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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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<S> <C>
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 Section 240.14a-11(c) or
Section 240.14a-12
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CV THERAPEUTICS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
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<S> <C> <C>
/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.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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CV THERAPEUTICS, INC.
3172 PORTER DRIVE
PALO ALTO, CA 94304
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2000
TO THE STOCKHOLDERS OF CV THERAPEUTICS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CV
Therapeutics, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 16, 2000 at 9:00 a.m. local time at 3172 Porter Drive, Palo Alto,
California for the following purposes:
1. To elect two directors to hold office until the 2003 Annual Meeting of
Stockholders.
2. To approve the Company's 2000 Equity Incentive Plan and the issuance of
up to 1,500,000 shares of common stock under such plan, to replace the
Company's 1992 Stock Option Plan and 1994 Equity Incentive Plan under
which plans an aggregate of approximately 113,000 shares of common stock
reserved for future awards would cease to be available for such purpose.
3. To approve the Company's Non-Employee Directors' Stock Option Plan, as
amended to increase the aggregate number of shares of common stock
authorized for issuance under such plan by 150,000 shares.
4. To approve the Company's Employee Stock Purchase Plan, as amended to
increase the aggregate number of shares of common stock authorized for
issuance under such plan by 75,000 shares and to provide for annual
increases for five years as more fully described in the accompanying
Proxy Statement.
5. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending December 31, 2000.
6. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 22, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
[LOGO]
Alan C. Mendelson
Secretary
Palo Alto, California
April 7, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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CV THERAPEUTICS, INC.
3172 Porter Drive
Palo Alto, CA 94304
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
May 16, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of CV
Therapeutics, Inc., a Delaware corporation ("CV Therapeutics" or the "Company"),
for use at the Annual Meeting of Stockholders to be held on May 16, 2000 at
9:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at 3172 Porter Drive,
Palo Alto, California. CV Therapeutics intends to mail this proxy statement and
accompanying proxy card on or about April 7, 2000 to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
CV Therapeutics will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy card and any additional information furnished to stockholders. Copies
of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of CV
Therapeutics or, at the Company's request, D.F. King & Co., Inc. No additional
compensation will be paid to directors, officers or other regular employees for
such services, but D. F. King & Co., Inc. will be paid its customary fee,
estimated to be $6,000, if it renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of common stock at the close of business on
March 22, 2000 will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on March 22, 2000 the Company had outstanding and
entitled to vote 18,340,556 shares of common stock. Each holder of record of
common stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
VOTING VIA THE INTERNET OR BY TELEPHONE
Stockholders may vote their shares by telephone or on the Internet. The law
of Delaware, under which CV Therapeutics is incorporated, specifically permits
electronically transmitted proxies, provided that each such proxy contains or is
submitted with information from which the inspectors of election can determine
that such proxy was authorized by the stockholder.
Submitting a proxy via the Internet or by telephone will not affect a
stockholder's right to vote in person should he or she decide to attend the
Annual Meeting.
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THE TELEPHONE AND INTERNET VOTING PROCEDURES BELOW ARE DESIGNED TO
AUTHENTICATE STOCKHOLDERS' IDENTITIES, TO ALLOW STOCKHOLDERS TO GIVE THEIR
VOTING INSTRUCTIONS AND TO CONFIRM THAT STOCKHOLDERS' INSTRUCTIONS HAVE BEEN
RECORDED PROPERLY. STOCKHOLDERS VOTING VIA THE INTERNET SHOULD UNDERSTAND THAT
THERE MAY BE COSTS ASSOCIATED WITH ELECTRONIC ACCESS, SUCH AS USAGE CHARGES FROM
INTERNET ACCESS PROVIDERS AND TELEPHONE COMPANIES, THAT MUST BE BORNE BY THE
STOCKHOLDER.
FOR SHARES REGISTERED IN YOUR NAME
Stockholders of record may go to http://www.eproxy.com/CVTX/ to vote on the
Internet. They will be required to provide the company number and control number
contained on their proxy cards. The voter will then be asked to complete an
electronic proxy card. The votes will be generated on the computer screen and
the voter will be prompted to submit or revise them as desired. Any stockholder
using a touch-tone telephone may also vote by calling 1-800-240-6326 (toll-free)
and following the recorded instructions.
FOR SHARES REGISTERED IN THE NAME OF A BROKER OR BANK
Most beneficial owners whose stock is held in street name receive voting
instruction forms from their banks, brokers or other agents, rather than the
Company's proxy card.
A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. If your shares are held in an account with a broker or bank
participating in the ADP Investor Communication Services program, you may vote
those shares telephonically by calling the telephone number shown on the voting
form received from your broker or bank, or via the Internet at ADP Investor
Communication Services' voting web site at http://www.proxyvote.com.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by (i) filing with
the Secretary of the Company at the Company's principal executive office, 3172
Porter Drive, Palo Alto, California 94304, a written notice of revocation or a
duly executed proxy bearing a later date, (ii) casting a later vote via the
Internet or by telephone or (iii) attending the meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders is December 8, 2000. Stockholders wishing to submit
proposals or director nominations at the Company's 2001 annual meeting of
stockholders that are not to be included in such proxy statement and proxy must
provide specified information to the Company between February 15, 2001 and
March 16, 2001.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and By-laws
provide that the Board of Directors of the Company (the "Board") shall be
divided into three classes, with each class having a three-year term. Except as
otherwise provided by law, vacancies on the Board shall be filled only by
affirmative vote of a majority of the directors then in office, even though less
than a quorum of the Board of Directors, and not by the stockholders, unless the
Board of Directors determines by resolution that any such vacancies shall be
filled by the stockholders. A director elected by the Board to fill a vacancy
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(including a vacancy created by an increase in the Board of Directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of six members. There are two
Class III directors, whose term of office expires in 2000. Each of the nominees
for election to this class is currently a director of the Company who was
previously elected by the stockholders. If elected at the Annual Meeting, each
of the nominees would serve until the 2003 annual meeting and until his
successor is elected and has qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
CLASS III DIRECTORS
LOUIS G. LANGE, M.D., PH.D. was a founder of CV Therapeutics and has served
as its Chairman of the Board and Chief Executive Officer since August 1992.
Dr. Lange has served as a trustee on the University of Rochester Board of
Trustees since May 1997, a member of the governing body of BIO's Emerging
Company Section since February 1999 and a member of the Board of Directors of
Cardiac Pathway Corporation from February 1998 to May 1999. From July 1980 to
August 1992, Dr. Lange served on the faculty of Washington University School of
Medicine, including as Chief of Cardiology at Jewish Hospital in St. Louis,
Missouri from May 1985 to August 1992, and as a full Professor of Medicine from
July 1990 until August 1992. Dr. Lange holds an M.D. from Harvard Medical School
and a Ph.D. in biochemistry from Harvard University.
ISAAC STEIN has served as a director of CV Therapeutics since March 1995.
Since its inception, Mr. Stein has served as the president of Waverley
Associates, Inc., a private investment firm, which he founded in 1983. In
addition, Mr. Stein serves as a Trustee of Stanford University. From
February 1993 to February 1994, Mr. Stein served as a special assistant to the
President of Stanford University. Mr. Stein currently serves as Chairman of the
board of directors of Maxygen, Inc., and as a director of ALZA Corporation, The
Benham Group and Symyx Technologies, Inc. Mr. Stein holds a B.A. in economics
and mathematics from Colgate University, an M.B.A. from Stanford Graduate School
of Business and a J.D. from Stanford Law School.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
CLASS II DIRECTORS
THOMAS L. GUTSHALL has served as a director of CV Therapeutics since
December 1994. Since August 1996, Mr. Gutshall has served as the Chief Executive
Officer of Cepheid Corporation, a diagnostics company. From January 1995 to
September 1996, he served as CV Therapeutics' President and Chief Operating
Officer. From June 1989 until December 1994, Mr. Gutshall served as Executive
Vice President at Syntex Corporation, a pharmaceutical and healthcare company.
Mr. Gutshall earned a B.S. in chemical
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engineering from the University of Delaware and completed the Executive
Marketing Management Program at Harvard Business School.
COSTA G. SEVASTOPOULOS, PH.D., has served as a director of CV Therapeutics
since October 1992. Since May 1994, Dr. Sevastopoulos has been an independent
consultant and a limited partner of Delphi Ventures I and II, both venture
capital partnerships. From April 1988 to April 1994, he served as a general
partner of Delphi BioVentures, a venture capital partnership, which he
co-founded. Dr. Sevastopoulos currently serves as Chairman of the Board of
Directors of Ixsys, Inc. and Idun Pharmaceuticals, Inc., both privately held
biopharmaceutical companies. He holds a B.S. in physics from the University of
Athens, Greece, an M.S. in electrical engineering from the California Institute
of Technology, an M.B.A. from the European Institute of Business Administration
in Fontainebleau, France, and a Ph.D. in molecular biology from the University
of California at Berkeley.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
CLASS I DIRECTORS
BARBARA J. MCNEIL, M.D., PH.D., has served as a director of CV Therapeutics
since December 1994. Since 1990, Dr. McNeil has served as the Ridley Watts
Professor of Health Care Policy at Harvard Medical School. In addition, since
July 1988, she has served as the Chair of the Department of Health Care Policy
at Harvard Medical School. Since 1983, she has been a professor of radiology at
both Harvard Medical School and Brigham and Women's Hospital in Boston.
Dr. McNeil holds an M.D. from Harvard Medical School and a Ph.D. in biological
chemistry from Harvard University.
J. LEIGHTON READ, M.D. has served as a director of CV Therapeutics since
September 1992. Dr. Read founded Aviron, a biopharmaceutical company, and has
served as its Chairman since April 1992. From April 1992 to December 1999,
Dr. Read also served as Chief Executive Officer of Aviron. From July 1991 to
July 1993, Dr. Read was a principal with Interhealth Limited, an investment
partnership. From January 1989 to July 1991, Dr. Read served as a managing
director of Affymax N.V., a biopharmaceutical company, which he co-founded in
1989. Dr. Read holds a B.S. in biology and psychology from Rice University and
an M.D. from the University of Texas Health Science Center at San Antonio.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999 the Board of Directors acted
six times. The Board has an Audit Committee and a Compensation Committee. The
Board does not have a nominating committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements, recommends to the Board the independent auditors to be retained, and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of three non-employee
directors: Messrs. Stein and Gutshall and Dr. McNeil. During the fiscal year
ended December 31, 1999, it met two times.
The Compensation Committee determines salaries and incentive compensation,
awards stock options to employees and consultants under the Company's stock
option plans and otherwise determines compensation levels and performs such
other functions regarding compensation as the Board may delegate. The
Compensation Committee is composed of two non-employee directors: Drs. Read and
Sevastopoulos. During the fiscal year ended December 31, 1999, it met two times.
During the fiscal year ended December 31, 1999, all directors attended at
least 75% of the aggregate of the meetings of the Board and of the committees on
which they served, held during the period for which they were a director or
committee member, respectively.
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PROPOSAL 2
APPROVAL OF THE 2000 EQUITY INCENTIVE PLAN
In March 2000, the Board adopted the CV Therapeutics, Inc. 2000 Equity
Incentive Plan ("Incentive Plan"), subject to stockholder approval. There are
1,500,000 shares of common stock reserved for issuance under the Incentive Plan.
No awards have been made under the Incentive Plan.
Subject to and upon approval of the Incentive Plan by the stockholders, the
Company's 1992 Stock Option Plan and 1994 Equity Incentive Plan will terminate,
and approximately 113,000 shares of common stock currently reserved for future
awards under these plans will no longer be available for such purpose. Options
outstanding under such plans will continue to remain outstanding. As of
March 29, 2000, options to purchase an aggregate of approximately 1,544,685
shares of common stock were outstanding under the 1992 Stock Option Plan and
1994 Equity Incentive Plan.
Stockholders are requested in this Proposal 2 to approve the Incentive Plan.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to approve the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Incentive Plan are outlined below:
GENERAL
The Incentive Plan provides for the grant of incentive stock options,
nonstatutory stock options, stock bonuses and restricted stock purchase awards
(collectively "awards"). Incentive stock options granted under the Incentive
Plan are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Nonstatutory stock options granted under the Incentive Plan are not intended to
qualify as incentive stock options under the Code. See "Federal Income Tax
Information" for a discussion of the tax treatment of awards.
PURPOSE
The Board adopted the Incentive Plan to provide a means by which employees,
directors and consultants of the Company and its affiliates may be given an
opportunity to purchase stock in the Company, to assist in retaining the
services of such persons, to secure and retain the services of persons capable
of filling such positions and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its affiliates. All of the
approximately 100 employees, directors and consultants of the Company and its
affiliates are eligible to participate in the Incentive Plan.
ADMINISTRATION
The Board administers the Incentive Plan. Subject to the provisions of the
Incentive Plan, the Board has the power to construe and interpret the Incentive
Plan and to determine the persons to whom and the dates on which awards will be
granted, the number of shares of common stock to be subject to each award, the
time or times during the term of each award within which all or a portion of
such award may be exercised, the exercise price, the type of consideration and
other terms of the award.
The Board has the power to delegate administration of the Incentive Plan to
a committee composed of not fewer than two members of the Board. In the
discretion of the Board, a committee may consist solely of two or more outside
directors in accordance with Section 162(m) of the Code or solely of two or more
non-employee directors in accordance with Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The Board has delegated
administration of the Incentive Plan to the Compensation Committee of the Board.
As used herein with respect to the Incentive Plan, the "Board"
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refers to any committee the Board appoints as well as to the Board itself. The
Board also may delegate to a committee of one or more members of the Board who
are not outside directors or non-employee directors the power to make awards to
persons who are not officers or directors of the Company.
Section 162(m) of the Code denies a deduction to any publicly-held
corporation for compensation paid to certain "covered employees" in a taxable
year to the extent that compensation to such covered employee exceeds
$1 million. The regulations under Section 162(m) require that the directors who
serve as members of the committee must be "outside directors." The Incentive
Plan provides that, in the Board's discretion, directors serving on the
committee may be "outside directors" within the meaning of Section 162(m). This
limitation would exclude from the committee directors who are (i) current
employees of the Company or an affiliate, (ii) former employees of the Company
or an affiliate receiving compensation for past services (other than benefits
under a tax-qualified pension Incentive Plan), (iii) current and former officers
of the Company or an affiliate, (iv) directors currently receiving direct or
indirect remuneration from the Company or an affiliate in any capacity (other
than as a director), and (v) any other person who is otherwise considered an
"outside director" for purposes of Section 162(m). The definition of an "outside
director" under Section 162(m) is generally NARROWER than the definition of a
"non-employee director" under Rule 16b-3 of the Exchange Act.
ELIGIBILITY
Incentive stock options may be granted under the Incentive Plan only to
employees (including officers) of the Company and its affiliates. Employees
(including officers), directors, and consultants of both the Company and its
affiliates are eligible to receive all other types of awards under the Incentive
Plan.
No incentive stock option may be granted under the Incentive Plan to any
person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of the Company or
any affiliate of the Company, unless the exercise price is at least 110% of the
fair market value of the stock subject to the option on the date of grant and
the term of the option does not exceed five years from the date of grant. In
addition, the aggregate fair market value, determined at the time of grant, of
the shares of Common Stock with respect to which incentive stock options are
exercisable for the first time by a participant during any calendar year (under
the Incentive Plan and all other such plans of the Company and its affiliates)
may not exceed $100,000.
No employee may be granted options under the Incentive Plan exercisable for
more than 300,000 shares of Common Stock during any calendar year
("Section 162(m) Limitation").
STOCK SUBJECT TO THE INCENTIVE PLAN
Subject to this Proposal, an aggregate of 1,500,000 shares of Common Stock
is reserved for issuance under the Incentive Plan. If awards granted under the
Incentive Plan expire or otherwise terminate without being exercised, the shares
of Common Stock not acquired pursuant to such awards again becomes available for
issuance under the Incentive Plan. If the Company reacquires unvested stock
issued under the Incentive Plan, the reacquired stock will again become
available for reissuance under the Incentive Plan for awards other than
incentive stock options.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under the
Incentive Plan. Individual option grants may be more restrictive as to any or
all of the permissible terms described below.
EXERCISE PRICE; PAYMENT. The exercise price of stock options may not be
less than 100% of the fair market value of the stock subject to the option on
the date of the grant and, in some cases (see "Eligibility" above), the exercise
price of incentive stock options may not be less than 110% of such fair market
value.
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As of March 29, 2000, the closing price of the Company's common stock as
reported on the Nasdaq National Market was $43.125 per share.
The exercise price of options granted under the Incentive Plan must be paid
either in cash at the time the option is exercised or at the discretion of the
Board, (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement or (iii) in any other form of legal consideration
acceptable to the Board.
OPTION EXERCISE. Options granted under the Incentive Plan may become
exercisable in cumulative increments ("vest") as determined by the Board. The
Company generally grants options that vest over four years during the
participant's employment by, or service as a director or consultant to, the
Company or an affiliate (collectively, "service"). Shares covered by options
granted in the future under the Incentive Plan may be subject to different
vesting terms. The Board has the power to accelerate the time during which an
option may vest or be exercised. In addition, options granted under the
Incentive Plan may permit exercise prior to vesting, but in such event the
participant may be required to enter into an early exercise stock purchase
agreement that allows the Company to repurchase unvested shares, generally at
their exercise price, should the participant's service terminate before vesting.
To the extent provided by the terms of an option, a participant may satisfy any
federal, state or local tax withholding obligation relating to the exercise of
such option by a cash payment upon exercise, by authorizing the Company to
withhold a portion of the stock otherwise issuable to the participant, by
delivering already-owned Common Stock of the Company or by a combination of
these means.
TERM. The maximum term of options under the Incentive Plan is 10 years,
except that in certain cases (see "Eligibility") the maximum term is five years.
Options under the Incentive Plan generally terminate three months after
termination of the participant's service unless (i) such termination is due to
the participant's permanent and total disability (as defined in the Code), in
which case the option may, but need not, provide that it may be exercised (to
the extent the option was exercisable at the time of the termination of service)
at any time within 12 months of such termination; (ii) the participant dies
before the participant's service has terminated, or within three months after
termination of such service, in which case the option may, but need not, provide
that it may be exercised (to the extent the option was exercisable at the time
of the participant's death) within 18 months of the participant's death by the
person or persons to whom the rights to such option pass by will or by the laws
of descent and distribution; or (iii) the option by its terms specifically
provides otherwise. A participant may designate a beneficiary who may exercise
the option following the participant's death. Individual option grants by their
terms may provide for exercise within a longer or shorter period of time
following termination of service.
A participant's option agreement may provide that if the exercise of the
option following the termination of the participant's service would be
prohibited because the issuance of stock would violate the registration
requirements under the Securities Act of 1933, as amended (the "Securities
Act"), then the option will terminate on the earlier of (i) the expiration of
the term of the option or (ii) three months after the termination of the
participant's service during which the exercise of the option would not be in
violation of such registration requirements.
TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
PAYMENT. The purchase price under a restricted stock purchase agreement may
not be less than 100% of the fair market value of the Company's Common Stock on
the date of grant. The Board may award stock bonuses in consideration of past
services without a purchase payment.
The purchase price of stock acquired pursuant to a restricted stock purchase
agreement under the Incentive Plan must be paid either in cash at the time the
option is exercised or at the discretion of the Board, (i) by delivery of other
Common Stock of the Company, (ii) pursuant to a deferred payment arrangement or
(iii) in any other form of legal consideration acceptable to the Board.
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VESTING. Shares awarded as stock bonuses may, but need not be, subject to a
repurchase option in favor of the Company in accordance with a vesting schedule
as determined by the Board. Shares of restricted stock sold under the Incentive
Plan shall be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule as determined by the Board, provided that the
vesting period shall not be less than three years unless based upon performance
milestones, in which event it shall not be less than one year. The Board has the
power to accelerate the vesting of stock acquired pursuant to a restricted stock
purchase agreement under the Incentive Plan only under extraordinary
circumstances, such as the death, disability or divorce of the participant or a
change in the Company's corporate structure.
RESTRICTIONS ON TRANSFER
The participant may not transfer an incentive stock option otherwise than by
will or by the laws of descent and distribution. During the lifetime of the
participant, only the participant may exercise an incentive stock option. The
Board may grant nonstatutory stock options that are transferable in certain
limited instances. Shares subject to repurchase by the Company under an early
exercise stock purchase agreement may be subject to restrictions on transfer
that the Board deems appropriate. Rights under a stock bonus or restricted stock
bonus agreement may be transferred only if expressly authorized by the terms of
the applicable stock bonus or restricted stock purchase agreement.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such as
a merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, combination or exchange of
shares or change in corporate structure, may change the class and number of
shares of Common Stock subject to the Incentive Plan and outstanding awards. In
that event, the Incentive Plan will be appropriately adjusted as to the class
and the maximum number of shares of Common Stock subject to the Incentive Plan
and the Section 162(m) Limitation, and outstanding awards will be adjusted as to
the class, number of shares and price per share of common stock subject to such
awards.
EFFECT OF CERTAIN CORPORATE EVENTS
The Incentive Plan provides that, in the event of a dissolution or
liquidation of the Company, then all outstanding awards shall terminate
immediately prior to such event.
In the event of a Change of Control (as defined below), to the extent
permitted by law, any surviving corporation or acquiring corporation may assume
any awards outstanding under the Incentive Plan or substitute similar awards
(including awards to acquire the same consideration paid to the stockholders in
the Change of Control) for those outstanding under the Incentive Plan. In the
event any surviving corporation or acquiring corporation does not assume such
awards or substitute similar stock awards for those outstanding under the
Incentive Plan, then with respect to awards held by participants whose service
has not terminated, the vesting of such awards shall be accelerated in full, and
the awards shall terminate if not exercised at or prior to such event. Any other
awards outstanding under the Incentive Plan shall terminate if not exercised
prior to such event.
In the event of a Change of Control not approved by the Board, each
outstanding award under the Incentive Plan shall become fully vested, and the
Company's right of repurchase shall lapse with respect to shares received upon
exercise of an award prior to full vesting, notwithstanding the terms of the
award or any early exercise stock purchase agreement, immediately prior to the
consummation of such Change of Control. The acceleration of an option in the
event of an acquisition or similar corporate event may be viewed as an
anti-takeover provision, which may have the effect of discouraging a proposal to
acquire or otherwise obtain control of the Company.
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For purposes of the Incentive Plan, "Change of Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, equal or
greater stock voting power); (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Incentive Plan without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the Incentive Plan will terminate on March 31, 2010.
The Board may also amend the Incentive Plan at any time or from time to
time. However, no amendment will be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary in
order for the Incentive Plan to satisfy Section 422 of the Code, Rule 16b-3 of
the Exchange Act or any Nasdaq Stock Market or securities exchange listing
requirements. The Board may submit any other amendment to the Incentive Plan for
stockholder approval, including, but not limited to, amendments intended to
satisfy the requirements of Section 162(m) of the Code regarding the exclusion
of performance-based compensation from the limitation on the deductibility of
compensation paid to certain employees.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term capital
gains rate for federal income tax purposes is currently 20% while the maximum
ordinary income rate and short-term capital gains rate is effectively 39.6%.
Slightly different rules may apply to participants who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
INCENTIVE STOCK OPTIONS. Incentive stock options under the Incentive Plan
are intended to be eligible for the favorable federal income tax treatment
accorded "incentive stock options" under the Code.
There generally are no federal income tax consequences to the participant or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
participant's alternative minimum tax liability, if any.
If a participant holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
participant upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the participant held the
stock for more than one year.
Generally, if the participant disposes of the stock before the expiration of
either of these holding periods (a "disqualifying disposition"), then at the
time of disposition the participant will realize taxable ordinary income equal
to the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the participant's actual gain, if any,
on the purchase and sale. The participant's additional gain or any loss upon the
disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term depending on whether the stock was held for more than
one year.
To the extent the participant recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of
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Section 162(m) of the Code and the satisfaction of a tax reporting obligation)
to a corresponding business expense deduction in the tax year in which the
disqualifying disposition occurs.
NONSTATUTORY STOCK OPTIONS, RESTRICTED STOCK PURCHASE AWARDS AND STOCK
BONUSES. Nonstatutory stock options, restricted stock purchase awards and stock
bonuses granted under the Incentive Plan generally have the following federal
income tax consequences:
There are no tax consequences to the participant or the Company by reason of
the grant. Upon acquisition of the stock, the participant normally will
recognize taxable ordinary income equal to the excess, if any, of the stock's
fair market value on the acquisition date over the purchase price. However, to
the extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
participant elects to be taxed on receipt of the stock. With respect to
employees, the Company is generally required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, the provisions of Section 162(m)
of the Code and the satisfaction of a tax reporting obligation, the Company will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the participant.
Upon disposition of the stock, the participant will recognize a capital gain
or loss equal to the difference between the selling price and the sum of the
amount paid for such stock plus any amount recognized as ordinary income upon
acquisition (or vesting) of the stock. Such gain or loss will be long-term or
short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to participants who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Section 162(m) of the Code
denies a deduction to any publicly-held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to awards, when combined with all other types of compensation
received by a covered employee from the Company, may cause this limitation to be
exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options and stock appreciation rights will qualify as
performance-based compensation if the award is granted by a compensation
committee comprised solely of "outside directors" and either (i) the plan
contains a per-employee limitation on the number of shares for which such awards
may be granted during a specified period, the per-employee limitation is
approved by the stockholders, and the exercise price of the award is no less
than the fair market value of the stock on the date of grant, or (ii) the award
is granted (or exercisable) only upon the achievement (as certified in writing
by the compensation committee) of an objective performance goal established in
writing by the compensation committee while the outcome is substantially
uncertain, and the award is approved by stockholders.
Compensation attributable to restricted stock and stock bonuses will qualify
as performance-based compensation, provided that: (i) the award is granted by a
compensation committee comprised solely of "outside directors" and (ii) the
purchase price of the award is no less than the fair market value of the stock
on the date of grant. Stock bonuses qualify as performance-based compensation
under the Treasury regulations only if (i) the award is granted by a
compensation committee comprised solely of "outside directors," (ii) the award
is granted (or exercisable) only upon the achievement of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, (iii) the compensation committee certifies
in writing prior to the granting (or exercisability) of the award that the
performance goal has been satisfied and (iv) prior to the granting (or
exercisability) of the award, stockholders have approved the material terms of
the award (including the class of employees
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eligible for such award, the business criteria on which the performance goal is
based, and the maximum amount--or formula used to calculate the amount--payable
upon attainment of the performance goal).
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In 1996, the Board amended and restated, and the stockholders subsequently
approved, the CV Therapeutics, Inc. Non-Employee Directors' Stock Option Plan
("Directors' Plan"). An aggregate of 250,000 shares of common stock have been
reserved for issuance under the Directors' Plan.
On February 23, 2000, the Board amended the Directors' Plan, subject to
stockholder approval, to increase the number of shares of common stock
authorized for issuance under the Directors' Plan by 150,000 shares to a total
of 400,000 shares. The Board adopted this amendment in order to ensure that the
Company can continue to grant stock options at levels determined appropriate by
the Board. The Board also amended the Directors' Plan to include the same change
of control provisions as are applicable to all other Company options, which
amendment does not require approval of the stockholders.
As of March 29, 2000, options (net of canceled or expired options) covering
an aggregate of 194,665 shares of the Company's Common Stock had been granted
under the Directors' Plan. Only 55,335 shares of common stock (plus any shares
that might in the future be returned to the Directors' Plan as a result of
cancellations or expiration of options) remained available for future grant
under the Directors' Plan. During the last fiscal year, non-employee directors
as a group received options covering an aggregate of 45,000 shares of common
stock at exercise prices of $4.15625 per share. See "Compensation of Directors."
Stockholders are requested in this Proposal 3 to approve the Directors'
Plan, as amended. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
meeting will be required to approve the amendment to the Directors' Plan.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
The essential features of the Directors' Plan are outlined below:
GENERAL
The Directors' Plan provides for the automatic grant of nonstatutory stock
options. Options granted under the Directors' Plan are not intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Code. See
"Federal Income Tax Information" in Proposal 2 above for a discussion of the tax
treatment of nonstatutory stock options.
PURPOSE
The Board adopted the Directors' Plan to provide a means by which
non-employees directors of the Company may be given an opportunity to purchase
stock in the Company, to assist in retaining the services of such persons, to
secure and retain the services of persons capable of filling such positions and
to provide incentives for such persons to exert maximum efforts for the success
of the Company.
ADMINISTRATION
The Board administers the Directors' Plan. The Board has the power to
construe and interpret the Directors' Plan but not to determine the persons to
whom or the dates on which options will be granted, the number of shares to be
subject to each option, the time or times during the term of each option within
which all or a portion of such option may be exercised, the exercise price, the
type of consideration or the other terms of the option.
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The Board has the power to delegate administration of the Directors' Plan to
a committee composed of not fewer than two members of the Board. The Board has
delegated administration of the Directors' Plan to the Compensation Committee of
the Board. As used herein with respect to the Directors' Plan, the "Board"
refers to any committee the Board appoints as well as to the Board itself.
ELIGIBILITY
The Directors' Plan provides that options may be granted only to
non-employee directors of the Company. A "non-employee director" is defined in
the Directors' Plan as a director of the Company who is not otherwise an
employee of or consultant to the Company or any affiliate. All of the current
directors of the Company except Dr. Lange are eligible to participate in the
Directors' Plan.
STOCK SUBJECT TO THE DIRECTORS' PLAN
Subject to this Proposal, an aggregate of 400,000 shares of common stock is
reserved for issuance under the Directors' Plan. If options granted under the
Directors' Plan expire or otherwise terminate without being exercised, the
shares of common stock not acquired pursuant to such options again becomes
available for issuance under the Directors' Plan.
TERMS OF OPTIONS
The following is a description of the terms of options under the Directors'
Plan. Individual option grants may not be more restrictive as to the terms
described below.
AUTOMATIC GRANTS. Pursuant to the terms of the Directors' Plan, each
non-employee director is automatically granted an option to purchase shares of
common stock. On September 8, 1996, each non-employee director was granted an
option to purchase 5,000 shares. Upon the amendment and restatement of the
Directors' Plan in September 1996, each non-employee director was granted an
additional option to purchase 15,000 shares. Each subsequently elected
non-employee director also is granted an option to purchase 15,000 shares upon
his or her initial election. In addition, at the annual meeting of the Company's
stockholders in 1998, each non-employee director was granted an option to
purchase 5,000 shares, and at each annual meeting of the Company's stockholders
thereafter, each non-employee director is granted an option to purchase 7,500
shares.
EXERCISE PRICE; PAYMENT. The exercise price of options may not be less than
100% of the fair market value of the stock subject to the option on the date of
the grant.
The exercise price of options granted under the Directors' Plan must be paid
either in (i) cash at the time the option is exercised (ii) by delivery of other
common stock of the Company or (iii) by a combination of the foregoing.
OPTION EXERCISE. The options granted to non-employee directors in
September 1996 and to each subsequently-elected non-employee director upon
initial election to the Board vest over four years, with one-third of the shares
covered thereby vesting 12 months after grant and the remainder vesting at the
rate of 1/36 per month thereafter. The options granted each year at the annual
meeting of stockholders vest one year from the grant date. Options granted under
the Directors' Plan vest only during the optionholder's service as a director of
the Company, during any subsequent employment of the optionholder by, and/or
service by the optionholder as a consultant to, the Company or an affiliate
(collectively, "service"). The Board has the power to accelerate the time during
which an option may vest or be exercised. Options granted under the Directors'
Plan do not permit exercise prior to vesting. An optionholder must satisfy any
federal, state or local tax withholding obligation relating to the exercise of
such option before shares of common stock are issued upon exercise of options.
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TERM. The term of options under the Directors' Plan is 10 years. Options
under the Directors' Plan terminate three months after termination of the
optionholder's service unless the optionholder dies before the optionholder's
service has terminated, in which case the option may be exercised (to the extent
the option was exercisable at the time of the optionholder's death) within
18 months of the optionholder's death by the person or persons to whom the
rights to such option pass by will or by the laws of descent and distribution.
An optionholder may designate a beneficiary who may exercise the option
following the optionholder's death. The option term is not extended in the event
that exercise of the option within these periods is prohibited.
OTHER PROVISIONS. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the Directors' Plan as
determined by the Board.
RESTRICTIONS ON TRANSFER
The optionholder may not transfer an option otherwise than by will or by the
laws of descent and distribution. During the lifetime of the optionholder, an
option may be exercised only by the optionholder.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such as
a merger, consolidation, reorganization, stock dividend, dividend in property
other than cash, stock split, combination or exchange of shares or change in
corporate structure, may change the class and number of shares of common stock
subject to the Directors' Plan and outstanding options. In that event, the
Directors' Plan will be appropriately adjusted as to the class and the maximum
number of shares of common stock subject to the Directors' Plan, and outstanding
options will be adjusted as to the class, number of shares and price per share
of common stock subject to such options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Directors' Plan provides that, in the event of a dissolution or
liquidation of the Company, then all outstanding awards shall terminate
immediately prior to such event.
In the event of a Change of Control (as defined below), to the extent
permitted by law, any surviving corporation or acquiring corporation may assume
any awards outstanding under the Directors' Plan or substitute similar awards
(including awards to acquire the same consideration paid to the stockholders in
the Change of Control) for those outstanding under the Directors' Plan. In the
event any surviving corporation or acquiring corporation does not assume such
awards or substitute similar stock awards for those outstanding under the
Directors' Plan, then with respect to awards held by participants whose service
has not terminated, the vesting of such awards shall be accelerated in full, and
the awards shall terminate if not exercised at or prior to such event. Any other
awards outstanding under the Directors' Plan shall terminate if not exercised
prior to such event.
In the event of a Change of Control not approved by the Board, each
outstanding award under the Directors' Plan shall become fully vested, and the
Company's right of repurchase shall lapse with respect to shares received upon
exercise of an award prior to full vesting, notwithstanding the terms of the
award or any early exercise stock purchase agreement, immediately prior to the
consummation of such Change of Control. The acceleration of an option in the
event of an acquisition or similar corporate event may be viewed as an
anti-takeover provision, which may have the effect of discouraging a proposal to
acquire or otherwise obtain control of the Company.
For purposes of the Directors' Plan, "Change of Control" means: (i) a sale
of substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, equal or
greater stock voting power);
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(iii) a reverse merger in which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise (other than a reverse merger in which stockholders
immediately before the merger have, immediately after the merger, greater stock
voting power); or (iv) any transaction or series of related transactions in
which in excess of 50% of the Company's voting power is transferred.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Directors' Plan without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the Directors' Plan will terminate on September 23, 2006.
The Board may also amend the Directors' Plan at any time or from time to
time. However, no amendment will be effective unless approved by the
stockholders of the Company within 12 months before or after its adoption by the
Board if the amendment would increase the number of shares reserved for issuance
upon exercise of options. The Board may submit any other amendment to the
Directors' Plan for stockholder approval.
INCOME TAX INFORMATION
Options granted under the Directors' Plan generally have the federal income
tax consequences of nonstatutory stock options described under "Federal Income
Tax Information" in Proposal 2 above.
PROPOSAL 4
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
In September 1996, the Board adopted, and the stockholders subsequently
approved, the CV Therapeutics, Inc. Employee Stock Purchase Plan (the "Purchase
Plan"). An aggregate of 150,000 shares of common stock has been reserved for
issuance under the Purchase Plan.
In February and March, 2000 the Board amended the Purchase Plan, subject to
stockholder approval, to increase the number of shares of common stock
authorized for issuance under the Purchase Plan by 75,000 shares to a total of
225,000 shares and to provide for annual increases in such number of shares,
over five years, each in an amount equal to the least of (i) one half of one
percent of the number of outstanding shares of the Company's common stock,
(ii) 100,000 shares, or (iii) a smaller number of shares determined by the
Board. The Board adopted this amendment in order to ensure that the Company can
continue to grant purchase rights at levels determined appropriate by the Board.
During the last fiscal year, shares of common stock were purchased in the
amounts and at the weighted average prices per share under the Purchase Plan as
follows: Louis G. Lange--245 shares ($4.89), Andrew A. Wolff--862 shares
($4.87), Daniel K. Spiegelman--4,063 shares ($4.86), Richard M. Lawn--5,256
shares ($4.86), David C. McCaleb--no shares, all current executive officers as a
group 15,680 shares ($4.91), and all employees (excluding executive officers) as
a group--55,990 shares ($4.86).
As of February 23, 2000, an aggregate of 134,144 shares of the Company's
common stock had been purchased under the Purchase Plan. Only 15,856 shares of
Common Stock (plus any shares that might in the future be returned to the
Purchase Plan as a result of cancellations or expiration of purchase rights)
remained available for future grant under the Purchase Plan.
Stockholders are requested in this Proposal 4 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the amendment to the Purchase Plan.
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THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
The essential features of the Purchase Plan, as amended, are outlined below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which employees of
the Company (and any parent or subsidiary of the Company designated by the Board
to participate in the Purchase Plan) may be given an opportunity to purchase
common stock of the Company through payroll deductions, to assist the Company in
retaining the services of its employees, to secure and retain the services of
new employees, and to provide incentives for such persons to exert maximum
efforts for the success of the Company. All of the Company's approximately 75
regular employees are eligible to participate in the Purchase Plan.
The rights to purchase common stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.
ADMINISTRATION
The Board administers the Purchase Plan and has the final power to construe
and interpret both the Purchase Plan and the rights granted under it. The Board
has the power, subject to the provisions of the Purchase Plan, to determine when
and how rights to purchase common stock will be granted, the provisions of each
offering of such rights (which need not be identical), and whether employees of
any parent or subsidiary of the Company will be eligible to participate in the
Purchase Plan.
The Board has the power to delegate administration of the Purchase Plan to a
committee composed of not fewer than two members of the Board. The Board has
delegated administration of the Purchase Plan to the Compensation Committee of
the Board. As used herein with respect to the Purchase Plan, the "Board" refers
to the Compensation Committee and to the Board.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company, or by any parent or subsidiary of the
Company designated by the Board (each, an "Affiliate") on the first day of an
offering is eligible to participate in that offering, provided such employee has
been continuously employed by the Company or the designated affiliate for such
continuous period preceding such offering as the Board or the Committee may
require. Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees as defined in the Code are not eligible to participate in the
offerings.
No employee is eligible to participate in the Purchase Plan if, immediately
after the grant of purchase rights, the employee would own, directly or
indirectly, stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any parent or subsidiary of
the Company (including any stock which such employee may purchase under all
outstanding rights and options). In addition, no employee may purchase more than
$25,000 worth of common stock (determined at the fair market value of the shares
at the time such rights are granted) under all employee stock purchase plans of
the Company and its affiliates in any calendar year.
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PARTICIPATION IN THE PLAN
Eligible employees enroll in the Purchase Plan by delivering to the Company,
prior to the date selected by the Board as the offering date for the offering,
an agreement authorizing payroll deductions of up to a maximum percentage
specified by the Board or the Committee of such employees' earnings (as defined
by the Board for each offering) during the offering.
PURCHASE PRICE
The purchase price per share at which shares of common stock are sold in an
offering under the Purchase Plan is the lesser of (i) 85% of the fair market
value of a share of common stock on first day of the offering or (ii) 85% of the
fair market value of a share of common stock on the purchase date.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering. At any time during the offering, a participant may reduce or
terminate his or her payroll deductions as the Board provides in the offering. A
participant may not increase or begin such payroll deductions after the
beginning of the offering, except, if the Board provides, in the case of an
employee who first becomes eligible to participate as of a date specified during
the offering. All payroll deductions made for a participant are credited to his
or her account under the Purchase Plan and deposited with the general funds of
the Company. A participant may make additional payments into such account only
if specially provided for in the offering.
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under the Purchase Plan. In connection with
offerings made under the Purchase Plan, the Board specifies a maximum number of
shares of common stock an employee may be granted the right to purchase and the
maximum aggregate number of shares of common stock that may be purchased
pursuant to such offering by all participants. If the aggregate number of shares
to be purchased upon exercise of rights granted in the offering would exceed the
maximum aggregate number of shares of common stock available, the Board would
make a pro rata allocation of available shares in a uniform and equitable
manner. Unless the employee's participation is discontinued, his or her right to
purchase shares is exercised automatically at the end of the offering at the
applicable price. See "Withdrawal" below.
WITHDRAWAL
A participant may withdraw from a given offering by terminating his or her
payroll deductions and by delivering to the Company a notice of withdrawal from
the Purchase Plan. Such withdrawal may be elected at any time prior to the end
of the applicable offering.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of common stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
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RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Purchase Plan at any time.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (i) increase the number of shares
of common stock reserved for issuance under the Purchase Plan, (ii) modify the
requirements relating to eligibility for participation in the Purchase Plan, or
(iii) modify any other provision of the Purchase Plan in a manner that would
materially increase the benefits accruing to participants under the Purchase
Plan, if such approval is required in order to comply with Section 423 of the
Code the requirements of Rule 16b-3 under the Exchange Act.
Rights granted before amendment or termination of the Purchase Plan will not
be altered or impaired by any amendment or termination of the Purchase Plan
without consent of the employee to whom such rights were granted.
STOCK SUBJECT TO PURCHASE PLAN
Subject to this Proposal, an aggregate of 225,000 shares of common stock has
been reserved for issuance under the Purchase Plan. On the day following each
annual meeting of the Company's stockholders, beginning with the meeting in 2001
and continuing through the meeting in 2005, the number of shares of common stock
reserved for issuance under the Purchase Plan shall be increased by the least of
(i) one half of one percent of the total number of shares of the Company's
common stock outstanding on such date, (ii) 100,000 shares, or (iii) a lesser
number of shares determined by the Board at or prior to the date of an increase.
If rights granted under the Purchase Plan expire, lapse or otherwise terminate
without being exercised, the shares of Common Stock not purchased under such
rights again becomes available for issuance under the Purchase Plan.
ADJUSTMENTS UPON CHANGES IN STOCK.
If any change is made in the stock subject to the Plan, or subject to any
rights granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding rights will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving corporation, a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise or the acquisition by any person, entity or group
of securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then, as
determined by the Board in its sole discretion (i) any surviving or acquiring
corporation may assume outstanding rights or substitute similar rights for those
under the Plan, (ii) such rights may continue in full force and effect, or
(iii) participants' accumulated payroll deductions may be used to purchase
common
17
<PAGE>
stock immediately prior to the transaction described above and the participants'
rights under the ongoing offering terminated.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for favorable
federal income tax treatment associated with rights granted under an employee
stock purchase plan which qualifies under provisions of Section 423 of the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of common stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. Such capital gains currently are generally
subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as a capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of the
grant or exercise of rights under the Purchase Plan. The Company is entitled to
a deduction to the extent amounts are taxed as ordinary income to a participant
(subject to the requirement of reasonableness and the satisfaction of tax
reporting obligations).
PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since its inception in 1990.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
18
<PAGE>
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Ernst & Young LLP. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 5.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of March 29, 2000 by: (i) each
stockholder who is known by the Company based on publicly available records to
own beneficially more than 5% of the Common Stock: (ii) the Company's Chief
Executive Officer and its four other most highly compensated executive officers
at December 31, 1999 (the "Named Executive Officers"); (iii) each director and
nominee for director; and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
------------------------------
BENEFICIAL OWNER NUMBER PERCENT OF TOTAL
- ---------------- ----------- ----------------
<S> <C> <C>
Biotech Target S.A ......................................... 1,969,647 10.7%
Swiss Bank Tower
Panama 1
Republic of Panama
FMR Corp. .................................................. 1,532,540 8.4%
82 Devonshire Street
Boston, MA 02109
Pequot Capital Management, Inc. ............................ 1,468,330 8.0%
500 Nyala Farm Road
Westport, CT 06880
Wellington Management Company, LLP. ........................ 1,303,000 7.1%
75 State Street
Boston, MA 02109
Quintiles Transnational Corp. .............................. 1,043,705 5.7%
4709 Creekstone Drive
Riverbirch Bldg., Suite 200
Durham, NC 27703
Louis G. Lange, M.D., Ph.D.(2).............................. 304,132 1.6%
Andrew A. Wolff, M.D.(3).................................... 90,909 *
Thomas L. Gutshall(4)....................................... 70,053 *
Isaac Stein(5).............................................. 58,499 *
Costa G. Sevastopoulos, Ph.D.(6)............................ 44,004 *
J. Leighton Read, M.D.(7)................................... 40,721 *
Barbara J. McNeil, M.D., Ph.D.(8)........................... 32,299 *
Richard M. Lawn, Ph.D.(9)................................... 76,757 *
Daniel K. Spiegelman(10).................................... 52,278 *
David C. McCaleb(11)........................................ 43,000 *
All directors and executive officers as a group (11 858,725 4.5%
persons)(12)..............................................
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1%.
19
<PAGE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Beneficial ownership also
includes shares of stock subject to options and warrants currently
exercisable or convertible, or exercisable or convertible within 60 days of
the date of this table. Except as indicated by footnote, and subject to
community property laws where applicable, to the knowledge of the Company,
all persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock, shown as beneficially owned by
them. Percentage of beneficial ownership is based on 18,349,256 shares of
Common Stock outstanding as of March 29, 2000, adjusted as required by rules
promulgated by the SEC.
(2) Includes 224,882 shares issuable upon the exercise of options as of May 29,
2000. Also, includes 7,500 shares held in the Louis Lange Family Trust.
Dr. Lange disclaims beneficial ownership of the shares held in the Louis
Lange Family Trust, except to the extent of his pecuniary interests therein.
(3) Includes 78,283 shares issuable upon the exercise of options as of May 29,
2000.
(4) Includes 44,714 shares issuable upon the exercise of options as of May 29,
2000. Also includes 24,125 shares held in the Gutshall Family Trust and 500
shares issuable upon the exercise of an outstanding warrant held in the
Gutshall Family Trust exercisable within 60 days of March 29, 2000.
(5) Includes 43,500 shares issuable upon the exercise of options as of May 29,
2000. Also, includes 4,375 shares held in the Stein 1995 Revocable Trust and
625 shares issuable upon the exercise of an outstanding warrant held in the
Stein 1995 Revocable Trust exercisable within 60 days of March 29, 2000.
(6) Includes 43,361 shares issuable upon the exercise of options as of May 29,
2000.
(7) Includes 33,000 shares issuable upon the exercise of options as of May 29,
2000.
(8) Includes 29,800 shares issuable upon the exercise of options as of May 29,
2000.
(9) Includes 44,650 shares issuable upon the exercise of options, 1,030 shares
of which would be subject to repurchase by the Company as of May 29, 2000.
(10) Includes 47,166 shares issuable upon the exercise of options as of May 29,
2000.
(11) Represents 43,000 shares issuable upon the exercise of options as of
May 29, 2000.
(12) Includes 669,947 shares issuable upon the exercise of options and warrants
held by all directors and executive officers that are exercisable within
60 days of March 29, 2000, 1,030 shares of which would be subject to
repurchase by the Company as of May 29, 2000. See footnotes (2)-(11).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the "1934
Act") requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file with the Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely upon a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
20
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The names of the executive officers and key employees of the Company and
their ages as of March 29, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------------------------------------------------------
<S> <C> <C>
Louis G. Lange, M.D., Ph.D....... 51 Chairman of the Board and Chief Executive Officer
Daniel K. Spiegelman............. 41 Senior Vice President, Chief Financial Officer
Andrew A. Wolff, M.D............. 45 Senior Vice President, Clinical Research and Development
Brent K. Blackburn, Ph.D......... 39 Vice President, Developmental Research
Richard M. Lawn, Ph.D............ 53 Vice President, Discovery Research
David C. McCaleb................. 46 Vice President, Marketing
</TABLE>
DANIEL K. SPIEGELMAN has served as Senior Vice President, Chief Financial
Officer for the Company since September 1999. From January 1998 to
September 1999, Mr. Spiegelman served as Vice President, Chief Financial
Officer. From July 1991 until January 1998, Mr. Spiegelman was employed by
Genentech, Inc., a biotechnology company, holding the position of treasurer from
December 1996 to January 1998, assistant treasurer from July 1992 to
December 1996, and treasury manager from July 1991 to July 1992. Mr. Spiegelman
holds a B.A. in economics from Stanford University and an M.B.A. from Stanford
Graduate School of Business.
ANDREW A. WOLFF, M.D., has served as Senior Vice President, Clinical
Research and Development since September 1999. From September 1996 to
September 1999, Dr. Wolff served as Vice President, Clinical Research and
Development for the Company. From September 1994 to September 1996, Dr. Wolff
served as Vice President, Clinical Research for the Company. From June 1993
until September 1994, Dr. Wolff served as the Executive Director of Medical
Research and New Molecules Clinical Programs Leader for Syntex Corporation, a
pharmaceutical and healthcare company. From July 1990 until June 1993,
Dr. Wolff served as the Director, Department for Cardiovascular Therapy for
Syntex. In addition, from August 1992 to February 1993, he served as the acting
Associate Director for Europe for the Institute for Cardiovascular and Central
Nervous System Clinical Research, Maidenhead, England. Since June 1988,
Dr. Wolff has also served as an Assistant Clinical Professor of Medicine in the
Cardiology Division of the University of California, San Francisco. He holds an
M.D. from the Washington University Medical School.
BRENT K. BLACKBURN, PH.D., has served as Vice President, Developmental
Research since October 1997. From September 1989 until September 1997,
Dr. Blackburn served in the Research Department at Genentech, Inc. From
September 1993 to September 1997, Dr. Blackburn also served as the project team
leader for the oral GPII(b)III(a)antagonist project, a cardiovascular product,
in the Development Department at Genentech, Inc. Dr. Blackburn holds a Ph.D. in
chemistry from the University of Texas in Austin and a B.S. in chemistry from
Texas Christian University.
RICHARD M. LAWN, PH.D., has served as Vice President, Discovery Research for
the Company since October 1997. From August 1992 until October 1997, he served
on a part-time basis as Vice President, Molecular Cardiology for the Company.
From October 1990 to October 1998, Dr. Lawn also served as a Professor of
Medicine at Stanford University School of Medicine. From January 1980 until
October 1990, Dr. Lawn served as a senior scientist and later as a staff
scientist at Genentech, Inc. Dr. Lawn has been a pioneer in the cloning of genes
involved in coagulation and heart disease, including globin genes and genes for
anti-hemophilia factor VIII. He was a post-doctoral fellow at the California
Institute of Technology and received a Ph.D. in molecular, cellular and
developmental biology from the University of Colorado and a B.A. in astronomy
from Harvard College.
21
<PAGE>
DAVID C. MCCALEB, has served as Vice President, Marketing since
October 1999. He has served as the Company's senior marketing advisor since
1997. In 1994, Mr. McCaleb founded McCaleb Associates, a private biotechnology
consulting firm, and has served as its President since that time. In this
capacity, in addition to consulting for the Company, he served as senior
marketing advisor to a number of other leading biotechnology companies,
including Coulter Pharmaceuticals, Inc., Gilead Sciences, Inc. and
Cephalon, Inc. From April 1998 until February 1994, Mr. McCaleb held several
marketing positions at Amgen, Inc., a biotechnology company. From October 1986
until March 1988, Mr. McCaleb was marketing manager for respiratory
pharmaceuticals at Forest Laboratories. Mr. McCaleb held various sales and
marketing positions in the cardiology field at Merck & Co. from August 1981
until September 1986. Mr. McCaleb holds a B.S. and an M.B.A from Arizona State
University and an M.S. in biology from Marquette University.
See "Proposal 1: Election of Directors" for a description of Dr. Lange's
experience and education.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company's non-employee directors receive $1,000 per meeting of the Board
of Directors attended. Members of the Audit and Compensation Committees also
receive $200 for each meeting of the applicable committee attended. Directors
may also be reimbursed for reasonable expenses in connection with attendance at
Board and committee meetings. Dr. Lange is not separately compensated for his
services as a director.
Each non-employee director of the Company receives stock option grants under
the Directors' Plan. See Proposal 3 for a description of the Directors' Plan.
During the fiscal year ended December 31, 1999 options were granted to
Messrs. Gutshall and Stein and Drs. McNeil, Read and Sevastopoulos covering
7,500 shares each at an exercise price of $4.15625 per share. David P. Holveck,
a former director, also received options covering 7,500 shares at an exercise
price of $4.15625 per share, which options were cancelled following
Mr. Holveck's resignation as a director on October 26, 1999.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the fiscal years ended December 31, 1997,
1998 and 1999 certain compensation awarded or paid to, or earned by, the Named
Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS (#) COMPENSATION($)
- ---------------------------- -------- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Louis G. Lange, M.D., Ph.D..... 1997 257,500 50,900 115,913(1) 30,000 --
Chairman of the Board and 1998 277,917 50,000 40,000(2) 100,000 --
Chief Executive Officer 1999 296,250 110,000 30,000(2) 70,000 --
Andrew A. Wolff, M.D........... 1997 196,000 30,000 -- 15,000 --
Senior Vice President,
Clinical 1998 215,000 20,000 -- 50,000 --
Research and Development 1999 227,500 75,000 -- 25,000 --
Richard M. Lawn, Ph.D.......... 1997 85,923(3) 38,333(4) -- 25,000 --
Vice President, 1998 183,750 15,000 -- 30,000 --
Discovery Research 1999 190,625 50,000 -- 25,000 --
Daniel K. Spiegelman........... 1998 181,266 53,500(5) -- 75,000 --
Senior Vice President and 1999 200,000 95,000(6) -- 35,000 --
Chief Financial Officer
David C. McCaleb............... 1999 47,500(7) 30,000(8) -- 54,000 149,183(9)
Vice President, Marketing
</TABLE>
22
<PAGE>
- ------------------------
(1) Consists of $50,000 of mortgage assistance and $65,913 paid to satisfy tax
obligations.
(2) Represents mortgage assistance.
(3) Dr. Lawn commenced employment with the Company in October 1997.
(4) Consists of $25,000 signing bonus and $13,333 paid in 1998 based upon
Dr. Lawn's performance in 1997.
(5) Consists of $25,000 paid in 1999 based upon Mr. Spiegelman's performance in
1998, a $15,000 signing bonus and the dollar value of shares awarded in 1998
upon Mr. Spiegelman's hiring. The dollar value was calculated by multiplying
the market value on the day prior to date of grant ($9.00 by the number of
shares awarded).
(6) Consists of $20,000 paid in 1999 as an additional signing bonus after
completion of one year of employment and $75,000 based upon
Mr. Spiegelman's performance in 1999.
(7) Mr. McCaleb commenced employment with the Company in October 1999.
(8) Consists of a $10,000 signing bonus and $20,000 based upon Mr. Caleb's
performance in 1999.
(9) Represents amount paid to Mr. McCaleb as a consultant prior to commencing
employment with the Company in October 1999.
OPTION GRANTS IN LAST FISCAL YEAR
The Company grants options to its executive officers under the 1992 Stock
Option Plan (the "1992 Plan") and its 1994 Equity Incentive Plan (the "1994
Plan") (collectively, the "Plans"). As of March 29, 2000, options to purchase
1,544,685 shares were outstanding under the Plans and options to purchase
113,023 shares remained available for grant. The following table sets forth each
grant of stock options made during the fiscal year ended December 31, 1999 to
each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIALTION FO
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERM(4)
OPTIONS GRANTED FISCAL YEAR PRICE EXPIRATION --------------------
NAME (#) (%)(2) ($/SH)(3) DATE 5% ($) 10% ($)
- ---- --------------- ------------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Louis G. Lange, M.D.,
Ph.D...................... 70,000(5) 14.8 5.8125 02/18/09 255,882 648,454
Andrew A. Wolff, M.D........ 25,000(5) 5.3 5.8125 02/18/09 91,386 231,591
Richard M. Lawn, Ph.D....... 25,000(5) 5.3 5.8125 02/18/09 91,386 231,591
Daniel K. Spiegelman........ 35,000(5) 7.4 5.8125 02/18/09 127,941 324,227
David C. McCaleb............ 54,000(5) 11.4 14.625 09/30/09 496,670 1,258,658
</TABLE>
- ------------------------
(1) Each grant listed in this table was granted under the 1994 Plan, however,
the Company has, in the past, also granted options to its executive officers
under the 1992 Plan. The terms of a stock option granted under the Plans
generally may not exceed 10 years. Options granted pursuant to the Plans
become exercisable at a rate specified in the option agreement. Options may
include provisions allowing exercise of any part or all of the options prior
to full vesting. Any unvested shares so purchased shall be subject to a
repurchase right in favor of the Company or to any other restriction the
Board determines to be appropriate. The exercise price of options granted
under the Plans is determined by the Board of Directors; provided, that, in
the case of an incentive stock option, the exercise price cannot be less
than 100% of the fair market value of the common stock on the date of
grant," and in the case of nonstatutory stock option, the exercise price
cannot be less than 85% of the
23
<PAGE>
fair market value of the common stock on the date of grant. Upon certain
changes in control of the Company, not subject to Board approval,
outstanding options shall be fully vested and shall be assumed, substituted
or continued by the surviving corporation or parent thereof. In the event
the surviving corporation or its parent refuses to assume, substitute or
continue such option, then such options shall be terminated if not exercised
prior to the change of control.
(2) Based on an aggregate of options to purchase 472,000 shares of the Company's
common stock granted to employees and directors of, and consultants to, the
Company during the fiscal year ended December 31, 1999, including the Named
Executive Officers.
(3) The exercise price per share of each option was equal to the fair market
value of the Company's common stock on the date of grant as determined by
the Board of Directors.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated assuming that the market
price of the Company's common stock on the date of grant appreciates from
the date of grant at the indicated annual rate compounded annually for the
entire term of the option and the option is exercised and sold on the last
day of its term for the appreciated stock price. No gain to the optionee is
possible unless the stock price increases over the option term.
(5) Twenty percent (20%) of the option vests one year from the vesting
commencement date, with subsequent vesting at a rate of 1.66% per month for
the next twenty-four (24) months and 3.33% per month for the remaining
twelve (12) months. The option expires ten years from the date of grant or
earlier upon termination of employment.
AGGREGATE OPTION EXERCISES IN FISCAL 1999 AND DECEMBER 31, 1999 OPTION VALUES
The following table sets forth the number and value of securities underlying
unexercised options held by each of the Named Executive Officers at
December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
SHARE VALUE OPTIONS AT VALUE OF UNEXERCISED IN-
ACQUIRED ON REALIZED DECEMBER 31, 1999 THE-MONEY OPTIONS AT
NAME EXERCISE (#) ($)(1) VESTED/UNVESTED (2) DECEMBER 31, 1999
- ---- ------------ -------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Louis G. Lange, M.D., Ph.D.......... -- $ -- 191,233/170,217 4,203,879/3,274,861
Andrew A. Wolff, M.D................ -- -- 73,916/68,584 1,569,750/1,277,594
Richard M. Lawn, Ph.D............... 20,000 77,000 30,612/59,888 577,408/1,121,561
Daniel K. Spiegelman................ -- -- 31,333/78,667 532,536/1,449,651
David C. McCaleb.................... -- -- 37,000/63,600 644,438/799,425
</TABLE>
- ------------------------
(1) Value realized is based on the fair market value of the Company's common
stock on the date of exercise minus the exercise price (or the actual sales
price if the shares were sold by the optionee simultaneously with the
exercise) without taking into account any taxes that may be payable in
connection with the transaction.
(2) Reflects shares vested and unvested at December 31, 1999. Certain options
granted under the 1994 Plan are immediately exercisable, but are subject to
the Company's right to repurchase unvested shares on termination of
employment.
(3) Based on the fair market value of the Company's common stock at
December 31, 1999 ($26.063) minus the exercise price of the options.
24
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee (the "Committee") of the Board of Directors
reviews and recommends to the Board of Directors for approval the Company's
executive compensation policies. During the year ended December 31, 1999, the
Committee consisted of non-employee directors David P. Holveck, Costa G.
Sevastopoulos, Ph.D. and J. Leighton Read, M.D. Mr. Holveck resigned as a
director effective October 26, 1999. The Committee annually evaluates the
performance, and determines the compensation, of the Company's Chief Executive
Officer and the other executive officers based upon a combination of several
factors: the achievement of corporate goals, individual performance and
comparisons with other biotechnology and biopharmaceutical companies. Companies
examined for comparative purposes may, but need not include those comprising the
Chase H & Q Biotechnology Index. The following is the report of the Committee
describing the compensation policies and rationales applicable to the Company's
executive officers with regard to the compensation payable to such executive
officers for the fiscal year ended December 31, 1999.
COMPENSATION PHILOSOPHY
The goals of the Company's compensation policies are to attract and retain
the highest quality executives, reward them for achieving the Company's goals
and objectives, and to motivate them to contribute to the long-term success and
value of the Company for stockholders. Compensation for the Company's executive
officers consists of a base salary and potential bonus, as well as potential
incentive compensation through stock options and stock ownership. The Company
awards cash and stock bonuses pursuant to an incentive bonus plan as set forth
below. The Committee considers the total current and potential long-term
compensation of each executive officer in establishing each element of
compensation.
BASE SALARY
The base salary component is designed to compensate executive officers
competitively at levels necessary to attract and retain qualified executives in
the pharmaceutical and biotechnology industry. The base salary for each officer
is set on the basis of individual performance, the salary levels in effect for
comparable positions within the Company's principal competitors, in accordance
with published biopharmaceutical and biotechnology compensation survey
information and other internal considerations. Based on such surveys, the
executive officers' salaries are set in the mid-range compared with other
biotechnology and biopharmaceutical companies. As a general matter, the base
salary for each executive officer is initially established through negotiation
at the time the officer is hired, taking into account such officer's
qualifications, experience, prior salary, and competitive salary information.
Year-to-year adjustments to each executive officer's base salary are based upon
individual performance for the year and changes in the general level of base
salaries of persons in comparable positions within the industry.
BONUSES
All regular employees (including executive officers) of the Company were
eligible to receive cash bonuses payable in 2000 based upon achievement of
individual and corporate goals in 1999. The amounts of such bonuses for
executive officers other than the Chief Executive Officer were based upon the
recommendation of the Chief Executive Officer, subject to review and approval of
the Compensation Committee. The amounts of such bonuses for the Chief Executive
Officer were determined by the Compensation Committee. The Company makes
determinations with respect to bonuses based upon a
- ------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the Commission, and is not to be incorporated by reference into
any filing of the Company under the Securities Act of 1933, as amended (the
"1933 Act") or the 1934 Act, whether made before or after the date hereof
and irrespective of any general incorporation language contained in such
filing.
25
<PAGE>
subjective assessment of a variety of factors, both individual and corporate.
These factors include, in order of importance, the progress of the Company in
fulfilling its yearly performance objectives, the individual performance of each
executive officer and a comparison with other biotechnology and
biopharmaceutical companies. The Company's key goals in 1999 included advancing
its lead products through development and clinical testing within the budget
established by the Board of Directors, recruiting a high quality management
team, planning and entering into appropriate collaborative arrangements with
pharmaceutical and biotechnology companies for the development of additional
products and securing additional capital to enable the Company to fund its
operations. In December 1999, the Company reviewed the corporate goals and
determined that 90% of the 1999 goals had been achieved.
LONG-TERM INCENTIVES
The Committee provides the Company's executive officers with long-term
incentive compensation through grants of stock options. The Committee believes
that stock options provide the Company's executive officers with the opportunity
to purchase and maintain an equity interest in the Company and to share in the
appreciation of the value of the Company's common stock. The Committee believes
that stock options directly motivate executives to maximize long-term
stockholder value. The options also utilize vesting periods (generally four
years) that encourage key executives to continue in the employ of the Company.
All options granted to executive officers to date have been granted with
exercise prices equal to the fair market value of the Company's common stock on
the date of grant. The Committee considers the grant of each option
subjectively, considering factors such as the progress of the Company in
fulfilling its yearly performance objectives, individual performance of the
executive officer and the past and anticipated future contribution of the
executive officer to the attainment of the Company's long-term strategic
performance goals. Long-term incentives granted in prior years, including the
number of unvested options, are also taken into consideration. Consistent with
these policies, the Committee granted options to purchase an aggregate of
236,500 shares of common stock to seven executive officers during 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Chief Executive Officer is reviewed annually on the
same basis as discussed above for all executive officers. In 1999, Louis G.
Lange received a base salary of $296,250. Dr. Lange's salary was determined on
the basis of negotiations between the Board of Directors and Dr. Lange with due
regard for his qualifications, experience, prior salary, and competitive salary
information. Dr. Lange's base salary for 1999 was established in part by
comparing the base salaries of chief executive officers at other biotechnology
and pharmaceutical companies of similar size. In awarding stock options, the
Committee considered Dr. Lange's performance, the overall contribution to the
Company and the Company's achievement of its performance objectives, the number
of unvested options and total number of options to be granted. In 1999,
Dr. Lange received an option to purchase 70,000 shares of common stock. In
addition, Dr. Lange will receive a cash bonus of $110,000 in 2000 which is being
paid for his performance during 1999. Dr. Lange also received forgiveness of
$225,000 of indebtedness, of which $175,000 is forgivable over four years. See
"Certain Relationships and Related Transactions." As with other executive
officers, total compensation was based, in part, on the Company's
accomplishments and Dr. Lange's contribution, including completing and reporting
positive data from a Phase III clinical for the Company's lead product
candidate, ranolazine, initiating other critical path Phase III activities for
ranolazine, establishing a commercialization pathway in the United States for
ranolazine by signing a sales and marketing agreement, initiating a Phase II
clinical trial for the compound CVT-510, identifying a new cardiovascular
molecular target and completing a financing.
SECTION 162(M)
The Board has considered the potential effect of Section 162(m) of the
Internal Revenue Code of 1996, as amended, on compensation paid to the Company's
executive officers. Section 162(m) disallows a
26
<PAGE>
tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any taxable year for each of the executive officers
named in the proxy statement. Compensation above $1 million may be deducted if
it is "performance-based compensation." The Committee has determined that, where
practical, stock options granted to executive officers under the Company's stock
plans with an exercise price of at least equal to the fair market value of the
Company's common stock on the date of grant shall be treated as
"performance-based compensation" provided, however, that options to purchase
common stock granted to certain executive officers in 1997 may not be eligible
for such treatment.
The Compensation Committee of the Board of Directors of CV
Therapeutics, Inc.
Costa G. Sevastopoulos, Ph.D.
J. Leighton Read, M.D.
PERFORMANCE MEASUREMENT COMPARISON(2)
The following graph shows the total stockholder return of an investment of
$100 in cash since the Company's initial public offering of common stock on
November 19, 1996 through December 31, 1999 for (i) the Company's common stock,
(ii) the Nasdaq Stock Market (U.S.) Index and (iii) the Chase H&Q Biotechnology
Index. All values assume reinvestment of the full amount of all dividends,
although dividends have not been declared on the Company's common stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CV THERAPEUTICS, INC. NASDAQ STOCK MARKET (U.S.) CHASE H & Q BIOTECHNOLOGY
<S> <C> <C> <C>
11/19/1996 100 100 100
12/96 87 103 103
12/97 126 126 104
12/98 64 177 158
12/99 350 328 338
</TABLE>
- ------------------------
(2) This section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the 1933 Act or the 1934 Act whether made before or after the
date hereof and irrespective of any general incorporation language in any
such filing.
27
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOANS
The Company has provided Louis G. Lange, M.D., Ph.D., Chairman of the Board
of Directors and Chief Executive Officer, with several loans. In August 1992,
the Company provided a loan in the principal amount of $500,000 at an annual
interest rate of 7.0%, pursuant to a promissory note secured by a deed of trust
on Dr. Lange's residence (the "1992 Note"). In June 1993, the Company provided a
loan in the principal amount of $25,000, at an annual interest rate of 5.33%,
pursuant to a promissory note secured by a stock pledge of 2,500 shares of CV
Therapeutics common stock held by Dr. Lange (the "1993 Note"). In June 1995, in
connection with the exercise of an option to purchase Common Stock, the Company
provided a loan in the principal amount of $37,500, at an annual interest rate
of 7.31%, pursuant to a promissory note secured by a pledge of 15,000 shares of
CV Therapeutics common stock held by Dr. Lange (the "1995 Note"). In
August 1996, the Company provided a loan to Dr. Lange in the principal amount of
$25,000, at an annual interest rate of 6.84%, pursuant to a promissory note
secured by a pledge of 2,500 shares of CV Therapeutics common stock held by
Dr. Lange (the "1996 Note").
In September 1996, the Company amended all four notes. Under the terms of
each amended note. the loans bear interest at the rate of 6.53% compounded
semi-annually and the outstanding principal amount is due on the earliest of
December 31, 2001, the termination of employment or a change in control. At the
same time, the Company forgave all interest due on the four loans as of
December 31, 1995 ($92,880). In addition, the Company will pay Dr. Lange the
following amounts for mortgage assistance: $50,000 in 1997, $40,000 in 1998,
$30,000 in 1999, $20,000 in 2000 and $10,000 in 2001. The forgiveness of the
accrued interest on the notes to Dr. Lange was accounted for as compensation
expense in the period in which the interest was deemed to have been forgiven.
In February 1999, the Compensation Committee approved the forgiveness of
one-half of the $350,000 remaining balance of the 1992 Note, or $175,000, over a
four year period beginning on February 19, 2000, with $43,750 to be forgiven per
year at the end of each twelve month period. In January 2000, the Company
approved the forgiveness of the 1993 Note and the 1996 Note, or a total of
$50,000. The forgiveness of the notes to Dr. Lange is accounted for as
compensation expense in the period in which the note is deemed to have been
forgiven.
The largest aggregate principal amount outstanding on the four notes in 1999
was $437,500. Under the terms of an Amended and Restated Stock Pledge Agreement,
the 1993 Note, 1995 Note and 1996 Note are secured by a stock pledge of 13,750
shares of CV Therapeutics common stock held by Dr. Lange. As of March 29, 2000,
an aggregate principal amount of $343,750 remained outstanding on the two
remaining notes.
In October 1999, the Board approved and in February 2000 the Company made a
loan to David C. McCaleb, who has served as the Vice President, Marketing since
October 1999, in the principal amount of $100,000 at an annual interest rate of
6.21%, pursuant to a promissory note secured by deed of trust on Mr. McCaleb's
residence. The outstanding principal amount is due on the earliest of
December 31, 2005, the termination of employment, or a change of control. The
Company will annually forgive 20% of the principal.
QUINTILES TRANSNATIONAL CORP.
In May 1999, CV Therapeutics entered into a sales and marketing services
agreement with Innovex, Inc., a subsidiary of Quintiles Transnational Corp.
Under this agreement, if ranolazine is approved for sale in the United States by
the Food and Drug Administration, Innovex will fund product launch and the first
five years of sales and marketing expenses. CV Therapeutics will receive 100% of
the revenues from sales of ranolazine and will pay Innovex a share of those
revenues.
28
<PAGE>
The agreement calls for Innovex to conduct pre-launch activities, hire and
train a dedicated cardiology sales force to launch and promote ranolazine, and
provide post-launch marketing and sales services. To fund pre-launch activities,
Quintiles will provide CV Therapeutics with a $10 million credit facility at the
time CV Therapeutics files with FDA for approval. CV Therapeutics is required to
spend a minimum of $10 million on ranolazine pre-launch marketing activities so
long as Quintiles provides advances under the credit facility. Upon FDA
approval, Quintiles will make a $10 million milestone payment to CV
Therapeutics, which CV Therapeutics is obligated to use to repay any amounts
outstanding under the credit facility. Should the Company file for approval and
draw down the credit facility, but never receive FDA approval, it is obligated
to repay the loan within 10 years of the date it received the loan.
Innovex has agreed to provide services for at least three years after launch
and to provide services in years four and five after launch if minimum sales
levels are met. The agreement also specifies the minimum number of sales
representatives and the minimum level of dollars to be spent on marketing by
Innovex during the first two years of the contract, regardless of sales levels.
The minimum size of the sales force and the marketing expenses in year three or
any subsequent year must be maintained by Innovex as long as minimum sales
levels are met.
In exchange for providing these sales and marketing services, Innovex will
receive up to an average of 33% of revenues in the first two years of sales,
declining to 30% for the third year and declining again to 25% in years four and
five. Further, in exchange for giving CV Therapeutics the option to retain this
trained sales force at the end of the contract, Innovex will receive a royalty
on sales of 7% in the sixth year and 4% in the seventh year after launch.
In connection with the agreement, Quintiles purchased 1,043,705 shares of
the Company's common stock for a total purchase price of $5.0 million.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
[LOGO]
Alan C. Mendelson
Secretary
April 7, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: DANIEL K. SPIEGELMAN, CV
THERAPEUTICS, INC. 3172 PORTER DRIVE, PALO ALTO, CA 94304.
29
<PAGE>
---------------------------
COMPANY #
CONTROL #
---------------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY:
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until noon on May 15, 2000.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/cvtx/ -- QUICK *** EASY *** IMMEDIATE
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
noon on May 15, 2000.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to CV Therapeutics, Inc., c/o Shareowner
Services-TM-, P.O. Box 64873, St. Paul, MN 55164-0873.
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
- PLEASE DETACH HERE -
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
1. To elect two directors to hold / / Vote FOR / / Vote WITHHELD
office until the 2003 Annual all nominees from all nominees
Meeting of Stockholders.
Louis G. Lange, M.D., Ph.D. and 2. Isaac Stein
TO WITHHOLD AUTHORITY TO VOTE FOR ANY ---------------------------
NOMINEE(S) WRITE SUCH NOMINEE(S)' NAME(S)
IN THE BOX PROVIDED TO THE RIGHT. ---------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2, 3, 4 AND 5.
2. To approve the Company's 2000 Equity / / For / / Against / / Abstain
Incentive Plan and the issuance of
up to 1,500,000 shares of common
stock under such plan, to replace the
Company's 1992 Stock Option Plan and
1994 Equity Incentive Plan under which
plans an aggregate of approximately
113,000 shares of common stock reserved
for future awards would cease to be
available for such purpose.
3. To approve the Company's Non-Employee / / For / / Against / / Abstain
Director's Stock Option Plan, as
amended to increase the aggregate
number of shares of common stock
authorized for issuance under such plan
by 150,000 shares.
4. To approve the Company's Employee / / For / / Against / / Abstain
Stock Purchase Plan, as amended to
increase the aggregate number of
shares of common stock authorized
for issuance under such plan by
75,000 shares and to provide for
annual increases for five years as
more fully described in the
accompanying Proxy Statement.
5. To ratify the selection of Ernst & Young / / For / / Against / / Abstain
LLP as independent auditors of the
Company for its fiscal year ending
December 31, 2000.
Address Change? Mark Box / / Please vote, date and promptly return
Indicate changes below: this proxy in the enclosed return
envelope which is postage prepaid if
mailed in the United States.
Dated
---------------------------
---------------------------------------
---------------------------------------
Signature(s) in Box
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR
MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS AND ATTORNEYS-IN-FACT
SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY
AUTHORIZED OFFICER SIGN, STATING
TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
<PAGE>
CV THERAPEUTICS, INC. PROXY
- --------------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 16, 2000
The undersigned hereby appoints Louis G. Lange, M.D., Ph.D. and Daniel K.
Spiegelman, and each of them, as attorneys and proxies of the undersigned,
with full power of substitution, to vote all of the shares of stock of CV
Therapeutics, Inc. which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of CV Therapeutics, Inc. to be held at 3172
Porter Drive, Palo Alto, California on Tuesday, May 16, 2000 at 9:00 a.m.
(local time), and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as
to any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, 4 AND 5, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
SEE REVERSE FOR VOTING INSTRUCTIONS
<PAGE>
APPENDIX A
CV THERAPEUTICS, INC.
2000 EQUITY INCENTIVE PLAN
ADOPTED MARCH 31, 2000
APPROVED BY STOCKHOLDERS _______________, 2000
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to
receive Stock Awards are the Employees, Directors and Consultants of the
Company and its Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock through
the granting of the following Stock Awards: (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire
restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards,
to secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee of one or more members of the
Board appointed by the Board in accordance with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means CV Therapeutics, Inc., a Delaware corporation.
(g) "CONSULTANT" means any person, including an advisor, (i)
engaged by the Company or an Affiliate to render consulting or advisory
services and who is compensated for such services or (ii) who is a member of
the Board of Directors of an Affiliate. However, the term "Consultant" shall
not include either Directors who are not compensated by the Company
1.
<PAGE>
for their services as Directors or Directors who are merely paid a director's
fee by the Company for their services as Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with
the Company or an Affiliate, whether as an Employee, Director or Consultant,
is not interrupted or terminated. The Participant's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's service to the Company or an Affiliate. For
example, a change in status without interruption from an Employee of the
Company to a Consultant of an Affiliate or a Director will not constitute an
interruption of Continuous Service. The Board or the chief executive officer
of the Company, in that party's sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave, military leave or
any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the
Company.
(k) "DISABILITY" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in 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 Board deems reliable.
(ii) In the absence of such markets for the Common Stock,
the Fair Market Value shall be determined in good faith by the Board.
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) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
a current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or a subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(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 an Incentive Stock Option or a Nonstatutory
Stock Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms
and conditions of the Plan.
(u) "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.
(v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated corporation"
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in
any capacity other than as a Director or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.
(w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "PLAN" means this CV Therapeutics, Inc. 2000 Equity Incentive
Plan.
(y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor to Rule 16b-3, as in effect from time to time.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3.
<PAGE>
(aa) "STOCK AWARD" means any right granted under the Plan, including
an Option, a stock bonus and a right to acquire restricted stock.
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
(cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; what type or combination of types of Stock
Award shall be granted; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive Common Stock pursuant to a Stock Award; and the number
of shares of Common Stock with respect to which a Stock Award shall be
granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in
Section 12.
(iv) To terminate or suspend the Plan as provided in
Section 13.
(v) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the
Plan to a Committee or Committees of one (1) or more members of the Board,
and the term "Committee" shall apply to any person or persons to whom such
authority has been delegated. If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of the Plan,
the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to
4.
<PAGE>
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
(ii) COMMITTEE COMPOSITION. In the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of
such authority, the Board or the Committee may (1) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority
to grant Stock Awards to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or (2) delegate to a committee of one or more members of the Board who
are not Non-Employee Directors the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange Act.
(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to
review by any person and shall be final, binding and conclusive on all
persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate one million
five hundred thousand (1,500,000) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not
acquired under such Stock Award shall revert to and again become available
for issuance under the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the
Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options
may be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.
5.
<PAGE>
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not
be granted an Incentive Stock Option unless the exercise price of such Option
is at least one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of
Section 11 relating to adjustments upon changes in the shares of Common
Stock, no Employee shall be eligible to be granted Options covering more than
three hundred thousand (300,000) shares of Common Stock during any calendar
year.
(d) CONSULTANTS. A Consultant shall not be eligible for the grant
of a Stock Award if, at the time of grant, a Form S-8 Registration Statement
under the Securities Act ("Form S-8") is not available to register either the
offer or the sale of the Company's securities to such Consultant because of
the nature of the services that the Consultant is providing to the Company,
or because the Consultant is not a natural person, or as otherwise provided
by the rules governing the use of Form S-8, unless the Company determines
both (i) that such grant (A) shall be registered in another manner under the
Securities Act (E.G., on a Form S-3 Registration Statement) or (B) does not
require registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and, if certificates are issued, a separate certificate
or certificates will be issued for shares of Common Stock purchased on
exercise of each type of Option. The provisions of separate Options need not
be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of
each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, no Incentive Stock Option shall be exercisable
after the expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the
exercise price of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise
price of each Nonstatutory Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted.
6.
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Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) (1)
by delivery to the Company of other Common Stock, (2) according to a deferred
payment or other similar arrangement with the Optionholder or (3) in any
other form of legal consideration that may be acceptable to the Board. Unless
otherwise specifically provided in the Option, the purchase price of Common
Stock acquired pursuant to an Option that is paid by delivery to the Company
of other Common Stock acquired, directly or indirectly from the Company,
shall be paid only by shares of the Common Stock of the Company that have
been held for more than six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting
purposes). At any time that the Company is incorporated in Delaware, payment
of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive
Stock Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the
Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may
be exercised (which may be based on performance or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options may
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vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which
an Option may be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an
Optionholder's Continuous Service terminates (other than upon the
Optionholder's death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder's Continuous Service (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionholder's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in
subsection 6(a) or (ii) the expiration of a period of three (3) months after
the termination of the Optionholder's Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.
(j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability,
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement) or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified herein, the Option shall terminate.
(k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for
a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder's death pursuant to subsection 6(e)
or 6(f), but only within the period ending on the earlier of (1) the date
eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement) or (2) the expiration of the term
of such Option as set forth in the Option Agreement. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder's Continuous Service terminates to
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exercise the Option as to any part or all of the shares of Common Stock
subject to the Option prior to the full vesting of the Option. Any unvested
shares of Common Stock so purchased may be subject to a repurchase option in
favor of the Company or to any other restriction the Board determines to be
appropriate. The Company will not exercise its repurchase option until at
least six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes) have elapsed
following exercise of the Option unless the Board otherwise specifically
provides in the Option.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change
from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit.
(ii) VESTING. Shares of Common Stock awarded under the
stock bonus agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In
the event a Participant's Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the
stock bonus agreement.
(iv) TRANSFERABILITY. Rights to acquire shares of Common
Stock under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the stock
bonus agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the stock bonus agreement remains subject to the
terms of the stock bonus agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and conditions
as the Board shall deem appropriate. The terms and conditions of the
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate restricted stock purchase agreements need
not be identical, but each restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
(i) PURCHASE PRICE. The purchase price under each
restricted stock purchase agreement shall be such amount as the Board shall
determine and designate in such restricted stock purchase agreement. The
purchase price shall not be less than one hundred percent (100%) of the
Common Stock's Fair Market Value on the date such award is made or at the
time the purchase is consummated.
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(ii) CONSIDERATION. The purchase price of Common Stock
acquired pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; provided, however, that at any
time that the Company is incorporated in Delaware, then payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law,
shall not be made by deferred payment.
(iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement shall be subject to a share repurchase
option in favor of the Company pursuant to a vesting schedule to be
determined by the Board in accordance with the following guidelines: (A) the
vesting period for shares of Common Stock acquired under restricted stock
purchase agreements shall be no less than three (3) years unless based upon
performance milestones, in which event the vesting period shall be no less
than one (1) year; and (B) notwithstanding the provisions of Section 10(a),
the Board may not accelerate such vesting except under extraordinary
circumstances, such as the death, disability or divorce of the Participant,
or a change in corporate structure of the Company.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In
the event a Participant's Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock
held by the Participant which have not vested as of the date of termination
under the terms of the restricted stock purchase agreement.
(v) TRANSFERABILITY. Rights to acquire shares of Common
Stock under the restricted stock purchase agreement shall be transferable by
the Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock
purchase agreement remains subject to the terms of the restricted stock
purchase agreement.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards,
the Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to grant Stock Awards and to issue and sell
shares of Common Stock upon exercise of the Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.
10.
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9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall
have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will
vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any
shares of Common Stock subject to such Stock Award unless and until such
Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or
any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause,
(ii) the service of a Consultant pursuant to the terms of such Consultant's
agreement with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the
Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that
the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant,
as a condition of exercising or acquiring Common Stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to the
Participant's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the Stock
Award; and (ii) to give written assurances satisfactory to the Company
stating that the Participant is acquiring Common Stock subject to the Stock
Award for the Participant's own account and not with any present intention of
selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (1) the issuance of the shares of Common Stock upon the
exercise or acquisition of Common Stock under the Stock Award has been
registered
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under a then currently effective registration statement under the Securities
Act or (2) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of
a Stock Award Agreement, the Participant may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
Common Stock under a Stock Award by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering
a cash payment; (ii) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the Participant
as a result of the exercise or acquisition of Common Stock under the Stock
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or
(iii) delivering to the Company owned and unencumbered shares of Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt
of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to subsection 4(a) and the maximum
number of securities subject to award to any person pursuant to subsection
5(c), and the outstanding Stock Awards will be appropriately adjusted in the
class(es) and number of securities and price per share of Common Stock
subject to such outstanding Stock Awards. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.
The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the Company.
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.
(c) CHANGE OF CONTROL. (i) Subject to clause (ii) below, in the
event of a Change of Control, to the extent permitted by law, any surviving
corporation or acquiring corporation may assume any Stock Awards outstanding
under the Plan or substitute similar stock awards (including awards to
acquire the same consideration paid to the stockholders in the Change of
Control) for those outstanding under the Plan. In the event any surviving
corporation or acquiring corporation does not assume such Stock Awards or
substitute similar stock awards for those outstanding under the Plan, then
with respect to Stock Awards held by Participants whose Continuous Service
has not terminated, the vesting of such Stock Awards (and, if applicable, the
time during which such Stock Awards may be exercised) shall be accelerated in
full, and the
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Stock Awards shall terminate if not exercised (if applicable) at or prior to
such event. With respect to any other Stock Awards outstanding under the
Plan, such Stock Awards shall terminate if not exercised (if applicable)
prior to such event.
(ii) In the event of a Change of Control not approved by the Board,
each outstanding Stock Award under the Plan shall become fully vested, and
the Company's right of repurchase shall lapse with respect to shares received
upon exercise of a Stock Award prior to full vesting, notwithstanding the
terms of the Stock Award or any early exercise stock purchase agreement,
immediately prior to the consummation of such Change of Control.
For purposes of this Plan, "Change of Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation (other
than a merger or consolidation in which shareholders immediately before the
merger or consolidation have, immediately after the merger or consolidation,
equal or greater stock voting power); (iii) a reverse merger in which the
Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise (other than a reverse merger in which stockholders immediately
before the merger have, immediately after the merger, greater stock voting
power); or (iv) any transaction or series of related transactions in which in
excess of 50% of the Company's voting power is transferred.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section 11 relating
to adjustments upon changes in Common Stock, no amendment shall be effective
unless approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy the requirements of Section 422 of the Code,
Rule 16b-3 or any Nasdaq or securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or
to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring
the Plan and/or Incentive Stock Options granted under it into compliance
therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the
Plan unless (i) the Company requests the consent of the Participant and (ii)
the Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time
to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under
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any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon its adoption by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
15. CHOICE OF LAW.
The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.
14.
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APPENDIX B
CV THERAPEUTICS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS ON SEPTEMBER 23, 1996
APPROVED BY THE STOCKHOLDERS ON OCTOBER 29, 1996
AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 23, 2000
APPROVED BY THE STOCKHOLDERS ON _____________, 2000
1. PURPOSE.
(a) The purpose of the Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of CV Therapeutics, Inc.
(the "Company") who is not otherwise an employee of the Company or of any
Affiliate of the Company (each such person being hereafter referred to as a
"Non-Employee Director") will be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated
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to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board, subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate four hundred thousand (400,000)
shares of the Company's common stock. If any option granted under the Plan shall
for any reason expire or otherwise terminate without having been exercised in
full, the stock not purchased under such option shall again become available for
the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is a Non-Employee Director on the date this
amendment and restatement of the Plan is adopted by the Board automatically
shall be granted an option to purchase fifteen thousand (15,000) shares of
the Company's common stock (after taking into account the 1:10 reverse split
adopted by the Board in September 1996) on the terms and conditions set forth
herein.
(b) Each person who is, after the date this amendment and
restatement of the Plan is adopted by the Board, elected for the first time
to be a Non-Employee Director automatically
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shall, upon the date of such person's initial election to be a Non-Employee
Director by the Board or stockholders of the Company, be granted an option to
purchase fifteen thousand (15,000) shares of the Company's common stock
(after taking into account the 1:10 reverse split adopted by the Board in
September 1996) on the terms and conditions set forth herein.
(c) At each annual meeting of the stockholders following the
effectiveness of the initial public offering of the Company's common stock
until and including the 1998 Annual Meeting, each person then serving as a
Non-Employee Director automatically shall be granted an option to purchase
five thousand (5,000) shares of the Company's common stock (after taking into
account the 1:10 reverse split adopted by the Board in September 1996) on the
terms and conditions set forth herein; at each annual meeting of the
stockholders beginning with the 1999 Annual Meeting, each person then serving
as a Non-Employee Director automatically shall be granted an option to
purchase seven thousand five hundred (7,500) shares of the Company's common
stock on the terms and conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the date of grant. If the optionee's service as a
Director of the Company terminates for any reason or for no reason, the option
shall terminate on the earlier of the Expiration Date or the date three (3)
months following the date of termination of service; PROVIDED, HOWEVER, that if
such termination of service is due to the optionee's death, the option shall
terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death. In any and all circumstances, an
option may be exercised following termination of the optionee's service as a
Non-Employee Director of the Company only as to that number of shares as to
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which it was exercisable on the date of termination of such service under the
provisions of subparagraph 6(e).
(b) Subject to applicable law, the exercise price of each option shall
be the fair market value of the stock subject to such option on the date such
option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise when the number of shares being purchased upon such exercise
is less than 1,000 shares; but when the number of shares being purchased upon an
exercise is 1,000 or more shares, the optionee may elect to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash at the
time of exercise; or
(ii) Provided that at the time of the exercise the Company's
common stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at its fair market
value on the date preceding the date of exercise; or
(iii) Payment by a combination of the methods of payment
specified in subparagraph 6(c)(i) and 6(c)(ii) above.
Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.
(d) An option shall not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the option is
4.
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granted only by such person or by such person's guardian or legal
representative. The person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.
(e) Each option shall become exercisable as follows: the initial
grants described in Sections 5(a) and 5(b) shall become exercisable ("vest")
as to thirty-three and thirty-three one hundredths percent (33.33%) twelve
(12) months from the date of grant and then at the rate of two and
seventy-seven one hundredths percent (2.77%) per month over the next
twenty-four (24) months; and the annual grants described in Section 5(c)
shall vest twelve (12) months from the date of grant; provided in each case
that the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director or as an employee of or
consultant to the Company or any Affiliate of the Company, whereupon such
option shall become fully exercisable in accordance with its terms with
respect to that portion of the shares represented by that installment.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for
5.
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the Company that such requirement need not be met in the circumstances under the
then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
(h) The Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that any optionee
not sell or otherwise transfer or dispose of any shares of common stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the
Company filed under the Securities Act as may be requested by the Company or the
representative of the underwriters.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; PROVIDED, HOWEVER, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the
6.
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lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
7.
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(e) As used in this Plan, fair market value means, as of any date, the
value of the common stock of the Company determined as follows:
(i) If the common stock of the Company is listed on any
established stock exchange, or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of a share of common stock of the
Company shall be the closing sales price for such stock (or the closing bid, if
no sales were reported) as quoted on such exchange or market (or the exchange or
market with the greatest volume of trading in common stock of the Company) 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 Board deems reliable;
(ii) In the absence of such markets for the common stock of
the Company, the Fair Market Value shall be determined in good faith by the
Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the common
stock subject to the Plan, or subject to any option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Section 3 and the number of shares subject to options that may be
granted pursuant to Section 5, and the outstanding options will be appropriately
adjusted in the class(es) and number of securities and price per share of common
stock subject to such outstanding options. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive. The
conversion of any convertible
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securities of the Company shall not be treated as a transaction "without receipt
of consideration" by the Company.
(b) (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding options shall terminate
immediately prior to such event.
(c) (c) CHANGE OF CONTROL. (i) Subject to clause (ii) below, in the
event of a Change of Control, to the extent permitted by law, any surviving
corporation or acquiring corporation may assume any options outstanding under
the Plan or substitute similar options (including awards to acquire the same
consideration paid to the stockholders in the Change of Control) for those
outstanding under the Plan. In the event any surviving corporation or acquiring
corporation does not assume such options or substitute similar options for those
outstanding under the Plan, then with respect to options held by optionees who
meet the continuous service criteria set forth in Section 6(e), the vesting of
such options (and, if applicable, the time during which such options may be
exercised) shall be accelerated in full, and the options shall terminate if not
exercised (if applicable) at or prior to such event. With respect to any other
options outstanding under the Plan, such options shall terminate if not
exercised (if applicable) prior to such event.
(ii) In the event of a Change of Control not approved by the Board,
each outstanding option under the Plan shall become fully vested,
notwithstanding the terms of the option, immediately prior to the consummation
of such Change of Control.
For purposes of this Plan, "Change of Control" means: (i) a sale of
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, equal or
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greater stock voting power); (iii) a reverse merger in which the Company is the
surviving corporation but the shares of common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will increase the number of shares which may be
issued under the Plan.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be altered or impaired by such amendment unless
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten years from the date the Board
approves this amendment and restatement of the Plan. No options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
10.
<PAGE>
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) This amendment and restatement of the Plan shall become effective
upon adoption by the Board of Directors, subject to the condition subsequent
that this amendment and restatement of the Plan is approved by the stockholders
of the Company. Following the effective date of this amendment and restatement,
options shall not be granted under the terms of the Plan in effect prior to such
effective date.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
11.
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APPENDIX C
CV THERAPEUTICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED SEPTEMBER 23, 1996
APPROVED BY THE STOCKHOLDERS IN NOVEMBER 1996
AMENDED BY THE BOARD OF DIRECTORS FEBRUARY 23 AND MARCH 31, 2000
APPROVED BY THE STOCKHOLDERS ON ___________, 2000
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of CV Therapeutics, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the
<PAGE>
exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate two hundred twenty-five
thousand (225,000) shares of the Company's common stock (the "Reserved Shares").
In addition, on the day following each annual meeting of the Company's
stockholders beginning with the meeting in 2001, and continuing through and
including the meeting in 2005, the number of Reserved Shares will be increased
automatically by the LEAST of (i) one half of one percent (0.5%) of the total
number of shares of Company's common stock outstanding on such date, (ii) one
hundred thousand (100,000) shares or (iii) a number of shares determined by the
Board, which number shall be less each of (i) and (ii) above. If any right
granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise)
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the period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent
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(5%) or more of the total combined voting power or value of all classes of stock
of the Company or of any Affiliate. For purposes of this subparagraph 5(c), the
rules of Section 424(d) of the Code shall apply in determining the stock
ownership of any employee, and stock which such employee may purchase under all
outstanding rights and options shall be treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined by the Board for each Offering) during the
period which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
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(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings (as defined
by the Board for each Offering) during the Offering. The payroll deductions made
for each participant shall be credited to an account for such participant under
the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
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<PAGE>
(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
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10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, as determined by the Board in its
sole discretion (i) any surviving or acquiring corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment
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shall be effective unless approved by the stockholders of the Company within
twelve (12) months before or after the adoption of the amendment, where the
amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval
in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee
stock purchase plan treatment under Section 423 of the Code or to
comply with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
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15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the same day that the Company's
initial public offering of shares of common stock becomes effective (the
"Effective Date"), but no rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted by the
Board or the Committee, which date may be prior to the Effective Date.
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