<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SUPERGEN, 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.
/ / $125 Per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously by written 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>
SUPERGEN, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
------------------------
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of SuperGen, Inc., a Delaware corporation (the "Company"), will be
held on Wednesday, May 5, 1999 at 2:00 p.m., local time, at the San Ramon
Marriott, 2600 Bishop Drive, San Ramon, California 94583 for the following
purposes:
1. To elect five (5) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To ratify and approve an amendment to the Company's Amended and Restated
1993 Stock Option Plan (the "Plan") increasing the number of shares of
Common Stock authorized for issuance by 600,000 shares for a total of
3,850,000 shares reserved under the Plan.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1999.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only holders of record of the Company's Common Stock at the close of
business on March 31, 1999, the record date, are entitled to notice of and to
vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
JOSEPH RUBINFELD
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
San Ramon, California
April 8, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE
<PAGE>
SUPERGEN, INC.
----------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
---------------------
PROCEDURAL MATTERS
GENERAL
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of SuperGen, Inc. ("We," "SuperGen," or the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Wednesday, May 5, 1999 at 2:00 p.m., local time, and at any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the
San Ramon Marriott, 2600 Bishop Drive, San Ramon, California 94583. The
Company's headquarters is located at Two Annabel Lane, Suite 220, San Ramon,
California 94583, and the telephone number at that location is (925) 327-0200.
These proxy solicitation materials were mailed on or about April 8, 1999,
together with the Company's 1998 Annual Report to Stockholders, to all
stockholders entitled to vote at the Annual Meeting.
RECORD DATE
Stockholders of record at the close of business on March 31, 1999 (the
"Record Date") are entitled to notice of and to vote at the meeting. As of the
Record Date, 21,094,608 shares of the Company's Common Stock were issued and
outstanding. No shares of Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING PROCEDURES
Each stockholder is entitled to one vote for each share of Common Stock held
on all matters to be voted on by the stockholders. Votes cast in person or by
proxy will be tabulated by ChaseMellon Shareholder Services, L.L.C., the
Company's transfer agent.
Upon the execution and return of the enclosed form of proxy, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy, the
shares represented thereby will be voted (i) "FOR" the election of each of the
Company's nominees as a director (ii) "FOR" ratification and approval of an
amendment to the Company's Amended and Restated 1993 Stock Option Plan (the
"Plan") increasing the number of shares of Common Stock authorized for issuance
by 600,000 to 3,850,000 shares and (iii) "FOR" ratification of the appointment
of Ernst & Young LLP as independent auditors for the Company for the fiscal year
ending December 31, 1999.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
A majority of the outstanding shares of Common Stock entitled to vote on the
Record Date, whether present in person or represented by proxy, shall constitute
a quorum for the transaction of business at the Annual Meeting or any
adjournments thereof. Shares that are voted "FOR" or "AGAINST" a matter are
<PAGE>
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as votes eligible to be cast by the Common Stock present in
person or represented by proxy at the meeting and "entitled to vote on the
subject matter" (the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions in the counting of votes, we believe that
abstentions should be counted for purposes of determining both the presence or
absence of a quorum for the transaction of business and the total number of
Votes Cast with respect to a particular matter. Accordingly, abstentions will
have the same effect as a vote against proposals set forth in this Proxy
Statement. In the absence of controlling precedent to the contrary, we intend to
treat abstentions in this manner. In a 1988 Delaware case, BERLIN V. EMERALD
PARTNERS, the Delaware Supreme Court held that, while broker non-votes may be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, broker non-votes should not be counted for the purposes
of determining the number of Votes Cast with respect to the particular proposal
on which the broker has expressly not voted. Broker non-votes with respect to
proposals set forth in this Proxy Statement will therefore not be considered
Votes Cast and, accordingly, will not affect the determination as to whether the
requisite majority of Votes Cast has been obtained with respect to a particular
matter.
COSTS OF SOLICITATION OF PROXIES
We will bear the costs of soliciting proxies. We may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Proxies
may also be solicited by certain of the Company's directors, officers and
employees, without additional compensation, personally or by telephone, letter
or facsimile.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of our stockholders intended to be presented at the regularly
scheduled 2000 Annual Meeting of Stockholders must be received by us no later
than December 10, 1999, and must satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
our proxy statement for that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
Our Board of Directors (the "Board") is currently composed of five members.
The directors are elected to serve one-year terms and until their respective
successors are elected and qualified. The Board has nominated the persons set
forth below, all of whom are currently directors of the Company, for election as
directors. Unless otherwise instructed, the holders of proxies solicited by this
Proxy Statement will vote the proxies received by them for such nominees. In the
event that any nominee is unable or declines to serve as a director at the time
of the Annual Meeting, the proxy holders will vote for a nominee designated by
the present Board to fill the vacancy. We are not aware of any reason that any
nominee will be unable or will decline to serve as a director.
VOTE REQUIRED
The five (5) nominees receiving the highest number of affirmative votes of
the shares entitled to be voted shall be elected as directors of the Company.
Votes withheld from any director are counted for purposes of determining the
presence or absence of a quorum but have no other legal effect under Delaware
law.
2
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR NAMED BELOW.
INFORMATION REGARDING NOMINEES
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ---------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Joseph Rubinfeld.................. 66 President, Chief Executive Officer and Director of
the Company
Denis Burger (1)(2)............... 55 President and Chief Executive Officer, AVI
BioPharma, Inc.
Lawrence J. Ellison............... 54 Chief Executive Officer and Chairman of the Board
of Oracle Corporation
Julius A. Vida (2)................ 70 President, Vida International Pharmaceutical
Consultants
Daniel Zurr (1)(2)................ 53 President and Chief Executive Officer, Quark
Biotech, Inc.
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
JOSEPH RUBINFELD, PH.D. co-founded the Company in 1991. He has served as
Chief Executive Officer, President and a director of the Company since its
inception and was Chief Scientific Officer from inception until September 1997.
Dr. Rubinfeld was one of the four initial founders of Amgen, Inc. in 1980 and
served as Vice President and Chief of Operations until 1983. From 1987 to 1990,
he was a Senior Director at Cetus Corporation. From 1968 to 1980, Dr. Rubinfeld
was employed at Bristol-Myers Company International Division ("Bristol-Myers")
in a variety of positions, most recently as Vice President and Director of
Research and Development. While at Bristol-Myers, Dr. Rubinfeld was instrumental
in licensing the original anticancer line of products for Bristol-Myers,
including mitomycin and bleomycin. Prior to that time, Dr. Rubinfeld was a
research scientist with several pharmaceutical and consumer product companies
including Schering-Plough Corporation and Colgate-Palmolive Co. Dr. Rubinfeld is
a member of the Board of Directors of AVI BioPharma, Inc. and NeoTherapeutics,
Inc. He received his B.S. in chemistry from C.C.N.Y., and his M.A. and Ph.D. in
chemistry from Columbia University. Dr. Rubinfeld has numerous patents and/or
publications on a wide range of inventions and developments including the
10-second developer for Polaroid film, manufacture of cephalosporins and the
first commercial synthetic biodegradable detergent. In 1984 Dr. Rubinfeld
received the Common Wealth Award for Invention.
DENIS BURGER, PH.D. has served as a director of the Company since January
1996. Dr. Burger has served as President and Chief Operating Officer of AVI
BioPharma, Inc. (formerly AntiVirals, Inc.) a biotechnology company specializing
in gene-targeted therapeutic and diagnostic products since February 1992 and as
Chief Executive Officer since February 1996. Dr. Burger was a co-founder of
Epitope, Inc., a biotechnology company, and served as its Chairman from 1981
until 1990. He has also been the general partner of Sovereign Ventures, LLC, a
biotechnology consulting and merchant banking venture since 1991. Dr. Burger is
a member of the Board of Directors of Cellegy Pharmaceuticals, Inc., AVI
BioPharma, Inc. and Trinity Biotech, PLC. He received his B.A. in Bacteriology
and Immunology from the University of California, Berkeley, and his M.S. and
Ph.D. in Microbiology and Immunology from the University of Arizona, Tucson.
LAWRENCE J. ELLISON has been a director of the Company since June 1997. Mr.
Ellison is Chief Executive Officer and Chairman of the Board of Directors of
Oracle Corporation, a company he founded in May 1977. Mr. Ellison is co-chairman
of California's Council on Information Technology and is a
3
<PAGE>
member of the Board of Directors of Apple Computer, Inc., a computer hardware
company, and CRT Group PLC, a U.K. training and recruiting company.
JULIUS A. VIDA, PH.D. has served as a director of the Company since January
1996. Since June 1993, Dr. Vida has served as President of Vida International
Pharmaceutical Consultants. From 1976 to May 1993, Dr. Vida worked at
Bristol-Myers, where he served as Vice President of Business Development,
Licensing and Strategic Planning from 1991 to 1993, as Vice President of
Licensing from 1985 to 1991 and as Director of Licensing from 1982 to 1985. Dr.
Vida is a member of the Board of Directors of Biomatrix, Inc. and Medarex, Inc.,
both biotechnology companies. Dr. Vida received his Ph.D. in Chemistry from
Carnegie Mellon University and his M.B.A. from Columbia University.
DANIEL ZURR, PH.D. has been a director of the Company since January 1994.
Dr. Zurr currently serves as President and Chief Executive Officer of Quark
Biotech, Inc. (formerly Expression Systems, Inc.). Dr. Zurr served as Scientific
Director and Business Development Director of the Pharmaceutical Division of
Israel Chemicals, Ltd., an Israeli limited liability company, from 1984 to 1985.
He also served as Director of Licensing at G.D. Searle & Company, Limited, from
1980 to 1983. He was Chief Executive Officer of Plantex-Ikapharm, an Israeli
pharmaceutical company, from 1975 to 1980. Dr. Zurr received his M.Sc. at the
Hebrew University of Jerusalem and his Ph.D. from the Imperial College
University of London in 1972.
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 1998, the Board held four meetings
(including regularly scheduled and special meetings). With the exception of Mr.
Ellison, all of the incumbent directors attended 75% or more of the meetings of
the Board and committees, if any, upon which such directors served. The Board
approved certain matters by unanimous written consent.
The Board currently has two standing committees: an Audit Committee and a
Compensation Committee. The Audit Committee is composed of Dr. Burger, Dr. Vida
and Dr. Zurr and the Compensation Committee is composed of Dr. Burger and Dr.
Zurr. We have no nominating committee or committee performing similar functions.
AUDIT COMMITTEE. The Audit Committee makes such examinations as are
necessary to monitor the corporate financial reporting and the internal and
external audits of the Company, provides to the Board the results of its
examinations and recommendations derived therefrom, outlines to the Board
improvements made, or to be made, in internal accounting controls, nominates
independent auditors, and provides to the Board such additional information and
materials as it may deem necessary to make the Board aware of significant
financial matters that require Board attention. The Audit Committee held one
meeting during 1998.
COMPENSATION COMMITTEE. The Compensation Committee reviews the Company's
executive compensation policy, including equity compensation for senior
executives of the Company, and makes recommendations to the Board regarding such
matters. The Compensation Committee took action by unanimous written consent
during 1998.
DIRECTOR COMPENSATION
All non-employee directors (the "Outside Directors") of the Company receive
$1,000 in compensation for attendance at each meeting of the Board, and Board
Committee members shall each receive $1,000 for each Board Committee meeting
held on a day on which no Board meeting is held. Directors and Board Committee
members are also reimbursed for all reasonable expenses incurred by them in
attending Board and Committee meetings. We have adopted the 1996 Directors'
Stock Option Plan providing for stock options to be granted to certain
non-employee directors.
4
<PAGE>
PROPOSAL TWO
AMENDMENT TO AMENDED AND RESTATED
1993 STOCK OPTION PLAN
GENERAL
Our Amended and Restated 1993 Stock Option Plan (the "1993 Plan") provides
for the granting to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
for the granting to employees and consultants of nonstatutory stock options and
stock purchase rights. The 1993 Plan was originally adopted by the Board in
December 1993 and approved by the Company's stockholders in January 1994. Unless
terminated sooner, the 1993 Plan will terminate automatically in December 2003.
In February 1999, the Board voted to increase the number of shares
authorized for issuance under the 1993 Plan by an aggregate of 600,000 shares,
bringing the total shares currently reserved for issuance under the 1993 Plan to
3,850,000 shares. Proposal Two seeks stockholder approval of the increase in
shares authorized under the 1993 Plan. As of the Record Date and after giving
effect to the proposed 600,000 share increase, there were 846,445 shares
available for future grant under the 1993 Plan. Approval of this amendment to
the 1993 Plan also perfects the stockholder approval requirement of Section 422
of the Code.
We believe that stock options play a key role in our ability to recruit,
reward and retain executives and key employees. Companies like SuperGen have
historically used stock options as an important part of recruitment and
retention packages. We compete directly with other companies for experienced
executives and sales personnel and believe that we must be able to offer
comparable packages to attract the caliber of individual necessary to our
business. Our growth is partly responsible for the need to increase shares
issuable under the 1993 Plan. The total number of employees has increased from
30 full-time employees as of December 31, 1996, to 55 full-time employees, one
part-time employee and approximately four consultants as of March 31, 1999.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of Common Stock
represented, in person or by proxy, and entitled to vote on this proposal will
be required to ratify and approve the amendment to the 1993 Plan. Abstentions
will have the same effect as votes against this proposal. Broker non-votes will
not be counted as having been represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE 1993 PLAN.
The essential provisions of the 1993 Plan are outlined below.
ADMINISTRATION
The 1993 Plan may be administered by the Board, the Compensation Committee
or a committee appointed by the Board. The 1993 Plan is currently administered
by the Compensation Committee (hereinafter referred to as the "Administrator")
composed of Dr. Burger and Dr. Zurr.
ELIGIBILITY; LIMITS ON GRANTS
The 1993 Plan provides that options and stock purchase rights may be granted
to employees, officers, directors and consultants to the Company, its parent or
subsidiaries. Incentive stock options may be granted only to employees,
including employee directors and officers. The Administrator approves the
participants, the time or times at which options and stock purchase rights are
granted and the number of shares subject to each. The 1993 Plan is administered
so as to satisfy certain requirements under the
5
<PAGE>
federal securities laws, including under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Code.
The 1993 Plan limits the discretion allowed to the Administrator in granting
options. This limitation is intended to preserve the Company's ability to deduct
for federal income tax purposes the compensation expense relating to options
exercised by certain executive officers under the 1993 Plan. The limitation
provides that under the 1993 Plan no employee may be granted in any one fiscal
year options and stock purchase rights to receive more than 500,000 shares of
Common Stock (except in connection with the commencement of employment, in which
case options and stock purchase rights to purchase no more than an additional
200,000 shares may be granted). See discussion below under "Tax Information" for
a summary of the more general rules governing the availability to the Company of
tax deductions in connection with stock options exercised under the 1993 Plan.
As of March 31, 1999, there were approximately 55 employees and four
consultants currently eligible to participate in the 1993 Plan, and 75
optionees, including consultants, held outstanding options under the 1993 Plan.
TERMS OF OPTIONS AND STOCK PURCHASE RIGHTS
The terms of options and stock purchase rights granted under the 1993 Plan
are determined by the Administrator but may not be longer than ten years, except
in the case of incentive stock options granted to an optionee who at the time of
grant owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any parent or subsidiary of the Company
(a "10% Stockholder"), for whom the term of each option may not be longer than
five years. Each option or stock purchase right is evidenced by a written
agreement between the Company and the optionee to whom such option or stock
purchase right is granted and is subject to the following additional terms and
conditions:
(a) EXERCISE OF THE OPTION: The Administrator determines when options
may be exercisable. Shares subject to an option generally vest and are
exercisable over four (4) years at the rate of one-quarter "1/4" of the
shares on the first anniversary of the option grant and the balance of the
shares subject to the option vesting at the rate of 1/36th per month
thereafter. The Administrator may accelerate the vesting of any outstanding
option. The purchase price of the shares to be purchased upon exercise of
any option may be paid, at the discretion of the Administrator, in cash,
check, or other shares of Common Stock (with some restrictions), or, if
specified in the optionee's option agreement, promissory note, cashless
exercise, a reduction in the amount of any Company liability to the
optionee, any combination thereof, or other legally permitted consideration.
(b) EXERCISE PRICE: The exercise price under the 1993 Plan is
determined by the Administrator, provided that, in the case of an incentive
stock option, the exercise price may not be less than 100% of the fair
market value of the Common Stock on the date the option is granted, and,
provided further, that, in the case of an incentive stock option granted to
a 10% Stockholder, the exercise price may be no less than 110% of the fair
market value of the Common Stock on the date the option is granted. In the
case of a non-statutory stock option, the exercise price is determined by
the Administrator; however, in the case of a non-statutory option intended
to qualify as "performance-based compensation" within the meaning of Section
162(m) of the Code, the exercise price may not be less than 100% of the fair
market value of the Common Stock on the date the option is granted.
(c) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP: If an
optionee's status as an employee or consultant terminates for any reason
other than death or disability, an option under the 1993 Plan may be
exercised not later than thirty (30) days (or such other period of time, not
exceeding three months in the case of incentive options, as is determined by
the Administrator and specified in the optionee's option agreement) after
such termination (but in no event later than the date of expiration of the
term of the option) and may be exercised only to the extent such option was
exercisable and vested on the date of termination.
6
<PAGE>
(d) DISABILITY OF OPTIONEE: If an optionee's continuous status as an
employee, director or consultant terminates as a result of the optionee's
disability (as defined in Section 22(e)(3) of the Code), an option may be
exercised within twelve (12) months after termination of employment due to
such disability (but in no event later than the date of expiration of the
term of the option), but only to the extent such option was exercisable and
vested on the date of termination.
(e) DEATH OF OPTIONEE: If an optionee should die while employed by the
Company, an option may be exercised by the optionee's estate at any time
within twelve (12) months after the date of death (but in no event later
than the date of expiration of the term of the option), but only to the
extent such options were exercisable and vested on the date of death.
(f) TERMINATION OF OPTIONS: Stock options granted under the 1993 Plan
expire as determined by the Administrator, but in no event later than ten
(10) years from the date of grant. However, in the case of an incentive
stock option granted to a 10% Stockholder, the term of the option may not be
greater than five (5) years. Under the form of option agreement currently
used by the Company, options generally expire ten (10) years from the date
of grant.
(g) NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS: Unless
otherwise specified by the Administrator, options and stock purchase rights
are non-transferable by the optionee other than by will or by the laws of
descent or distribution and are exercisable during the optionee's lifetime
only by the optionee.
(h) OTHER PROVISIONS: The option agreement may contain such other
terms, provisions and conditions not inconsistent with the 1993 Plan as may
be determined by the Administrator.
The 1993 Plan permits the Company to grant stock purchase rights to purchase
Common Stock of the Company either alone, in addition to, or in tandem with
other awards under the 1993 Plan and/or cash awards made outside the Plan. Upon
the granting of a stock purchase right under the 1993 Plan, the offeree is
advised in writing of the terms, conditions and restrictions related to the
offer, including the number of shares of Common Stock that the offeree is
entitled to purchase, the price to be paid and the time within which the offeree
must accept such offer (which shall in no event exceed six (6) months from the
date of grant). The offer is accepted by execution of a restricted stock
purchase agreement between the Company and the offeree.
Unless the Administrator determines otherwise, the restricted stock purchase
agreement grants the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the purchaser's employment or consulting
relationship with the Company for any reason (including death or disability as
defined in Section 22(e)(3) of the Code). The purchase price for shares
repurchased pursuant to this repurchase option is the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option lapses at such rate as the Administrator
may determine.
Upon exercise of a stock purchase right, the purchaser has all rights of a
stockholder of the Company. As of the Record Date, the Company has not granted
any stock purchase rights under the 1993 Plan.
CHANGES IN CAPITALIZATION
In the event a change, such as a stock split or stock dividend payable in
Common Stock, is made in the Company's capitalization which results in an
exchange of Common Stock for a greater or lesser number of shares without
receipt of consideration by the Company, appropriate adjustment will be made in
the number of shares reserved for issuance under the 1993 Plan and in the number
of shares subject to outstanding options and stock purchase rights under the
1993 Plan, as well as in the price per share of Common Stock covered by such
options and stock purchase rights. Such adjustment will be made by the Board,
whose determination will be final, binding and conclusive.
7
<PAGE>
In the event of the proposed dissolution or liquidation of the Company,
options and stock purchase rights outstanding under the 1993 Plan will terminate
immediately prior to such action. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
into another corporation, outstanding options and stock purchase rights may be
assumed or an equivalent option or stock purchase right may be substituted by
the successor entity. If such outstanding options and stock purchase rights are
not assumed or substituted, however, the Administrator must provide for all or
some part of the options and stock purchase rights to become fully vested and
immediately exercisable for a period of fifteen (15) days.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend the 1993 Plan at any time, or may terminate the 1993
Plan, without stockholder approval; provided, however, that stockholder approval
is required for any amendment to the 1993 Plan for which stockholder approval
would be required under the Code or other applicable rules, and no action by the
Board or stockholders may unilaterally impair any option or stock purchase right
previously granted under the 1993 Plan. In any event, the 1993 Plan will
terminate in December 2003. Any options outstanding under the 1993 Plan at the
time of its termination will remain outstanding until they expire by their
terms.
TAX INFORMATION
THE FOLLOWING IS A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION WITH
RESPECT TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE
1993 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE OR FOREIGN COUNTRY IN WHICH A PARTICIPANT MAY RESIDE.
INCENTIVE STOCK OPTIONS
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% Stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
NON-STATUTORY STOCK OPTIONS
All other options which do not qualify as incentive stock options are
referred to as non-statutory stock options. An optionee will not recognize any
taxable income at the time he or she is granted a non-statutory stock option.
However, upon the option's exercise, the optionee will recognize taxable income,
generally measured as the excess of the then fair market value of the shares
purchased over the exercise price. Any taxable income recognized in connection
with an option exercise by an optionee who is also an employee of the Company
will be subject to tax withholding by the Company. The Company will be entitled
to a tax deduction in the same amount as the ordinary income recognized by the
optionee. Upon resale of such shares by the optionee, any difference between the
sales price and the exercise price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period.
8
<PAGE>
STOCK PURCHASE RIGHTS
Stock purchase rights will generally be taxed in the same manner as
non-statutory stock options. However, the stock issued upon exercise of a stock
purchase right is usually subject to the Company's right to repurchase such
stock upon the purchaser's termination of employment with the Company, which
right lapses progressively over time. As a result, at the time of purchase, this
restricted stock is subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. As a result, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the date or dates when the stock ceases to be subject to
substantial risk of forfeiture. The stock will generally cease to be subject to
a substantial risk of forfeiture when it is no longer subject to the Company's
right to repurchase the stock (i.e., as it "vests"). At such times, the
purchaser will recognize the ordinary income measured as the difference between
the purchase price and the fair market value of the stock on the date the stock
is no longer subject to a substantial risk of forfeiture. The ordinary income
recognized by a purchaser who is an employee will be treated as wages and will
be subject to tax withholding by the Company. Generally, the Company will be
entitled to a tax deduction in the amount and at the time the purchaser
recognizes ordinary income.
Notwithstanding the foregoing, a purchaser may accelerate the date of his or
her recognition of ordinary income, and the beginning of any capital gain
holding period, by timely filing an election pursuant to Section 83(b) of the
Code. In such event, the ordinary income recognized, if any, would be equal to
the difference between the purchase price and the fair market value of the stock
on the date of purchase, and the capital gain holding period would commence on
the purchase date.
Different rules may apply in the case of purchasers who are subject to
Section 16 of the Exchange Act.
PARTICIPATION IN THE 1993 PLAN
The grant of options and stock purchase rights under the 1993 Plan to
eligible employees and consultants is subject to the discretion of the
Administrator. The table on page 13 sets forth information with respect to
options granted under the 1993 Plan during 1998 to each of the officers named in
the Summary Compensation Table. The term of options under the 1993 Plan (other
than those granted to 10% Stockholders, as to which the term is five years from
the date of grant) is generally ten years from the date of grant.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has appointed Ernst & Young LLP as independent auditors of the
Company to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1999, and recommends that the stockholders vote
for ratification of such appointment.
Ernst & Young LLP has audited our financial statements since March 1994. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement and is expected to be
available to respond to appropriate questions.
VOTE REQUIRED
Ratification of the appointment of Ernst & Young LLP as our independent
auditors will require the affirmative vote of a majority of the outstanding
shares of Common Stock represented, in person or by proxy, and entitled to vote
on this proposal. Abstentions will have the same effect as a vote against this
proposal. Broker non-votes will not be counted as having been represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF APPOINTING
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
9
<PAGE>
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of March 31, 1999 for the following: (i) each person or entity
who is known by the Company to own beneficially more than 5% of the outstanding
shares of the Company's Common Stock; (ii) each of the Company's directors;
(iii) each of the officers named in the Summary Compensation Table; and (iv) all
current directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OWNED (1) OWNED (%)
- ------------------------------------------------------------------------------ ----------- -------------
<S> <C> <C>
Tako Ventures, LLC (2)........................................................ 4,493,683 19.7
Lawrence J. Ellison
c/o Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065
Joseph Rubinfeld (3).......................................................... 2,590,918 11.8
c/o SuperGen, Inc.
Two Annabel Lane, Suite 220
San Ramon, CA 94583
J. Gregory Swendsen (4)....................................................... 1,506,250 7.1
703 Market Street
San Francisco, CA 94103
Frank Brenner (5)............................................................. 130,260 *
Rajesh Shrotriya (6).......................................................... 97,142 *
Luigi Lenaz (7)............................................................... 38,021 *
Frederick Grab (8)............................................................ 57,410 *
Julius A. Vida (9)............................................................ 40,000 *
Denis Burger (10)............................................................. 40,000 *
Daniel Zurr (10).............................................................. 40,000 *
All current directors and executive officers as a group (11 persons) (11)..... 7,661,584 31.6
</TABLE>
- ------------------------
* Less than 1%.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire at May 30, 1999
through the exercise of any stock option or other right. Unless otherwise
indicated in the footnotes, each person has sole voting and investment
power (or shares such powers with his or her spouse) with respect to the
shares shown as beneficially owned.
(2) Includes 1,775,000 shares issuable upon exercise of warrants to purchase
shares of Common Stock and exercisable at May 30, 1999. Tako Ventures, LLC
is an investment entity controlled by Lawrence J. Ellison, a director of
the Company.
10
<PAGE>
(3) Includes 1,694,500 shares held jointly by Joseph and Loretta Rubinfeld,
husband and wife, 20,000 shares held individually by Joseph Rubinfeld,
35,000 shares held by Joseph and Loretta Rubinfeld as custodians under the
California Uniform Transfers to Minors Act, 839,167 shares issuable upon
exercise of options to purchase shares of Common Stock exercisable by
Joseph Rubinfeld at May 30, 1999, and options to purchase 2,251 shares of
Common Stock exercisable by Loretta Rubinfeld, his wife, at May 30, 1999.
(4) Represents 1,506,250 shares held jointly by J. Gregory Swendsen and Susan
H. Bell, Co-Trustees of The J. Gregory Swendsen and Susan H. Bell Revocable
Inter Vivos Trust.
(5) Includes warrants to purchase 3,300 shares of Common Stock exercisable at
May 30, 1999, held by Frank Brenner and Christine Carey, his wife, as joint
tenants. Also includes 55,923 shares issuable upon the exercise of stock
options to purchase shares of Common Stock exercisable by Frank Brenner at
May 30, 1999, and options to purchase 50,155 shares of Common Stock
exercisable by Christine Carey, his wife, at May 30, 1999. Mr. Brenner
resigned the position Vice President of Sales in January 1999. He remains
an employee of SuperGen.
(6) Includes 85,642 shares issuable upon the exercise of stock options to
purchase shares of Common Stock and 2,000 shares issuable upon the exercise
of warrants to purchase shares of Common Stock, each exercisable at May 30,
1999.
(7) Includes 36,521 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable at May 30, 1999.
(8) Includes 1,285 shares held jointly by Frederick and Elaine Grab, husband
and wife, 300 shares held individually by Frederick Grab, and 55,825 shares
issuable on the exercise of stock options to purchase shares of Common
Stock exercisable at May 30, 1999.
(9) Represents 40,000 shares issuable upon the exercise of a stock option to
purchase shares of Common Stock issuable at May 30, 1999. Does not include
an additional 25,000 shares issuable upon the exercise of a
performance-based option to purchase Common Stock of the Company.
(10) Represents 40,000 shares issuable upon the exercise of a stock option to
purchase shares of Common Stock issuable at May 30, 1999.
(11) See footnotes (2) through (10). Includes 1,792,633 shares issuable upon
exercise of warrants to purchase shares of Common Stock and 1,357,300
shares issuable upon the exercise of stock options to purchase shares of
Common Stock held by executive officers and directors which are
exercisable at May 30, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities ("10% of Class Stockholders") to file with
the Securities and Exchange Commission (the "SEC") reports of ownership on Form
3 and reports on changes in ownership on Form 4 or Form 5. Such executive
officers, directors and 10% of Class Stockholders are also required by SEC rules
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that, through the Record
Date, its executive officers, directors and 10% of Class Stockholders complied
with all applicable Section 16(a) filing requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in January of 1993 and is
currently composed of Dr. Burger and Dr. Zurr. Dr. Burger is also a director of
the Company and the President and Chief Executive Officer of AVI BioPharma, Inc.
Dr. Zurr is also a director of the Company and the President and Chief Executive
Officer of Quark Biotech, Inc. Dr. Rubinfeld is a member of the Boards of
Directors of Quark Biotech, Inc. and AVI BioPharma, Inc., and serves on the
compensation committee of AVI BioPharma, Inc. No member of the Compensation
Committee is or was formerly an officer, employee or consultant of the Company.
11
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four other
most highly compensated executive officers (collectively, the "Named Officers")
for services rendered to the Company in all capacities during the last three
fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------ -------------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(2) BONUS ($) OPTIONS (#) ($)
- -------------------------------------- --------- --------- --------------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Rubinfeld, Ph.D. (1)........... 1998 350,000 7,500 158,800 200,000 4,800(3)
President and Chief Executive 1997 286,250 7,312 159,000 400,000 4,800
Officer 1996 250,000 -- 312,500 500,000 41,430
Rajesh Shrotriya, M.D................. 1998 187,775 5,812 4,800 13,500 4,800(3)
Executive Vice President and Chief 1997 171,667 727 4,700 135,000 122,397
Scientific Officer 1996 N/A N/A N/A N/A N/A
Luigi Lenaz, M.D. (4)................. 1998 162,400 -- 4,200 50,000 4,800(3)
Senior Vice President of Clinical 1997 40,000 -- 15,000 75,000 --
Research and Medical Affairs 1996 N/A N/A N/A N/A N/A
Frank Brenner (5)..................... 1998 114,695 -- 24,000 1,000 4,461(3)
Vice President of Sales 1997 110,500 -- 32,900 -- 3,566
1996 112,000 -- 5,400 -- 3,750
Frederick L. Grab, Ph.D. (6).......... 1998 106,575 -- 2,800 7,000 3,314(3)
Vice President of Pharmaceutical 1997 104,800 -- 3,789 -- 9,783(7)
Operations 1996 61,029 -- -- 70,000 --
</TABLE>
- ------------------------
(1) Dr. Rubinfeld's amended Employment Agreement provides for an annual base
salary of $350,000 (increased from $250,000 effective October 1, 1997) and a
minimum annual performance bonus (a "Minimum Bonus") which the Board or its
Compensation Committee has set at $150,000 and which may be drawn in advance
from the ensuing year. In 1996, Dr. Rubinfeld was paid a bonus of $312,500,
which included his Minimum Bonus for 1996 and a draw upon his entire Minimum
Bonus for 1997. In 1997, he was paid a bonus of $159,000, which included a
draw upon his entire Minimum Bonus for 1998. In 1998 he was paid $158,800
which included the balance of his total 1998 bonus which the Compensation
Committee set at $300,000.
(2) Represents use of Company leased vehicles.
(3) Represents 401(k) contribution.
(4) Dr. Lenaz joined the Company in October 1997.
(5) Mr. Brenner resigned the position of Vice President of Sales in January
1999. He remains an employee of SuperGen.
(6) Dr. Grab joined the Company in July 1996.
(7) Includes 401(k) contribution of $3,150 and relocation reimbursement of
$6,633.
12
<PAGE>
OPTION GRANTS IN 1998
The following table shows, as to the Named Officers, information concerning
stock options granted during 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM($)(2)
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION --------------------
NAME GRANTED(1) FISCAL YEAR(1) SHARE($) DATE 5% 10%
- ------------------------------------------- ----------- ----------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph Rubinfeld, Ph.D..................... 100,000 14.8% 14.500 05/07/08 911,897 2,310,927
100,000 14.8% 5.875 09/02/08 369,476 936,324
Rajesh Shrotriya, M.D...................... 13,500 2.0% 5.875 09/02/08 49,879 126,404
Luigi Lenaz, M.D........................... 15,000 2.2% 6.500 12/22/08 61,317 155,390
25,000 3.7% 13.375 01/26/08 210,287 532,908
10,000 1.5% 5.875 09/02/08 36,948 93,632
Frank Brenner.............................. 1,000 0.1% 5.875 09/02/08 3,695 9,363
Frederick L. Grab, Ph.D.................... 7,000 1.0% 5.875 09/02/08 25,863 65,543
</TABLE>
- ------------------------------
(1) The Company granted options to acquire 675,128 shares to employees in 1998.
(2) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which is equal to the exercise price of options
granted in 1998, assuming that the stock appreciates in value from the date
of grant until the end of the option term at the annual rates specified (5%
and 10%). Potential Realizable Value is net of the option exercise price.
The assumed rates of appreciation are specified in rules of the SEC and do
not represent the Company's estimate or projection of future stock price.
Actual gains, if any, resulting from stock option exercises and Common Stock
holdings are dependent on the future performance of the Common Stock and
overall stock market conditions, as well as the option holders' continued
employment through the exercise/vesting period. The amounts reflected in
this table may never be achieved.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth, as to the Named Officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of December 31, 1998. Also reported are values
for unexercised "in-the-money" options, which values represent the positive
spread between the respective exercise prices of outstanding stock options and
the fair market value of the Company's Common Stock as of December 31, 1998. No
options were exercised by the Named Officers in 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-MONEY
NUMBER OF SECURITIES UNDERLYING OPTIONS AT
UNEXERCISED OPTIONS AT FISCAL YEAR END (1)
FISCAL YEAR END ---------------------------------
---------------------------------- EXERCISABLE
NAME EXERCISABLE (#) UNEXERCISABLE (#) ($) UNEXERCISABLE ($)
- ------------------------------------------------- --------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Joseph Rubinfeld, Ph.D........................... 739,166 360,834 1,557,188 405,313
Rajesh Shrotriya, M.D............................ 74,646 73,854 4,556 41,006
Luigi Lenaz, M.D................................. 16,625 108,375 3,375 71,625
Frank Brenner.................................... 54,975 4,025 467,076 16,319
Frederick L. Grab, Ph.D.......................... 47,367 29,633 2,363 21,263
</TABLE>
- ------------------------------
(1) The value of underlying securities is based on the $9.25 per share closing
price of the Company's Common on December 31, 1998 (the last market trading
day in 1998), minus the aggregate exercise price.
13
<PAGE>
EMPLOYMENT AGREEMENTS
We maintain an employment agreement with Joseph Rubinfeld (the "Employment
Agreement"). The Employment Agreement, as restated January 1, 1998, provides for
his employment as President and Chief Executive Officer at an annual base salary
of at least $350,000 commencing October 1, 1997 and an annual minimum
performance bonus ("Minimum Bonus"), which Minimum Bonus was set by the Board or
its Compensation Committee at $150,000 for 1996, 1997, 1998, and 1999, with the
added condition that in each of such years Dr. Rubinfeld be allowed to draw
against the Minimum Bonus for the ensuing year. As an additional incentive,
under the terms of the Employment Agreement, we issued Dr. Rubinfeld an option
to purchase up to 500,000 shares of Common Stock at a per share exercise price
of $6.00. Of the shares subject to this option, twenty-five percent (25%) were
vested and exercisable as of March 12, 1996 and an additional 1/36th of the
remaining shares vested and became exercisable at the end of each month
thereafter. This option vested in full in March 1999. The Employment Agreement
provides for an employment term through December 31, 1999.
The Employment Agreement provides for annual adjustments to compensate for
changes in the cost of living, and such additional salary or incentive
compensation as the Compensation Committee of the Board may determine from time
to time. The Employment Agreement provides for participation in our employee
benefit plans and such other plans as we may institute for the benefit of our
executive employees.
We entered into an employment agreement with Frank Brenner dated February 1,
1994, which provided for his employment as Vice President, Marketing and Sales,
at an annual salary of at least $85,000 and an employment term through December
31, 1997, which was the date of termination of this agreement. Mr. Brenner
continued to serve the Company in the capacity of Vice President of Sales until
he resigned that position in January 1999. He remains an employee of SuperGen.
CERTAIN TRANSACTIONS
INVESTMENT BY TAKO VENTURES, LLC. On June 17, 1997, we entered into an
agreement with Tako Ventures, LLC ("Tako"), an investment entity controlled by
Lawrence J. Ellison, a director of the Company, for a private placement in our
Common Stock (the "Tako Agreement"). Under the Tako Agreement, Tako paid $15.3
million for 1,700,000 shares of unregistered restricted common stock. We also
issued Tako an option to purchase up to 850,000 shares of common stock at $9.00
per share and warrants to acquire up to 1,275,000 shares of common stock at
$13.50 per share until June 2007. On November 18, 1997, Tako exercised its
option and purchased 850,000 shares of common stock for a total purchase price
of $7,650,000. The initial purchase of shares under the Tako Agreement reflected
a discount to market of approximately 20% using the market price of SuperGen
common stock of $11.25 on April 2, 1997 (the date terms were established for the
agreement). The market price of SuperGen common stock on June 17, 1997, the
execution date of the Tako Agreement, was $13.25. We have calculated the
aggregate value of the options and warrants issued in this transaction, using
the Black Scholes valuation model, to be approximately $6.7 million.
Pursuant to the terms of the Tako Agreement, Mr. Ellison became a director
of SuperGen in June 1997. As long as Tako owns not less than 850,000 shares of
common stock, the Board of Directors will nominate and recommend Mr. Ellison or
another representative of Tako for election as director.
The Tako Agreement contains provisions regarding sales or issuances of stock
below a set minimum price of $9.00 during a two-year period commencing June
1997. Sales or issuances of stock below the set minimum price trigger
adjustments to the exercise price of the Tako warrants and the issuance of
additional shares of common stock, at no cost to Tako. As a result of a December
1998 private placement of 460,000 shares of unregistered restricted common stock
to a third party investor at a price below the set minimum price, we issued an
additional 107,333 shares to Tako and reduced the warrant exercise price for
230,000 shares from $13.50 to $10.35.
14
<PAGE>
In January 1999, Tako exercised its pre-emptive rights pursuant to the Tako
Agreement and purchased 61,350 shares of unregistered restricted common stock
for a total purchase price of $400,002. This transaction reflected a discount of
4% to a weighted average stock price for a specific period of time. We granted
registration rights in connection with this transaction.
In March 1999, we executed a secured promissory note with Tako under which
we may draw up to $5 million through December 31, 1999. In connection with this
note, we granted Tako a warrant to acquire up to 500,000 shares of unregistered
restricted common stock at $11.00 per share until March 25, 2004. We will
amortize the estimated value of this warrant, $2 million, through non-cash
charges to operations in 1999.
CONSULTING AGREEMENTS. We maintain an agreement for consulting services in
the area of corporate development with one director, Julius A. Vida. During
1998, payments under this agreement totaled $24,000.
AMUR PHARMACEUTICALS, INC. INVESTMENT. We own 519,665 shares of common
stock of AMUR Pharmaceuticals, Inc. a Delaware corporation ("Amur"), as well as
99,665 shares of Series B Preferred Stock purchased in February 1998 for
approximately $200,000. We hold 9.2% of the outstanding voting stock of Amur and
we have rights to purchase an additional 300,335 shares of Amur Common Stock,
which rights expire July 31, 2001. Dr. Rubinfeld is a former director of Amur
and has rights to purchase an aggregate of 42,000 shares of Amur Common Stock.
QUARK BIOTECH, INC. INVESTMENT. In May 1997, we made an equity investment
of $500,000 in Series C Preferred Stock of Quark Biotech, Inc. ("QBI"), a
biotechnology company, representing less than 1% of the outstanding stock of
QBI, and in September 1997 were issued a warrant to purchase 31,250 shares of
Series D Preferred Stock. Dr. Rubinfeld, Mr. Ellison (through Tako Ventures,
LLC), and Dr. Zurr, directors and stockholders of SuperGen, beneficially own an
aggregate of 11,924,413 shares, or approximately 63%, of QBI as of the Record
Date. Dr. Rubinfeld, Mr. Ellison, and Dr. Zurr are also directors of QBI. Dr.
Zurr is the President and Chief Executive Officer of QBI.
PROPERTY LEASE WITH QBI. In November 1997, we leased approximately
one-third of the laboratory square footage at the SuperGen Pharmaceutical
Research Institute to QBI for $3,000 per month for three years, plus its pro
rata share of specified common expenses. We also completed building and
laboratory improvements and purchased furniture on behalf of QBI for a total of
approximately $750,000, of which $300,000 was reimbursed by QBI in 1997 and of
which the balance is to be reimbursed by QBI.
OPTION GRANTS TO EXECUTIVE OFFICERS. In 1998, we granted stock options
under the 1993 Plan to the following executive officers:
<TABLE>
<CAPTION>
PER SHARE
NO. OF EXERCISE
OFFICER DATE OF GRANT SHARES PRICE
- ------------------------------------------------- ------------- ------------ -------------
<S> <C> <C> <C>
Frank Brenner.................................... 09/02/98 1,000 $ 5.875
Frederick Grab................................... 09/02/98 7,000 5.875
R. David Lauper.................................. 09/02/98 7,500 5.875
Luigi Lenaz...................................... 01/26/98 25,000 13.375
Luigi Lenaz...................................... 09/02/98 10,000 5.875
Luigi Lenaz...................................... 12/22/98 15,000 6.500
Joseph Rubinfeld................................. 05/07/98 100,000 14.500
Joseph Rubinfeld................................. 09/02/98 100,000 5.875
Rajesh Shrotriya................................. 09/02/98 13,500 5.875
Simeon Wrenn..................................... 09/02/98 6,950 5.875
</TABLE>
15
<PAGE>
The per share exercise price of each of the above options is equal to the
closing price of the Company's Common Stock on the date of grant. The options
granted to Mr. Brenner, Dr. Grab, Dr. Lauper, Dr. Shrotriya, and Dr. Wrenn vest
ratably over 30 months from the date of the grant. The 25,000 share option
granted to Dr. Lenaz on January 27, 1998 vests as to 25% of the shares on
January 27, 1999, with the balance of the shares vesting ratably over three
years. The 10,000 share option granted to Dr. Lenaz on September 2, 1998 vests
ratably over 30 months from the date of the grant. The 15,000 share option
granted to Dr. Lenaz on December 22, 1998 vests ratably over three years from
the date of the grant. The 100,000 share option granted to Dr. Rubinfeld on May
7, 1998 vests as to 25% of the shares on November 14, 1997, with the balance of
the shares vesting ratably over three years. The 100,000 share option granted to
Dr. Rubinfeld on September 2, 1998 vests ratably over three years from the date
of the grant.
MANAGEMENT INDEBTEDNESS. In June 1998, the Company loaned $85,000 to Dr.
Shrotriya. This term loan, with an annual interest rate of 5.5% is due in full
June 30, 1999. At December 31, 1998 and March 31, 1999 the balance of this loan,
including interest, was $88,000 and $89,000, respectively.
On September 8, 1998 the Company loaned $503,000 to Dr. Rubinfeld. This loan
took the form of a promissory note with an annual interest rate of 5.5%. The
loan balance and accrued interest thereupon, in the total amount of $505,000 was
paid in full on September 30, 1998. At March 31, 1999, the loan balance is zero.
EMPLOYMENT OF CERTAIN FAMILY MEMBERS. Among employees who earned more than
$60,000 in 1998, three are immediate family members of Dr. Rubinfeld. The
following table sets forth certain information concerning their relationships
and annual aggregate salary and bonus amounts for the year ending December 31,
1998.
<TABLE>
<CAPTION>
ANNUAL
EMPLOYEE NAME RELATIONSHIP COMPENSATION
- ------------------- --------------------------------------------------------- -------------
<S> <C> <C>
Joseph Iovino Son-in-law of Dr. Rubinfeld $ 81,765
Kevin Rolens Son-in-law of Dr. Rubinfeld $ 72,950
Steven Rubinfeld Son of Dr. Rubinfeld $ 114,495
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board (the "Committee") consists of
directors Denis Burger and Daniel Zurr, neither of whom is an employee or
officer of the Company. The Committee was established in January 1996 and is
responsible for reviewing and making recommendations to the Board regarding all
forms of compensation to be provided to the executive officers and directors of
SuperGen, including stock compensation and loans, and all bonus and stock
compensation to all employees. The goal of the Committee is to ensure that our
compensation practices are sufficient to attract the necessary talent to enable
growth from a development stage company into one with commercialized products.
COMPENSATION COMMITTEE PURPOSES
The Compensation Committee of the Board serves as an administrative arm of
the Board to make decisions on behalf of the Board with respect to all forms of
compensation to executive officers, and all bonus and stock compensation to
employees.
Compensation for officers and key employees includes both cash and equity
elements. Cash compensation consists of base salary, which is determined on the
basis of the level of responsibility, expertise and experience of the employee,
taking into account competitive conditions in the industry. In addition, cash
bonuses may be awarded to officers and other key employees. Such bonuses are
based on accomplishment of designated Company goals.
16
<PAGE>
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of SuperGen are eligible to
participate in the 1993 Plan, which was adopted prior to our initial public
offering in March 1996. The 1993 Plan permits the Board or a committee
designated by the Board to grant stock options to employees on such terms as the
Board or such committee may determine. Employee option grants typically vest
over a four-year period and thus require the employee's continuing efforts. The
Committee believes that it is in the stockholders' interests to link employee
compensation as closely as possible to equity appreciation and thus to share
with the employees the benefits of their efforts on behalf of our success. See
"Certain Transactions--Option Grants to Executive Officers."
DESCRIPTION OF 401(K) PLAN
We also maintain a 401(k) Plan to provide retirement benefits through tax
deferred salary deductions for all employees. We may make discretionary
contributions, which will be allocated based upon the relative compensation of
each participant with at least 1,000 hours of service during the plan year and
who are employed on the last day of the plan year. Company contributions vest
ratably over five years. For 1998, we intend to make a discretionary
contribution at the rate of 3% of each eligible participant's salary as defined.
1998 EXECUTIVE COMPENSATION
Executive compensation for 1998 included base salary, cash bonuses,
incentive stock option grants and other compensation. We issued cash bonuses in
recognition of employee's prior service and contributions towards the
achievement of Company goals.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1998
The compensation for Dr. Rubinfeld for 1998 was intended to reward him for
increasing stockholder value. It included a base salary of $350,000 per annum
adjusted for changes in the cost of living and an option to purchase 100,000
shares of SuperGen stock at an exercise price $14.50 per share granted on May 7,
1998, vesting as to 25% of the shares on November 14, 1997 with the balance of
the shares vesting ratably over three years. In addition, Dr. Rubinfeld receives
a Minimum Bonus which was set by the Board or its Compensation Committee at
$150,000 for each of 1996, 1997, 1998 and 1999, with the added condition that in
each of such years Dr. Rubinfeld be allowed to draw against the Minimum Bonus
for the ensuing year. In 1997, Dr. Rubinfeld was paid a bonus of $159,000, which
included a draw of $150,000 upon his entire Minimum Bonus for 1998. The
Compensation Committee set his total 1998 bonus at $300,000 and the balance of
the total 1998 bonus due him of $150,000 was paid in 1998. See "Executive
Officer Compensation--Employment Agreements."
SUMMARY
The Compensation Committee advises the Board regarding our cash and equity
incentive programs for the purpose of attracting and retaining highly skilled
executives who will promote our business goals and providing incentive for these
persons to achieve goals which are intended to build long-term stockholder
value.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Denis Burger, Chairman
Daniel Zurr
17
<PAGE>
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares our cumulative total stockholder return with
those of the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index. The
graph assumes that $100 was invested on March 13, 1996 (the effective date of
the Company's initial public offering) in the Company's Common Stock and on
February 29, 1996 in the Nasdaq Composite Index and the Nasdaq Pharmaceutical
Index, including reinvestment of dividends. Note that historic stock price
performance is not necessarily indicative of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SUPERGEN, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ PHARMACEUTICALS
<S> <C> <C> <C>
3/13/96 100 100 100
12/31/96 288 119 94
12/31/97 353 146 97
12/31/98 218 203 124
</TABLE>
18
<PAGE>
OTHER MATTERS
We know of no other matters to be submitted to the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to vote the shares they represent as the Board
may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are therefore urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
THE BOARD OF DIRECTORS
San Ramon, California
April 8, 1999
19
<PAGE>
SUPERGEN, INC.
1993 STOCK OPTION PLAN
(AS AMENDED THROUGH FEBRUARY 20, 1999)
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions
of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means SuperGen, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services.
A-1
<PAGE>
(i) "CONTINUOUS STATUS AS A DIRECTOR OR CONSULTANT" means that the
employment relationship, directorship or consulting relationship with the
Company, any Parent, or Subsidiary, is not interrupted or terminated.
Continuous Status as a Director or Consultant shall not be considered
interrupted in the case of (i) any leave of absence approved by the Company
or (ii) transfers between locations of the Company or between the Company,
its Parent, any Subsidiary, or any successor. A leave of absence approved by
the Company shall include sick leave, military leave, or any other personal
leave approved by an authorized representative of the Company. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
A-2
<PAGE>
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option or Stock Purchase Right grant. The
Notice of Grant is part of the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option or
Stock Purchase Right.
(w) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option or Stock Purchase Right.
(x) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this SuperGen, Inc. 1993 Stock Plan.
(z) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 below.
(aa) "RESTRICTED STOCK PURCHASE AGREEMENT" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(bb) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
A-3
<PAGE>
(cc) "SECTION 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(dd) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 3,850,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan. For purposes of the preceding sentence, voting rights
shall not be considered a benefit of Share ownership.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) SECTION 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) RULE 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
A-4
<PAGE>
(iv) OTHER ADMINISTRATION. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(n) of the Plan;
(ii) to select the Employees, Directors and Consultants to
whom Options and Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Stock Purchase Rights may be exercised (which may be based
on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
A-5
<PAGE>
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an Optionee
to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable;
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees, Directors and Consultants. Incentive Stock Options may
be granted only to Employees.
6. LIMITATIONS.
(a) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
employment relationship, directorship or consulting relationship with the
Company, nor shall they interfere in any way with the Optionee's right or the
Company's right to terminate such employment relationship, directorship or
consulting relationship at any time, with or without cause.
A-6
<PAGE>
(c) The following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees, Directors and Consultants:
(i) No Employee, Director or Consultant shall be granted, in
any fiscal year of the Company, Options and Stock Purchase Rights to purchase
more than 500,000 Shares.
(ii) In connection with his or her initial service with the
Company, an Employee, Director or Consultant may be granted Options and Stock
Purchase Rights to purchase up to an additional 200,000 Shares which shall not
count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option or Stock Purchase Right is cancelled in the
same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 13), the cancelled Option or
Stock Purchase Right will be counted against the limits set forth in subsections
(i) and (ii) above. For this purpose, if the exercise price of an Option or
Stock Purchase Right is reduced, the transaction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant of a new Option
or Stock Purchase Right.
7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 19 of the
Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of
A-7
<PAGE>
stock of the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the
date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
A-8
<PAGE>
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT, CONSULTING RELATIONSHIP OR
DIRECTORSHIP. Upon termination of an Optionee's Continuous Status as an
Employee, Director or Consultant, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Notice of Grant, and only to the extent
that the Optionee was entitled to exercise it at the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Notice of Grant). In the absence of a specified time in the Notice of
Grant, the Option shall remain exercisable for three (3) months following the
Optionee's termination. In the case of an Incentive Stock Option, such period
of time for exercise shall not exceed three (3) months from the date of
termination. If, on the date of termination, the Optionee is
A-9
<PAGE>
not entitled to exercise the Optionee's entire Option, the Shares covered by
the unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
Notwithstanding the above, in the event of an Optionee's change in
status from Consultant or Director to Employee or Employee or Director to
Consultant, an Optionee's Continuous Status as a Director or Consultant shall
not automatically terminate solely as a result of such change in status.
However, in such event, an Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option three months and one day following such
change of status from an Employee to a Consultant.
(c) DISABILITY OF OPTIONEE. In the event that an Optionee's
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Optionee's Disability, the Optionee may exercise his or her Option at any
time within twelve (12) months from the date of such termination, but only to
the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing, by means of a Notice of Grant, of the terms, conditions and
A-10
<PAGE>
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer, which shall in no event exceed six (6)
months from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(d) RIGHTS AS A SHAREHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option
or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in
A-11
<PAGE>
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall have the right to exercise
the Option or Stock Purchase Right as to all of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If an Option or Stock
Purchase Right is exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee that
the Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
A-12
<PAGE>
14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Sections 162(m) or 422 of the Code (or any successor rule or statute or
other applicable law, rule or regulation, including the requirements of any
exchange or quotation system on which the Common Stock is listed or quoted).
Such shareholder approval, if required, shall be obtained in such a manner and
to such a degree as is required by the applicable law, rule or regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of
A-13
<PAGE>
any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered
by an Option or Stock Purchase Right exceeds, as of the date of grant, the
number of Shares which may be issued under the Plan without additional
shareholder approval, such Option or Stock Purchase Right shall be void with
respect to such excess Optioned Stock, unless shareholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 15(b) of the Plan.
18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
A-14
<PAGE>
- -------------------------------------------------------------------------------
SUPERGEN, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SuperGen, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, each dated April 8, 1999 and hereby appoints Joseph
Rubinfeld, its proxy and attorney-in-fact, with full power of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1999 Annual Meeting of Stockholders of SuperGen, Inc. to be held on
Wednesday, May 5, 1999, at 2:00 p.m. local time, at the San Ramon Marriott,
2600 Bishop Drive, San Ramon, CA 94583 and at any adjournment(s) thereof,
and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set
forth on the reverse side, and, in their discretion, upon such other matter
or matters which may properly come before the meeting and any adjournment(s)
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, "FOR" EACH PROPOSAL LISTED, AND AS SAID PROXY DEEMS ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE OTHER SIDE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- -------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example /X/
1. ELECTION OF DIRECTORS:
Nominees: Joseph Rubinfeld, Denis Burger, Lawrence J. Ellison, Julius A.
Vida, Daniel Zurr
FOR WITHHELD
/ / / /
/ /
---------------------------------------
For all nominees except as noted above
2. PROPOSAL TO RATIFY AND APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
1993 STOCK OPTION PLAN INCREASING THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY 600,000 SHARES TO 3,850,000 SHARES:
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999:
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, upon such other matter or matters which may properly
come before the meeting and any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, "FOR" EACH PROPOSAL LISTED, AND AS SAID PROXY DEEMS ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Signature(s)______________________________ Dated___________, 1999
This Proxy should be marked, dated, signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
