<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 sections 240.14a-11(c) or 240.14a-12
La Jolla Pharmaceutical Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
[LA JOLLA PHARMACEUTICAL LOGO]
----------------------------
LA JOLLA PHARMACEUTICAL COMPANY
6455 NANCY RIDGE DRIVE
SAN DIEGO, CALIFORNIA 92121
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 11, 2000
The Annual Meeting of Stockholders of La Jolla Pharmaceutical Company,
a Delaware corporation (the "Company") will be held at the Company's offices at
6455 Nancy Ridge Drive, San Diego, California 92121, on Thursday, May 11, 2000,
at 10:00 a.m. for the following purposes:
1. To elect two Class I directors to the Board of Directors who will
serve until the 2003 annual meeting of stockholders and until their successors
are duly elected and qualified.
2. To consider and vote on a proposal to amend the Company's 1994 Stock
Incentive Plan to increase by 1,000,000 (subject to antidilution adjustments
specified in the plan) the total number of shares of the Company's common stock
that may be issued under the plan.
3. To consider and vote on a proposal to amend the Company's 1994 Stock
Incentive Plan to increase the annual limit on the amount of shares available
under certain awards granted to a participant from 250,000 to 400,000.
4. To consider and vote on a proposal to amend the Company's 1995
Employee Stock Purchase Plan to increase by 200,000 (subject to antidilution
adjustments specified in the plan) the total number of shares of the Company's
common stock that may be issued under the plan.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
March 17, 2000 as the record date for determining stockholders entitled to
notice of the annual meeting and to vote at the annual meeting.
All stockholders are cordially invited to attend the meeting. You are
urged to sign, date and complete the enclosed proxy card and return it promptly
in the enclosed envelope even if you plan to attend the meeting. If you attend
the meeting and wish to vote your shares in person, you may do so even if you
have signed and returned your proxy card.
By order of the Board of Directors
Gail A. Sloan
Secretary
San Diego, California
April 7, 2000
<PAGE> 3
LA JOLLA PHARMACEUTICAL COMPANY
6455 NANCY RIDGE DRIVE
SAN DIEGO, CALIFORNIA 92121
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 11, 2000
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of La Jolla Pharmaceutical Company, a
Delaware corporation (the "Company"), for use at the Company's 2000 Annual
Meeting of Stockholders to be held on Thursday, May 11, 2000 at 10:00 a.m. and
at any and all postponements and adjournments of the meeting. The meeting will
be held at the Company's offices at 6455 Nancy Ridge Drive, San Diego,
California 92121. This proxy statement and the accompanying proxy card will be
first mailed to stockholders on or about April 7, 2000.
The cost of preparing, assembling and mailing these proxy materials and
the cost of soliciting proxies will be paid for by the Company. The Company will
pay brokers or other persons holding stock in their names or the names of their
nominees for the reasonable expenses of forwarding soliciting material to their
principals. Proxies may be solicited in person or by telephone, telefax or other
electronic means by personnel of the Company who will not receive any additional
compensation for such solicitation. In addition, the Company has engaged
MacKenzie Partners, Inc. to assist in soliciting proxies for a fee of
approximately $5,000 plus reimbursement of reasonable out-of-pocket expenses.
VOTING
The close of business on March 17, 2000 has been fixed as the record
date for the determination of stockholders entitled to notice of the meeting and
to vote at the meeting. On that date there were 24,391,155 shares of the
Company's common stock outstanding. Each share is entitled to one vote on any
matter that may be presented for consideration and action by the stockholders at
the meeting. The holders of a majority of the shares of common stock outstanding
on the record date and entitled to be voted at the meeting, present in person or
by proxy, will constitute a quorum for the transaction of business at the
meeting and any adjournments and postponements thereof.
Shares abstained or subject to a broker non-vote are counted as present
for the purpose of determining the presence or absence of a quorum for the
transaction of business. For proposals other than the election of directors,
abstentions are counted in tabulations of the votes cast on a proposal presented
to stockholders and generally have the same effect as a vote against the
proposal, whereas broker non-votes are not counted for purposes of determining
whether a proposal has been approved. With regard to the election of directors,
votes may be cast in favor of the director or withheld. Because directors are
elected by plurality, abstentions from voting and broker non-votes will be
entirely excluded from the vote and will have no effect on its outcome. If a
quorum is present at the meeting, the nominees receiving the greatest number of
votes (up to two directors) will be elected.
Each proxy submitted by a stockholder will, unless otherwise directed
by the stockholder in the proxy, be voted in favor of:
Proposal 1 Election of the two director nominees named in this proxy
statement;
<PAGE> 4
Proposal 2 Amendment of the Company's 1994 Stock Incentive Plan, as
amended, to increase by 1,000,000 shares (subject to
antidilution adjustments specified in the Plan) the total
number of shares of the common stock that may be issued under
this plan; and
Proposal 3 Amendment of the Company's 1994 Stock Incentive Plan, as
amended, to increase from 250,000 to 400,000 shares the annual
limit on the amount of shares available under certain awards
granted to a participant; and
Proposal 4 Amendment of the Company's 1995 Employee Stock Purchase Plan
to increase by 200,000 shares (subject to antidilution
adjustments specified in the Plan) the total number of shares
of common stock that may be issued under this plan.
In addition, the persons acting as proxies will cast their votes in
their discretion for any additional matters that are properly brought up for
consideration at the meeting. If you submit a proxy, your shares will be voted
according to your direction. You have the power to revoke your proxy at any time
before it is voted at the meeting by submitting a written notice of revocation
to the Secretary of the Company or by filing with the Company a valid proxy
bearing a later date. Your proxy will not be voted if you attend the meeting and
elect to vote your shares in person.
The Board of Directors reserves the right to withhold any proposal
described in this proxy statement from a vote at the meeting if the Board of
Directors deems a vote on such proposal to be contrary to the best interests of
the Company and its stockholders. In that event, the proposal withheld will be
neither adopted nor defeated.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's certificate of incorporation was amended in 1999 to
provide for a board of directors divided into three classes, each as nearly
equal in number as possible. The terms for each class are staggered over a
three-year period. This year, the term of the directors in Class I expires.
Accordingly, two directors will be elected at the annual meeting.
Both of the nominees for election as directors at the meeting set forth
in the table below are incumbent directors and were elected at the 1999 Annual
Meeting of Stockholders. These nominees have consented to serve as a director if
elected. Unless authority to vote for either of the nominees is withheld in a
proxy, shares represented by proxies will be voted FOR such nominees. In the
event that any of the nominees for director should before the meeting become
unable to serve if elected, shares represented by proxies will be voted for
substitute nominees as may be recommended by the Company's existing Board of
Directors, unless other directions are given in the proxies. Proxies cannot be
voted for more than two directors, the number of nominees herein. To the
Company's knowledge, both nominees will be available to serve.
NOMINEES FOR DIRECTORS
Each of the persons listed below is nominated for election to Class I
of the Board of Directors (to serve three year terms ending at the 2003 annual
meeting and until their respective successors are elected and qualified).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.
THOMAS H. ADAMS, PH.D., 57, has been a director of the Company since
1991. Dr. Adams is the founder and Chairman Emeritus of Genta, Inc., a publicly
held biotechnology company in the field of antisense technology, and, since
September 1998, has been Chairman of the Board and Chief Executive Officer of
Leucadia Technologies, a privately held company in the field of medical devices.
Before assuming the role of Chairman Emeritus of Genta, Inc. in 1997, Dr. Adams
served as Genta, Inc.'s Chief Executive Officer. Before founding Genta in 1989,
Dr. Adams founded Gen-Probe, Inc. in 1984 and served as its Chief Executive
Officer and Chairman until its acquisition by Chugai Biopharmaceuticals, Inc. in
1989. Before founding Gen-Probe and until 1984, Dr. Adams
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<PAGE> 5
was Senior Vice President of Research and Development at Hybritech. Hybritech
was later acquired by Eli Lilly and Co. in 1986. Dr. Adams has also held
management positions at Technicon Instruments and the Hyland Division of Baxter
Travenol, and served as a Director of Biosite Diagnostics, Inc., a publicly held
medical research firm, from 1989 to 1998. In addition, Dr. Adams currently
serves as a Director of Life Technologies, Inc., which is a publicly held
medical research firm. Dr. Adams holds a Ph.D. in Biochemistry from the
University of California, at Riverside.
STEVEN B. ENGLE, 45, serves as Chairman of the Board and Chief
Executive Officer and joined the Company in 1993 as Executive Vice President and
Chief Operating Officer. He assumed the offices of President, Director, and
Secretary in 1994, and became Chief Executive Officer in 1995 and Chairman of
the Board in 1997. He has been a director of the Company since 1994. From 1991
to 1993, Mr. Engle served as Vice President of Marketing and in other senior
management positions while at Cygnus Inc., a publicly held company that develops
drug delivery systems for therapeutic drugs. From 1987 to 1991, he was Chief
Executive Officer of Quantum Management Company, a privately held management
consulting firm serving the pharmaceutical industry. From 1984 to 1987, he was
Vice President of Marketing and Divisional General Manager for Micro Power
Systems, a privately held company that manufactures high technology products
including medical devices. From 1979 to 1984, he was a management consultant at
Strategic Decisions Group and SRI International, where he advised
pharmaceutical, high technology and other companies. Mr. Engle is the Chairman
of BIOCOM, a regional trade association for the biotechnology and medical
devices industries and is a Director of CareLinc Corporation, a privately held
developer of clinical information management. Mr. Engle holds an MSEE and a BSEE
with a focus in biomedical engineering from the University of Texas.
CONTINUING DIRECTORS
CLASS II
Currently serving until the 2001 Annual Meeting
and until his successor is elected and qualified.
ROBERT A. FILDES, PH.D., 61, has been a director of the Company since
1991. Dr. Fildes currently serves as President of SB2, Inc., a privately held
company in the field of antibody technology. From June to December of 1998, Dr.
Fildes served as Chief Executive Officer of Atlantic Pharmaceuticals, a publicly
held company in the field of biotechnology. From 1993 until August 1997, Dr.
Fildes was the Chairman and Chief Executive Officer of Scotgen
Biopharmaceuticals, Inc., a privately held company in the field of human
monoclonal antibody technology. Scotgen Biopharmaceuticals filed for Chapter 7
bankruptcy protection under the federal bankruptcy laws in August of 1997. From
1990 to 1993, Dr. Fildes was an independent consultant in the biopharmaceutical
industry. Dr. Fildes was the President and Chief Executive Officer of Cetus
Corporation from 1982 to 1990. Before his eight years at Cetus, Dr. Fildes was
the President of Biogen, Inc. from 1980 to 1982 and the Vice President of
Operations for the Industrial Division of Bristol-Myers from 1975 to 1980. Dr.
Fildes is currently a Director of Carrington Laboratories, a publicly held
company that develops and manufactures products for wound and skin care, and
Cytovax Biotechnologies and SB2, Inc., privately held companies. Dr. Fildes
holds a D.C.C. degree in Microbial Bio-chemistry and a Ph.D. in Biochemical
Genetics from the University of London.
CLASS III
Currently serving until the 2002 Annual Meeting
and until their respective successors are elected and qualified.
WILLIAM E. ENGBERS, 57, has been a director of the Company since 1991.
Mr. Engbers is the former Director of Venture Capital for Allstate Insurance
Company. Mr. Engbers became a Director of Venture Capital for Allstate Insurance
Company in 1997 after serving as Venture Capital Manager since 1989. During
1999, Mr. Engbers was a consultant to Allstate Insurance Company and Landmark
Partners, Inc. Before joining Allstate, he was a Vice President at Whitehead
Associates, an investment firm, from 1983 to 1987, and Chairman of the Board of
Plant Genetics, Inc., a publicly traded biotechnology company, from 1982 to
1989. Mr. Engbers currently serves as a Director of J. Jill Group, Anthra
Pharmaceuticals, Hawaiian Wireless, Periodontix, Inc. and UroSurge, Inc. and is
President of CLS Holdings, LLC. Mr. Engbers has been the Chairman or Director of
more than two dozen corporations.
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<PAGE> 6
W. LEIGH THOMPSON, M.D., PH.D., 61, has been a director of the Company
since 1996. Dr. Thompson has been President and Chief Executive Officer of
Profound Quality Resources, Ltd., a private healthcare consulting firm which
provides worldwide consulting services to health institutions and manufacturers,
since 1995. From 1982 until 1994, Dr. Thompson was employed by Eli Lilly and
Co., retiring as Chief Scientific Officer. Dr. Thompson was Professor of
Medicine at Case Western Reserve University from 1974 until 1982 and Professor
of Medicine at Indiana University from 1984 to 1995. Dr. Thompson also serves as
a Director of BAS, Inc., DepoMed, Inc., Guilford Pharmaceuticals, Inspire
Pharmaceuticals, Maret Corporation, Medarex, Inc., Ontogeny, Ophidian
Pharmaceuticals, Inc., Orphan Medical, Inc., and Tanabe Research Laboratories
each of which is a medical research firm. Dr. Thompson holds a Ph.D. from the
Medical University of South Carolina and an M.D. from The Johns Hopkins
University.
PROPOSAL 2
AMENDMENT TO 1994 STOCK INCENTIVE PLAN
The maximum number of shares of the Company's common stock that may be
issued pursuant to awards under the Company's 1994 Stock Incentive Plan (the
"Option Plan") is currently 2,500,000, and as of March 17, 2000, options
covering a total of 2,482,852 shares are outstanding or have been exercised
under the Option Plan. Accordingly, only 17,148 shares remain available for new
grants. The Company relies heavily upon the Option Plan to recruit, retain, and
reward qualified employees and directors, and the Company's Board of Directors
has unanimously approved, subject to approval by the Company's stockholders, an
amendment of the Option Plan to make available an additional 1,000,000 shares of
the Company's common stock for option awards (subject to antidilution
adjustments).
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Each of the current directors and each of the executive officers
designated from time to time by the Compensation Committee of the Board of
Directors (the "Committee"), which is the Option Plan's administrative
committee, is eligible to receive awards under the Option Plan. Pursuant to the
Option Plan, each of the directors and executive officers, among others, is
eligible to receive Incentive Awards. Dr. Adams, if re-elected as a director at
the Meeting, will automatically receive a Non-Employee Directors' Option to
purchase up to 5,000 shares of the Company's common stock on May 11, 2000, and
on the dates of future annual meetings if continuing as a director. As the Chief
Executive Officer of the Company, Mr. Engle is not eligible for a Non-Employee
Directors' Option grant.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the shares present or represented
by proxy and entitled to vote at the meeting, at which a quorum representing a
majority of all outstanding shares of common stock of the Company is present and
entitled to vote, is required to approve Proposal 2. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 2.
PROPOSAL 3
AMENDMENT TO THE 1994 STOCK INCENTIVE PLAN
If an award under the Company's 1994 Stock Incentive Plan is intended
to qualify as performance-based compensation for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), then the annual
amount of shares available under awards granted to a participant cannot exceed
250,000 shares. Section 162(m) of the Code imposes a $1 million limit on the
amount of compensation that may be deducted by the Company in any year with
respect to the CEO of the Company and its other four most highly compensated
employees, including deductions attributable to awards under the 1994 Stock
Incentive Plan. The $1 million deduction limit of Section 162(m), however, does
not apply to "performance-based compensation." For awards under the 1994 Stock
Incentive Plan to constitute "performance-based compensation," one requirement
is that the stockholders approve the maximum number of shares for which grants
may be made to any participant during a specified period.
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<PAGE> 7
The current annual limit, which was previously approved by the
Company's stockholders, is 250,000 shares. The Company desires to increase the
annual limit to 400,000 shares and, in order to preserve the deductibility of
compensation expense relating to awards granted under the 1994 Stock Incentive
Plan, is seeking the favorable approval of the Company's stockholders.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Each of the current directors and each of the executive officers is
eligible to participate in the Option Plan. Participation in the Option Plan is
at the discretion of the Committee and accordingly, future participation by
directors, executive officers and other employees under the Option Plan is not
determinable. However, if this proposal is approved, the annual limit provided
to any participant, including the directors and executive officers, would be
raised from 250,000 to 400,000 shares and would be an eligible compensation
expense deduction by the Company under Section 162(m) of the Code.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the shares present or represented
by proxy and entitled to vote at the meeting, at which a quorum representing a
majority of all outstanding shares of common stock of the Company is present and
entitled to vote, is required to approve Proposal 3. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 3.
PROPOSAL 4
AMENDMENT TO THE 1995 EMPLOYEE STOCK PURCHASE PLAN
The maximum number of shares of the Company's common stock that may be
sold and issued under the Company's 1995 Employee Stock Purchase Plan (the
"Purchase Plan") is currently 300,000 shares. As of March 17, 2000, 189,893
shares have been sold and issued under the Purchase Plan and 110,107 shares
remain available for issuance. The Purchase Plan permits qualifying employees of
the Company to purchase shares of the Company's common stock every six months at
a price that is 85% of the fair market value of the common stock at certain
specified dates. The Company uses the Purchase Plan as an incentive to employees
and to encourage employee ownership in the Company. By increasing employee stock
ownership, the Company hopes to align the interests of its employees with the
interests of its stockholders. The Board of Directors has unanimously approved,
subject to stockholder approval, an amendment to the Purchase Plan to make
available an additional 200,000 shares of the Company's common stock for
purchase by qualifying employees (subject to antidilution adjustments).
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Each of the executive officers identified in this proxy statement may
qualify for participation under the Purchase Plan and thus be eligible to
annually purchase up to $25,000 worth of the Company's common stock under the
Purchase Plan at a slight discount below the market price. If Proposal 4 is
approved, additional shares will be available for sale under the Purchase Plan.
The maximum possible annual benefit for each of these executives is
approximately $3,750, assuming the purchase of the maximum number of shares at a
discount of 15% below market price. This estimate may change depending on future
changes to the Internal Revenue Code and resulting changes to the Purchase Plan.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the shares present or represented
by proxy and entitled to vote at the meeting, at which a quorum representing a
majority of all outstanding shares of common stock of the Company is present and
entitled to vote, is required to approve Proposal 4. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 4.
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<PAGE> 8
STOCKHOLDER PROPOSALS
2001 ANNUAL MEETING PROPOSALS
Stockholders who wish to have proposals for action at the Company's
2001 Annual Meeting of Stockholders considered for inclusion in next year's
proxy statement and form of proxy must cause their proposals to be received in
writing by the Company at its address set forth on the first page of this proxy
statement no later than December 6, 2000. Such proposals should be addressed to
the Company's Secretary, and may be included in next year's proxy materials if
they comply with certain rules and regulations promulgated by the Securities and
Exchange Commission.
2000 ANNUAL MEETING PROPOSALS
In addition, the Company's Amended and Restated Bylaws require that a
stockholder give written notice of any proposal or the nomination of a director,
addressed to the Secretary of the Company. Such written notice must be received
by the Secretary not less than 90 days nor more than 120 days prior to the
scheduled Annual Meeting of Stockholders, or if less than 95 days' notice or
prior public disclosure of the date of the scheduled Annual Meeting of
Stockholders is given or made, such written notice must be received by the
Secretary not later than the close of business on the seventh day following the
earlier of the date of the first public announcement of the date of such meeting
and the date on which such notice of the scheduled meeting was mailed. Any
notice to the Secretary regarding a stockholder proposal must include as to each
matter the stockholder proposes to bring before the meeting: (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the Company's books, of the stockholder proposing such
business and any stockholders known by such stockholder to be supporting such
proposal, (c) the class and number of shares of the Company's stock that are
beneficially owned by the stockholder and by any other stockholder known by such
stockholder to be supporting such matter on the date of such stockholder notice,
and (d) any material interest of the stockholder in such business.
Any notice to the Secretary regarding a nomination for the election of
directors must include: (a) the name and address of the stockholder who intends
to make the nomination and of the person or persons to be nominated, (b) the
class and number of shares of the Company's stock that are beneficially owned by
the stockholder and a representation that such stockholder intends to appear in
person or by proxy at the meeting and nominate the person or persons specified
in the notice, (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
persons) pursuant to which the nomination or nominations are to be made by the
stockholder, (d) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the Board, and (e) the consent of each nominee to
serve as a director of the Company if so elected. Nothing in this section shall
be deemed to require the Company to include in its proxy statement or the proxy
relating to any annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the Securities and Exchange
Commission.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the meeting. If any other matters
come before the meeting or any adjournments and postponements thereof, the
persons named in the enclosed proxy will have the discretionary authority to
vote all proxies received with respect to such matters in accordance with their
judgment.
INDEPENDENT PUBLIC AUDITORS
By selection of the Company's Board of Directors, the firm of Ernst &
Young LLP has served as the Company's auditor since its incorporation in 1989.
The Board of Directors has again selected Ernst & Young LLP to serve as the
Company's independent auditors for the fiscal year ending December 31, 2000. One
or more representatives of Ernst & Young LLP are expected to be present at the
meeting and will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
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<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of March 17, 2000 by those known by the
Company to be beneficial owners of more than five percent of the outstanding
shares of the Company's common stock, by each of the current directors, by each
of the executive officers named in the Summary Compensation Table on page 9, and
by all directors and executive officers of the Company as a group. On March 17,
2000, there were 24,391,155 shares of common stock outstanding. The number of
shares beneficially owned is deemed to include shares of the Company's common
stock as to which the beneficial owner solely has or shares investment or voting
power. Unless otherwise stated, and except for voting powers held jointly with a
person's spouse, the persons and entities named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them. All information with respect to beneficial ownership
is based on filings made by the respective beneficial owners with the Securities
and Exchange Commission or information provided to the Company by such
beneficial owners.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Beneficial Owner** Beneficial Ownership(1) Class
--------------------- ----------------------- ----------
<S> <C> <C>
Abbott Laboratories 3,369,604 13.8%
100 Abbott Park Road
Abbott Park, Illinois 60064
Biotech Target SA(2) 2,001,000 8.2%
Swiss Bank Tower
Panama 1
Republic of Panama
State of Wisconsin Investment Board 2,332,500 9.6%
121 East Wilson
Madison, Wisconsin 53707
Alta Partners(3) 1,470,000 6.0%
One Embarcadero Center
Suite 4050
San Francisco, California 94111
Thomas H. Adams, Ph.D.(4) 108,899 *
Mark T. Edgar, Ph.D. -- *
William E. Engbers(4) 94,762 *
Steven B. Engle(5) 865,264 3.5%
Wood C. Erwin -- *
Robert A. Fildes, Ph.D.(6) 143,040 *
Matthew D. Linnik(5) 87,970 *
W. Leigh Thompson, M.D., Ph.D.(7) 88,704 *
Andrew Wiseman(8) 88,390 *
All directors and executive officers
as a group (10 persons)(9) 1,504,978 6.2%
</TABLE>
- ---------------------------
* Less than 1%
** Unless otherwise indicated, the address for each beneficial owner is
care-of La Jolla Pharmaceutical Company, 6455 Nancy Ridge Drive, San Diego,
California 92121.
(1) Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of
1934, as amended. Shares not outstanding that are subject to options or
warrants exercisable by the holder thereof within 60 days of March 17, 2000
are deemed outstanding for the purposes of calculating the number and
percentage owned by such stockholder, but not deemed outstanding for the
purpose of calculating the percentage owned by each other stockholder
listed. Unless otherwise noted, all shares listed as beneficially owned by
a stockholder are actually outstanding.
(2) Wholly owned subsidiary of BB Biotech AG, a Swiss corporation
(3) Includes 913,731 shares held by Alta BioPharma Partners, LP, 521,828 shares
held by La Jolla Chase Partners (Alta Bio), LLC and 34,441 shares held by
Alta Embarcadero BioPharma Partners, LLC as reported in the Schedule 13G
filed with the Securities and Exchange Commission on February 24, 2000.
(4) All shares are issuable upon exercise of stock options.
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<PAGE> 10
(5) Includes 863,280 shares issuable upon exercise of stock options and 500
shares issuable upon exercise of warrants.
(6) Includes 56,875 shares issuable upon exercise of stock options and 2,101
shares issuable upon exercise of warrants.
(7) All shares are issuable upon exercise of stock options. Stock options for
41,334 shares are held by Dr. Thompson's daughter, Mary Linton Bounetheau
Thompson Peters, and are beneficially owned by Dr. Thompson.
(8) Includes 72,545 shares issuable upon exercise of stock options.
(9) Includes 1,373,035 shares issuable upon exercise of stock options and 2,601
shares issuable upon exercise of warrants.
BOARD COMMITTEES AND MEETINGS
The Audit Committee of the Board of Directors currently consists of Mr.
Engbers, Dr. Adams and Dr. Thompson. The Audit Committee performs the following
functions:
o reviews, prior to publication, the Company's annual financial
statements;
o reviews the scope of the current annual audit and fees therefore,
and the results of the prior year's audit;
o reviews the Company's accounting and financial reporting practices;
o reviews the Company's system of internal accounting controls;
o reviews the scope of any other services to be performed by the
independent auditors;
o recommends the retention or replacement of the independent auditors;
o reviews the adequacy of the Company's accounting and financial
personnel resources;
o reviews and considers any other matters relative to the audit of the
Company's accounts and the preparation of its financial statements
and reports that the committee deems appropriate; and
o reviews, acts on and reports to the Board of Directors with respect
to various financial reporting and accounting practices and consults
with the Company's independent auditors and management with respect
thereto.
The Compensation Committee of the Board of Directors currently consists
of Dr. Adams, Dr. Thompson and Dr. Fildes. The Compensation Committee advises
the Board of Directors with respect to various human resource matters, including
compensation, and administers the Company's stock incentive plans.
The Board of Directors acts as a committee of the whole with respect to
nominations for membership on the Board. The Board will consider nominees
recommended by stockholders, and stockholders desiring to make such a
recommendation should submit the name, address, telephone number, and
qualifications of the proposed nominee in writing to the Company's Secretary.
See "Stockholder Proposals," above, for the requirements applicable to
stockholders wishing to make director nominations.
During the Company's fiscal year ended December 31, 1999, there were
five meetings attended in person and five telephonic meetings of the Board of
Directors, one telephonic meeting of the Audit Committee, and two telephonic
meetings of the Compensation Committee. All directors attended at least 80% of
the total Board meetings and the meetings of the committees on which they serve.
8
<PAGE> 11
DIRECTORS' COMPENSATION
Directors who are also employees of the Company receive no extra
compensation for their service on the Board. Non-employee directors receive an
annual retainer of $5,000, fees of $1,000 per Board or committee meeting
attended in person, and $500 per telephonic Board or committee meeting, as well
as reimbursement of reasonable costs associated with attendance at meetings of
the Board and its committees.
Under the Option Plan, each non-employee director of the Company
automatically receives, upon becoming a director, a one-time grant of an option
to purchase up to 40,000 shares of the Company's common stock at an exercise
price equal to the fair market value of a share of the common stock on the date
of the option's grant. The options have a term of ten years and become
exercisable with respect to 25% of the underlying shares on the grant date and
with respect to an additional 25% of the underlying shares on the date of each
of the first three annual stockholders' meetings following the grant date (or,
if an annual meeting occurs within six months after the grant date, then on the
second, third and fourth anniversaries of the grant date), if the recipient is
then continuing as a director for the ensuing year. Each non-employee director
also receives, upon each re-election to the Board, an automatic annual grant of
an option to purchase up to 5,000 shares of the Company's common stock. These
options have a term of ten years and an exercise price equal to the fair market
value of a share of the Company's common stock on the date of grant. These
options vest and become exercisable on the earlier to occur of (a) the first
anniversary of the grant date or (b) immediately prior to the Annual Meeting of
Stockholders of the Company following the grant date, if the director has served
as a director from the grant date to such earlier date. These automatic grants
of options to non-employee directors are referred to herein as "Non-Employee
Directors' Options." In addition, each non-employee director is eligible to
receive Incentive Award options as determined by the Compensation Committee or
the Board. These options vest and become exercisable pursuant to the Option Plan
and the grant.
During the fiscal year ended December 31, 1999, options to purchase a
total of 211,100 shares of the Company's common stock were issued to the
Company's non-employee directors. Of those options, options to purchase 20,000
shares of the Company's common stock were annual grants of Non-Employee
Directors' Options and the remaining options to purchase 191,100 shares of the
Company's common stock were Incentive Awards.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for the last three
fiscal years to: (a) the Company's Chief Executive Officer, (b) the other two
most highly compensated persons who were serving as executive officers of the
Company at the end of the fiscal year ended December 31, 1999 and whose total
annual salary and bonus for that fiscal year exceeded $100,000, and (c) two
additional individuals, Mark Edgar and Wood Erwin, who would have been in the
latter category of most highly compensated executive officers had they still
been serving as executive officers of the Company on December 31, 1999
(collectively, the "Named Executive Officers").
9
<PAGE> 12
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------- ---------------------
Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation($)
- --------------------------- ---- --------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Steven B. Engle 1999 286,347 63,691 250,000 --
Chief Executive Officer and 1998 279,900 -- 150,000 --
Chairman of the Board 1997 246,737 10,000 25,000 --
Mark T. Edgar, Ph.D.(1) 1999 155,468 23,994 -- 95,000(4)
Vice President of Product 1998 178,385 -- 50,000 --
Development and Operations 1997 155,863 -- 19,000 --
Matthew D. Linnik, Ph.D.(2) 1999 161,334 30,389 100,792 --
Executive Vice President of 1998 100,310 10,000 75,000 30,212(6)
Research 1997 -- -- -- --
Wood C. Erwin(3) 1999 127,403 17,196 -- 90,500(5)
Vice President of Finance and 1998 132,141 -- 31,000 --
Chief Financial Officer 1997 110,754 -- 9,000 6,086(6)
Andrew Wiseman, Ph.D. 1999 107,656 884 48,380 --
Senior Director of Business 1998 104,294 -- 12,000 --
Development 1997 95,518 5,000 10,000 --
</TABLE>
- ---------------------------
(1) Dr. Edgar left the Company on September 29, 1999.
(2) Dr. Linnik joined the Company on February 3, 1998. Accordingly, he
received compensation from the Company only for the period from February
3, 1998 to December 31, 1998 in the fiscal year ended December 31, 1998.
(3) Mr. Erwin left the Company on October 29, 1999.
(4) All Other Compensation consisted of severance benefits paid upon
termination.
(5) All Other Compensation consisted of $22,000 for relocation expense and
$68,500 for severance benefits paid upon termination.
(6) All Other Compensation consisted of relocation expense reimbursement.
10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted to the Named Executive Officers during the fiscal year ended December
31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
Potential Realizable Value at
Number % of Total Assumed Annual Rates of Stock
of Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term ($)(4)
Options Employees in Price Expiration -----------------------------
Name Granted(#)(1) Fiscal Year ($/share)(2) Date(3) 5% 10%
---- -------------- ------------ ------------ ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Steven B. Engle 183,675 26.5% 0.484 9/28/09 55,908 141,682
66,325 9.6% 0.344 11/2/09 14,349 36,363
Mark T. Edgar -- 0.0% -- -- -- --
Matthew D. Linnik 17,806 2.6% 0.484 9/28/09 5,420 13,735
74,032 10.7% 0.484 9/28/09 22,534 57,106
8,954 1.3% 0.344 11/2/09 1,937 4,909
Wood C. Erwin -- 0.0% -- -- -- --
Andrew Wiseman 41,018 5.9% 0.484 9/28/09 12,485 31,640
3,064 0.4% 0.484 9/28/09 933 2,363
2,965 0.4% 0.344 11/2/09 641 1,626
1,333 0.2% 0.344 11/2/09 288 731
</TABLE>
- ---------------------------
(1) All options were granted under the Option Plan. The Option Plan is
administered by the Compensation Committee of the Board, which has broad
discretion and authority to construe and interpret the Option Plan and to
modify outstanding options. All options granted vest and become
exercisable pursuant to the Option Plan and the grant between the date of
the grant and September 28, 2002.
(2) The exercise price and tax withholding obligations related to the exercise
may be paid by delivery of already owned shares or offset by the
underlying shares, subject to certain conditions. The exercise price for
each grant is the market price of the Company's common stock on the date
of grant.
(3) All of the options were granted for a term of ten years, subject to
earlier termination upon certain events related to termination of
employment or a change in control of the Company.
(4) The potential realizable values listed are based on an assumption that the
market price of the Company's common stock appreciates at the stated rate,
compounded annually, from the date of grant to the expiration date. The 5%
and 10% assumed rates of appreciation are determined by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate of the future market value of the common stock. Actual gains, if
any, are dependent on the future market price of the Company's common
stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares acquired on
exercise of stock options and the aggregate gains realized on exercise during
the fiscal year ended December 31, 1999 by the Named Executive Officers. The
table also sets forth the number of shares covered by exercisable and
unexercisable options held by such executives on December 31, 1999, and the
aggregate gains that would have been realized had these options been exercised
on that date, even though these options were not exercised, and the
unexercisable options could not have been exercised, on that date.
11
<PAGE> 14
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year End (#) At Fiscal Year End (1)($)
Shares Acquired Value --------------------------- -----------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven B. Engle -- -- 650,501 124,499 750,182 --
Mark T. Edgar -- -- -- -- -- --
Matthew D. Linnik -- -- 52,398 118,435 62,094 145,481
Wood C. Erwin -- -- 18,800 -- -- --
Andrew Wiseman 720 793 73,278 29,257 97,798 21,571
</TABLE>
- ---------------------------
(1) These amounts represent the difference between the exercise price of the
in-the-money options and the market price of the Company's common stock on
December 31, 1999 (the last trading day of 1999). The closing price of the
Company's common stock on that day on the Nasdaq National Market was
$2.531. Options are in-the-money if the market value of the shares covered
thereby is greater than the option exercise price.
EMPLOYMENT AND CONSULTING CONTRACTS
Steven B. Engle has an employment contract with the Company that
provides for a minimum annual salary of $273,000 and entitles him to receive
twelve months severance and up to twelve months of medical, dental and life
insurance coverage in the event of (a) involuntary termination of his employment
by the Company without cause; (b) if a change in control of the Company occurs
and (i) his employment is terminated, (ii) his reporting responsibility changes,
such that he does not report directly to the Board of Directors of the surviving
company on all matters, (iii) he has a material reduction in responsibility,
(iv) he is required to be employed other than in the San Diego area, or (v) any
material breach by the Company or its successor of this Agreement, as amended.
Also, all employee stock options and other performance awards granted to Mr.
Engle before the termination of his employment shall automatically vest and
become fully exercisable as of his termination date and shall remain exercisable
for a period equal to the remaining term of the employee stock option or other
performance award as provided by the applicable plan or grant pursuant to which
the options or awards were granted. If, within one year from the termination of
Mr. Engle's employment, employee stock options granted to any executive officer
or non-employee director of the Company or its successor are repriced, the
Company shall provide similar repricing for all outstanding employee stock
options granted to Mr. Engle before his termination date. If Mr. Engle
terminates for any reason other than under the above circumstances, all employee
stock options granted to him before the termination of his employment shall
remain exercisable for a period of one year from his termination date or such
longer period as provided by the applicable plan or grant pursuant to which the
options were granted. Finally, if an acquisition, merger or reorganization of
the Company occurs with in thirty days of Mr. Engle's termination of employment,
Mr. Engle may be eligible to receive a bonus of $100,000.
Matthew D. Linnik has an employment agreement with the Company that
entitles him to receive nine months severance at his then current base salary
and up to nine months of medical and dental coverage in the event of (a)
involuntary termination of his employment by the Company without cause; (b) if a
change in control of the Company occurs and (i) his employment is terminated,
(ii) his reporting responsibility changes, such that he is no longer a Vice
President of the surviving company with compensation and functional duties
similar to those he had prior to the change in control, (iii) he has a material
reduction in responsibility, or (iv) he resigns because he is required to be
employed more than 50 miles from the Company's headquarters. Also, all employee
stock options and other performance awards granted to Dr. Linnik before the
termination of his employment shall automatically vest and become fully
exercisable as of his termination date and shall remain exercisable for a period
of one year from his termination date or such longer period as provided by the
applicable plan or grant pursuant to which the options were granted.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of three non-employee directors and administers the Company's
executive compensation programs, including the Company's stock incentive plans.
The Company's executive compensation program is designed to provide competitive
levels of base compensation in order to attract, retain and motivate
high-quality employees, tie individual total compensation to individual
performance and the success of the Company, and align the interests of the
Company's executive
12
<PAGE> 15
officers with those of its stockholders. In 1999, the Company's executive
compensation program consisted of base salary, selected bonuses and stock option
grants.
The Committee believes that the Company's ability to execute its drug
discovery programs and successfully bring products to market depends heavily
upon the quality of its top scientific and management personnel. Accordingly,
the Committee attempts to set base salary for the Company's executive officers
at levels that are competitive with compensation paid to top executives of
similarly situated biotechnology companies, and not significantly below cash
compensation available to the Company's key executives through alternative
employment. However, because of the Company's current and historical need to
conserve its cash resources, rewards for Company or individual performance have
generally taken the form of stock-based awards, and, in 1999, limited bonuses.
The Committee administers the Option Plan pursuant to which the Company
may grant various stock-based awards intended to compensate Company personnel
and align the interests of the recipients with those of the Company's
stockholders. To date, only stock options have been granted under the Option
Plan, although the Committee may, in the future, utilize other types of
Incentive Awards available under the Option Plan. The Committee also administers
options previously granted under the Company's 1989 Incentive Stock Option Plan
and 1989 Nonstatutory Stock Option Plan.
Because of the Company's need to conserve cash, the Committee has used
stock options to reward executives for individual and Company performance and to
provide incentives for vigorous pursuit of the Company's goals. In general,
executive officers receive a substantial grant of stock options upon joining the
Company. The Committee believes that these initial grants serve two purposes.
First, they help to make up for any discrepancy between the cash compensation
paid by the Company and salaries and bonuses available from more established
employers who would compete for the services of the Company's executives.
Second, the initial option grants are intended to give the recipients a
meaningful stake in the Company's long-term performance, with any ultimate
realization of significant value from those options being commensurate with
returns to stockholders on investments in the Company's stock.
In addition to initial grants, executive officers are eligible to
receive periodic option grants based upon the performance of the Company and
their individual progress and contributions. Such grants, if any, are determined
by the Committee with the input and recommendation of the Company's Chief
Executive Officer. In determining award levels, the Committee emphasizes Company
performance and the contributions made by individual executives to that
performance. The Committee believes that such a retrospective analysis is most
appropriate and practicable for a development-stage biopharmaceutical enterprise
like the Company, which operates in an uncertain environment and without the
same types of standard measures of performance as are available to more seasoned
companies.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Company faces significant challenges in the coming years and will
rely heavily upon the Chief Executive Officer for leadership, strategic
direction and operational effectiveness. The Company's goals over the next few
years include succeeding in clinical trials of LJP 394 and additional drug
candidates, forming additional strategic alliances, raising additional
financing, and building a strong organization to support the Company's
anticipated growth. The Chief Executive Officer will have ultimate
responsibility for these goals as part of maximizing stockholders' returns on
their investments in the Company and the Committee believes stockholders are
best served if the Chief Executive Officer has significant incentives to meet
these expectations. In February 1999, the Chief Executive Officer received a
bonus of $63,691, primarily in recognition of his leadership in moving the lupus
drug candidate through clinical trials and meeting the needs of our corporate
partner in 1998. In September and November 1999, the Chief Executive Officer
received options to purchase up to 250,000 shares of common stock primarily in
recognition of leading the scientific and business teams in the identification
of important new clinical information that allowed the Company to proceed with
the lupus program, successfully managing the Company through an extensive
reorganization and ultimately increasing the Company's stock value. The
Committee sets the Chief Executive Officer's options and bonus on the basis of
its qualitative evaluation of the Chief Executive Officer's contributions. The
Committee did not attempt to apply any specific quantitative measures to the
Chief Executive Officer's compensation, or to provide any specific dollar value
of option-based compensation
13
<PAGE> 16
to the Chief Executive Officer, due to the difficulty of determining the
long-term value of an investment in the Company's stock.
COMPENSATION COMMITTEE
Thomas H. Adams, Ph.D.
W. Leigh Thompson, M.D., Ph.D.
Robert A. Fildes, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors consists
of Dr. Adams, Dr. Thompson and Dr. Fildes. No current member of the Compensation
Committee is a current or former officer or employee of the Company. There are
no Compensation Committee interlocks between the Company and other entities
involving the Company's executive officers and Board members who serve as
executive officers or Board members of such other entities.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's common stock for the period beginning December 31, 1995 and ending
on December 31, 1999 with the Center for Research in Securities Prices ("CRSP")
Total Return Index for the Nasdaq Stock Market (U.S. Companies) and the CRSP
Total Return Index for Nasdaq Pharmaceutical Stocks (comprising all companies
listed in the Nasdaq Stock Market under SIC 283). The graph assumes that $100
was invested on December 31, 1995 in the Company's common stock and each index
and that all dividends were reinvested. No cash dividends have been declared on
the Company's common stock. The comparisons in the graph are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's common stock.
<TABLE>
<CAPTION>
12/29/1995 12/31/1996 12/31/1997 12/31,1998 12/31/1999
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
LA JOLLA PHARMACEUTICAL COMPANY 100 120 89 90 51
NASDAQ -- US 100 123 151 212 384
NASDAQ -- PHARMACEUTICALS 100 100 104 133 246
RAW VALUES:
LA JOLLA PHARMACEUTICAL COMPANY 5.000 6.000 4.438 4.500 2.531
NASDAQ -- US 345.609 425.222 521.032 732.202 1326.416
NASDAQ -- PHARMACEUTICALS 396.535 397.770 410.733 525.507 976.397
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the directors and
officers of the Company and persons who own more than 10% of the Company's
equity securities are required to report their initial ownership of the
Company's equity securities and any subsequent changes in that ownership to the
Securities and Exchange Commission and the Nasdaq National Market. Specific due
dates for these reports have been established, and the
14
<PAGE> 17
Company is required to disclose in this proxy statement any late filings during
the fiscal year ended December 31, 1999. To the Company's knowledge, based
solely on its review of the copies of such reports required to be furnished to
the Company during the fiscal year ended December 31, 1999, all of these reports
were timely filed.
ANNUAL REPORT
The Company's Annual Report to stockholders for calendar year ended
December 31, 1999 has been mailed to stockholders concurrently with this proxy
statement, but such report is not incorporated herein and is not deemed to be a
part of this proxy solicitation material.
15
<PAGE> 18
PROXY CARD
LA JOLLA PHARMACEUTICAL COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven B. Engle and Gail A. Sloan as proxies
with the power to appoint their substitutes and hereby authorizes them to
represent and vote, as designated below, all of the shares of common stock of La
Jolla Pharmaceutical Company, held by the undersigned on March 17, 2000, at the
Annual Meeting of Stockholders to be held on Thursday, May 11, 2000 or any
adjournment thereof, with like effect as if the undersigned were personally
present and voting upon the following matters.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. THE GIVING OF THIS
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE ANNUAL
MEETING. YOU MAY ALSO SUBMIT TO THE SECRETARY OF THE COMPANY A LATER DATED
REVOCATION OR AMENDMENT TO THIS PROXY ON ANY OF THE ISSUES SET FORTH ABOVE.
<PAGE> 19
Please mark your
[X] votes as in this
example
1. ELECTION OF DIRECTORS:
WITHHOLD
FOR AUTHORITY
[ ] [ ]
ELECT TWO CLASS I DIRECTORS named below to serve until the annual meeting
of stockholders to be held in the year 2003 and until their successors
have been duly elected and qualified.
STEVEN B. ENGLE THOMAS H. ADAMS, PH.D.
To withhold authority to vote for any one or more of the nominees named
above, strike through that/those name(s).
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR the election of the above-named nominees, FOR amendment of the 1994
Stock Incentive Plan and FOR amendment of the ESPP. This proxy confers
discretionary authority with respect to matters not known or determined at
the time of mailing the notice of annual meeting and the enclosed proxy
statement.
2. AMEND THE 1994 STOCK INCENTIVE PLAN to increase the total shares authorized
for issuance under this plan by 1,000,000 to a total of 3,500,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. AMEND THE 1994 STOCK INCENTIVE PLAN to increase the annual limit on the
amount of shares available under awards granted to a participant from
250,000 to 400,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. AMEND THE 1995 EMPLOYEE STOCK PURCHASE PLAN ("ESPP") to increase the total
shares available for sale and issuance under this plan by 200,000 to a total
of 500,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Signature(s) of Stockholder(s)____________________ Dated ___________, 2000
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement furnished herewith and directs that his or her
votes be cast by the above named proxies in the manner directed herein.
Signature should agree with the name(s) printed hereon. Executors,
administrators, trustees, guardians and attorneys should so indicate when
signing. Attorneys should submit powers of attorney.
