with respect to such
Offering Period and any other Offering Period ending within the same calendar
year equal $21,250. Payroll deductions shall re-commence at the rate provided in
such participant's subscription agreement at the beginning of the first
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Offering Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.
7. Grant of Option.
(a) On the Offering Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Purchase Date a number of shares of the Company's
Common Stock determined by dividing such Employee's Contributions accumulated
prior to such Purchase Date and retained in the participant's account as of the
Purchase Date by the lower of (i) eighty-five percent (85%) of the fair market
value of a share of the Company's Common Stock on the Offering Date, or (ii)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Purchase Date; provided however, that the maximum number of
shares an Employee may purchase during each calendar year for which an option is
outstanding shall be determined at the Offering Date by dividing $25,000 by the
fair market value of a share of the Company's Common Stock on the Offering Date,
and provided further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 13. The fair market value of a share of the Company's
Common Stock shall be determined as provided in Section 7(b).
(b) The option price per share of the shares offered in a
given Offering Period shall be the lower of: (i) 85% of the fair market value of
a share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Purchase Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion based on the closing
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as
reported by the National Association of Securities Dealers Automated Quotation
(Nasdaq) National Market or, if such price is not reported, the mean of the bid
and asked prices per share of the Common Stock as reported by Nasdaq or, in the
event the Common Stock is listed on a stock exchange, the fair market value per
share shall be the closing price on such exchange on such date (or, in the event
that the Common Stock is not traded on such date, on the immediately preceding
trading date), as reported in The Wall Street Journal.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full shares subject to the option will be purchased at the
applicable option price with the accumulated Contributions in his or her
account. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date of
each Offering Period, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option or the deposit of such number of shares with
the broker selected by the Company for administration of Plan stock purchases,
as determined by the Company. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him or her of shares at
the termination of each Purchase Period, shall be carried over to the next
Purchase Period if the Employee continues to participate in the Plan, or if the
Employee does not continue to participate, shall be returned to said
participant.
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<PAGE>
10. Voluntary Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of shares will be made during the Offering
Period.
(b) Upon termination of the participant's Continuous Status as
an Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous
Status as an Employee of the Company for at least twenty (20) hours per week
during the Offering Period in which the employee is a participant, he or she
will be deemed to have elected to withdraw from the Plan and the Contributions
credited to his or her account will be returned to him or her and his or her
option terminated.
(d) A participant's withdrawal from an offering will not have
any effect upon his or her eligibility to participate in a succeeding offering
or in any similar plan which may hereafter be adopted by the Company.
11. Automatic Withdrawal. If the fair market value of the shares on any
Purchase Date of an Offering Period, other than the final Purchase Date of an
Offering Period, is less than the fair market value of the shares on the
Offering Date for such Offering Period, then every participant shall
automatically (i) be withdrawn from such Offering Period at the close of such
Purchase Date and after the acquisition of shares for such Purchase Period, and
(ii) be enrolled in a new twenty-four (24) month Offering Period commencing on
the first business day subsequent to such Purchase Period, with subsequent
Offering Periods commencing in twenty-four (24) month periods thereafter.
12. Interest. No interest shall accrue on the Contributions of a
participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 500,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18. If the total number of shares which would otherwise be subject to
options granted pursuant to Section 7(a) on the Offering Date of an Offering
Period exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in
shares covered by his or her option until such option has been exercised.
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<PAGE>
(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.
14. Administration. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan. The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of a Purchase Period but prior to delivery to him or her
of such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the participant's
account under the Plan in the event of such participant's death prior to the
Purchase Date of an Offering Period. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
16. Transferability. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
17. Use of Funds. All Contributions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such Contributions.
18. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees promptly following the Purchase Date, which statements will set forth
the amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization; Corporate
Transactions.
(a) Adjustment. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each option under the Plan which has not yet been
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exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
(b) Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, each option under the Plan shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offering Period then in progress by setting a new Purchase Date
(the "New Purchase Date"). If the Board shortens the Offering Period then in
progress in lieu of assumption or substitution in the event of a merger or sale
of assets, the Board shall notify each participant in writing, at least ten (10)
days prior to the New Purchase Date, that the Purchase Date for his or her
option has been changed to the New Purchase Date and that his or her option will
be exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 10. For
purposes of this paragraph, an option granted under the Plan shall be deemed to
be assumed if, following the sale of assets or merger, the option confers the
right to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section 424(e)
of the Code), the Board may, with the consent of the successor corporation and
the participant, provide for the consideration to be received upon exercise of
the option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time
terminate or amend the Plan. Except as provided in Section 19, no such
termination may affect options previously granted,
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nor may an amendment make any change in any option theretofore granted which
adversely affects the rights of any participant. In addition, to the extent
necessary to comply with Rule 16b-3 under the Exchange Act, or under Section 423
of the Code (or any successor rule or provision or any applicable law or
regulation), the Company shall obtain shareholder approval in such a manner and
to such a degree as so required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been adversely affected, the
Board (or its committee) shall be entitled to change the Offering Periods and
Purchase Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each participant properly correspond with
amounts withheld from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee) determines in its sole
discretion advisable which are consistent with the Plan.
21. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan; Effective Date. The Plan shall become effective
upon the earlier to occur of its adoption by the Board of Directors or its
approval by the shareholders of the Company. It shall continue in effect
for a term of twenty (20) years unless sooner terminated under Section 20.
24. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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APPENDIX B
PROXY
SCICLONE PHARMACEUTICALS, INC.
901 MARINERS ISLAND BOULEVARD
SAN MATEO, CALIFORNIA 94404
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS ON JULY 25, 1996.
DONALD R. SELLERS or MARK A. CULHANE (collectively, the "Proxies"), or
either of them, each with the power of substitution, are hereby authorized to
represent and vote the shares of the undersigned, with all the powers which the
undersigned would possess if personally present, at the Annual Meeting of
Shareholders (the "Annual Meeting") of SciClone Pharmaceuticals, Inc., a
California corporation (the "Company"), to be held at the Holiday Inn Select,
1221 Chess Drive, Foster City, California 94404, on Thursday, July 25, 1996, at
10 a.m., local time, and any adjournments or postponements thereof.
Election of all five (5) directors (or if any nominee is not available for
election, such substitute as the Board of Directors or the Proxies may
designate). Nominees: DONALD R. SELLERS, THOMAS E. MOORE, JOHN D. BAXTER, M.D.,
EDWIN C. CADMAN, M.D., and JERE E. GOYAN, PH.D.
Shares represented by this proxy card will be voted as directed by the
shareholder. If no such directions are indicated, the Proxies will have
authority to vote FOR the election of all directors, and FOR items 2 and 3. In
their discretion, the Proxies are authorized to vote upon such other business as
may properly come before the Annual Meeting.
The Board of Directors recommends a vote FOR the election of Directors and
FOR proposals 2 and 3.
<TABLE>
1. Election of Directors:
<S> <C>
/ / FOR all nominees listed above / / WITHHOLD for all nominees listed above
(except as marked to the contrary below
</TABLE>
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
SEE REVERSE SIDE: IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, JUST SIGN AND DATE ON THE REVERSE SIDE. YOU NEED NOT MARK ANY
BOXES.
(Continued and to be signed on reverse side)
<PAGE>
(Continued from other side)
2. To approve the adoption of the Company's 1996 Employee Stock Purchase
Plan and the reservation of 500,000 shares of Common Stock for issuance
thereunder:
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors for the Company for the year ending December 31, 1996:
/ / FOR / / AGAINST / / ABSTAIN
Please sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have a
duly authorized officer sign, stating title. If a signer is a partnership,
please sign in partnership name by authorized person.
------------------------------------
(Signature)
------------------------------------
(Signature)
DATE:_______________________, 19____
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED RETURN ENVELOPE.
