SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SUNPHARM CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING THE PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
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4) Proposed maximum aggregate value of transaction:
N/A
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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 date of its filing.
1) Amount Previously Paid:
N/A
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2) Form, Schedule or Registration Statement No.:
N/A
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3) Filing Party:
N/A
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4) Date Filed:
N/A
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<PAGE>
SUNPHARM CORPORATION
4651 SALISBURY ROAD, SUITE 205
JACKSONVILLE, FLORIDA 32256
April 21, 1998
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of SunPharm Corporation to be held on Thursday, May 21, 1998, at
8:00 a.m., local time, at The Ritz-Carlton, 4750 Amelia Island Parkway, Amelia
Island, Florida. A Notice of the Annual Meeting, Proxy Statement and form of
proxy are enclosed with this letter.
We encourage you to read the Notice of the Annual Meeting and Proxy
Statement so that you may be informed about the business to come before the
meeting. Your participation in the Company's business is important, regardless
of the number of shares that you hold. To ensure your representation at the
meeting, please promptly sign and return the accompanying proxy card in the
postage-paid envelope.
We look forward to seeing you on May 21, 1998.
Sincerely,
/s/ STEPHAN BORG
-----------------------------------------
Stefan Borg
President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
To the Stockholders of SunPharm Corporation:
The Annual Meeting of Stockholders (the "Annual Meeting") of SunPharm
Corporation (the "Company") will be held on Thursday, May 21, 1998, at 8:00
a.m., local time, at The Ritz-Carlton, 4750 Amelia Island Parkway, Amelia
Island, Florida, for the following purposes:
1. To elect eight directors of the Company, each to serve until
the Company's next Annual Meeting of Stockholders or until their
respective successors have been duly elected and qualified;
2. To approve the amendment of the SunPharm Corporation Amended
and Restated 1995 Nonemployee Directors' Stock Option Plan;
3. To ratify and approve the appointment of Deloitte & Touche
LLP as the Company's independent public accountants for its fiscal year
ending December 31, 1998; and
4. To act upon such other business as may properly come before
the meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 9, 1998
will be entitled to notice of and to vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of whether you plan to attend. THEREFORE, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID ENVELOPE AS
PROMPTLY AS POSSIBLE. If you are present at the Annual Meeting, and wish to do
so, you may revoke the proxy and vote in person.
By Order of the Board of Directors,
/s/ CECILIA BRYANT
-----------------------------------
Cecilia Bryant
Secretary
Jacksonville, Florida
April 21, 1998
<PAGE>
SUNPHARM CORPORATION
4651 SALISBURY ROAD, SUITE 205
JACKSONVILLE, FLORIDA 32256
---------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 21, 1998
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of
SunPharm Corporation (the "Company"), to be voted at the Annual Meeting of
Stockholders of the Company to be held on Thursday, May 21, 1998 (the "Annual
Meeting"), at 8:00 a.m., local time, at The Ritz-Carlton, 4750 Amelia Island
Parkway, Amelia Island, Florida, for the purpose set forth in the accompanying
Notice of Annual Meeting of Stockholders, and at any adjournment(s) of the
Annual Meeting. If the accompanying Proxy is properly executed and returned, the
shares it represents will be voted at the Annual Meeting in accordance with the
directions noted thereon or, if no direction is indicated, it will be voted in
favor of the proposals described in this Proxy Statement. In addition, the Proxy
confers discretionary authority to the persons named in the Proxy authorizing
those persons to vote, in their discretion, on any other matters properly
presented at the Annual Meeting. The Board of Directors is not currently aware
of any such other matters.
Each stockholder of the Company has the unconditional right to revoke
his Proxy at any time prior to its exercise, either in person at the Annual
Meeting or by written notice to the Company addressed to Secretary, SunPharm
Corporation, 4651 Salisbury Road, Suite 205, Jacksonville, Florida 32256. No
revocation by written notice will be effective unless such notice has been
received by the Secretary of the Company prior to the day of the Annual Meeting
or by the inspector of election at the Annual Meeting.
The principal executive offices of the Company are located at 4651
Salisbury Road, Suite 205, Jacksonville, Florida 32256. This Proxy Statement and
the accompanying Notice of Annual Meeting of Stockholders and Proxy are being
mailed to the Company's stockholders on or about April 22, 1998.
In addition to the solicitation of proxies by use of this Proxy
Statement, directors, officers and employees of the Company may solicit the
return of proxies by mail, personal interview, telephone or telegraph. Officers
and employees of the Company will not receive additional compensation for their
solicitation efforts, but they will be reimbursed for any out-of-pocket expenses
incurred. Brokerage houses and other custodians, nominees and fiduciaries will
be requested, in connection with the stock registered in their names, to forward
solicitation materials to the beneficial owners of such stock.
All costs of preparing, printing, assembling and mailing the Notice of
Annual Meeting of Stockholders, this Proxy Statement, the enclosed form of Proxy
and any additional materials, as well as the cost of forwarding solicitation
materials to the beneficial owners of stock and all other costs of solicitation,
will be borne by the Company.
<PAGE>
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will be asked to
consider and act upon the following matters:
1. The election of eight directors of the Company, each to serve
until the Company's next Annual Meeting of Stockholders or until
their respective successors have been duly elected and qualified;
2. A proposal to approve the amendment of the SunPharm Corporation
Amended and Restated 1995 Nonemployee Directors' Stock Option
Plan;
3. A proposal to ratify and approve the appointment of Deloitte &
Touche LLP as the Company's independent public accountants for its
fiscal year ending December 31, 1998; and
4. Such other business as may properly come before the meeting or any
adjournments thereof.
QUORUM AND VOTING
The close of business on April 9, 1998 has been fixed as the record
date (the "Record Date") for the determination of stockholders entitled to vote
at the Annual Meeting and any adjournment(s) thereof. As of the Record Date, the
Company had issued and outstanding 5,758,901 shares of common stock, par value
$.0001 per share (the "Common Stock").
Each stockholder of record of Common Stock will be entitled to one vote
per share on each matter that is called to vote at the Annual Meeting.
The presence, either in person or by proxy, of holders of a majority of
the outstanding shares of Common Stock is necessary to constitute a quorum at
the Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present. A plurality vote is required for the
election of directors. Accordingly, if a quorum is present at the Annual
Meeting, the eight persons receiving the greatest number of votes will be
elected to serve as directors. Withholding authority to vote for a director
nominee and broker non-votes in the election of directors will not affect the
outcome of the election of directors. All other matters to be voted on will be
decided by the vote of the holders of a majority of the shares present or
represented at the Annual Meeting and entitled to vote on such matter. On any
such matter, an abstention will have the same effect as a negative vote but,
because shares held by brokers will not be considered entitled to vote on
matters as to which the brokers withhold authority, a broker non-vote will have
no effect on such vote.
All Proxies that are properly completed, signed and returned prior to
the Annual Meeting will be voted. Any Proxy given by a stockholder may be
revoked at any time before it is exercised by the stockholder (I) filing with
the Secretary of the Company an instrument revoking it, (ii) executing and
returning a Proxy bearing a later date or (iii) attending the Annual Meeting and
expressing a desire to vote his shares of Common Stock in person. Votes will be
counted by Continental Stock Transfer & Trust Company, the Company's transfer
agent and registrar.
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<PAGE>
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
The Board of Directors has nominated and urges you to vote for the
election of the eight nominees identified below, who have been nominated to
serve as directors for a one-year term or until their successors are duly
elected and qualified. Each of the nominees listed below is a member of the
Company's present Board of Directors. Proxies solicited hereby will be voted for
all of the nominees unless stockholders specify otherwise in their Proxies.
If, at the time of or prior to the Annual Meeting, any of the nominees
should be unable or decline to serve, the discretionary authority provided in
the Proxy may be used to vote for a substitute or substitutes designated by the
Board of Directors. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required.
NOMINEES FOR ELECTION AS DIRECTORS
The eight nominees for election as directors and certain additional
information with respect to each of them, are as follows:
<TABLE>
<CAPTION>
Year First
Name Age Position with the Company Became a Director
---- --- ------------------------- -----------------
<S> <C> <C> <C> <C>
Stefan Borg (1) 44 President and Chief Executive Officer, Director 1991
Philip R. Tracy (2) 56 Chairman of the Board of Directors 1995
Charles L. Dimmler III (1) 56 Director 1997
Jerry T. Jackson 56 Director 1996
Robert S. Janicki, M.D. (3)(4) 63 Director, Member of the Pharmaceutical Advisory Board 1991
Jay Moorin(1) 47 Director 1997
Jacques F. Rejeange (3) 58 Director 1994
Robert A. Schoellhorn (3)(4) 69 Director 1992
</TABLE>
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(1) Member of the Nominating Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Option Committee
STEFAN BORG
PRESIDENT AND CHIEF EXECUTIVE OFFICER, DIRECTOR
Mr. Borg founded the Company and has been President and Chief Executive
Officer of the Company since its inception and was Chairman of the Board of
Directors of the Company from inception until January 1995. From September 1991
to August 1993, Mr. Borg was a general partner of Batterson, Johnson & Borg, a
venture capital partnership located in Chicago, Illinois. From 1986 to 1990, he
was Vice President of Business Development of Houston Biotechnology
Incorporated. From 1984 to 1986, he was Manager of Business Development for
California Biotechnology, Inc. From 1982 to 1984, he was Product Manager for
Bethesda Research Laboratories, Inc., a supplier of genetic engineering tools.
From 1980 to 1982, he was Marketing Manager and head of Boehringer Mannheim
GmbH's subsidiary in Copenhagen, Denmark. Mr. Borg received his M.B.A. in
Marketing from INSEAD in Fontainebleau, France and his M.Sc. degree in
Biochemistry from the University of Copenhagen.
PHILIP R. TRACY
CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Tracy has been a director of the Company since October 1995 and
Chairman of the Board since May 1996. Mr. Tracy is presently of counsel to
Smith, Anderson, Blount, Dorsett, Mitchell and Jernigan, a law firm in Raleigh,
North Carolina. From 1989 until its sale to Glaxo Inc. in 1995, Mr. Tracy was
President and Chief Executive Officer of Burroughs
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<PAGE>
Wellcome Co. and a member of the Board of Directors of Burroughs Wellcome Co.
and its parent organizations, The Wellcome Foundation Limited and Wellcome plc.
From 1974 to 1989, Mr. Tracy held several positions in the legal department of
Burroughs Wellcome Co., including as Vice President, Secretary and General
Counsel from 1981 to 1989. Prior thereto, he was employed at Steptoe & Johnson
and the Federal Bureau of Investigation. Mr. Tracy currently serves as a
director of Cardiovascular Diagnostics, Inc. He received a B.A. from the
University of Nebraska and his L.L.B. from George Washington University.
CHARLES L. DIMMLER III
DIRECTOR
Mr. Dimmler has been a director of the Company since April 1997. Mr.
Dimmler is a principal investment officer of the Cross Atlantic Partners Funds
and an operating officer of Hambro Health International, a private equity
investment and commercial development firm. A General Partner of Hambro
International Equity Partners, Mr. Dimmler joined Hambro America, Inc., an
affiliate of London-based merchant bank Hambros Bank Limited, in 1988. Mr.
Dimmler co-founded Applied Immune Sciences, Inc., which was subsequently
acquired by RPR Gencell in 1992, and operated Metcalf Ross & Company, a company
which he formed to manage and commercialize intellectual property owned by
medical research institutions, from 1985 to 1988. He has business experience as
an operating executive of two Fortune 100 industrial companies, and he served as
an infantry officer in the United States Marine Corps. Mr. Dimmler currently
serves as a director of Gene Logic, Inc. He earned his undergraduate degree from
the University of California at Davis.
JERRY T. JACKSON
DIRECTOR
Mr. Jackson has been a director of the Company since August 1996. From
1965 until his retirement in 1995, Mr. Jackson was employed with Merck & Co.,
Inc. in various senior management positions, including at his retirement
Executive Vice President of Merck & Co., Inc. Mr. Jackson currently serves as a
director on the boards of Crescendo Pharmaceuticals Corp., Cor Therapeutics,
Inc. and Molecular Biosystems, Inc. and as Chairman of Transcend Therapeutics,
Inc.
ROBERT S. JANICKI, M.D.
DIRECTOR AND MEMBER OF THE PHARMACEUTICAL ADVISORY BOARD
Dr. Janicki has been a director of the Company since 1991 and a member
of the Pharmaceutical Advisory Board since 1993. From 1969 until his retirement
as Senior Vice President for Scientific & Medical Affairs in 1992, Dr. Janicki
was employed by Abbott Laboratories. From 1968 to 1969, he was Associate Medical
Director of Union Carbide Corporation's pharmaceutical division, and from 1966
to 1968, he was Associate Director of Clinical Research for the Dow
Pharmaceutical Division of Dow Chemical Company. Dr. Janicki served as a
director of Cetus Corporation prior to its merger with Chiron Corporation and
currently serves as a director of Afferon Corporation (Wayne, Pennsylvania), a
privately-held pharmaceutical company. He is presently engaged as a consultant
to several health care companies. Dr. Janicki received his M.D. from Temple
University School of Medicine.
JAY MOORIN
DIRECTOR
Mr. Moorin has been a director of the Company since November 1997. He
has been President and Chief Executive Officer of Magainin Pharmaceuticals,
Inc., a biopharmaceutical company engaged in identifying and developing
compounds from the host defense systems of animals, since 1991 and in 1996 was
appointed Chairman of the Board of that company. Prior to joining Magainin, Mr.
Moorin served as a Managing Director at Bear, Stearns & Co., Inc., responsible
for health care investment banking, and in other capacities from 1988 to 1991.
From 1983 to 1988, Mr. Moorin was employed by E.R. Squibb & Co., Inc., first as
Corporate National Accounts Director and subsequently as Vice President of
Marketing and Business Development at the Squibb Mark Division.
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<PAGE>
JACQUES F. REJEANGE
DIRECTOR
Mr. Rejeange has been a director of the Company since June 1994 and was
Chairman of the Board from January 1995 to May 1996. Mr. Rejeange was President
and Chief Executive Officer of Sterling Winthrop, Inc. from January 1994 through
January 1995 and President of its pharmaceuticals division from July 1992
through January 1994. From January 1989 through 1992, Mr. Rejeange was President
and Chief Executive Officer of Sandoz Pharmaceuticals Corporation U.S.A. Prior
to 1989, Mr. Rejeange was employed in various managerial positions with Sandoz
in Europe, Hong Kong and the United States. Mr. Rejeange is a member of the
Board of Trustees of Drew University and a member of the Board of Directors of
the Pharmaceutical Manufacturers Association, and serves as a director of
Hafslund-Nycomed Inc. Mr. Rejeange received his M.B.A. in 1963 from INSEAD in
Fontainebleau, France and is a 1962 graduate of the Ecole Superieure de Commerce
de Reims.
ROBERT A. SCHOELLHORN
DIRECTOR
Mr. Schoellhorn has been a director of the Company since 1993. Mr.
Schoellhorn is presently Chairman and Chief Executive Officer of Marathon Coach,
Inc. (Eugene, Oregon), a privately held company owned by Mr. Schoellhorn and
certain members of his family which manufactures luxury motor coaches. From 1973
until his retirement in 1990, Mr. Schoellhorn was employed with Abbott
Laboratories in various senior management positions, including Chief Executive
Officer since 1979 and Chairman of the Board since 1981. For 26 years prior to
joining Abbott, Mr. Schoellhorn held various management positions with American
Cyanamid Corporation. Mr. Schoellhorn is presently Chairman and Chief Executive
Officer of Outdoor Resorts of America, Inc., a developer and operator of luxury
recreational resorts. In addition, Mr. Schoellhorn is on the board of First
Community Bank of the Desert, and has previously served on the boards of SCM
Corporation, Pillsbury, ITT and Shell Oil Company. He is a graduate of the
Philadelphia College of Textiles and Science, where he majored in chemistry.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
EACH OF THE ABOVE-NAMED NOMINEES.
DIRECTORS' MEETINGS AND COMPENSATION
During 1997, the Board of Directors met five times and took certain
additional actions by unanimous written consent in lieu of meetings. During
1997, no director of the Company attended fewer than 75 percent of the meetings
of the Board of Directors during the period served, except for Jacques Rejeange,
who attended one of the five meetings of the Board of Directors.
Each nonemployee director receives $1,500 for each meeting of the Board
of Directors or of a committee of the Board of Directors which is attended in
person, provided that in the event a committee meeting is scheduled in
conjunction with a Board meeting, only one payment will be received. Payments
for participation in a telephonic meeting of the Board of Directors and Board
committees are $750. All directors receive reimbursement of reasonable expenses
incurred in attending meetings. Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.
In addition, pursuant to the Company's Amended and Restated 1995
Nonemployee Directors' Stock Option Plan, each director who is not an employee
of or consultant to the Company receives an initial stock option to purchase
25,000 shares of the Company's Common Stock upon election to the Board and an
annual stock option to purchase 5,000 shares of the Company's Common Stock, with
vesting contingent on providing services over the following twelve months. The
Chairman of the Board receives an additional annual stock option under the
Amended and Restated 1995 Nonemployee Directors' Stock Option Plan to purchase
10,000 shares of Common Stock.
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<PAGE>
BOARD COMMITTEES
The Company's Board of Directors has an Audit Committee, Compensation
Committee, Option Committee and Nominating Committee. The Audit Committee's
functions include making recommendations concerning the engagement of
independent public accountants, reviewing with the independent public
accountants the plan and results of the auditing engagement, approving
professional services provided by the independent public accountants and
reviewing the adequacy of the Company's internal accounting controls. The
Compensation Committee makes recommendations concerning compensation, including
incentive arrangements, for the Company's officers. The Option Committee
administers the Company's Amended and Restated 1994 Stock Option Plan and
approves all stock options awarded under it. The Nominating Committee
establishes procedures for the evaluation and selection of nominees to the Board
of Directors, and is also responsible for the smooth and orderly transition in
the Company's management, in the event such a need arises.
During 1997, the Audit Committee, Compensation Committee, Option
Committee and Nominating Committee each met one time. During 1997, no director
of the Company attended fewer than 75 percent of the meetings of committees on
which he served.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL
NUMBER 1, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL NUMBER 2:
AMENDMENT OF THE AMENDED AND RESTATED 1995 NONEMPLOYEE
DIRECTORS' STOCK OPTION PLAN
GENERAL
On April 22, 1998, the Board, subject to the approval by the
stockholders of the Company, approved the amendment of the SunPharm Corporation
Amended and Restated 1995 Nonemployee Directors' Stock Option Plan (as presently
in effect, the "Director Plan") to increase the number of shares of Common Stock
available for the grant of options under the Director Plan. The purpose of the
Director Plan is to promote and advance the interests of the Company by aiding
the Company in attracting and retaining qualified nonemployee directors and to
further align the interests of such directors with those of stockholders through
stock options. The following summary sets forth the material terms of the
Director Plan. The complete text of the Director Plan is included in an exhibit
filed pursuant to the Securities Exchange Act of 1934, as amended.
Options to purchase an aggregate of 300,000 shares may be granted under
the Director Plan as presently in effect. Options to purchase a total of 240,000
shares of the Company's Common Stock have been granted under the Director Plan,
leaving a total of 60,000 shares as to which options may be granted under the
Plan as presently in effect. The number of shares as to which options may be
granted would be increased to 500,000 shares pursuant to the amendment of the
Director Plan being submitted to the Company's stockholders for approval at the
Annual Meeting. No other changes are proposed to be made to the Director Plan.
SUMMARY OF THE DIRECTOR PLAN
The Director Plan is a "formula" plan for purposes of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, pursuant to
which options for shares of Common Stock are automatically granted to certain
eligible nonemployee directors of the Company as of specified dates. No person
exercises any discretion with respect to persons eligible to receive grants of
options under the Director Plan or the amount of grants thereunder. The term of
the Director Plan expires on July 10, 2005.
ELIGIBILITY. Persons who are nonemployee and nonconsultant directors of
the Company ("Nonemployee Directors") are eligible to participate in the
Director Plan. The Company presently has seven such directors. The Director Plan
sets forth various restrictions upon the exercise of options following the
death, disability or termination of services of a Nonemployee Director.
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<PAGE>
SHARES SUBJECT TO DIRECTOR PLAN. If the Company's stockholders approve
the amendment of the Director Plan at the Annual Meeting, the maximum number of
shares of Common Stock in respect of which options may be granted under the
Director Plan, as amended, shall be 500,000, an increase of 200,000 shares from
the number presently authorized under the Director Plan, subject to appropriate
adjustment upon a reorganization, stock split, recapitalization or other change
in the Company's capital structure.
OPTION PERIOD. Options granted to Nonemployee Directors under the
Director Plan have a term of ten years from the date of grant.
AMENDMENT. The Board in its discretion may terminate the Director Plan
at any time with respect to any shares for which options have not theretofore
been granted. The Board has the right to alter or amend the Director Plan or any
part thereof from time to time; provided that no change in any option
theretofore granted may be made which would impair the rights of the optionee
without the consent of such optionee and provided, further, that the Board may
not make any alteration or amendment whichwould (I) materially increase the
benefits accruing to participants under the Director Plan, (ii) increase the
aggregate number of shares which may be issued pursuant to the provisions of the
Director Plan, (iii) change the class of individuals eligible to receive options
under the Director Plan or (iv) extend the term of the Director Plan, without
the approval of the stockholders of the Company.
NON-QUALIFIED OPTIONS. Options issued under the Director Plan
constitute non-qualified stock options.
AUTOMATIC GRANT OF OPTIONS. In general, under the Director Plan each
Nonemployee Director who is first elected to the Board is entitled to receive an
option to purchase 25,000 shares of Common Stock on the date on which he first
becomes a Nonemployee Director. Each Nonemployee Director, regardless of when
elected to the Board, is entitled to receive options annually on the date of his
or her reelection to the Board to purchase 5,000 shares of Common Stock. In
addition, the Chairman of the Board ofDirectors is entitled to receive options
annually to purchase an additional 10,000 shares of Common Stock if the Chairman
of the Board is a Nonemployee Director. The amounts of all such option grants
are subject to appropriate adjustment upon a reorganization, stock split,
recapitalization or other change in the Company's capital structure.
EXERCISABILITY. Options granted under the Director Plan become
exercisable in 8.33% installments that vest at the end of each subsequent month
following the first day of the calendar month coincident with or next following
the date of grant until the option is 100% vested. The exercise price for
options may be paid in cash, by delivery of shares of Common Stock already owned
by the optionee with a market value equal to the exercise price, or in any
combination of cash and shares of Common Stock.
CHANGE IN CONTROL. Upon a change in control of the Company as a result
of a merger, contested election, purchase of 50% or more of the Company's
outstanding Common Stock or other related events described in the Director Plan,
all options outstanding under the Director Plan shall become fully exercisable.
OPTION EXERCISE PRICE. The exercise price of options granted under the
Director Plan is equal to one hundred percent (100%) of the fair market value of
the Common Stock on the date of grant. For purposes of the Director Plan, the
"fair market value" of a share of Common Stock, on the date of grant means the
average of the high and low sales prices of the Common Stock on the Nasdaq Stock
Market or, if the Common Stock is listed on a national stock exchange, the
average of the high and low sales prices on the exchange on such date.
FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTOR PLAN
GENERAL. A Nonemployee Director will not recognize any taxable income
at the time an option is granted. Ordinary income will be recognized by a
Nonemployee Director at the time of exercise in an amount equal to the excess of
the fair market value of the shares of Common Stock received over the option
price for such shares. However, if other shares of Common Stock have been
purchased by a Nonemployee Director within six months of the exercise of an
option, recognition of the income attributable tosuch exercise may under certain
circumstances be postponed for a period of up to six months from the date of
such purchase of such other shares of Common Stock due to liability to suit
under Section 16(b) of the Exchange Act. If applicable, one effect of any such
postponement would be to measure the amount of the
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<PAGE>
Nonemployee Director's taxable income by reference to the fair market value of
such shares at the time such liability to suit under Section 16(b) of the
Exchange Act no longer exists (rather than at the earlier date of the exercise
of the option). The Nonemployee Director will generally recognize a capital gain
or loss upon a subsequent sale of the shares of Common Stock.
DEDUCTIBILITY. Upon a Nonemployee Director's exercise of an option
granted under the Director Plan, the Company may claim a deduction for
compensation paid at the same time and in the same amount as ordinary income is
recognized by the Nonemployee Director.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL
NUMBER 2, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL NUMBER 3:
RATIFICATION AND APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP
as the Company's independent public accountants to make an examination of the
accounts of the Company for the fiscal year ending December 31, 1998, subject to
ratification by the Company's stockholders. Representatives of Deloitte & Touche
LLP will be present at the Annual Meeting and will have an opportunity to make a
statement, if they desire to do so. They will also be available to respond to
appropriate questions from stockholders attending the Annual Meeting.
Stockholder ratification of the selection of Deloitte & Touche LLP as
the Company's independent public accountants is not required by the Company's
Bylaws or otherwise. However, the Board is submitting the selection of Deloitte
& Touche LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit Committee
and the Board will reconsider whether or not to retain the firm. Even if the
selection is ratified, the Audit Committee and the Board in their discretion may
direct the appointment of different independent public accountants at any time
during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On January 17, 1996, the Company's independent public accountants,
Arthur Andersen LLP in Houston, Texas, were dismissed. On January 18, 1996, the
Company retained Deloitte & Touche LLP in Jacksonville, Florida as its
independent public accountants. The decision to change independent accountants
was recommended by management to the Audit Committee of the Board of Directors
of the Company and approved by the Audit Committee of the Board Directors of the
Company.
The report of the Company's former independent public accountants on
the financial statements of the Company for the year ended December 31, 1993
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles other than the
modification stating the following: The financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
operated as a development stage enterprise since its inceptions, devoting
substantially all of its efforts to financial planning, raising capital and
performing research and development. The Company incurred losses since its
inception, has a deficit in stockholders' equity and a working capital deficit.
The Company expects to continue to incur losses in the foreseeable future and
there can be no assurance that the Company will successfully complete the
transition from a development stage company to successful operations. These
factors raise substantial doubt about the ability of the Company to continue as
a going concern. In addition, certain claims have been made against the Company,
and the financial statements do not include any adjustments that might result
from the outcome of these uncertainties.
The former independent public accountants' report on the financial
statements of the Company for the year ended December 31, 1994 contained no
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope of accounting principles other than the explanatory
emphasis-of-a-matter paragraph stating that the Company is a development stage
enterprise with no significant revenues to date and in order to complete the
research and development and other activities necessary to commercialize its
products, additional financing would be required subsequent to December 31,
1995. In addition, the report was modified stating that certain claims had been
made again the Company,
-8-
<PAGE>
the outcome of which was uncertain, and no provisions for any liabilities that
may result related to these claims, had been made in the financial statements.
During the years ended December 31, 1993 and December 31, 1994 and all
subsequent interim periods preceding such dismissal there were no disagreements
with the Company's former independent public accountants on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which, if not resolved to the satisfaction of the former
independent public accountant, would have caused the former independent public
accountant to make reference to the matter in their report.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL
NUMBER 3, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
-9-
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive
officers of the Company, including the business experience of each during the
past five years.
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Stefan Borg ......................... 44 President and Chief Executive Officer
James W. Kesterson, D.V.M.,Ph.D ..... 58 Vice President-Product Development
Cecilia Bryant ...................... 51 Vice President-Legal Affairs, Secretary and General
Counsel
J. Michael Schafer .................. 40 Vice President-Business Development
Ronald W. Sanda ..................... 55 Vice President-Manufacturing and Operations
Paul M. Herron ...................... 49 Vice President and Chief Financial Officer
</TABLE>
Information regarding the business experience of Mr. Borg is set forth
above under the heading "Nominees for Election as Directors."
JAMES W. KESTERSON, D.V.M., PH.D.,
VICE PRESIDENT - PRODUCT DEVELOPMENT
Dr. Kesterson has been Vice President-Product Development of the
Company since October 1994. Dr. Kesterson was a pharmaceutical industry
consultant from 1991 to 1994. From 1975 to 1991, Dr. Kesterson was employed by
Abbott Laboratories, during the last seven years of which he served as Vice
President, Pharmaceutical Development. From 1971 to 1975, Dr. Kesterson was
Supervisor of Pathology for ICI United States, Inc. Dr. Kesterson received his
D.V.M. and his Ph.D. from Purdue University.
CECILIA BRYANT
VICE PRESIDENT-LEGAL AFFAIRS, SECRETARY AND GENERAL COUNSEL
Ms. Bryant has been Secretary, Vice President-Legal Affairs, Secretary
and General Counsel of the Company since September 1996 on a part time basis.
Ms. Bryant was an attorney with the Securities and Exchange Commission from 1973
to 1975 and was in private practice prior to serving as Special Counsel of
Voyager Insurance Companies from 1978 to 1986, returning thereafter to private
practice. She is an Associate Professor at Florida Coastal School of Law, a
director of SunTrust Bank of North Florida, N.A. and Chairman of PRIDE of
Florida, Inc. Ms. Bryant served from 1982 to 1989 on the Florida University
System Board of Regents and was its Vice Chairman in 1989. Ms. Bryant received
her law degree from the University of Florida and is a Certified Life
Underwriter (CLU) and a Chartered Financial Consultant (ChFC).
J. MICHAEL SCHAFER
VICE PRESIDENT-BUSINESS DEVELOPMENT
Mr. Schafer has been Vice President-Business Development of the Company
since October 1996. From 1992 to 1996, Mr. Schafer was a consultant for
All-American Racers, Inc., a private company in Santa Ana, California. At
All-American he was responsible for special projects, strategic planning and
business development. From 1982 to 1992 Mr. Schafer was a general partner of The
Woodlands Venture Partners, L.P., a venture capital fund in The Woodlands,
Texas, where he was responsible for sourcing, screening and negotiating the
fund's investments.
-10-
<PAGE>
RONALD W. SANDA
VICE PRESIDENT-MANUFACTURING AND OPERATIONS
Mr. Sanda has been Vice President-Manufacturing and Operations of the
Company since July 1994. Mr. Sanda was Director, Quality Assurance of Houston
Biotechnology Incorporated from 1988 to 1994. From 1986 to 1988, Mr. Sanda was
Director, Quality Assurance of Biospecific Technologies, Inc. From 1961 to 1986,
Mr. Sanda was employed by Ben Venue Laboratories, Inc. in various quality
assurance and GMP compliance functions. Mr. Sanda has a B.S. in Chemistry from
Kent State University.
PAUL M. HERRON
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Mr. Herron has been Vice President and Chief Financial Officer of the
Company since September 1997. From 1994 to 1997, he was Director of Finance and
Investor Relations for Immunomedics, Inc. From 1990 to 1994, Mr. Herron was
employed by The Dupont Merck Pharmaceutical Co. as Finance Manager for two of
the company's operating businesses, radiopharmaceuticals from 1990 to 1991 and
multi-source products from 1991 to 1994. Previously, he served for 14 years with
the Finance Department of E. I. DuPont de Nemours & Co. in a variety of
corporate finance assignments, including accounting, taxes, and employee
benefits.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued during the last three years to the Company's
President and Chief Executive Officer and to each of the other executive
officers of the Company, determined as of the end of the last fiscal year, whose
annual compensation exceeded $100,000 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------------
Annual Compensation Securities
------------------- Underlying Options All Other
Name and Principal Position Year Salary Bonus (Number of Shares) Compensation
--------------------------- ---- ------ ----- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Stefan Borg 1997 $190,833 $15,000 25,000 $ --
President and Chief 1996 163,125 18,750 -- --
Executive Officer 1995 145,280 7,280 -- 12,458(1)
James W. Kesterson 1997 136,944 20,250 10,000 --
Vice President-Product 1996 125,625 7,500 -- --
Development 1995 120,000 11,000 20,000 3,710(2)
J. Michael Schafer 1997 125,000 -- 10,000 --
Vice President-Business 1996 31,250 -- 50,000 10,428(2)
Development 1995 -- -- -- --
Ronald W. Sanda 1997 103,444 4,300 7,500 --
Vice President-Manufacturing 1996 102,812 7,500 -- --
and Operations 1995 103,647 1,000 10,000 6,314(2)
</TABLE>
- ---------------------
(1) Reflects amortization of a loan made to Mr. Borg at an annual interest
rate equal to 5.88 percent, which was forgiven by the Company on its due
date (April 1996). See Note 2 of the Notes to the Financial Statements
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995.
(2) Relocation expenses.
-11-
<PAGE>
OPTION GRANTS IN 1997
The following table provides information concerning stock options
granted during the year ended December 31, 1997, to the Company's Chief
Executive Officer and its other executive officers included in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Percentage of
Number of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date
- ---- ------- ----------- ----- ----
<S> <C> <C> <C> <C>
Stefan Borg ........... 25,000 23% $ 2.797 8/12/07
James W. Kesterson .... 10,000 9% 2.797 8/12/07
J. Michael Schafer .... 10,000 9% 2.797 8/12/07
Ronald W. Sanda ....... 7,500 7% 2.797 8/12/07
</TABLE>
OPTION VALUES
The following table provides information concerning the value of
unexercised options held as of December 31, 1997 by the Company's Chief
Executive Officer and its other executive officers named in the Summary
Compensation Table (no options were exercised during such year). The fair market
value of the shares of Common Stock underlying such options was determined by
using the closing bid price of the Company's Common Stock, which was $5.00 per
share as of December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at December 31, 1997 Options Held at December 31, 1997
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stefan Borg 48,407 23,333 $ 217,832 $ 104,998
James W. Kesterson 44,786 24,164 201,537 108,738
J. Michael Schafer 12,334 47,666 55,503 214,497
Ronald W. Sanda 36,192 20,258 162,864 91,161
</TABLE>
EMPLOYMENT AGREEMENTS
In 1993, the Company entered into an employment agreement with Stefan
Borg to serve as the Company's Chief Executive Officer and President under which
Mr. Borg received an annual salary of $120,000 per annum, and an option to
purchase 46,740 shares of Common Stock at a price of $.32 per share. In June
1994, Mr. Borg's annual salary was increased to $132,000 and he received a cash
bonus of $30,000. Effective April 1, 1995, Mr. Borg's annual salary was
increased to $150,000 and the agreement was extended to March 31, 1997, renewing
on a year-to-year basis thereafter.
Messrs. Sanda, Herron and Ms. Bryant have each entered into employment
agreements with the Company which are renewed on a year-to-year basis after the
initial term; provided however, that either party may thereafter terminate the
agreement on sixty days notice subject to the employee's right to receive either
full salary continuation for up to six months or one-half salary continuation
for twelve months in the event of termination without cause. The President has a
policy of reviewing the salary of employees on an annual basis and may make
salary and bonus recommendations to the Board of Directors. The employment
agreement with Mr. Schafer provides for an annual salary review and a bonus of
up to 15% of salary based upon agreed upon milestones and a salary continuation
for six months in the event of termination not for cause during the first two
years of the agreement.
The Company has engaged Dr. Bergeron as its Chief Scientific Consultant
in the areas of polyamine analogues and metal chelators on an exclusive basis
through December 2000, at a current rate of $96,000 per year. Such agreement may
be terminated by the Company in the event the Sponsored Research Agreement with
the University of Florida Research
-12-
<PAGE>
Foundation terminates.
CERTAIN TRANSACTIONS
The Company loaned Mr. Borg an aggregate of $35,000 during 1992 and
1993, which amount was forgiven on the due date (April 1, 1996) pursuant to its
terms. On March 31, 1997, the Company loaned Mr. Borg $87,491 at 8% per annum,
due March 31, 1998 and extended thereafter at interest of 1 1/2% per month. On
April 1, 1997, the Company loaned Mr. Borg $24,500 at 8% per annum which was
repaid on July 11, 1997.
The Company entered into License Agreements with the University of
Florida Research Foundation, Inc. in December 1991 and October 1995. The Company
has issued the Foundation a total of 342,760 shares of Common Stock in partial
consideration for the rights granted under the License Agreements, and has
ongoing royalty obligations under the License Agreements. The Company is a party
to a Sponsored Research Agreement with the Foundation under which the Company
has agreed to fund research at the University of Florida through 1998 at a cost
of approximately $875,000 per year.
On March 31, 1997, the Company sold an aggregate of 714,286 units
("Units") each consisting of one share of Common Stock and a warrant to purchase
one share of Common Stock, to Cross Atlantic Partners K/S and Cross Atlantic
Partners II K/S (together, "Cross Atlantic") at a price of $3.50 per Unit. Mr.
Dimmler is an affiliate of Cross Atlantic. In addition, Mr. Dimmler and members
of his family purchased 4,000 Units at the same price.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding the
beneficial ownership of the Company's Common Stock as of April 9, 1998 by (i)
each person who is known by the Company to own beneficially more than five
percent of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) the Company's chief executive officer and each of the other Named
Executive Officers and (iv) all directors and executive officers as a group.
Except as described below, each of the persons listed in the table has sole
voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
Percentage
Number of Beneficially
Name Shares (1) Owned (1)
- ---- ---------- ------------
<S> <C> <C> <C>
Cross Atlantic Partners Funds(2) 1,428,572 22.1%
New York Life Insurance Company(3) 1,142,858 18.1%
Stefan Borg (4) 515,890 8.9%
InterSouth Partners III, L.P.(5) 400,000 6.7%
University of Florida Research Foundation, Inc.(6) 342,760 6.0%
SunPharm Investors, L.P.(7) 307,820 5.2%
Philip R. Tracy(8) 53,750 *
Charles L. Dimmler, III(9) 1,466,155 22.5%
Jerry T. Jackson(10) 29,583 *
Robert S. Janicki(11) 192,846 3.3%
Norman H. Lipoff(12) 29,167 *
Jay Moorin(13) 14,583 *
Jacques F. Rejeange(14) 70,163 1.2%
Robert A. Schoellhorn(15) 147,933 2.5%
George B. Schwartz(16) 374,505 6.1%
James W. Kesterson(17) 53,014 *
Ronald W. Sanda (18) 42,503 *
J. Michael Schafer(19) 18,334 *
All executive officers and directors as a group
(15) persons (4)(8)-(19) 3,053,781 40.9%
</TABLE>
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of April 9, 1998 are
deemed outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of each other person.
Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, each stockholder named in the table has
sole voting and investment
-13-
<PAGE>
power with respect to the shares set forth opposite such stockholder's
name.
(2) The business address of the Cross Atlantic Partners Funds is c/o Hambro
Health International, Inc., 650 Madison Avenue, 21st Floor, New York 10022.
Includes warrants to purchase 714,286 shares of Common Stock.
(3) The business address of New York Life Insurance Company is 51 Madison
Avenue, New York, New York 10010. Includes warrants to purchase 571,429
shares of Common Stock.
(4) Mr. Borg's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes options to purchase 50,490 shares of
Common Stock.
(5) The business address of InterSouth Partners III, L.P. is 1000 Park Forty
Plaza, Durham, North Carolina 27713. Includes warrants to purchase 200,000
shares of Common Stock.
(6) The business address of the University of Florida Research Foundation, Inc.
is 223 Grinter Hall, Gainesville, Florida 32611. Karen Holbrook, President
of the Foundation, has investment and voting control over such shares.
(7) The business address of SunPharm Investors, L.P. is 140 Greenwich Avenue,
Greenwich, Connecticut 06830. Includes warrants to purchase 147,978 shares
of Common Stock.
(8) Mr. Tracy's business address is 2500 First Union Capitol Center, Raleigh,
NC 27602. Includes options to purchase 53,750 shares of Common Stock.
(9) Mr. Dimmler's business address is 650 Madison Avenue, 21st Floor, New York,
New York 10022. Includes (i) 1,600 shares of Common Stock and warrants to
purchase 1,600 shares of Common Stock held by Mr. Dimmler's children, (ii)
1,428,572 shares beneficially owned by the Cross Atlantic Partners Funds
(including warrants to purchase 714,286 shares), of which Mr. Dimmler is an
affiliate, (iii) options to purchase 29,583 shares of Common Stock, and
(iv) 2,400 shares of common Stock and warrants to purchase 2,400 shares of
Common Stock held jointly by Mr. Dimmler and his wife.
(10) Mr. Jackson's business address is 24 Arroyo Hondo Vistas, 124 Circle Loop,
Santa Fe, New Mexico 87505. Includes options to purchase 29,583 shares of
Common Stock.
(11) Dr. Janicki's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes options to purchase 70,996 shares of
Common Stock. Also includes a warrant to purchase 1,000 shares of Common
Stock.
(12) Norman Lipoff's business address is 1221 Brickell Avenue, 21st Floor,
Miami, Florida 33131. Includes an option to purchase 29,167 shares of
Common Stock.
(13) Mr. Moorin's business address is 5110 Campus Drive, Plymouth Meeting,
Pennsylvania 19462. Includes options to purchase 14,583 shares of Common
Stock.
(14) Mr. Rejeange's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes an option to purchase 50,163 shares
of Common Stock.
(15) Mr. Schoellhorn's business address is 91333 Coburg Industrial Way, Coburg,
Oregon 97408. Includes options to purchase 53,533 shares of Common Stock
and warrants to purchase 79,400 shares. All shares and warrants are held by
The Robert A. Schoellhorn Trust dated June 26, 1989, of which Mr.
Schoellhorn serves as Trustee.
(16) Mr. Schwartz's business address is 644 Santa Helena, Solana Beach,
California 92075. Includes options to purchase 14,167 shares of Common
Stock. Also includes options to purchase 39,961 shares of Common Stock
which are held by Gene Salkind, Trustee of the Danielle Schwartz Trust, as
to which Mr. Schwartz disclaims beneficial ownership. Also includes 159,842
shares of Common Stock and warrants to purchase 147,978 shares owned by
SunPharm Investors, L.P., a limited partnership of which Tioga Capital
Corporation is the general partner. Mr. Schwartz is the President of Tioga
Capital Corporation.
(17) Dr. Kesterson's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes options to purchase 53,014 shares of
Common Stock.
(18) Mr. Sanda's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes options to purchase 42,503 shares of
Common Stock.
(19) Mr. Schafer's business address is 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256. Includes options to purchase 18,334 shares of
Common Stock.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more than 10%
of the Common Stock, to file initial reports of ownership and reports of changes
in ownership (Forms 3, 4, and 5) of Common Stock with the Securities and
Exchange Commission (the "SEC") and The Nasdaq Stock Market. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and on written representations by
certain reporting persons that no reports on Form 5 were required, the Company
believes that during the fiscal year ended December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and 10% stockholders
were complied with in a timely manner.
-14-
<PAGE>
PROPOSAL OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the next
annual meeting must be received at the Company's principal executive offices no
later than December 31, 1998, if the proposal is to be considered for inclusion
in the Company's Proxy Statement relating to such meeting.
FINANCIAL INFORMATION
A copy of the Company's Annual Report on Form 10-KSB, including any
financial statements and schedules and exhibits thereto, may be obtained without
charge by written request to Stefan Borg, President and Chief Executive Officer,
SunPharm Corporation, 4651 Salisbury Road, Jacksonville, Florida 32256.
By Order of the Board of Directors
/s/ STEFAN BORG
----------------------------------
STEFAN BORG
President and Chief Executive Officer
April 21, 1998
Jacksonville, Florida
<PAGE>
PROXY
SUNPHARM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO BE HELD MAY 21, 1998
The undersigned hereby appoints Stefan Borg and Paul M. Herron, and each of
them, as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side, all of
the shares of the common stock of SunPharm Corporation (the "Company") held of
record by the undersigned on April 9, 1998 at the Annual Meeting (the "Annual
Meeting") of Stockholders of the Company to be held on Thursday, May 21, 1998,
at 8:00 a.m., local time, at the Ritz-Carlton, 4750 Amelia Island Parkway,
Amelia Island, Florida, and any adjournment(s) thereof.
1. To elect eight directors of the Company each to serve until the Company's
next Annual Meeting of Stockholders or until their respective successors
have been duly elected and qualified.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
</TABLE>
Stefan Borg, Philip R. Tracy, Jacques F. Rejeange, Charles L. Dimmler III,
Robert A. Schoelhorn, Jerry T. Jackson, Robert S. Janicki, M.D., Jay Moorin
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
such name or names in the space provided below.)
- --------------------------------------------------------------------------------
(TO BE DATED AND SIGNED ON REVERSE SIDE)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. To vote upon a proposal to amend the SunPharm
Corporation Nonemployee Directors' Stock Option Plan: [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify and approve the appointment of
Deloitte & Touche LLP as the Company's
independent public accountants for its fiscal
year ending December 31, 1998; and [ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. To act upon such other business as may properly come before the meeting or
any adjournments thereof.
The shares of stock represented by this proxy will be voted as directed. If no
contrary instruction is given, the shares will be voted FOR Proposals 1-4.
DATED: , 199
------------------- ----
-----------------------------------
(Signature)
-----------------------------------
(Signature if held jointly)
Please date, sign as name appears
at the left, and return promptly.
If the shares are registered in the
names of two or more persons, each
should sign. When signing as
Corporate Officer, President,
Executor, Administrator, Trustee or
Guardian, please give full title.
Please note any changes in your
address alongside the address as it
appears in the proxy.
