<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the Appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NAPRO BIOTHERAPEUTICS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement. if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NAPRO BIOTHERAPEUTICS, INC.
6304 Spine Road, Unit A
Boulder, Colorado 80301
___________________________________
Notice of Annual Meeting of Stockholders
to be held on June 10, 1997
___________________________________
TO THE STOCKHOLDERS OF NAPRO BIOTHERAPEUTICS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NaPro
BioTherapeutics, Inc. (the "Company"), a Delaware corporation, will be held on
June 10, 1997, at 9:00 A.M. at the conference center at the Raintree Plaza
Hotel, 1850 Industrial Circle, Longmont, Colorado, for the following purposes:
1. To elect two Class I directors to serve until the 2000 annual meeting
of stockholders;
2. To ratify the selection by the Board of Directors of Ernst & Young LLP
as the Company's independent auditors for the year ending December 31, 1996; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
The Board of Directors has fixed the close of business on April 18, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE ENCOURAGED TO MARK, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE PREPAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
ANY STOCKHOLDER ATTENDING THE MEETING MAY VOTE IN PERSON EVEN IF THAT
STOCKHOLDER HAS RETURNED A PROXY.
By Order of the Board of Directors
Patricia A. Pilia, Ph.D.
Secretary
Boulder, Colorado
May 21, 1997
<PAGE>
NAPRO BIOTHERAPEUTICS, INC.
6304 Spine Road, Unit A
Boulder, Colorado 80301
PROXY STATEMENT
GENERAL
The enclosed proxy is solicited by the Board of Directors of NaPro
BioTherapeutics, Inc. (the "Company" or "NaPro") for use at the Annual Meeting
of Stockholders to be held on June 10, 1997, at 9:00 A.M. at the conference
center at the Raintree Plaza Hotel, 1850 Industrial Circle, Longmont, Colorado,
or at any adjournment or postponement of that meeting, for the purposes set
forth in the foregoing Notice of Annual Meeting. This Proxy Statement is being
furnished to holders of the Company's voting common stock, $0.0075 par value per
share ("Common Stock") and Series A Convertible Preferred Stock, $.001 par value
per share ("Preferred Stock"). The cost of solicitation of proxies will be paid
by the Company. Copies of solicitation material will be furnished to brokers,
fiduciaries, and custodians to forward to beneficial owners of Common Stock held
in their names. The Company will reimburse brokers and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. This Proxy Statement and
accompanying proxy will be mailed on or about May 21, 1997 to all stockholders
entitled to vote at the meeting. Unless the context otherwise requires, the
terms, "Company" and "NaPro" include the Company and each of its subsidiaries.
ANNUAL REPORT
The Annual Report to Stockholders covering the year ended December 31, 1996
including audited financial statements is enclosed. This Annual Report to
Stockholders does not form any part of the material for the solicitation of
proxies.
STOCKHOLDER PROPOSALS
Proposals by stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Secretary
of the Company not later than December 31, 1997, in order to be included in the
proxy statement and proxy relating to the 1998 Annual Meeting.
VOTING SECURITIES, REVOCABILITY OF PROXY
Only stockholders of record at the close of business on April 18, 1997 are
entitled to notice of and to vote at the meeting. As of April 18, 1997, there
were 11,767,251 shares of Common Stock and 125,000 shares of Preferred Stock
outstanding. Each such share is entitled to one vote. There are no other
classes of voting securities outstanding. Abstentions and broker votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. For proposal 1, directors are elected by a plurality
of the votes cast at the annual meeting. Approval of Proposal 2 to ratify the
selection of Ernst & Young LLP as the Company's independent auditors requires
the affirmative vote of a majority of the shares of Common Stock and Preferred
Stock voting as a single class represented in person or by proxy at the annual
meeting and entitled to vote. All votes will be tabulated by the inspector of
election appointed for the meeting, who will separately tabulate affirmative and
negative votes, and broker non-votes. Broker non-votes are not counted for any
purpose in determining whether a matter has been approved.
Any stockholder giving a proxy has the power to revoke it any time before
it is exercised. Proxies may be revoked by filing with the Secretary of the
Company at the principal executive office of the Company, 6304 Spine Road, Unit
A, Boulder, Colorado, 80301, a written notice of revocation, or a duly executed
proxy bearing a later date. Proxies may also be revoked by attendance at the
Annual Meeting and an election to vote in person.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 18, 1997,
regarding ownership of the Common Stock and the Preferred Stock by (1) persons
believed by the Company to be the beneficial owners of more than five percent of
its outstanding Common Stock and Preferred Stock; (2) by each Director and
nominee for director and by the officers of the Company named in the Summary
Compensation Table; and (3) by all current executive officers and directors of
the Company as a group. Unless otherwise noted, all addresses are care of:
NaPro BioTherapeutics, Inc., 6304 Spine Road, Unit A, Boulder, CO 80301.
<TABLE>
<CAPTION>
Number of Number of
Name of Director, Officer or Shares of Percent of Shares of Percent of
Beneficial Owner(1) Common Stock Class Preferred Stock Class
- ---------------------------------------- ---------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Leonard P. Shaykin 908,809(2)(3) 7.7% 0 0%
Sterling K. Ainsworth 1,119,046(3)(4) 9.4% 0 0%
Patricia A. Pilia 295,879(3)(5) 2.5% 0 0%
Gordon H. Link, Jr. 33,034(6) * 0 0%
David L. Denny 6,300(7) * 0 0%
James D. McChesney 6,250(8) * 0 0%
Arthur H. Hayes, Jr. 15,000(9) * 0 0%
E. Garrett Bewkes, Jr. 100,167(10) * 0 0%
Vaughn D. Bryson 25,000(11) * 0 0%
Mark B. Hacken 25,000(12) * 0 0%
Richard C. Pfenniger, Jr. 21,000(13) * 0 0%
All Directors and Executive 2,555,485(14) 21% 0 0%
Officers as a Group (12 persons)
D&N Holding Company 1,126,398(3)(15) 13.2% 0 0%
c/o IVAX Corporation
8800 Northwest 36th Street
Miami, Florida 33178
Mervyn Adelson Trust 275,000(16) 2.3% 125,000 100%
c/o Nigro, Karlin & Segal
10100 Santa Monica Boulevard
Suite 1300
Los Angeles, CA 90067
T. Rowe Price Associates, Inc 971,000(17) 8.25% 0 0
100 East Pratt Street
Baltimore, MD 21202
</TABLE>
- -------------
* Less than 1%.
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock or Preferred Stock beneficially owned by them.
2
<PAGE>
(2) Includes 25,000 shares of Common Stock issuable upon exercise of options
granted under the 1994 Plan.
(3) IVAX (through D&N), Mr. Shaykin, Dr. Ainsworth, Dr. Pilia and the Company
are parties to an amended Stockholders Agreement dated as of June 7, 1993
(the "Stockholders Agreement"), pursuant to which, among other things,
each of such directors and IVAX were obligated to vote for the election of
Dr. Ainsworth and two individuals designated by IVAX to the Company's
Board of Directors. IVAX's designees were Dr. Phillip Frost and Mr.
Richard Pfenniger. Mr. Pfenniger was elected as a Class III director and
his term as a director will expire in 1999. Dr. Frost was elected to serve
as a Class I director, and his term will expire as of the current meeting
of shareholders. Dr. Frost is not nominated for an additional term. The
Agreement provided that the voting requirements would terminate upon the
completion of a Public Offering (as defined in the Agreement). The
Company's public offering consummated in August 1996 constituted a Public
Offering as defined in the Agreement and terminated the voting obligations
of the Agreement.
(4) Includes 122,667 shares of Common Stock issuable upon exercise of non-plan
options granted to Dr. Ainsworth in connection with the formation of the
Company in 1991; 10,000 shares of Common Stock issuable upon exercise of
options granted under the 1994 Plan; and 42,550 shares of Common Stock
gifted by Dr. Ainsworth to relatives and certain other persons, which Dr.
Ainsworth may be deemed to beneficially own by virtue of holding powers of
attorney to vote and take certain other actions with respect to such
shares. Dr. Ainsworth, who is engaged to be married to Dr. Pilia,
disclaims beneficial ownership of the shares of Common Stock beneficially
owned by Dr. Pilia and the gifted shares over which Dr. Ainsworth holds
powers of attorney.
(5) Includes 36,800 shares of Common Stock issuable upon exercise of non-plan
options granted to Dr. Pilia in connection with formation of the Company
in 1991; 5,000 shares of Common Stock issuable upon exercise of options
granted under the 1994 Plan; and 10,800 shares of Common Stock gifted by
Dr. Pilia to relatives and certain other persons which Dr. Pilia may be
deemed to beneficially own by virtue of holding powers of attorney to vote
and take certain other actions with respect to such shares. Dr. Pilia
disclaims beneficial ownership of shares of Common Stock beneficially
owned by Dr. Ainsworth and the gifted shares over which Dr. Pilia holds
powers of attorney. See note (4) above.
(6) Includes 20,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Link under the Company's 1993 Stock Option Plan;
12,500 shares of Common Stock issuable upon the exercise of options
granted to Mr. Link under the 1994 Plan; and 534 shares of restricted
Common Stock granted under the 1994 Plan.
(7) Includes 6,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Denny under the Company's 1994 Stock Option Plan.
(8) Includes 6,250 shares of Common Stock issuable upon the exercise of
options granted to Mr. McChesney under the Company's 1994 Stock Option
Plan.
(9) Includes 15,000 shares of Common Stock issuable upon exercise of options
granted to Dr. Hayes under the 1994 Plan.
(10) Includes 33,500 shares of Common Stock issuable upon exercise of options
granted to Mr. Bewkes under the 1994 Plan.
(11) Includes 25,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Bryson under the 1994 Plan.
(12) Includes 25,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Hacken under the 1994 Plan.
3
<PAGE>
(13) Includes 21,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Pfenniger under the 1994 Plan.
(14) Includes an aggregate of 351,217 shares of Common Stock issuable upon
exercise of warrants, non-plan options, and options granted under the 1993
Stock Option Plan and the 1994 Plan.
(15) Information in the table as to beneficial ownership of Common Stock by
IVAX and D&N is based upon filings with the Company made on Schedule 13G
by IVAX. Such shares are held directly by D&N.
(16) Includes 150,000 shares of Common Stock and 125,000 shares of Convertible
Preferred Stock, Series A which is convertible into Common Stock. Mervyn
Adelson, as trustee of the Mervyn Adelson Trust, is deemed to beneficially
own the Preferred Stock.
(17) Information in the table as to beneficial ownership of Common Stock by T.
Rowe Price Associates, Inc. is based upon filings with the Company made on
Schedule 13G. These securities are owned by various individual and
institutional investors, including T. Rowe Price New Horizons Fund, Inc.,
which owns 700,000 shares, representing 5.9% of the shares outstanding,
which T. Rowe Price Associates Inc. (Price Associates) serves as
investment advisor with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
4
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of nine members,
namely: Leonard P. Shaykin (Chairman); Sterling K. Ainsworth, Ph.D.; Patricia
A. Pilia, Ph.D.; E. Garrett Bewkes, Jr.; Richard C. Pfenniger, Jr.; Phillip
Frost, M.D.; Arthur H. Hayes, Jr., M.D.; Mark B. Hacken; and Vaughn D. Bryson.
These directors are divided into three classes. Mr. Shaykin and Drs. Frost and
Hayes are Class I directors, with terms of office expiring at the Annual
Meeting. (Dr. Frost is not standing for re-election.) Dr. Pilia and Messrs.
Bewkes and Bryson are Class II directors, with terms of office expiring at the
1998 annual meeting. Dr. Ainsworth and Messrs. Pfenniger, and Hacken are Class
III directors, with terms of office expiring at the 1999 annual meeting.
Two Class I directors will be elected at the Annual Meeting for a term
expiring at the 2000 annual meeting of stockholders. Mr. Shaykin and Dr. Hayes
are nominated for these board seats. Unless otherwise indicated on any proxy,
shares represented by proxies will be voted for all of the nominees as follows:
Mr. Shaykin and Dr. Hayes for a term expiring at the 2000 annual meeting of
shareholders.
Each person nominated has agreed to serve if elected, and management
has no reason to believe that any of the nominees will be unavailable for
service. Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the re-election of such nominees. If any nominee
should become unavailable for election due to an unexpected occurrence, such
shares will be voted for the election of a substitute nominee as the current
Board of Directors may propose.
INFORMATION CONCERNING THE NOMINEES
LEONARD P. SHAYKIN, 53, has served as Chairman of the Board since June
1993. Pursuant to his Executive Agreement, Mr. Shaykin is not required to
devote more than 20 hours in any week nor more than 80 hours in any month to the
Company's affairs. In 1995, Mr. Shaykin founded Shaykin & Company, a private
investment holding firm. Prior to founding Shaykin & Company, Mr. Shaykin
served as founding and managing partner in Adler & Shaykin, an equity investment
partnership organized to sponsor leveraged buyouts. Prior thereto, Mr. Shaykin
was Vice President, director and a member of the Investment Committee of
Citicorp Venture Capital, Ltd. and Citicorp Capital Investors, Inc., the venture
capital and equity investment subsidiaries of Citicorp and Citibank. Mr.
Shaykin is Chairman of the Board of Directors of Kimeragen, Inc., a privately
held gene repair company; a director of Avigen, a public gene therapy company;
Chairman of the Neuroblastoma Foundation; a director of the Jerusalem Post, an
English-language offshore newspaper; and Vice President and Vice Chairman of the
Board of Directors of To Life!, L.L.C., a privately held neutraceutical company.
Mr. Shaykin is also a governing trustee of The Jackson Laboratories, a privately
held genetic research institute, and a trustee of the University of Chicago
Graduate School of Business. Mr. Shaykin is a graduate of the University of
Chicago (B.A., M.A., M.B.A.).
ARTHUR H. HAYES, JR., M.D., 63, was appointed a director of the
Company in March 1996. He is currently President and Chief Operating Officer of
MediScience Associates, Inc., a pharmaceutical consulting company and is a
Professor of Medicine at New York Medical College and Pennsylvania State
University College of Medicine. From 1981 to 1983, Dr. Hayes served as the
Commissioner of the FDA. From 1986 to 1991, he was President and Chief
Executive Officer of EM Pharmaceuticals, as well as a member of the board of
directors. Dr. Hayes served as Provost & Dean at New York Medical College from
1983 to 1986, and served as the Director of the Institute of Human Values in
Medical Ethics, International Health and Biomedical Sciences, the latter of
which he also served as Chairman. Dr. Hayes has held several posts with
Pennsylvania State University which included Professor of Medicine and
Pharmacology from 1977 to 1981, Dean of Admissions from 1976 to 1979 and
Associate Professor of Medicine and Pharmacology and Director of the Division of
Clinical Pharmacology from 1972 to 1977. Dr. Hayes currently serves on the
board of directors of Myriad Genetics, Inc. (a genomic research and
pharmaceutical company), Celgene Corporation (a pharmaceutical company), and
Premier Research Worldwide. Dr. Hayes' received his M.D. from
5
<PAGE>
Cornell University Medical College, and also attended Cornell's Graduate School
of Medical Sciences, Department of Pharmacology. He undertook premedical
studies, and attended medical school at Georgetown University. Dr. Hayes
received his M.S. (Philosophy, Politics and Economics) from Oxford University,
where he was a Rhodes Scholar, and his A.B. (Philosophy) from Santa Clara
University in 1955.
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR EACH NOMINEE FOR
===========================================================================
RE-ELECTION TO THE BOARD.
=========================
DIRECTORS WHOSE TERMS EXPIRE IN 1998
E. GARRETT BEWKES, JR., 70, has served as a director of the Company
since September 1993. Since April 1987, Mr. Bewkes has been a director of
PaineWebber Group, Inc. and a consultant and Chairman of a number of PaineWebber
mutual funds. From 1982 until 1987 he was Chairman of American Bakeries Corp
and currently serves as a director of Interstate Bakeries Corp.
VAUGHN D. BRYSON, 58 was appointed a director of the Company in March
1996. He has been the President of Life Science Advisors from May 1995 to the
present. Vaughn Bryson was Vice Chairman of Vector Securities International,
Inc. ("Vector"), a specialty health care investment banking firm, from April
1994 to December 1996. Prior to joining Vector, Mr. Bryson worked in various
positions for Eli Lilly and Company for 32 years. Mr. Bryson served as Eli
Lilly's President and Chief Executive Officer from 1991 until June 1993. Mr.
Bryson was a director of Eli Lilly from 1984 until his retirement in 1993. Mr.
Bryson is a Director of five public companies, ARIAD Pharmaceuticals, Inc., Endo
Vascular Technologies, Inc. Perclose, Inc., Fusion Medical Technologies, Inc.,
and Quintiles Transnational Corp. Mr. Bryson earned a B.S. in Pharmacy from the
University of North Carolina and completed the Stanford Sloan Program at
Stanford University Graduate School of Business.
PATRICIA A. PILIA, Ph.D., 49, a co-founder of the Company, has served
as a director of the Company since its inception. She was appointed Secretary
of the Company in November 1991, Treasurer of the Company in October 1992 and
Vice President of BioResearch and Toxicology in March 1993. In 1990, she co-
founded, with Dr. Ainsworth, Pacific Biotechnology, Inc. (a predecessor of the
Company) and served as its Vice President and Director of Biotechnology. From
1983 to 1991, Dr. Pilia was an Assistant Professor of Pathology in the College
of Medicine and Dental Medicine and the College of Graduate Studies at the
Medical University of South Carolina ("MUSC"). Dr. Pilia served as the
Assistant Director of the MUSC Immunopathology Diagnostic and Research
Laboratories from 1985 to 1991. Since 1984 she has been a consultant to
industry on the design and development of biomedical devices and treatment
modalities and the design and performance of clinical trials. Dr. Pilia
received a Bachelor's degree in 1970 from Boston University, a Master's degree
in Immunology/Microbiology in 1978 and a Doctoral degree in Pathology in 1980
from MUSC. Dr. Pilia is engaged to marry Dr. Ainsworth, a director and chief
executive officer of the Company.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
STERLING K. AINSWORTH, Ph.D., 56, a co-founder of the Company, has
served as an executive officer and director of the Company since its inception,
as Chief Executive Officer since November 1991 and as President since October
1992. In 1990, he co-founded, with Dr. Pilia, Pacific Biotechnology, Inc. and
served as Chairman and President of such company until the Company's inception.
From 1972 until 1990, Dr. Ainsworth held various levels of professorships of
Pathology with tenure in the College of Medicine and Dental Medicine and
Graduate Studies at MUSC, where he established, developed and directed MUSC's
Immunopathology Diagnostic Laboratory. Dr. Ainsworth received a Bachelor's
degree from the University of Mississippi in 1963. He received a Master's
degree in Medical Microbiology in 1965 and a Doctoral degree in Medical Science
in 1969 from the University of Mississippi Medical School. He completed his
post-doctoral fellowship in the Department of Pathology at Harvard Medical
School from 1970 to 1972. Dr. Ainsworth is engaged to marry Dr. Pilia, a
director and officer of the Company.
6
<PAGE>
MARK B. HACKEN, 62, was appointed a director of the Company in March
1996. Mr. Hacken has been President and Chief Executive Officer of To Life!,
L.L.C. (a privately held neutraceutical company) since August 1996, and is a
director of G.G.G. Inc. He was President of MBH International, a retail and
health care consulting company from March 1995 to August 1996. He is the former
Chief Executive Officer of FHP International Corporation ("FHP International"),
a $4 billion HMO with members in 11 states, and its operating subsidiary, FHP
Incorporated ("FHP Incorporated"), a diversified health care services company.
Prior to his appointment to the Office of the Chief Executive in October 1993,
he served on the board of directors of FHP International and of FHP Incorporated
for two years and seven years, respectively. He was co-founder and President of
Elliott Drugs, and President of Drug King after the firm was acquired from DART
Industries. After Drug King was sold to Thrifty Corporation, he was
instrumental in converting them to the Thrifty Jr. drug store concept and he was
President of that division. Mr. Hacken received a B.S. in Pharmacy from the
University of Florida.
RICHARD C. PFENNIGER, JR., 41, has served as a director of the Company
since June 1993. Mr. Pfenniger is the Chief Executive Officer and Vice Chairman
of the board of directors of Whitman Education Group, Inc. Mr. Pfenniger
served as Chief Operating Officer of IVAX from April 1994 to March 1997. He
served as Senior Vice President-Legal Affairs, Secretary and General Counsel of
IVAX from 1989 until April 1994, and as Secretary of IVAX from 1990 until April
1994. For the period prior to joining IVAX, Mr. Pfenniger was engaged in
private law practice. Mr. Pfenniger is a director of North American Vaccine,
Inc. and Pan Am Corp.
OTHER EXECUTIVE OFFICERS
The Company has the following executive officers in addition to those who serve
as directors:
GORDON H. LINK, JR., 42, a certified public accountant and a certified
management accountant, joined the Company as Vice President, Finance and Chief
Financial Officer in September 1993. Prior thereto, Mr. Link served
concurrently as Corporate Controller of Synergen, Inc. and of the Syntex-
Synergen Neuroscience Joint Venture. From February 1991 until April 1993, Mr.
Link was Treasurer of Synergen Development Corporation. From October 1983
through May 1990, Mr. Link practiced as a certified public accountant, most
recently in the position of Audit Manager with Deloitte & Touche. He received
undergraduate degrees in chemistry from Rensselaer Polytechnic Institute in 1976
and in accounting from Metropolitan State College in 1983.
DAVID L. DENNY, 44, has served as Vice President, Operations of the
Company since September 1995. From 1991 to 1993, Mr. Denny served as Vice-
President of Operations for Somatogen, Inc. Prior thereto, Mr. Denny served in
manufacturing and quality assurance capacities with Miles Pharmaceutical, Abbott
Laboratories and Kabi-Pharmacia. He received a B.S. in Biological Sciences from
Tennessee Technological University in 1972 and attended graduate school at the
same institution from 1972 to 1974.
JAMES D. MCCHESNEY, Ph.D., 56, joined the Company as Vice-President of
Natural Products Chemistry in January 1996. From 1987 until June 1995, he
served as Director of the Research Institute of Pharmaceutical Sciences at the
University of Mississippi, specializing in natural product pharmaceutical
research and development. In July 1993, Dr. McChesney was named Frederick A.P.
Barnard Distinguished Professor of Pharmacognosy at the University of
Mississippi. Dr. McChesney joined the School of Pharmacy at the University of
Mississippi in 1978 as Professor and Chair of the Department of Pharmacognosy.
After graduating with honors from Iowa State University in 1961 with a B.S. in
Chemical Technology, he earned degrees in Botany (M.A. 1964) and Natural
Products Chemistry (Ph.D. 1965) at Indiana University. He has been a Fulbright
Lecturer in Brazil and a Visiting Professor at several South American
universities.
WILLIAM D. FAIRBAIRN, R.A.C, 58, was appointed Vice President,
Regulatory Affairs in 1996. Prior thereto, he was a consultant to NaPro and the
pharmaceutical industry. From 1988 to 1994 Mr. Fairbairn was Vice-President of
7
<PAGE>
Regulatory Affairs and Compliance at Synergen, Inc. He was Director of
Regulatory Affairs at Allergan Pharmaceuticals where he also held other
positions from 1963 to 1988. He has worked more 30 years in the pharmaceutical
business with 20 years in regulatory affairs and the remainder in clinical and
preclinical research. Mr. Fairbairn received a B.S. from California State
Polytechnic University, an M.A. from the University of California at Los
Angeles, and an M.B.A. from Pepperdine University. From 1987 to 1993, he served
on the Board of Directors of the Regulatory Affairs Professionals Society. In
1991 Mr. Fairbairn received his Certification as a Regulatory Affairs
Professional, and he currently serves on the Regulatory Affairs Certification
Board.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held six meetings during 1996, including both
regularly scheduled and special meetings.
The Board of Directors has established an Audit Committee, a
Compensation Committee and a Strategic Planning Committee. The Audit Committee,
which currently consists of Mr. Hacken, Chairman, and Mr. Bewkes, meets
periodically with representatives of the Company's independent auditors and the
Company's management to obtain an assessment of the Company's financial
condition and results of operations, the results and scope of the annual audit
and other services provided by the Company's independent auditors, and reports
to the full Board of Directors with respect thereto. The Audit Committee met
two times during 1996. The Compensation Committee, which currently consists of
Mr. Bewkes, Chairman, and Mr. Pfenniger, meets periodically to review and to
recommend to the full Board of Directors compensation arrangements for senior
management and directors. In addition, the Compensation Committee is
responsible for administering the Company's existing stock option plans. The
Compensation Committee met twice during 1996. The Strategic Planning Committee,
which currently consists of Mr. Bryson, Chairman, Mr. Shaykin, Dr. Ainsworth,
and Dr. Hayes, meets periodically to review the Company's strategic plans in
connection with product development and marketing, regulatory approvals,
clinical testing and other matters. The Strategic Planning Committee met once
during 1996. Each director attended more than 75% of the aggregate number of
board and/or applicable committee meetings in 1996.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth compensation paid to Dr. Ainsworth, Mr.
Shaykin, Dr. Pilia, Mr. Link, and Dr. McChesney.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------------------------------------------------
Awards Payout
-----------------------------------------
Securities
Other Under-
Annual Restricted lying All Other
Name and Principal Compensa- Stock Options LTIP Compensa-
Position Year Salary ($) Bonus($) tion($) Awards($) SARs(#) Payout($) tion($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sterling K. Ainsworth 1996 $159,000 $20,000 0 0 50,000 0 0
President and C.E.O. 1995 $152,077 $20,000 0 $20,000 40,000 0 0
1994 138,111 0 0 0 0 0 0
Leonard P. Shaykin 1996 $159,000 $20,000 0 0 50,000 0 0
Chairman of the 1995 $152,077 $20,000 0 $20,000 100,000 0 0
Board 1994 106,192 0 0 0 0 0 0
Patricia A. Pilia 1996 $121,900 $20,000 0 0 25,000 0 0
Vice President 1995 $116,592 $15,000 0 $15,000 20,000 0 0
Secretary and Treasurer 1994 96,077 0 0 0 0 0 0
Gordon H. Link, Jr. 1996 $109,156 $13,370 0 0 20,000 0 0
Chief Financial 1995 $101,385 $10,000 0 $10,000 10,000 0 0
Officer 1994 92,480 0 0 0 16,667 0 0
James D. McChesney 1996 $101,538 $10,000 0 0 10,000 0 0
Vice-President, 1995 0 0 0 0 25,000 0 0
Natural Product
Chemistry
-----------
</TABLE>
9
<PAGE>
The following table sets forth each grant of options to purchase Common Stock
made during the year ended December 31, 1996 to Dr. Ainsworth, Mr. Shaykin, Dr.
Pilia, Mr. Link, and Dr. McChesney. Grants of options to such executive officers
were made under the 1994 Plan:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates of
Number of % of Total Stock Price
Securities Options Appreciation for
underlying Granted to Exercise or Base Option Terms ($)(4)
Options Granted Employees in Price Per Share Expiration ----------------------
Name (#)(1) Fiscal Year(2) ($/sh) Date(3) 5% 10%
- --------------------------- --------------- -------------- ------------------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sterling K. Ainsworth 50,000 13.52% $ 7.125 11/14/06 $224,044 $567,771
Leonard P. Shaykin 50,000 13.52% $ 7.125 11/14/06 $224,044 $567,771
Patricia A. Pilia 25,000(5) 6.76% $8.75/$7.125(5) (5) $127,351 $322,733
Gordon H. Link, Jr. 20,000(6) 5.41% $8.75/$7.125(6) (6) $104,946 $265,956
James D. McChesney 10,000 2.70% $ 7.125 11/14/06 $ 44,809 $113,554
------------
</TABLE>
(1) Options granted under the 1994 Plan become exercisable at the rate of 25%
of the shares subject to the option one year after the date of grant and
25% of the shares subject to the option each year thereafter.
(2) Based on the aggregate of 369,700 options granted under the 1994 Plan in
1996 to employees of the Company, including the named executive officers.
(3) These options have a 10-year term, subject to earlier termination upon
death, disability or termination of employment.
(4) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years) assuming that the stock price on
the date of grant appreciates at the indicated annual rate compounded
annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. No gain to the optionee is possible unless the stock price
increases over the option term, which will benefit all stockholders.
(5) Includes options received by Dr. Pilia under two grants. The first was a
grant of options to purchase 15,000 shares of Common Stock at an exercise
price of $8.75; these options expire on 7/31/06. The second was a grant of
options to purchase 10,000 shares of Common Stock at an exercise price of
$7.125; these options expire on 11/14/06.
(6) Includes options received by Mr. Link under two grants. The first was a
grant of options to purchase 15,000 shares of Common Stock at an exercise
price of $8.75; these options expire on 7/31/06. The second was a grant of
options to purchase 5,000 shares of Common Stock at an exercise price of
$7.125; these options expire on 11/14/06.
10
<PAGE>
The following table sets forth information concerning outstanding options held
by Dr. Ainsworth, Mr. Shaykin, Dr. Pilia, Mr. Link, and Dr. McChesney as of the
fiscal year ended December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal Year End(#) in-the-Money Options/SARs at Fiscal Year End($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sterling K. Ainsworth 132,667 / 80,000 $1,285,337 / $190,000
President and C.E.O.
Leonard P. Shaykin 25,000 / 125,000 $ 12,500 / $212,500
Chairman of the Board
Patricia A. Pilia 41,800 / 40,000 $ 386,600 / $ 70,625
Vice President,
Secretary and Treasurer
Gordon H. Link, Jr. 32,500 / 40,834 $ 263,000 / $152,048
Chief Financial Officer
James D. McChesney 6250 / 28,750 $ 3,125 / $ 44,375
VP, Natural Products
Chemistry
</TABLE>
(1) Represents the difference between the option exercise price and the closing
price of the Common Stock as quoted on the NASDAQ Small Cap on December 31,
1996 ($10.625), multiplied by the corresponding number of underlying
shares.
COMPENSATION OF DIRECTORS
Pursuant to the 1994 Plan, non-employee directors automatically are
granted each year, on the date of the Company's annual meeting of stockholders,
non-qualified options to purchase 10,000 shares of Common Stock. In addition,
any non-employee director who is first appointed or elected other than at an
annual meeting of stockholders automatically receives non-qualified options to
purchase 10,000 shares of Common Stock upon such appointment or election. The
1994 Plan also provides for automatic annual grants of non-qualified stock
options to purchase 10,000 shares of Common Stock to directors who serve as
chair of the Audit, Compensation and Strategic Planning Committees of the Board
of Directors. All such options are exercisable at an exercise price equal to
the fair market value of the Common Stock on the date of grant and are subject
to certain vesting schedules.
Directors are reimbursed for their costs incurred in attending Board
of Directors meetings.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company entered into an Employment and Executive Stock Agreement
with each of Mr. Shaykin and Drs. Ainsworth and Pilia (collectively, the "Senior
Executives"), effective as of June 7, 1993, and amended and restated effective
as of May 31, 1994 (collectively, the "Executive Agreements"). Each Executive
Agreement provides for an initial five-year employment term that expires June 7,
1998 (the "Initial Term"), and is renewable each year thereafter (each, a
"Renewal Term") unless either party gives notice of termination to the other
party at least 180 days prior to the commencement of any Renewal Term.
The Executive Agreements provide for annual base salaries for Mr.
Shaykin and Drs. Ainsworth, and Pilia of $150,000, $150,000, and $115,000
respectively. Under the Executive Agreements, the Senior Executives may be
granted annual bonuses at the discretion of the Board's Compensation Committee.
Mr. Shaykin is a part-time
11
<PAGE>
employee of the Company, and is not required under his Executive Agreement to
spend more than 20 hours in any week or 80 hours per month on the Company's
affairs.
Each Executive Agreement provides for certain benefits if, prior to
the end of the Initial Term or any Renewal Term, a Senior Executive's employment
is terminated either by the Company other than for Cause (as defined in the
Executive Agreements) or by the Senior Executive for Good Reason (as defined in
the Executive Agreements). In general, each Senior Executive would be entitled
to (i) a continuance of their respective salary and bonus, if any, through the
end of the Initial Term (but in no event for longer than three years in the case
of Mr. Shaykin) or the then-current Renewal Term, if applicable, and (ii) health
and welfare benefits as in effect immediately prior to termination for a maximum
of 18 months following termination. The foregoing benefits would be limited by
the amount deductible for income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code").
The Executive Agreements also contain provisions (i) prohibiting
disclosure of confidential information, (ii) granting to the Company rights to
intellectual property developed by the Senior Executives that relate to the
Company's business or developed in the course of employment with the Company (or
that otherwise relate in any way to health care or pharmaceuticals, in the case
of Drs. Ainsworth and Pilia) and (iii) prohibiting competition with the Company
during and for five years after the Senior Executive's employment.
Under the Executive Agreements, Mr. Shaykin and Drs. Ainsworth, and
Pilia acquired 531,864, 578,592, and 150,428 shares of Common Stock,
respectively (the "Executive Stock"). The purchase price for such shares was
$1.50 per share and is represented by promissory notes in favor of the Company
(collectively, the "Executive Notes"). The Executive Notes, which were amended
effective as of May 31, 1994, bear interest at the greater of (i) the prime rate
minus 1% (9% as of June 1995) and (ii) the applicable federal rate (set annually
on June 7). Principal and interest on the Executive Notes are due and payable
upon the receipt of proceeds from a Senior Executive's transfer of any shares of
Executive Stock, in the full amount of such proceeds. Notwithstanding the
foregoing, the outstanding principal amount of, and accrued and unpaid interest
under, an Executive Note shall become immediately due and payable upon the
earliest to occur of (i) the Sale of the Company (as defined in the Executive
Agreements), (ii) the termination of a Senior Executive's employment by the
Company for Cause (as defined in the Executive Agreement), by the Senior
Executive other than for Good Reason (as defined in the Executive Agreement), or
by reason of a Senior Executive's death, disability or incapacity and (iii) the
Senior Executive's failure to pay any principal or interest within 15 days of
the date due.
The shares of Common Stock acquired by each Senior Executive were
pledged to the Company pursuant to a pledge agreement as security for payment of
such Senior Executive's Executive Note. In addition, the Executive Notes
provide for recourse against the respective Senior Executives to the extent of
25% of the then outstanding principal amount. The Executive Agreements also
contain provisions restricting the transfer of Executive Stock and requiring the
Senior Executives to sell their Executive Stock under certain circumstances if
the Board approves a Sale of the Company.
Commencing May 9, 1995, each Senior Executive became able to repay all
or part of the outstanding principal and/or interest on his or her Executive
Note by remitting to the Company shares of his or her Common Stock, to be valued
for such purposes in an amount equal to the average of the last reported sales
price of the Common Stock for the five trading days prior to remittance
multiplied by the number of shares remitted. During 1997, Mr. Shaykin remitted
shares of Common Stock to the Company in exchange for extinguishment of the debt
represented by his Executive Note. See "--Certain Relationships and Related
Transactions--Indebtedness of Management."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors and certain of its officers, and persons holding more than
ten percent of the Company's Common Stock are required to file forms reporting
their beneficial ownership of the Company's Common Stock and subsequent changes
in that ownership with the Securities and Exchange Commission. Such persons are
also required to furnish the Company copies of forms so filed. Based solely
upon a review of copies of such forms filed with the Company, Dr. Hacken was
late in filing one form 5, on which he reported one transaction, and no other
directors or officers were late in filing any reports on Forms 3, 4 and 5.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, the Compensation Committee, consists of Mr. Bewkes,
Chairman, and Mr. Pfenniger. From March 1996 to March, 1997, Mr. Bryson also
served on the Compensation Committee. Mr. Pfenniger served as Chief Operating
Officer of IVAX and held various other executive positions with certain IVAX
subsidiaries during 1996. See "--Certain Relationships and Related
Transactions--IVAX."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The report of the Compensation Committee of the Board of Directors
(the "Committee") shall not be deemed incorporated by reference by any general
statement incorporating by reference this report into any filing under the
Securities Act of 1933, or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Goals. The Committee implements the Company's executive compensation
policies. The Company is committed to executive compensation policies that
promote and support the Company's goals and that inspire executives to make a
significant contribution to the financial performance of the Company. The
Company's overall compensation philosophy for executive officers has the
following objectives: (1) the attraction and retention of qualified personnel
whose participation is important to the short-term and long-term success of the
Company; and (2) the creation of a mutual interest between executive officers
and stockholders that permits executive officers to share in the risks and
rewards of strategic decision-making.
The Company has established its executive compensation policies using
the above objectives as its foundation. The Committee's current practice is to
review the compensation of: the five highest paid employees of the Company, all
employees earning at least $75,000 per year and any other executive officers of
the Company that are named in any required disclosure documents under applicable
securities laws. The Committee also administers all annual bonuses and equity
based incentive compensation including grants of stock options and restricted
stock. The following describes the three primary components of the Company's
current executive compensation program.
Base Salary. For fiscal year 1996, the base salary compensation of
the Company's Chief Executive Officer, Dr. Ainsworth, and certain other senior
executives, was primarily determined by such officers employment agreements with
the Company. The Compensation Committee believes that the current base salaries
of the Company's executive officers are justified by such officers' performance
and value to the Company, and take into account the market and competitive
conditions affecting the demand for the skills and expertise of such executive
officers.
Annual Bonus. For fiscal year 1996, the cash bonuses paid to the
Company's executive officers were based primarily on recommendations made to
the Committee by the Chairman of the Board and the President of the Company and
the Committee's own subjective evaluation of the individual executives'
performance and the performance of the Company, taking into account the goals
and overall compensation philosophy stated above.
Equity-based Incentives. The Company considers equity-based
incentives to be an integral part of executive compensation. The Committee
believes that the grant of restricted stock awards, stock options and other
awards pursuant to the 1993 Stock Option Plan and 1994 Long-Term Performance
Incentive Plan has been, and will continue to be, an effective method for the
creation of a mutual interest between the Company's employees and the Company's
stockholders. During 1996, stock options were granted to six executive officers
and restricted stock awards were granted to four executive officers. These
grants were recommended to the Committee by the Chairman of the Board and the
President. Factors considered in the grant of restricted stock awards and stock
options generally are the same as those used in determining annual bonuses. The
recommendations of such grants to the Committee and the Committee's approval of
such recommendations were not based on any specific formulas.
13
<PAGE>
For fiscal year 1996, the total compensation (including bonuses and equity-
based incentives) of the Company's Chief Executive Officer, Dr. Ainsworth, and
other senior executives, was assessed in light of such executives' performance
and the progress of the Company. Factors taken into account included various
achievements by the Company in scaling up its manufacturing activities, securing
raw material resources, and other steps taken by the Company to support the
manufacture, registration, and marketing of the Company's primary product,
paclitaxel.
COMPENSATION COMMITTEE
E. Garrett Bewkes, Jr.
Richard C. Pfenniger, Jr
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this report into
any filing under the Securities Act of 1933, or under the Securities Exchange
Act of 1934, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The graph below compares the cumulative return of the Company's Common
Stock against the Total Return Index for the NASDAQ Market (U.S.) and a peer
group which is comprised of the companies listed on the NASDAQ Pharmaceutical
Stock Index. The cumulative return presented is based upon an initial
investment of $100 over the period August 1, 1994 (the date of the Company's
initial public offering) through December 31, 1996. The stock price performance
on the graph is not necessarily an indicator of future price performance. The
information presented below was compiled by the Center for Research in Security
Prices at the University of Chicago Graduate School of Business. The cumulative
return of the Company's Common Stock is based upon its initial public offering
price of $5.00 and the last reported sale price of the Common Stock as reported
on the NASDAQ National Market System on December 31, 1996, the last trading day
of 1996 ($10.625). The indices assume the reinvestment of all dividends.
[GRAPH WITH PLOT POINTS APPEARS HERE]
<TABLE>
<CAPTION>
August 1, 1994 December 30, 1994 December 29, 1995 December 31, 1996
<S> <C> <C> <C> <C>
NaPro (NPRO) $100 $120.00 $187.50 $212.50
NASDAQ Market (U.S.) $100 $104.38 $147.63 $181.55
Peer Group
(NASDAQ Pharmaceutical Index) $100 $102.46 $187.40 $188.01
</TABLE>
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
IVAX
In June 1993, the Company entered into a 20-year strategic alliance
(the "IVAX Agreement") with Baker Norton Pharmaceuticals, a subsidiary of IVAX,
one of the largest generic pharmaceutical companies in the United States, which
provides for certain exclusive and non-exclusive rights for IVAX to develop and
market the Company's paclitaxel. The Company continues to supply IVAX with
paclitaxel pursuant to the terms of the IVAX Agreement. During 1996, the
Company's sales of paclitaxel to IVAX were $882,000, or 25% of the Company's
revenues during such period. IVAX, through D&N, currently beneficially owns
13.2 % of the Common Stock.
Pursuant to the IVAX Agreement, IVAX may, under limited circumstances,
obtain manufacturing information from the Company, or, under some circumstances,
terminate its relationship with the Company or purchase paclitaxel from third
parties if the Company is unable to supply paclitaxel in sufficient quantities
to meet IVAX's requirements.
Richard C. Pfenniger, Jr., a director of the Company served as Chief
Operating Officer of IVAX until March 1997.
INDEBTEDNESS OF MANAGEMENT
On January 27, 1997, Mr. Shaykin remitted to the Company 74,550 shares
of Common Stock in exchange for extinguishment of the debt represented by the
Executive Note of $989,640.72 owed to the Company by Mr. Shaykin. See "Proposal
1-Executive Compensation-Employment Agreements and Termination of Employment
Agreements."
The transaction described above whereby 74,550 shares of Common Stock
were returned to the Company in exchange for extinguishment of debt was
conducted pursuant to the terms of the Employment and Executive Stock
Agreements, Executive Notes, and Executive Stock Pledge Agreements entered into
by the respective Executives and the Company on June 7, 1993, and subsequently
amended as of May 31, 1994. The stock value computed according to this formula
and used for the purpose of these transactions was $13.275 per share.
OTHER
The Company and MediScience Associates, Inc. ("MediScience"), entered
into a consulting agreement (the "MediScience Agreement") whereby Dr. Hayes,
who is President and Chief Operating Officer of MediScience, will provide the
Company with consulting services in a variety of areas, including clinical
research planning, strategic positioning and regulatory guidance. The Company
makes quarterly payments to MediScience under the MediScience Agreement of
$12,500 for such services. Dr. Hayes is obligated to provide consulting
services under the MediScience Agreement indefinitely, provided that the
MediScience Agreement is terminable by the Company with 90 days prior notice or
by MediScience at any time with 90 days prior notice.
During 1996, Vaughn D. Bryson served as Vice Chairman of Vector
Securities, an investment banking firm that was the lead managing underwriter
of a public offering of the Company which was consummated in August of 1996.
Mr. Bryson is also a principal of Life Science Advisors, a health care
consulting firm which will provide consulting services to the Company in the
area of pharmaceutical development in 1997.
16
<PAGE>
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1997, and has further
directed that management submit this selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Ernst & Young LLP have
audited the Company's financial statements for 1996. Representatives of Ernst &
Young LLP who are expected to be present at the Annual Meeting will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions. If a majority of the shares voted at the
Annual Meeting do not vote for ratification of the selection of Ernst & Young
LLP, the Board of Directors will reconsider such selection.
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THIS PROPOSAL TO
RATIFY SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at
the meeting, but if other matters do properly come before the meeting, it is
intended that the persons named in the proxy will vote in respect thereof in
accordance with their best judgment.
The Board of Directors encourages you to have your shares voted by
signing and returning the enclosed proxy. The fact that you will have returned
your proxy in advance will not affect your right to vote in person should you
find it possible to attend. However, by signing and returning the proxy, you
have assured your representation at the Annual Meeting. Thank you for your
cooperation.
By Order of the Board of Directors,
Patricia A. Pilia
Secretary
Boulder, Colorado
May 21, 1996
17
<PAGE>
COMMON STOCK
SERIES A CONVERTIBLE PREFERRED STOCK
NAPRO BIOTHERAPEUTICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 1996
THE UNDERSIGNED HEREBY APPOINTS LEONARD P. SHAYKIN, STERLING K.
AINSWORTH AND PATRICIA A. PILIA, OR ANY OF THEM, WITH FULL POWER OF
SUBSTITUTION, AS A PROXY OR PROXIES TO REPRESENT THE UNDERSIGNED AT THE ANNUAL
MEETING (THE "ANNUAL MEETING") OF STOCKHOLDERS OF NAPRO BIOTHERAPEUTICS, INC.
(THE "COMPANY") TO BE HELD ON JUNE 10, 1996, AT 9:00 A.M. AT THE CONFERENCE
CENTER AT THE RAINTREE PLAZA HOTEL, 1850 INDUSTRIAL CIRCLE, LONGMONT, COLORADO,
AND AT ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, AND TO VOTE THEREAT ALL THE
SHARES OF COMMON STOCK, $.0075 PAR VALUE PER SHARE AND SERIES A CONVERTIBLE
PREFERRED STOCK, $.001 PAR VALUE PER SHARE, HELD OF RECORD BY THE UNDERSIGNED AT
THE CLOSE OF BUSINESS ON APRIL 18, 1996, WITH ALL THE POWER THAT THE UNDERSIGNED
WOULD POSSESS IF PERSONALLY PRESENT, AS DESIGNATED ON THE REVERSE SIDE.
SHARES WILL BE VOTED AS SPECIFIED. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR AND APPROVAL OF THE PROPOSALS. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS IN ACCORDANCE WITH THE
BOARD OF DIRECTORS RECOMMENDATIONS. THE PROXIES OR SUBSTITUTES MAY VOTE
ACCORDINGLY IN THEIR DISCRETION UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
X PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
-------
1. ELECTION OF DIRECTORS:
CLASS I NOMINEES: LEONARD P. SHAYKIN
(TO SERVE UNTIL
2000 ANNUAL MEETING) ARTHUR H. HAYES, JR.
FOR WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED
[_] [_]
To withhold authority to vote for any individual nominee, write that
nominee's name on the lines provided below:
_____________________________ ______________________________
2. TO RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF ERNST & YOUNG LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1997;
FOR [_] AGAINST [_] ABSTAIN [_]
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
SIGNATURE(S)_________________________________________ DATE______________________
_______________
NOTE: PLEASE SIGN THIS PROXY AS YOUR NAME APPEARS HEREON, INCLUDING THE TITLE
"EXECUTOR," "TRUSTEE," ETC. IF SUCH IS INDICATED. IF JOINT ACCOUNT, EACH JOINT
OWNER SHOULD EACH SIGN. IF STOCK IS HELD BY A CORPORATION, THIS PROXY SHOULD BE
EXECUTED BY A PROPER OFFICER THEREOF.
