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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
GENELABS TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[GENELABS LOGO]
May 18, 2001
To Our Shareholders:
You are cordially invited to attend the 2001 annual meeting of the
shareholders of Genelabs Technologies, Inc. The meeting will be held at
Genelabs' principal executive offices at 505 Penobscot Drive, Redwood City,
California 94063 on Thursday, June 21, 2001, at 10:00 a.m. local time.
At the meeting, you will be asked to elect members to the board of
directors and to approve the adoption of the Genelabs Technologies, Inc. 2001
Stock Option Plan and the Genelabs Technologies, Inc. 2001 Employee Stock
Purchase Plan. These matters are described more fully in the proxy statement
attached hereto and made a part hereof.
I would like to thank you for your support as a Genelabs Technologies, Inc.
shareholder and urge you to please complete, date, sign and return the enclosed
proxy as soon as possible. We look forward to seeing you at the meeting.
Sincerely,
/s/ Irene A. Chow, Ph.D.
Irene A. Chow, Ph.D.
Chairman of the Board
and Chief Executive Officer
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GENELABS TECHNOLOGIES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE: THURSDAY, JUNE 21, 2001
TIME: 10:00 A.M., P.D.T.
PLACE: 505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063
NOTICE IS HEREBY GIVEN that the 2001 annual meeting of the shareholders of
Genelabs Technologies, Inc., a California corporation, will be held at the place
and time indicated above for the following purposes:
1. ELECTION OF DIRECTORS. To elect eight directors to the board of
directors, each to serve until the next annual meeting of shareholders
and until his or her successor has been elected and qualified or until
his or her earlier resignation or removal;
2. ADOPTION OF 2001 STOCK OPTION PLAN. To approve the adoption of the 2001
Stock Option Plan;
3. ADOPTION OF 2001 EMPLOYEE STOCK PURCHASE PLAN. To approve the adoption
of the 2001 Employee Stock Purchase Plan; and
4. OTHER BUSINESS. To transact other business that may properly come before
the annual meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy
statement that is attached and made a part hereof.
The board of directors has fixed the close of business on Thursday, April
26, 2001 as the record date for determining the shareholders entitled to notice
of and to vote at the annual meeting and any adjournment or postponement
thereof.
Whether or not you expect to attend the annual meeting in person, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope provided to ensure your representation
and the presence of a quorum at the annual meeting. If you send in your proxy
card and then decide to attend the annual meeting to vote your shares in person,
you may still do so. Your proxy is revocable in accordance with the procedures
set forth in the proxy statement. 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.
By Order of the Board of Directors
/s/ Heather Criss Keller
Heather Criss Keller
Vice President, General Counsel and
Secretary
Redwood City, California
May 18, 2001
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GENELABS TECHNOLOGIES, INC.
505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063
------------------------
PROXY STATEMENT
DATE, TIME AND PLACE OF MEETING
This proxy statement is furnished to the shareholders of Genelabs
Technologies, Inc., a California corporation, in connection with the
solicitation by the board of directors of Genelabs of proxies in the
accompanying form for use in voting at the 2001 annual meeting of the
shareholders to be held on Thursday, June 21, 2001 at 10:00 a.m., local time, at
Genelabs' principal office located at 505 Penobscot Drive, Redwood City,
California 94063, and any adjournment or postponement thereof. The shares
represented by the proxies received, properly marked, dated, executed and not
revoked will be voted at the annual meeting. This proxy statement is being
mailed to shareholders on or about May 18, 2001.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by: (1) delivering to Genelabs (to
the attention of Heather Criss Keller, Genelabs' Vice President, General Counsel
and Secretary) a written notice of revocation or a duly executed proxy that is
signed at a later date by the person who signed the earlier proxy; or (2)
attending the annual meeting and voting in person.
DISSENTERS' RIGHTS OF APPRAISAL
Under applicable California law, none of the holders of common stock are
entitled to dissenters' rights of appraisal in connection with any proposal to
be acted on at the annual meeting.
SOLICITATION AND VOTING
The close of business on Thursday, April 26, 2001 has been fixed as the
record date for determining the holders of the shares of Genelabs common stock
entitled to notice of and to vote at the annual meeting. As of the close of
business on this record date, Genelabs had 49,478,876 shares of common stock
outstanding and entitled to vote. The presence of a majority of these shares at
the annual meeting, either in person or by proxy, will constitute a quorum for
the transaction of business.
Shareholders are generally entitled to one vote for each share of common
stock held as of the record date. In electing directors, however, each
shareholder has cumulative voting rights and therefore is entitled to cast a
number of votes equal to the number of shares held multiplied by the number of
directors to be elected. The shareholder may cast these votes all for a single
candidate or may distribute the votes among some or all of the candidates. No
shareholder will be entitled to cumulate votes for a candidate, however, unless
that candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the annual meeting
prior to the voting of an intention to cumulate votes. In this event, the proxy
holder may allocate the votes represented by proxies among the board of
directors' nominees in the proxy holder's sole discretion.
In the election of directors, the nominees receiving the highest number of
affirmative votes will be elected as directors. The affirmative vote of a
majority of the shares represented and voting at the annual meeting, either in
person or by proxy, will effectively approve the adoption of the 2001 Stock
Option Plan and the 2001 Employee Stock Option Plan.
An automated system administered by Genelabs' transfer agent will tabulate
votes cast by proxy and an employee of the transfer agent will tabulate votes
cast in person at the annual meeting. All votes will be tabulated by an
inspector of elections appointed for the annual meeting who will separately
tabulate
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affirmative and negative votes, abstentions and broker non-votes for each
proposal. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting, and each is tabulated
separately. However, broker non-votes are not counted for purposes of
determining the number of votes cast with respect to a particular proposal. In
determining whether a proposal has been approved, broker non-votes are not
counted as votes for or against the proposal. If no specific instructions are
given with respect to matters to be acted upon at the annual meeting, shares of
common stock represented by a properly executed proxy will be voted (1) FOR
election of the nominees for directors listed in Proposal No. 1, (2) FOR
approval of the adoption of the 2001 Stock Option Plan and (3) FOR approval of
the adoption of the 2001 Employee Stock Purchase Plan.
Genelabs will pay the expenses of soliciting proxies to be voted at the
annual meeting. Genelabs may conduct further solicitation personally,
telephonically or by facsimile through its officers, directors or regular
employees, none of whom will receive additional compensation for assisting with
such solicitation, or through an agent hired by Genelabs for such purpose to
whom Genelabs may pay compensation that is customary for such services.
Following the original mailing of the proxies and other soliciting materials,
Genelabs will request that brokers, custodians, nominees and other record
shareholders forward copies of the proxy and other soliciting materials to
persons for whom they hold shares and request authority for the exercise of
proxies. In such cases, upon the request of the record shareholders, Genelabs
will reimburse such holders for their reasonable expenses.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
Genelabs' bylaws state that the number of directors is not to be less than
five or more than nine. The number of directors on the board is currently fixed
at eight. At the annual meeting, the shareholders will be asked to elect all
eight directors, each of whom will serve until the next annual meeting of
shareholders or until a successor has been elected and qualified or until the
director's earlier resignation or removal. Shares represented by the
accompanying proxy will be voted for the election of the eight nominees unless
the proxy is marked to withhold authority to do so. If any nominee is unable to
serve for any reason or will not serve for good cause, the proxies may be voted
for such substitute nominee as the board of directors may determine. The board
of directors has no reason to believe that any of the persons named below will
be unable or unwilling to serve as a director if elected.
The names of the nominees, their ages as of April 27, 2001, and certain
other information about each of them are set forth below:
NAME AGE POSITION
---- --- --------
Irene A. Chow, Ph.D. ........................ 62 Chief Executive Officer and Chairman of the
Board of Directors
J. Richard Crout, M.D.(1).................... 71 Director
Thomas E. Dewey, Jr.(1)...................... 68 Director
Arthur Gray, Jr.(2).......................... 78 Director
H. H. Haight(2).............................. 67 Director
Alan Y. Kwan(1).............................. 55 Director
James A. D. Smith............................ 42 President and Director
Nina K. Wang(2).............................. 63 Director
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(1) Member of the Human Resources Committee.
(2) Member of the Audit and Finance Committee.
Each of the directors listed above was elected to be a director at
Genelabs' 2000 annual meeting of shareholders held on June 1, 2000.
There are no family relationships among any of Genelabs' directors or
executive officers.
Irene A. Chow, Ph.D. has been Chairman since April 1999 and has been Chief
Executive Officer since January 2001. From July 1995 through March 1999, Dr.
Chow was President and Chief Executive Officer. Dr. Chow joined Genelabs as an
officer and director in 1993. In addition to her duties at Genelabs, Dr. Chow is
also the chairman of the board of Genelabs Biotechnology Co., Ltd. Prior to
joining Genelabs, Dr. Chow held several positions at Ciba-Geigy Corporation,
most recently as Senior Vice President of Drug Development for the
pharmaceuticals division. Prior to joining Ciba-Geigy, Dr. Chow served as an
associate professor and an assistant dean of Health Related Medical School,
State University of New York. Dr. Chow holds a B.A. degree in Literature from
National Taiwan University, and both an M.A. and a Ph.D. in Biostatistics from
the University of California, Berkeley.
J. Richard Crout, M.D. has been a director of Genelabs since January 1999.
Dr. Crout is a pharmaceutical industry consultant, providing regulatory and drug
development advice to pharmaceutical and biotechnology companies. Prior to
forming Crout Consulting in 1994, Dr. Crout served as Vice President, Medical
and Scientific Affairs of Boehringer Mannheim Pharmaceuticals Corporation. Dr.
Crout has also headed the Office of Medical Applications of Research at the
National Institutes of Health and served as director of the Bureau of Drugs (now
the Center for Drug Evaluation and Research) at the Food and Drug
Administration. Dr. Crout is currently a member of the board of directors of
Trimeris, Inc.
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Thomas E. Dewey, Jr. has been a director of Genelabs since January 1999.
Mr. Dewey is a senior investment banker and financial adviser with McFarland
Dewey & Co., LLC, an investment banking firm in New York City concentrating in
health care. Prior to founding his first firm in 1976, Mr. Dewey was General
Partner of the international investment banking firm Kuhn, Loeb & Co. Mr. Dewey
is currently a senior trustee of Lenox Hill Hospital, where he was Chairman for
a 10-year term, and a director of Northwest Natural Gas Company.
Arthur Gray, Jr. has been a director of Genelabs since March 1991. Mr. Gray
has been Senior Managing Director of Carret & Co. since October 1999.
Previously, Mr. Gray was a Managing Director of Cowen Investment Counselors, a
division of Cowen & Co., from July 1993 to September 1999. Prior to joining
Cowen, Mr. Gray was President and Chief Executive Officer of Dreyfus Personal
Management, Inc., a subsidiary of the Dreyfus Corporation, from January 1984 to
June 1993. Mr. Gray is also a director of Seventh Generation, an environmental
product catalog company.
H. H. Haight has been a director of Genelabs since May 1989. Mr. Haight is
President and Chief Executive Officer of Argo Global Capital, Inc., where he
specializes in high-technology industries. Prior to joining Argo in 1998, Mr.
Haight was a Managing Director of Advent International Corporation, an advisor
and manager of international venture capital funds, where he was closely
involved in Advent's Far East activities and responsible for Advent's Far East
Group from 1985 through 1998. Mr. Haight holds a B.S. in Forestry from the
University of California, Berkeley and an M.B.A. from Harvard University. Mr.
Haight serves on the board of directors of Novatel Wireless, Inc.
Alan Y. Kwan has been a director of Genelabs since January 1999. Mr. Kwan
is an attorney based in Houston, Texas, where he maintains a general legal
practice with an emphasis in business transactions and asset management.
Previously, for more than 20 years Mr. Kwan was active in real estate
development and general management for several Hong Kong-based international
companies including the Chinachem Group, Swire Properties, Ltd. and Tai Cheung
Properties, Ltd. Mr. Kwan was also a director of the Hong Kong operation of
China International Trust & Investment Corp.
James A. D. Smith has been President of Genelabs since April 1999. From
January 2000 to January 2001, Mr. Smith also served as Chief Executive Officer.
From October 1996 through March 1999, Mr. Smith was Chief Operating Officer.
From June 1995 through September 1996, Mr. Smith was Vice President, Marketing
and Business Development, and from January 1994 through June 1995, Mr. Smith was
Director of Marketing. Prior to joining Genelabs, Mr. Smith was with ICN
Pharmaceuticals for more than ten years in various marketing and business
development positions, most recently as Director of Worldwide Business
Development. Mr. Smith has a B.S. in Molecular and Cellular Biology from the
University of California, San Diego.
Nina K. Wang has been a director of Genelabs since February 1997. Mrs. Wang
is the Chairlady of the Chinachem Group, one of Hong Kong's largest private real
estate developers. Mrs. Wang is currently a director of Yangming Marine
Transport Corporation in Taiwan, Bank of Overseas Chinese in Taiwan, Chelsfield
PLC in the United Kingdom and the University of International Business and
Economics and the Foreign Affairs College in China. Mrs. Wang created the Ruxin
Agricultural Award to recognize technological advancements and achievements in
agriculture in China, is the Honorary President of the Chinese Red Cross
Foundation, and is Special Advisor to the World Federation of United Nations
Associations. Mrs. Wang is a John Harvard Fellow of Harvard University and is a
Professor at both Peking University and The Foreign Affairs College.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors met twelve times in 2000. All directors attended at
least 75% of the meetings of the board and of the committees on which they
served, except for Mr. Haight and Mrs. Wang, who attended less than 75% of such
meetings. The board of directors currently has two committees: the Human
Resources Committee and the Audit and Finance Committee. The board does not have
a nominating committee or a committee performing similar functions.
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The Audit and Finance Committee is composed of three non-employee
directors: Mr. Gray, Mr. Haight and Mrs. Wang. Each of these committee members
is "independent" as such term is defined by the National Association of
Securities Dealers. The Audit and Finance Committee reviews Genelabs' accounting
practices, internal control systems, cash investment policy and filings with the
Securities and Exchange Commission and meets with Genelabs' outside auditors
concerning the scope and terms of their engagement and the results of their
audits. The Audit and Finance Committee also is responsible for evaluating
significant finance transactions. The Audit and Finance Committee met four times
in 2000. The charter of the Audit and Finance Committee is attached as Annex A
to this proxy statement. Additional information regarding this committee's
activities in 2000 are set forth below under the heading "Report of the Audit
and Finance Committee."
The Human Resources Committee is composed of three non-employee directors:
Dr. Crout, Mr. Dewey and Mr. Kwan. The Human Resources Committee is responsible
for reviewing compensation paid to executive officers and for administering
Genelabs' stock option and employee benefit plans. The Human Resources Committee
met four times in 2000. Additional information regarding this committee's
activities in 2000 are set forth below under the heading "Report of the Human
Resources Committee."
COMPENSATION OF DIRECTORS
As of January 2001, non-employee directors are eligible to receive $1,500
for each board meeting he or she attends in person and $500 for each meeting he
or she attends by telephone. All directors also are reimbursed for actual
business expenses incurred in attending board and committee meetings. Upon his
or her first election to the board, each non-employee director is granted an
option to purchase 30,000 shares of Genelabs common stock at an exercise price
equal to the fair market value of the common stock on the date of grant. At each
annual meeting after the second anniversary of each director's election to the
board, each non-employee director is granted an additional option to purchase
15,000 shares. Directors who are also employees are granted options under the
1995 Stock Option Plan in accordance with Genelabs' general compensation policy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF ALL DIRECTORS NOMINATED.
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PROPOSAL NO. 2
APPROVAL OF THE ADOPTION OF THE
2001 STOCK OPTION PLAN
The shareholders will be asked to approve the adoption of the 2001 Stock
Option Plan at the annual meeting.
On April 23, 2001, the board of directors adopted the 2001 Stock Option
Plan (the "2001 Option Plan"), subject to shareholder approval. The board of
directors believes the proposed 2001 Option Plan, pursuant to which 2,500,000
shares of Genelabs common stock will be reserved for issuance of awards, is
essential to maintain balanced and competitive total compensation programs.
Genelabs currently grants options under its sole existing stock option plan, the
1995 Stock Option Plan, as amended (the "1995 Plan"), which was approved by
Genelabs' shareholders in May 1995. As of April 20, 2001, 852,888 shares of
Genelabs common stock remained available for future grants under the 1995 Plan
and 3,840,611 shares of common stock were subject to outstanding options granted
under the 1995 Plan. Without the adoption of the 2001 Option Plan, sufficient
shares will not be available under the 1995 Plan to provide for continued option
grants in 2001 and beyond, consistent with the purpose of Genelabs' normal
compensation practices. The 2001 Option Plan would enable Genelabs to continue
to attract and retain high quality employees.
Immediately prior to the 2001 annual meeting of shareholders of Genelabs,
subject to shareholder approval of the adoption of the 2001 Option Plan, the
1995 Plan will be merged and incorporated into the 2001 Option Plan and shall
terminate and no further option grants shall be made thereunder. Upon approval
of the 2001 Option Plan, all shares of Genelabs common stock available for grant
under the 1995 Plan as of such time, and all shares of Genelabs common stock
that are subject to outstanding awards under the 1995 Plan that remain unissued
upon expiration or cancellation of awards thereunder, will be transferred to the
2001 Option Plan.
SUMMARY OF THE 2001 OPTION PLAN
The following summary of the material provisions of the proposed 2001
Option Plan does not purport to be complete, and is subject to and qualified in
its entirety by reference to the complete text of the 2001 Option Plan, which is
attached as Annex B to this proxy statement.
SHARES SUBJECT TO THE 2001 OPTION PLAN. The stock reserved for issuance
pursuant to the exercise of options under the 2001 Option Plan will consist of
2,500,000 shares of authorized but unissued Genelabs common stock or treasury
shares, subject to certain adjustments as described below. Generally, shares
subject to an award that remain unissued upon expiration or cancellation of an
award will be available for other awards under the 2001 Option Plan. On April
20, 2001, the closing price of Genelabs common stock as reported on the NASDAQ
National Market, was $2.75 per share.
ELIGIBILITY. In addition to the shares that will be transferred from the
1995 Option Plan, the 2001 Option Plan provides that options may be granted only
to such employees, directors, consultants, officers, independent contractors and
advisors (provided that such consultants, independent contractors and advisors
render bona fide services not in connection with the offer or sale of securities
in a capital-raising transaction) of Genelabs or any parent, subsidiary or
affiliate of Genelabs as the Administrator (as defined below) may determine
(including directors who are also employees or consultants). Approximately 130
employees and consultants are currently eligible to participate in the 2001
Option Plan, and currently there are six non-employee directors eligible for
automatic grants as described below. The 2001 Option Plan provides that an
optionee will be eligible to receive options to purchase up to an aggregate
maximum of 500,000 shares during each calendar year.
ADMINISTRATION. The 2001 Option Plan will be administered by the Human
Resources Committee or other committee appointed by the board of directors or
the board itself (in each case, the "Administrator"). The committee would
consist of certain members who are intended to be "disinterested persons" within
the meaning of the provisions of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and "outside directors"
within the meaning of the Internal Revenue Code of 1986, as
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amended (the "Code"), unless otherwise determined by the Administrator. The
Administrator is authorized, amongst other things, to construe, interpret and
implement the provisions of the 2001 Option Plan, to select the persons to whom
awards will be granted and to determine the terms and conditions of such awards.
The interpretation or construction by the Administrator of any provision of the
2001 Option Plan or of any option granted thereunder will be final and binding
on all optionees.
AWARDS UNDER THE 2001 OPTION PLAN. The 2001 Option Plan authorizes the
grant of awards of incentive stock options ("ISOs") to eligible employees or
non-qualified stock options to eligible employees, directors, consultants,
independent contractors and advisors. The 2001 Option Plan also provides that
upon the election or appointment of a non-employee director to the board, he or
she will be granted automatically a non-qualified stock option to purchase
30,000 shares of Genelabs common stock. Additionally, at the annual shareholders
meeting after the second anniversary of such election or appointment to the
board and at each subsequent annual shareholders meeting, each such director
will be granted an additional option to purchase 15,000 shares of Genelabs
common stock. Non-employee director options will be fully vested and exercisable
in their entirety immediately upon grant except that no such options will be
exercisable after the expiration of ten years from the date the option is
granted.
TERMS OF OPTIONS. Subject to the terms and conditions of the 2001 Option
Plan, the Administrator, in its discretion, will determine for each option
whether the option is to be an ISO or a non-qualified stock option, the number
of shares for which the option will be granted, the exercise price of the
option, the periods during which the option may be exercised and other terms and
conditions. Each option is evidenced by an option grant in such form as the
Administrator approves and is subject to the following conditions:
Exercise Price. The exercise price of an option may not be less than 85% of
the fair market value of the shares of Genelabs common stock on the date of
grant, and the exercise price of any ISO may not be less than 100% of the fair
market value of the shares of Genelabs common stock on the date of grant, and
any ISO granted to a holder of greater than 10% of the total combined voting
shares may not be less than 110% of the fair market value of the shares of
Genelabs common stock on the date of the grant.
Form of Payment. The exercise price is generally payable in cash or by
check. In addition, upon approval by the Administrator, the option exercise
price may also be payable by: (i) cancellation of indebtedness of Genelabs owed
to the optionee; (ii) surrender of shares of fully paid common stock that have
been owned by an optionee for more than six months; (iii) by promissory note
subject to certain terms; (iv) by waiver of compensation due or accrued to the
optionee; (v) through a "same day sale"; (vi) through a "margin commitment";
(vii) by any combination of the foregoing that the Administrator may authorize;
or (viii) by any other method approved by the Administrator.
Term of Options and Vesting. Under the 2001 Option Plan, options would
generally be permitted to be exercisable for up to ten years, except that an ISO
granted to a 10% shareholder can only be exercisable for five years. All options
are subject to earlier expiration due to termination of employment or service
with Genelabs. Each stock option agreement will specify the vesting and
exercisability of the option granted thereunder.
Limitations on ISOs. An individual will not be eligible to receive an ISO
unless such individual is an employee of Genelabs or of a parent or subsidiary
of Genelabs. The 2001 Option Plan also includes other provisions intended to
satisfy certain tax requirements relating to ISOs.
Transferability. Generally, stock options granted under the 2001 Option
Plan will not be transferable or assignable by an optionee except by will or by
the laws of descent and distribution, and will be exercisable during the
lifetime of the optionee only by the optionee except that, upon approval of the
Administrator, a non-qualified stock option may be transferred to family
members, trusts and charitable institutions.
CHANGE IN CONTROL AND ADJUSTMENTS. The number of shares subject to the 2001
Option Plan and any option will be adjusted in the event of, amongst other
things, a stock dividend, stock split, reverse stock split or similar change
relating to Genelabs common stock. In general, in the event of a change in
control of Genelabs, unless otherwise provided in the applicable stock option
agreement or other agreement, any or all outstanding options will accelerate and
become exercisable in full upon the occurrence of such change in control.
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COMPLIANCE WITH RULE 16B-3 AND CODE SECTION 162(m). The 2001 Option Plan is
intended to comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act. In addition, the 2001 Option Plan is intended to provide
performance-based compensation so as to be eligible for compliance with Section
162(m) of the Code which, generally, limits the deduction of an employer for
compensation of certain covered officers. Under Section 162(m), certain
compensation, including compensation based on the attainment of performance
goals, may be disregarded for purposes of this deduction limit if certain
requirements are met. Among the requirements for compensation to qualify for
this exception is that the material terms pursuant to which the compensation is
to be paid is disclosed to and approved by the shareholders in a separate vote
prior to the payment. Accordingly, if the 2001 Option Plan is approved by
shareholders and the other conditions of Section 162(m) relating to
performance-based compensation are satisfied, compensation paid to covered
employees pursuant to the 2001 Option Plan will not fail to be deductible under
Section 162(m) of the Code. If shareholder approval is not obtained, the 2001
Option Plan will terminate and have no force or effect.
AMENDMENT AND TERMINATION OF THE 2001 OPTION PLAN. The Administrator may,
at any time, terminate or amend the 2001 Option Plan in any respect; provided,
however, that the Administrator will not, without shareholder approval, amend
the plan in any manner that requires such shareholder approval pursuant to the
Code or the regulations promulgated thereunder or pursuant to the Exchange Act
or Rule 16b-3 (or its successor) promulgated thereunder, to the extent the
Administrator intends the plan to comply with such foregoing requirement or law.
TERM OF THE 2001 OPTION PLAN. Options may be granted pursuant to the 2001
Option Plan from time to time until April 23, 2011, which is ten years after the
date the 2001 Option Plan was originally adopted by the Board of Directors,
unless earlier terminated.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summarizes certain U.S. federal income tax considerations
generally applicable to options granted under the 2001 Option Plan, if approved.
This summary does not purport to be complete and is based on current provisions
of the U.S. federal tax laws and regulations, all of which are subject to change
(possibly with retroactive effect) and does not address any tax consequences
arising under the laws of any state, local or foreign jurisdiction.
NON-QUALIFIED STOCK OPTIONS. Generally, an optionee will not be taxed upon
the grant of a non-qualified stock option. Rather, at the time that an optionee
exercises a non-qualified stock option (and in the case of an untimely exercise
of an ISO), the optionee will recognize ordinary income for U.S. federal income
tax purposes in an amount equal to the excess of the fair market value of the
shares purchased over the option price for such shares. Genelabs will generally
be entitled to a tax deduction at such time and in the same amount that the
optionee recognizes as ordinary income subject to the limits under Section
162(m) of the Code.
If the optionee sells or exchanges stock that was acquired upon exercise of
a non-qualified stock option (or upon an untimely exercise of an ISO), then the
optionee recognizes capital gain or loss equal to the difference between (i) the
sales price and (ii) the fair market value of such stock on the date that
ordinary income was recognized with respect thereto. Any such capital gain or
loss will be long-term capital gain or loss if such stock was held for more than
12 months at the time of the sale or exchange. Under current law, an optionee is
generally subject to U.S. federal income tax at a maximum rate of 20% of net
capital gain attributable to the sale of property held for more than 12 months.
INCENTIVE STOCK OPTIONS. If an optionee satisfies certain requirements, the
optionee will not be generally subject to U.S. federal income tax upon the grant
of an ISO or the timely exercise of an ISO (except that the alternative minimum
tax may apply). For purposes of the ISO rules under the Code, exercise of an ISO
will be timely if made during its term and if the optionee remains an employee
of Genelabs or its subsidiary at all times during the period beginning on the
grant date of the ISO and ending on the date three months before the exercise
date (or one year before the exercise date in the case of a disabled optionee).
Exercise of an ISO will also be timely for this purpose if made by the
optionee's legal representative and if the optionee dies (i) while in the employ
of Genelabs or its subsidiary or (ii) within three months after termination of
the optionee's
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employment. The U.S. federal income tax consequences of an untimely exercise of
an ISO are determined in accordance with the rules applicable to non-qualified
stock options. (See "United States Federal Income Tax
Consequences -- Non-Qualified Stock Options" above.)
If an optionee disposes of stock that was acquired pursuant to the timely
exercise of an ISO, then such optionee, except as noted below, will recognize
long-term capital gain or loss equal to the difference between the sales
proceeds and the option price. Genelabs, under these circumstances, will not be
entitled to any U.S. federal income tax deduction in connection with either the
exercise of the ISO or the sale of such stock.
If, however, an optionee disposes of stock acquired pursuant to the
exercise of an ISO before the expiration of two years from the grant date of the
ISO or within one year from the date such stock is transferred to him or her (a
"disqualifying disposition") upon exercise, any gain that was realized generally
will be taxable at the time of such disqualifying disposition as follows: (i) at
ordinary income rates to the extent of the difference between the option price
and the lesser of the fair market value of the stock on the exercise date or the
amount realized on such disqualifying disposition and (ii) as short-term or
long-term capital gain to the extent of any excess of the amount realized on
such disqualifying disposition over the fair market value of the stock on the
date that governs the determination of ordinary income. In such case, Genelabs
generally may claim a U.S. federal income tax deduction at the time of such
disqualifying disposition for the amount taxable to the optionee as ordinary
income subject to the limits of Section 162(m) of the Code. Any such capital
gain or loss will be long-term capital gain or loss if the optionee held such
stock for more than 12 months at the time of the disqualifying disposition.
Under current law, an optionee generally is subject to U.S. federal income tax
at a maximum rate of 20% of net capital gain attributable to the sale of
property held for more than 12 months.
ERISA INFORMATION
The 2001 Option Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
NEW PLAN BENEFITS
Genelabs cannot determine the amount of options under the 2001 Option Plan,
if approved, that will be granted in 2001 to specific officers, officers as a
group, or non-officer employees as a group. Grants under the 2001 Option Plan
will be made at the discretion of the Human Resources Committee or the Board of
Directors and, accordingly, are not yet determinable. In addition, benefits
under the 2001 Option Plan will depend on a number of factors, including the
fair market value of Genelabs common stock on future dates and the exercise
decisions made by optionees. Consequently, it is not possible to determine the
benefits that might be received by participants (except in the case of
non-employee directors) of awards that will be made thereunder during 2001 or
the awards that would have been made thereunder during 2000 had the 2001 Option
Plan been in effect. The following chart sets forth the name, position and grant
information for currently eligible non-employee directors if the 2001 Option
Plan is approved.
NAME NUMBER OF UNITS
---- ---------------
J. Richard Crout, M.D. ............................... 15,000
Thomas E. Dewey, Jr. ................................. 15,000
Arthur Gray, Jr. ..................................... 15,000
H. H. Haight.......................................... 15,000
Alan Y. Kwan.......................................... 15,000
Nina K. Wang.......................................... 15,000
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VOTE REQUIRED
The affirmative vote of a majority of the votes cast on this proposal will
be required to approve the 2001 Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPROVAL OF THE ADOPTION OF THE 2001 STOCK OPTION PLAN.
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PROPOSAL NO. 3
APPROVAL OF THE ADOPTION OF THE
2001 EMPLOYEE STOCK PURCHASE PLAN
The shareholders are being requested to approve the adoption of the
Genelabs 2001 Employee Stock Purchase Plan at the annual meeting.
On April 23, 2001, the board of directors adopted the 2001 Employee Stock
Purchase Plan (the "2001 ESPP"), subject to shareholder approval. The board of
directors believes the proposed 2001 ESPP, pursuant to which 2,000,000 shares of
Genelabs common stock will be reserved for issuance and purchase by eligible
employees, is essential to maintain balanced and competitive total compensation
programs.
Genelabs currently grants eligible employees rights to purchase shares of
Genelabs common stock under its sole existing employee stock purchase plan, the
Employee Stock Purchase Plan which was adopted in 1991 (the "1991 ESPP"). As of
April 20, 2001, 370,264 shares of Genelabs common stock remained available for
future purchases under the 1991 ESPP. Without adoption of the 2001 ESPP, the
1991 ESPP will expire and sufficient shares will not be available under the 1991
ESPP to provide for continued option grants in 2001 and beyond, consistent with
the purpose of Genelabs' normal compensation practices. The 2001 ESPP would
enable Genelabs to continue to (i) provide eligible employees of Genelabs and
its subsidiaries with a convenient means of acquiring an equity interest in
Genelabs through payroll deductions, (ii) enhance such employees' sense of
participation in the affairs of Genelabs and (iii) provide an incentive for
continued employment. The 2001 ESPP will further align the interests of
employees with those of shareholders through increased stock ownership.
SUMMARY OF THE 2001 ESPP
The following summary of the material provisions of the proposed 2001 ESPP
does not purport to be complete, and is subject to and qualified in its entirety
by reference to the complete text of the 2001 ESPP, which is attached as Annex C
to this proxy statement.
SHARES SUBJECT TO THE 2001 ESPP. A total of 2,000,000 shares of Genelabs
common stock has been reserved for purchase by eligible employees under the 2001
ESPP, subject to certain adjustments as described below.
ELIGIBILITY. All employees of Genelabs, or any parent or subsidiary
thereof, are eligible to participate in the 2001 ESPP except the following:
(1) employees who are not employed Genelabs or its subsidiaries, on
the day before the first day of the Offering Period (as defined below);
(2) employees who are customarily employed for less than 20 hours per
week;
(3) employees who are customarily employed for less than five months
in a calendar year; and
(4) employees who own or hold options to purchase or who, as a result
of participation in the 2001 ESPP, would own stock or hold options to
purchase stock possessing 5% or more of the total combined voting power or
value of all classes of Genelabs stock of pursuant to Section 424(d) of the
Code.
Approximately 130 employees are currently eligible to participate in the
2001 ESPP.
ADMINISTRATION. The 2001 ESPP would be administered by the Human Resources
Committee or other committee appointed by the Board (the "Committee") or the
Board itself (in each case, the "Administrator"). The Committee will consist of
certain members who are intended to be "disinterested persons" within the
meaning of the provisions of Rule 16b-3 promulgated under the Exchange Act
unless otherwise determined by the Administrator. Subject to the provisions of
the 2001 ESPP and Section 423 of the Code, all questions of interpretation or
application of the 2001 ESPP will be determined by the Administrator and its
decisions shall be final and binding upon all employees.
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PARTICIPATION. The 2001 ESPP would have 24-month offering periods (the
"Offering Periods") which will consist of four six-month purchase periods
(individually, a "Purchase Period"). Offering Periods will commence on January 1
and July 1 of each year and end on June 30 and December 31 of each year. The
Administrator has the power to change the timing and duration of Offering
Periods without shareholder approval.
PAYROLL DEDUCTIONS. Employees may participate in the 2001 ESPP during each
pay period through payroll deductions. An employee sets the rate of such payroll
deductions, which may not be less than 1% nor more than 15% of the employee's
base salary or wages, bonuses, overtime, shift premiums and commissions, plus
draws against commissions, unreduced by the amount by which the employee's
salary is reduced pursuant to Sections 125 or 401(k) of the Code. The amount of
payroll deductions may not exceed $25,000 per year unless otherwise determined
by the Administrator. An employee may increase or lower the rate of payroll
deductions for any upcoming Purchase Period but may only lower the rate of
payroll deductions during the current Purchase Period.
CERTAIN LIMITATIONS. As required by tax law, no employee may receive an
option under the 2001 ESPP to purchase shares of Genelabs common stock which
have a fair market value in excess of $25,000 for any calendar year, determined
at the time such option is granted. Additionally, the Administrator may set a
maximum number of shares of common stock that may be purchased by any employee
at any single purchase date. If the number of shares of common stock to be
purchased on the first day of the purchase period by all employees participating
in the 2001 ESPP exceeds the number of shares then available for issuance under
the 2001 ESPP, Genelabs will make a pro rata allocation of the remaining shares
in as uniform a manner as shall be practicable and as the Administrator shall
determine to be equitable.
PURCHASE PRICE. The purchase price of shares that may be acquired in any
Offering Period under the 2001 ESPP will be 85% of the lesser of (a) the fair
market value of the shares on the first day of the Offering Period or (b) the
fair market value of the shares on the last business day of the Offering Period.
PURCHASE OF STOCK. The number of whole shares that an employee will be able
to purchase in any Offering Period will be determined by dividing the total
amount of payroll deductions from the employee's salary during the Offering
Period by the price per share determined as described above. The purchase shall
take place automatically on the last day of the Offering Period.
WITHDRAWAL. An employee may withdraw from any Offering Period at any time
at least 15 days prior to the end of an Offering Period. No further payroll
deductions for the purchase of shares will be made for the succeeding Offering
Period unless the employee enrolls in the new Offering Period in the same manner
as for initial participation in the 2001 ESPP.
TERMINATION OF EMPLOYMENT. Termination of an employee's employment for any
reason, including retirement or death, immediately cancels his or her
participation in the 2001 ESPP. In such event, the payroll deductions credited
to the employee's account will be returned to such employee.
CHANGE IN CONTROL AND ADJUSTMENTS. The number of shares subject to the 2001
ESPP and any right to purchase stock thereunder will be adjusted in the event
of, amongst other things, a stock dividend, stock split, reverse stock split or
similar change relating to Genelabs common stock. In general, in the event of a
change in control of Genelabs, the Offering Period will terminate on such date
as determined by the Administrator and all payroll deductions on such date shall
be used to purchase such number of applicable shares of Genelabs common stock,
unless otherwise provided by the Administrator.
AMENDMENT AND TERMINATION OF THE 2001 ESPP. The Administrator may, at any
time, terminate or amend the 2001 ESPP in any respect except that any such
amendment or termination cannot adversely affect options previously granted
under the 2001 ESPP without the employees' consent and, further provided, that
the Administrator will not make certain amendments without shareholder approval
as set forth in the 2001 ESPP.
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TERM OF THE 2001 ESPP. Options may be granted pursuant to the 2001 ESPP
from time to time until April 23, 2011, which is ten years after the date the
2001 ESPP was originally adopted by the board of directors, unless earlier
terminated.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summarizes certain U.S. federal income tax considerations
generally applicable to options granted under the 2001 ESPP, if approved. This
summary does not purport to be complete and is based on current provisions of
the U.S. federal tax laws and regulations, all of which are subject to change
(possibly with retroactive effect) and does not address any tax consequences
arising under the laws of any state, local or foreign jurisdiction.
TAX TREATMENT OF EMPLOYEES UNDER THE 2001 ESPP
The 2001 ESPP is intended to be an "employee stock purchase plan" as
defined in Section 423 of the Code. Amounts deducted from an employee's pay
under the 2001 ESPP would be included in the employee's compensation subject to
federal income and social security taxes.
Assuming the satisfaction of certain conditions, an employee will not
recognize income for federal income tax purposes either upon enrollment in the
2001 ESPP or upon the purchase of shares of Genelabs common stock under the 2001
ESPP. All tax consequences are deferred until a participating employee sells the
shares or otherwise disposes of the shares.
If shares of Genelabs common stock are held for more than one year after
the date of purchase and more than two years after the beginning of the
applicable Offering Period, upon a sale or disposition of such shares, the
employee will generally realize ordinary income to the extent of the lesser of
(i) the actual gain (the amount by which the fair market value of the shares at
the time of such sale or disposition exceeds the purchase price) or (ii) an
amount equal to 15% of the fair market value of the shares on the first day of
the Offering Period, if the shares were purchased at no less than 85% of the
fair market value of the shares on the first day of the Offering Period. Any
additional gain upon the sale or disposition of shares should be treated as
long-term capital gain.
If the shares are sold or otherwise disposed of within either the one-year
or the two-year holding periods described above (in either case a "disqualifying
disposition"), the employee would realize ordinary income at the time of sale or
other disposition taxable to the extent that the fair market value of the shares
at the date of purchase is greater than the purchase price. Any additional gain
or loss on such share or disposition will be long-term or short-term capital
gain or loss, depending on the holding period.
TAX TREATMENT OF GENELABS
Genelabs will be entitled to a deduction in connection with the disposition
of shares acquired under the 2001 ESPP to the extent that the employee
recognized ordinary income on a disqualifying disposition of such shares.
ERISA INFORMATION
The 2001 ESPP is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
NEW PLAN BENEFITS
Because Genelabs cannot presently determine the participation levels, rates
of deferral and the eventual purchase prices under the proposed 2001 ESPP, the
future benefits to be distributed under the 2001 ESPP are not determinable at
this time.
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VOTE REQUIRED
The affirmative vote of a majority of the votes cast on this proposal will
be required to approve the 2001 ESPP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPROVAL OF THE ADOPTION OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to Genelabs as of April
10, 2001, regarding the beneficial ownership of Genelabs common stock by:
- each person known to the board of directors to be the beneficial owner of
more than 5% of the outstanding common stock;
- each director and nominee;
- each executive officer named in the Summary Compensation Table herein;
and
- all directors and executive officers as a group.
Information with respect to beneficial ownership has been furnished by each
director, executive officer or 5% shareholder, as the case may be.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities, and includes shares of common
stock issuable pursuant to the exercise of stock options or warrants that are
immediately exercisable or exercisable within 60 days after April 10, 2001.
Unless otherwise indicated, the persons or entities identified in this table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to applicable community property laws.
NUMBER OF NUMBER OF
SHARES SHARES WITH RIGHT TOTAL SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED TO ACQUIRE BENEFICIALLY OWNED OUTSTANDING SHARES(1)
- ------------------------------------ --------- ----------------- ------------------ ---------------------
Veron International Limited(2)..... 5,391,633 -- 5,391,633 10.9%
Top Floor Chinachem Golden Plaza
77 Mody Road
Tsimshatsui East
Kowloon, Hong Kong
Watson Pharmaceuticals, Inc. ...... 3,000,000 500,000 3,500,000 7.0%
311 Bonnie Circle
Corona, California 92880
Irene A. Chow, Ph.D. .............. 12,502 740,763 753,255 1.5%
James A. D. Smith.................. 32,808 222,300 255,108 *
Matthew M. Loar.................... 39,813(3) 93,945 133,758 *
Arthur Gray, Jr. .................. 105,000(4) 10,000 115,000 *
Marc J. Gurwith, M.D. ............. 15,660 90,692 106,352 *
H. H. Haight....................... 45,162 30,000 75,162 *
Heather Criss Keller............... 23,582 35,380 58,962 *
J. Richard Crout, M.D. ............ 19,400(5) 20,000 39,400 *
Thomas E. Dewey, Jr. .............. 10,000 20,000 30,000 *
Nina K. Wang....................... -- 30,000 30,000 *
Alan Y. Kwan....................... 4,500 20,000 24,500 *
All directors and executive officers
as a group (13 persons)(6)....... 313,573 1,356,413 1,669,986 3.3%
- ---------------
* Represents less than 1%.
(1) Based on 49,475,876 shares of Genelabs common stock outstanding as of April
10, 2001.
(2) An investment holding company whose principal shareholder is Mrs. Wang, a
Genelabs director.
(3) Includes 5,000 shares held by Mr. Loar's children.
(4) Includes 15,000 shares held by trust of which Mr. Gray is the beneficiary
and 25,000 shares held by Mr. Gray's spouse.
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(5) Includes 8,000 shares held in trust for Dr. Crout's child and 1,400 shares
held in trust for Dr. Crout's nephew, for which Dr. Crout is trustee.
(6) Includes holdings of the above listed officers and directors and two other
Genelabs executive officers. Excludes shares held by Veron International,
Ltd.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth all compensation earned during the fiscal
years ended December 31, 2000, 1999 and 1998, by Genelabs' Chief Executive
Officer and each of Genelabs' four other most highly compensated executive
officers (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)
--------------------------- ---- --------- -------- ------------ ------------
Irene A. Chow, Ph.D.(2)................. 2000 262,550 150,000 89,605 40,000
Chairman of the Board 1999 263,542 79,326 101,164 135,000
and Chief Executive 1998 293,583 97,055 110,479 40,000
Officer
James A. D. Smith(3).................... 2000 256,650 -- 40,968 40,000
President 1999 216,275 38,028 42,225 90,000
1998 195,833 45,100 35,191 12,000
Marc J. Gurwith, M.D. .................. 2000 204,642 37,775 46,688(4) 30,000
Vice President, Drug Development 1999 196,617 38,690 34,943(5) 35,000
and Chief Medical Officer 1998 187,750 35,720 21,836(6) 4,000
Heather Criss Keller.................... 2000 161,282 34,200 6,107 45,000
Vice President, 1999 138,600 18,322 -- 20,000
General Counsel and Secretary 1998 25,057(7) -- -- 25,000
Matthew M. Loar......................... 2000 148,986 32,490 17,652 45,000
Vice President, Finance 1999 126,667 21,760 10,399 50,000
1998 111,417 15,288 5,303 6,000
- ---------------
(1) Unless otherwise noted, amounts in this column represent amounts vested in
the long-term portion of Genelabs' Annual and Long Term Incentive Based
Compensation Program.
(2) Dr. Chow was Chief Executive Officer through March 31, 1999 and was
re-appointed Chief Executive Officer on January 19, 2001.
(3) Mr. Smith served as Chief Executive Officer from April 1, 1999 through
January 18, 2001.
(4) Represents $29,840 vesting in the long-term portion of the Annual and Long
Term Incentive Based Compensation Program and forgiveness of $14,400 in
principal, and $2,448 in interest, of a loan made to Dr. Gurwith.
(5) Represents $16,943 vesting in the long-term portion of the Annual and Long
Term Incentive Based Compensation Program and forgiveness of $14,400 in
principal, and $3,600 in interest, of a loan made to Dr. Gurwith.
(6) Represents $5,036 vesting in the long-term portion of the Annual and Long
Term Incentive Based Compensation Program and forgiveness of $14,400 in
principal, and $2,400 in interest, of a loan made to Dr. Gurwith.
(7) Ms. Keller joined Genelabs on October 26, 1998.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding individual grants of
stock options granted during 2000 to each of the named executive officers.
INDIVIDUAL GRANTS
--------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(1) IN 2000 ($/SHARE) DATE ($)(2)
---- ------------- ---------- --------- ---------- -------------
Irene A. Chow, Ph.D. ................. 40,000 3.9 5.7969 1/20/2010 199,320
James A. D. Smith..................... 40,000 3.9 5.7969 1/20/2010 199,320
Marc J. Gurwith, M.D. ................ 30,000 3.0 5.7969 1/20/2010 149,490
Heather Criss Keller.................. 25,000 2.5 5.7969 1/20/2010 124,602
20,000 2.0 5.2500 9/08/2010 90,167
Matthew M. Loar....................... 25,000 2.5 5.7969 1/20/2010 124,602
20,000 2.0 5.2500 9/08/2010 90,167
- ---------------
(1) Stock options are awarded with an exercise price equal to the fair market
value of Genelabs common stock on the date of award. Generally, 25% of the
stock options become exercisable on the first anniversary of the date of
grant, with pro-rata monthly vesting thereafter for the remaining three
years, so long as employment with Genelabs continues. All of the options
granted have a 10-year term.
(2) The estimated "grant date present value" of options granted in 2000 is based
on a Black-Scholes option pricing model, a model that reflects certain
assumptions regarding variable factors such as interest rates and stock
price volatility. Stock options have value only as a result of appreciation
in the price of Genelabs common stock. If, at the time of exercise, the
price of Genelabs common stock is the same as or lower than the option
exercise price, there will be no gain to the optionee. Because changes in
the subjective input assumptions can materially affect the fair value
estimate, it is the belief of Genelabs that this model does not necessarily
provide a reliable single measure of the fair value of the options granted.
For the purposes of establishing the "grant date present value" shown in the
table, the model assumed a dividend yield of zero, risk-free interest rate
of 6.0%, volatility factor of the expected market price of the Genelabs
common stock of 1.0, and an expected life of the options of one year
subsequent to vesting.
OPTION EXERCISES AND OPTION VALUE FOR FISCAL 2000
There were no stock option exercises by any of the named executive officers
during 2000. The following table sets forth certain information concerning the
number and value of unexercised options held by each of the named executive
officers as of December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END OPTIONS AT YEAR-END
(#) ($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Irene A. Chow, Ph.D. ...................... 744,597 99,308 937,324 74,417
James A. D. Smith.......................... 193,519 99,081 189,138 104,209
Marc J. Gurwith, M.D. ..................... 68,735 60,265 85,847 45,600
Heather Criss Keller....................... 21,526 68,474 44,665 49,530
Matthew M. Loar............................ 75,542 77,858 55,753 53,395
- ---------------
(1) These values are based on the positive spread between the respective
exercise price of outstanding stock options and the fair market value of
Genelabs common stock at December 31, 2000 ($4.09). These amounts may not
represent amounts actually realized by the named executive officers.
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Notwithstanding anything to the contrary set forth in any of Genelabs'
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the Report of the Human Resources
Committee of the Board of Directors on Executive Compensation that follows shall
not be deemed to be incorporated by reference into any such filings and it is
not considered filed under the Securities Act or the Exchange Act unless this
section is specifically referenced.
REPORT OF THE HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Executive compensation and stock option grants to executives are reviewed
by the Human Resources Committee of the board of directors which generally makes
recommendations for approval by the board. This committee is currently composed
of three independent directors. Although Mr. Smith attended the meetings of this
committee during 2000, he did not vote on any matters that relate to
compensation and was excused from meetings when matters concerning his
compensation were discussed.
EXECUTIVE OFFICER COMPENSATION POLICIES
The Human Resources Committee acts on behalf of the board of directors to
establish Genelabs' general compensation policy for all employees, including
executive officers. The primary objective of the executive officer compensation
policies are to attract, reward, and retain executive officers and other
employees who contribute to Genelabs' long-term success. The committee typically
reviews base salary levels and target bonuses for the Chief Executive Officer,
President and other executive officers and key employees at or about the
beginning of each year.
In determining executive compensation levels, the Human Resources Committee
reviews third party surveys regarding cash compensation and stock option grants
to similarly situated executive officers at companies competing in the
biopharmaceutical industry. In addition, custom survey data are also reviewed on
a case-by-case, position-by-position basis as the committee deems necessary or
appropriate. The committee and the board strive to provide compensation packages
to the executive officers that are competitive with the companies surveyed.
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION
Genelabs offers a total compensation package consisting of base salary,
bonus and long-term equity incentives including stock option grants and
restricted share awards.
BASE SALARIES. For most of the executive officers, base salaries were
increased in February based on their previous base salary as well as the surveys
noted above and other information reviewed by the committee.
BONUSES. In addition to their base salaries, Genelabs' executive officers,
including the Chief Executive Officer, are each eligible to receive an annual
cash bonus under an incentive bonus program. The committee's philosophy in
compensating executive officers, including the Chief Executive Officer, is to
relate compensation principally to corporate and executive performance. Thus, a
portion of the cash compensation paid to the executive officers, including the
Chief Executive Officer, is in the form of discretionary bonus payments that are
paid on an annual basis. Under the incentive bonus program, cash bonuses are
awarded only if an executive officer achieves predetermined individual
performance objectives and Genelabs met certain corporate objectives that were
approved by the committee. Bonus payments are expressly linked to the attainment
of goals established for each executive officer, as well as overall corporate
goals, and are limited by the target bonus amount established for each executive
officer which is a percentage of the officer's base salary.
In the biopharmaceutical industry, traditional measures of corporate
performance, such as earnings per share or return on equity, may not readily
apply in evaluating the performance of executives. Because Genelabs has been
engaged primarily in research and development activities, its objectives are
based on other financial and strategic measures, such as the progress of
research and development programs, the establishment of cooperative development
and marketing relationships with corporate partners, the recruitment of
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management personnel, and the securing of capital resources sufficient to enable
Genelabs to further research and product development plans. General corporate
goals for 2000 included submission of a New Drug Application for Genelabs'
investigational drug for the treatment of systemic lupus erythematosus to the
FDA, reaching progress milestones in DNA-targeted research programs and securing
financing to support operating requirements.
The committee concluded that the executive officers' 2000 objectives were
met, and the committee generally awarded cash bonuses to its executive officers.
These bonuses were equal to a percentage of each executive officer's base
salary, determined by the degree to which the committee believed each such
executive officer realized his or her objectives. In addition, stock options
were granted as part of the annual review of performance.
LONG-TERM EQUITY INCENTIVES. Under the incentive bonus program established
for certain executive management positions, there is a long-term compensation
element that is in addition to the annual bonus described above. If an officer
in this category should be eligible for and receive an annual bonus, the amount
of the bonus will also be awarded in the long-term portion of the program. This
long-term element is designed to defer payments to the executive over a
three-year period, vesting one-third each year.
The number of shares subject to each stock option granted as long-term
equity incentives to executive officers is based, in part, on each officer's
anticipated future contribution and ability to impact corporate and/or business
unit results, past individual or corporate performance or consistency within the
executive's peer group. In making its decisions, the committee considers these
factors, as well as the number of options held by such executive officers as of
the date of grant that remained unvested. The goal of the plan is to encourage
the executive to remain with Genelabs on a long-term basis by committing the
payment of additional compensation if employment continues throughout the
vesting period.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Smith's 2000 bonus and salary were set by the committee with due regard
to his industry experience, competitive salary information and current market
conditions and in accordance with the committee's objectives and policies as set
forth above. As with other executive officers, the amount of Mr. Smith's total
compensation was based on Genelabs' 2000 results and his individual performance
with respect to meeting previously established performance objectives.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE OF 1986
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
provides that publicly-held companies may not deduct compensation paid to
certain of its top executive officers to the extent such compensation exceeds $1
million per officer in any year, Certain performance-based compensation is
specifically exempt from the deduction limit. The 1995 Stock Option Plan meets
the requirements of Section 162(m) of the Internal Revenue Code of 1986 and none
of the executive officers have received cash compensation exceeding the
statutory limit under Section 162(m).
HUMAN RESOURCES COMMITTEE
J. Richard Crout, Chair
Thomas E. Dewey, Jr.
Alan Y. Kwan
April 23, 2001
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Notwithstanding anything to the contrary set forth in any of Genelabs'
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the chart titled "Genelabs Stock Price
Performance" that follows shall not be deemed to be incorporated by reference
into any such filings and it is not considered filed under the Securities Act or
the Exchange Act unless it is specifically referenced.
GENELABS STOCK PRICE PERFORMANCE
The graph below compares the cumulative total shareholder return on
Genelabs common stock for the five-year period from December 31, 1995 through
December 31, 2000 with the cumulative total return on the NASDAQ Stock Market
Index (U.S. companies) and the NASDAQ Pharmaceuticals Stock Index over the same
period. The graph assumes an investment of $100 in Genelabs common stock and in
each of the indexes on December 31, 1995, and reinvestment of all dividends.
[PERFORMANCE GRAPH]
- --------------------------------------------------------------------------------------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------------------------------------------------------------------
Genelabs
Technologies,
Inc. 100.0 125.6 57.7 56.4 112.8 84.0
NASDAQ Stock Market 100.0 123.0 150.7 212.5 394.9 237.6
NASDAQ
Pharmaceuticals 100.0 100.3 103.7 132.0 248.0 308.5
- --------------------------------------------------------------------------------------
20
24
Notwithstanding anything to the contrary set forth in any of Genelabs'
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the Report of the Audit and Finance
Committee that follows shall not be deemed to be incorporated by reference into
any such filings and it is not considered filed under the Securities Act or the
Exchange Act unless this section is specifically referenced.
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee oversees Genelabs' financial reporting
process on behalf of the board of directors. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
this committee reviewed the audited financial statements in the Annual Report on
Form 10-K with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
This committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of Genelabs' accounting principles and
such other matters as are required to be discussed with this committee under
generally accepted auditing standards. In addition, this committee has discussed
with the independent auditors the auditors' independence from management and the
company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of non-audit
services with the auditors' independence.
This committee discussed and Genelabs' independent auditors have discussed
the overall scope and plans for their audits. This committee meets periodically
with the independent auditors, with and without management present, to discuss
the results of their examinations, their evaluations of Genelabs' internal
controls and the overall quality of Genelabs' financial reporting. This
committee held four meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, this
committee recommended to the board of directors, and the board has ratified, the
inclusion of the audited financial statements in the Annual Report on Form 10-K
for the year ended December 31, 2000 for filing with the Securities and Exchange
Commission.
AUDIT AND FINANCE COMMITTEE
H. H. Haight, Chair
Arthur Gray, Jr.
Nina K. Wang
April 23, 2001
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INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, audited Genelabs' financial
statements for the year ended December 31, 2000. Representatives of Ernst &
Young LLP are expected to attend the annual meeting, will have the opportunity
to make a statement if they desire to do so and are expected to be available to
respond to appropriate questions. The Audit and Finance Committee has considered
whether the provision of non-audit services by Ernst & Young LLP is compatible
with maintaining their independence, and has determined that it is.
Fees billed by Ernst & Young LLP for the fiscal year ended December 31,
2000 were as follows:
Audit Fees................................................ $124,500
Audit Related Fees........................................ 30,000
Financial Information Systems Design and Implementation
Fees.................................................... -0-
All Other Fees............................................ 39,000
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 2000 to the present, there have been no transactions in
which the amount involved exceeded $60,000 to which Genelabs or any of its
subsidiaries was a party and in which any executive officer, director, 5%
beneficial owner of common stock or member of the immediate family of any of the
foregoing persons had or have a direct or indirect material interest, except
certain transactions identified below.
In connection with Richard Waldron's departure from Genelabs as Vice
President, Chief Financial Officer, Genelabs forgave $100,000 of indebtedness
pursuant to a previously outstanding loan plus accrued interest, and Mr. Waldron
executed a customary release in Genelabs' favor.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING OF SHAREHOLDERS
A shareholder who wants to present a proposal to be considered for
inclusion in Genelabs' proxy materials for the 2002 annual meeting of
shareholders must submit that proposal in writing no later than January 7, 2002.
To be timely, shareholder proposals to be presented and considered at the 2002
annual meeting, but not through Genelabs' proxy materials, must be received in
writing by the Corporate Secretary at Genelabs' executive offices after March
23, 2002 and before April 23, 2002, unless the 2002 annual meeting is called for
a date earlier than May 22, 2002 or later than July 21, 2002, in which case such
proposal must be received by the Corporate Secretary no earlier than 90 days and
no later than 60 days prior to the date of the meeting. In the event that
Genelabs publicly announces the date of the 2002 annual meeting less than 70
days prior to the date of the meeting, shareholder proposals to be presented and
considered at the meeting, but not through Genelabs' proxy materials, must be
received by the Corporate Secretary within ten days following the date of such
announcement.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Genelabs' directors, executive
officers and persons who own more than 10% of Genelabs common stock
(collectively, "Reporting Persons") to file with the Securities and Exchange
Commission initial reports of ownership and changes in ownership of Genelabs
common stock. Reporting Persons are required by the Commission's regulations to
furnish the company with copies of all Section 16(a) reports they file. To
Genelabs' knowledge, based solely on its review of the copies of such reports
received or written representations from certain Reporting Persons that no other
reports were required, Genelabs believes that during its fiscal year ended
December 31, 2000, all Reporting Persons complied with all applicable filing
requirements.
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OTHER BUSINESS
The board does not presently intend to bring any other business before the
annual meeting, and, so far as is known to the board, no matters are to be
brought before the annual meeting except as specified in the Notice of the
Meeting. As to any business that may properly come before the annual meeting,
however, it is intended that proxies, in the form enclosed, will be voted in
respect thereof in accordance with the judgment of the persons voting such
proxies.
ALL SHAREHOLDERS 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.
23
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ANNEX A
GENELABS TECHNOLOGIES, INC.
AUDIT AND FINANCE COMMITTEE CHARTER
APPROVED BY THE BOARD OF DIRECTORS
OCTOBER 29, 1999
ORGANIZATION
The audit and finance committee of the board of directors shall be
comprised of at least three directors who are independent of management and the
Company. Members of the audit and finance committee shall be considered
independent if they have no relationship to the Company that may interfere with
the exercise of their independence from management and the Company. All audit
and finance committee members will be financially literate and have accounting
or related financial management expertise.
STATEMENT OF POLICY
The audit and finance committee shall provide assistance to the directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Company, and the quality and integrity of financial reports of the
Company. The audit and finance committee shall also provide assistance to the
directors in evaluating the Company's financial position and shall be
responsible for evaluating significant corporate acquisitions, divestitures and
fund raising activities. In so doing, it is the responsibility of the audit and
finance committee to maintain free and open communication between the directors,
the independent auditors, the internal auditors, and the financial management of
the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the audit and finance committee
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and to ensure to the directors and shareholders
that the corporate financial, accounting and reporting practices of the Company
are in accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit and finance committee
will:
- Obtain the full board of directors' approval of this Charter and review
and reassess this Charter as conditions dictate.
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Company and its
divisions and subsidiaries.
- Have a clear understanding with the independent auditors that they are
ultimately accountable to the board of directors and the audit and
finance committee, as the shareholders' representatives, who have the
ultimate authority in deciding to engage, evaluate, and if appropriate,
terminate their services.
- Beginning at such time as the audit and finance committee feels
appointment of an internal audit function is warranted, review and concur
with management's appointment, termination, or replacement of the
director of internal audit.
- Meet with the independent auditors and financial management of the
Company to review the scope of the proposed independent audit and the
procedures to be utilized, review the adequacy of the independent
auditor's compensation and comments or recommendations of the independent
auditors.
- Review with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the Company, and elicit any recommendations for the
improvement of such internal controls or particular areas where new or
more detailed controls or procedures are desirable. Particular emphasis
should be given to the adequacy of internal controls to
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expose any payments, transactions, or procedures that might be deemed
illegal or otherwise improper. Further, the committee periodically should
review company policy statements to determine their adherence to the code
of conduct.
- Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related Company compliance policies.
- Beginning at such time as the audit and finance committee feels
appointment of an internal audit function is warranted, review the
internal audit function of the Company including the independence and
authority of its reporting obligations, the proposed audit plans for the
coming year, and the coordination of such plans with the independent
auditors.
- Inquire of management, the internal auditor, and the independent auditors
about significant risks or exposures and assess the steps management has
taken to minimize such risks to the Company.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Review with financial management and the independent auditors the results
of their timely analysis of significant financial reporting issues and
practices, including changes in, or adoptions of, accounting principles
and disclosure practices, and discuss any other matters required to be
communicated to the committee by the auditors. Also review with financial
management and the independent auditors their judgments about the
quality, not just acceptability, of accounting principles and the clarity
of the financial disclosure practices used or proposed to be used, and
particularly, the degree of aggressiveness or conservatism of the
organization's accounting principles and underlying estimates, and other
significant decisions made in preparing the financial statements.
- Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the audit and finance committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the Company's
financial, accounting and auditing personnel, and the cooperation that
the independent auditors received during the course of audit.
- Review accounting and financial human resources and succession planning
within the Company.
- Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend the
full board of directors meeting to assist in reporting the results of the
annual audit or to answer other directors' questions (alternatively, the
other directors, particularly the other independent directors, may be
invited to attend the audit and finance committee meeting during which
the results of the annual audit are reviewed).
- On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. In addition, review with
the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
board of directors take, appropriate action to ensure the continuing
independence of the auditors.
- Monitor the Company's investments and financial position.
- Evaluate the Company's proposed and significant financing transactions,
including but not limited to acquisitions, divestitures and equity and
debt offerings.
- Submit the minutes of all meetings of the audit and finance committee to,
or discuss the matters discussed at each committee meeting with, the
board of directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
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ANNEX B
GENELABS TECHNOLOGIES, INC.
2001 STOCK OPTION PLAN
ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 23, 2001
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the 2001 Stock Option Plan (the "Plan"). The Plan
was adopted by the Board (defined below) on April 23, 2001, subject to the
approval of the shareholders of Genelabs Technologies, Inc. (the "Company"). The
purpose of the Plan is to enable the Company to attract, retain and provide
equity incentives to selected persons to promote the financial success of the
Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(1) "Administrator" means the Board, or if and to the extent the Board
does not administer the Plan, the Committee in accordance with Section 2
below.
(2) "Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to cause the direction of the
management and policies of the corporation, whether through the ownership
of voting securities, by contract or otherwise.
(3) "Board" means the Board of Directors of the Company.
(4) "Change in Control" means a change in the ownership or control of
the Company, effected through any of the following events:
(a) any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company; any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company; or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of Common Stock of the Company) is or becomes, after the
Effective Date (as defined herein), the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company
or its affiliates) representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of
such period constitute the Board, and any new director (other than a
director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (a), (c) or (d)
of this definition) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two thirds ( 2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute at least a majority thereof;
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A)
a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least sixty percent (60%) of
the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of
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the Company (or similar transaction) in which no person acquires more
than fifty percent (50%) of the combined voting power of the Company's
then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(5) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(6) "Committee" means the Human Resources Committee of the Board plus
such additional individuals as the Board shall designate in order to meet
the qualifications referred to in Section 162(m) of the Code and Rule 16b-3
as promulgated by the Securities and Exchange Commission under the Exchange
Act or any other committee the Board may subsequently appoint to administer
the Plan. Unless otherwise determined by the Board, the Committee shall be
composed entirely of members who meet the qualifications referred to in
Rule 16b-3 under the Exchange Act ("Rule 16b-3") and Section 162(m) of the
Code. If at any time the Board shall not administer the Plan, then the
functions of the Board specified in the Plan shall be exercised by the
Committee.
(7) "Common Stock" means the common stock, no par value per share, of
the Company.
(8) "Company" means Genelabs Technologies, Inc., a corporation
organized under the laws of the State of California (or any successor
corporation).
(9) "Disability" has the meaning as set forth in Section 22(e)(3) of
the Code.
(10) "Disinterested Person" shall have the meaning set forth in Rule
16b-3, and as such Rule may be amended from time to time, or any successor
definition adopted by the SEC.
(11) "Effective Date" shall mean the date provided pursuant to Section
11.
(12) "Eligible Recipient" means an employee, officer, director,
consultant, independent contractor or advisor (provided such consultant,
independent contractor or advisor renders bona fide services not in
connection with the offer or sale of securities in a capital-raising
transaction) of the Company or any Parent, Subsidiary or Affiliate of the
Company eligible to participate in the Plan pursuant to Section 4.
(13) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor thereto.
(14) "Fair Market Value" means, as of any given date, the fair market
value of a Share as determined by the Committee from time to time in good
faith; provided that (i) if the Shares are admitted to trading on a
national securities exchange, the fair market value of a Share on any date
shall be the closing price per Share reported on the last date preceding
such date on which a sale was reported, (ii) if the Shares are admitted to
quotation on the National Association of Securities Dealers Automated
Quotation ("Nasdaq") System or other comparable quotation system and has
been designated as a National Market System ("NMS") security, the fair
market value of a Share on any date shall be the closing price per Share
reported on the last trading day preceding such date as quoted on the
Nasdaq and as reported in the Wall Street Journal.
(15) "Incentive Stock Option" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(16) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option, including any Stock Option that provides (as of
the time such Stock Option is granted) that it will not be treated as an
Incentive Stock Option.
(17) "Optionee" means any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 2
below, to receive grants of Stock Options.
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31
(18) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of
the other corporations in the chain.
(19) "SEC" means the Securities and Exchange Commission.
(20) "Securities Act" means the Securities Act of 1933, as amended,
from time to time, or any successor thereto.
(21) "Share" means a share of the Common Stock.
(22) "Stock Option" means an option to purchase Shares granted
pursuant to Sections 5 and 6 below.
(23) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
(24) "Ten Percent Shareholder" means a person who owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary.
SECTION 2. ADMINISTRATION.
The Plan shall be administered in accordance with the requirements of
Section 162(m) of the Code (but only to the extent necessary and desirable to
maintain qualification of awards under the Plan under Section 162(m) of the
Code) and, to the extent applicable, Rule 16b-3, by the Board or, at the Board's
sole discretion, by the Committee, which shall be appointed by the Board, and
which shall serve at the pleasure of the Board.
Pursuant to the terms of the Plan, the Administrator shall have the power
and authority to grant Stock Options to Eligible Recipients pursuant to the
terms of the Plan. The Administrator may delegate to officers of the Company the
authority to grant Stock Options under this Plan to Eligible Recipients who are
not officers or directors of the Company whose transactions in the Company's
Common Stock are subject to Section 16(b) of the Exchange Act.
Additionally, subject to the terms and provisions of the Plan, the
Administrator's powers shall include, without limitation, the authority to:
(1) select those Eligible Recipients who shall be Optionees;
(2) determine whether and to what extent Stock Options are to be
granted hereunder to Optionees including whether a Stock Option is to be an
Incentive Stock Option or a Non-Qualified Stock Option;
(3) determine the number of Shares to be covered by each such Stock
Option granted hereunder, the exercise price of a Stock Option and the
period during which the Stock Option may be exercised;
(4) determine other terms and conditions, not inconsistent with the
terms of the Plan, of each Stock Option granted hereunder;
(5) determine whether an Optionee has ceased to be employed or
retained by the Company or any Parent, Subsidiary or Affiliate of the
Company and the effective date on which such employment terminated and
whether an Optionee who is a director, consultant, independent contractor
or advisor is employed or retained by the Company or any Parent, Subsidiary
or Affiliate of the Company;
(6) adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable;
B-3
32
(7) interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and
(8) otherwise supervise the administration of the Plan.
All decisions and interpretations made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on the Company and
all persons having an interest in any Stock Option or any Shares purchased
pursuant to a Stock Option.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of Shares reserved and available for issuance under the
Plan shall be 2,500,000. Such Shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares. No one Optionee shall be
eligible to receive more than 500,000 Shares during any single calendar year
during the term of this Plan pursuant to the grant of Stock Options hereunder.
Upon shareholder approval of the Plan, (1) the Company's 1995 Stock Option Plan
(the "1995 Plan") shall be merged and incorporated into the Plan, effective
immediately prior to the 2001 annual meeting of the shareholders of the Company,
(2) all outstanding options under the 1995 Plan shall be treated as outstanding
under the Plan; provided however, that each outstanding option so incorporated
shall be governed solely by the express terms and conditions of the 1995 Plan
and all other instruments evidencing the grant of such options, and (3) all
available shares for grant under the 1995 Plan as of such date shall be
available for grant hereunder, and any and all shares that would otherwise be
returned to the 1995 Plan by reason of expiration of its term or cancellation
upon termination of employment or service shall be available again for grant
hereunder as of such date of cancellation or termination. Effective immediately
prior to the 2001 annual meeting of the shareholders of the Company, and subject
to shareholder approval of the Plan at such meeting, the 1995 Plan shall
terminate and no further option grants shall be made therefrom.
Consistent with the provisions of Section 162(m) of the Code, as from time
to time applicable, to the extent that a Stock Option expires or is otherwise
terminated without being exercised, such Shares shall again be available for
issuance in connection with future awards granted under the Plan. If any Shares
have been pledged as collateral for indebtedness incurred by an Optionee in
connection with the exercise of a Stock Option and such Shares are returned to
the Company in satisfaction of such indebtedness, such Shares shall again be
available for issuance in connection with future awards granted under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, combination or other change in
the capital structure of the Company, as may be determined by the Administrator,
in its sole discretion and subject to any required action by the Board or
shareholders of the Company and compliance with applicable securities laws, a
substitution or adjustment shall be made in (i) the aggregate number of Shares
reserved for issuance under the Plan and (ii) the kind, number and option price
of Shares subject to outstanding Stock Options granted under the Plan; provided,
however, that the number of shares subject to any award shall always be a whole
number; and provided further, that the exercise price may not be decreased to
below the par value, if any, for the Shares. Such other substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. In connection with any event described in this paragraph, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.
SECTION 4. ELIGIBILITY.
Non-Qualified Stock Options may be granted to employees, directors,
consultants, officers, independent contractors and advisors (provided such
consultants, independent contractors and advisors render bona fide services not
in connection with the offer or sale of securities in a capital-raising
transaction) of the Company or any Parent, Subsidiary or Affiliate of the
Company. Incentive Stock Options may be granted only to employees (including
officers and directors who are also employees) of the Company or a Parent or
Subsidiary of the Company.
B-4
33
SECTION 5. STOCK OPTIONS.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. The Administrator shall have
the authority to grant to any Eligible Recipient Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option. More than one Stock Option may
be granted to the same Optionee and be outstanding concurrently hereunder.
Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve, and the provisions of Stock Option
awards need not be the same with respect to each Optionee. Stock Options granted
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable:
(1) Form of Stock Option Grant. Optionees who are granted Stock
Options shall enter into a stock option agreement with the Company, in such
form (which need not be the same for each Optionee) as the Administrator
shall from time to time approve, which stock option agreement shall comply
with and be subject to the terms and conditions of this Plan.
(2) Date of Grant. The date of grant of a Stock Option shall be the
date on which the Administrator makes the determination to grant such Stock
Option unless otherwise specified by the Administrator. The stock option
agreement representing the Stock Option will be delivered to the Optionee
with a copy of this Plan within a reasonable time after the granting of the
Stock Option.
(3) Exercise Price. The option price per Share purchasable under a
Stock Option shall be determined by the Administrator, in its sole
discretion, on the date the Stock Option is granted; provided that (i) the
exercise price of a Non-Qualified Stock Option shall not be less than 85%
of the Fair Market Value of the Shares on the date the Stock Option is
granted; (ii) the exercise price of an Incentive Stock Option shall be not
less than 100% of the Fair Market Value of the Shares on the date the Stock
Option is granted; and (iii) if an Incentive Stock Option is granted to a
Ten Percent Shareholder, the exercise price of such Incentive Stock Option,
to the extent required at the time of grant by the Code, shall be no less
than 110% of the Fair Market Value of the Common Stock on the date such
Incentive Stock Option is granted.
(4) Exercise Period. Subject to this Section 5 and Section 10 herein,
Stock Options shall be exercisable within the times or upon the events
determined by the Administrator as set forth in the respective stock option
agreement; provided, however, that no Stock Option shall be exercisable
after the expiration of ten (10) years from the date the Stock Option is
granted and provided, further, that no Incentive Stock Option granted to a
Ten Percent Shareholder shall be exercisable after the expiration of five
(5) years from the date the Stock Option is granted.
(5) Limitations on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Incentive Stock Option is granted) of
Shares with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year (under this Plan or
under any other incentive stock option plan of the Company or of any Parent
or Subsidiary) shall not exceed $100,000. If the Fair Market Value of
Shares with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year exceeds $100,000,
the Stock Options for the first $100,000 worth of Shares to become
exercisable in such year shall be Incentive Stock Options and the Stock
Options for the amount in excess of $100,000 that become exercisable in
that year shall be Non-Qualified Stock Options. In the event that the Code
or the regulations promulgated thereunder are amended after the effective
date of this Plan to provide for a different limit on the Fair Market Value
of Shares permitted to be subject to Incentive Stock Options, such
different limit shall be incorporated herein and shall apply to any Stock
Options granted after the effective date of such amendment.
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(6) Stock Options Non-Transferable. Stock Options granted under this
Plan, and any interest therein, shall not be transferable or assignable by
an Optionee, and may not be made subject to execution, attachment or
similar process, otherwise than by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the Optionee
only by such Optionee; provided, however, that Non-Qualified Stock Options
may be transferred to such family members, trusts and charitable
institutions as the Administrator, in its sole discretion, shall approve at
the time of the grant of such Stock Option.
(7) Assumed Stock Options. In the event the Company assumes a stock
option granted by another company unless otherwise determined by the
Administrator, the terms and conditions of such option shall remain
unchanged (except the exercise price and the number and nature of shares
issuable upon exercise, which will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
stock option rather than assuming an existing option, such new option may
be granted with a similarly adjusted exercise price.
(8) Exercise of Stock Options.
(a) Notice. Stock Options may be exercised only by delivery
(including electronic delivery or other delivery method approved by the
Administrator) to the Company of a written stock option exercise
agreement in a form approved by the Administrator (which need not be the
same for each Optionee), stating the number of Shares being purchased,
the restrictions imposed on the Shares, if any, and such representations
and agreements regarding the Optionee's investment intent and access to
information, if any, as may be required by the Company to comply with
applicable securities laws, together with payment in full of the
exercise price for the number of Shares being purchased.
(b) Payment. Payment for the Shares may be made in cash (by check)
or, where approved by the Administrator in its sole discretion at the
time of grant and where permitted by law: (i) by cancellation of
indebtedness of the Company to the Optionee; (ii) by surrender of Shares
having a Fair Market Value equal to the applicable exercise price of the
Stock Options that have been owned by the Optionee for more than six (6)
months (and which have been paid for within the meaning of SEC Rule 144
and, if such Shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to such
shares), or were obtained by the Optionee in the open public market;
(iii) by tender of a full recourse promissory note having such terms as
may be approved by the Administrator and bearing interest at the market
rate on the date such promissory note is executed; provided, however,
that such rate is sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code; (iv) by waiver of compensation due or
accrued to the Optionee for services rendered; (v) provided that a
public market for the Company's stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD Dealer") whereby
the Optionee irrevocably elects to exercise the Stock Option and to sell
a portion of the Shares so purchased to pay for the exercise price and
whereby the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the exercise price directly to the Company; (vi) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Stock Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the exercise price, and
whereby the NASD Dealer irrevocably commits upon receipt of such Shares
to forward the exercise price directly to the Company; (vii) by any
combination of the foregoing; or (viii) by any other method approved by
the Administrator. Optionees who are not employees of the Company shall
not be entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the Shares.
(c) Loans. The Company may make loans available to Optionees in
connection with the exercise of outstanding Stock Options, as the
Administrator, in its sole discretion, may determine. Such loans shall
(i) be evidenced by a full recourse promissory note entered into by the
Optionee in favor of the Company, (ii) be subject to the terms and
conditions set forth in this Section 5 and such other terms and
conditions, not inconsistent with the Plan, as the Administrator shall
determine,
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(iii) bear interest at such rate as the Administrator shall determine
but in no event less than the market rate on the date such promissory
note is executed; provided, however, that such rate is sufficient to
avoid imputation of income under Sections 483 and 1274 of the Code and
(iv) be subject to Board approval (or to approval by the Administrator
to the extent the Board may delegate such authority). In no event may
the principal amount of any such loan exceed the sum of (x) the exercise
price less the par value of the Shares covered by the Stock Option, or
portion thereof, exercised by the Optionee, and (y) any Federal, state,
and local income tax attributable to such exercise. The initial term of
the loan, the schedule of payments of principal and interest under the
loan and the conditions upon which the loan will become payable in the
event of the holder's termination of employment or service to the
Company or to any Subsidiary shall be determined by the Administrator,
provided, however, that the term of the loan, including extensions,
shall not exceed seven years. Unless the Administrator determines
otherwise, when a loan is made, Shares having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the
Optionee to the Company as security for payment of the unpaid balance of
the loan, and such pledge shall be evidenced by a pledge agreement, the
terms of which shall be determined by the Administrator, in its sole
discretion; provided, however, that each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the
Federal Reserve System and any other governmental agency having
jurisdiction.
(d) Withholding Taxes. Prior to issuance of the Shares upon
exercise of a Stock Option, the Optionee shall pay to the Company, or
make arrangements satisfactory to the Administrator regarding payment
of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such Stock Option. The obligations of the
Company under the Plan shall be conditional on the making of such
payments or arrangements, and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any
kind otherwise due to the Optionee.
(e) Limitations on Exercise. The exercisability of a Stock Option
shall be subject to the following:
(i) The Administrator may specify a reasonable minimum number of
Shares that may be purchased on any exercise of a Stock Option,
provided that such minimum number will not prevent an Optionee from
exercising the full number of Shares as to which the Stock Option is
then exercisable.
(ii) A Stock Option shall not be exercisable unless such
exercise is in compliance with the Securities Act, all applicable
state securities laws and the requirements of any stock exchange or
national market system upon which the Shares may then be listed, as
they are in effect on the date of exercise. The Company shall be
under no obligation to register the Shares with the SEC or to effect
compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or national
market system, and the Company shall have no liability for any
inability or failure to do so.
(9) Termination of Employment or Service Other Than Due to Death or
Disability. Unless otherwise provided in the applicable stock option
agreement, if an Optionee ceases to be employed or retained by the Company
or any Parent, Subsidiary or Affiliate of the Company for any reason except
death or Disability, the Optionee may exercise such Optionee's Incentive
Stock Options or Non-Qualified Stock Options, to the extent that they are
exercisable on the date of termination, within three (3) months after the
date of termination or such other time period as may be specified in the
applicable stock option agreement (but in no event later than the
expiration date of the term of such Stock Option as set forth in Section
5(4) above). To the extent an Optionee was not entitled to exercise a Stock
Option at the date of termination, or if an Optionee does not exercise such
Stock Option to the extent so entitled within the time specified herein,
the Stock Option shall terminate unless as otherwise provided in the
applicable stock option agreement.
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(10) Termination of Employment or Service Due to Death or
Disability. Unless otherwise provided in the applicable stock option
agreement, if an Optionee's employment or retention with the Company or any
Parent, Subsidiary or Affiliate of the Company is terminated because of the
Optionee's death or Disability, the Optionee may exercise such Optionee's
Incentive Stock Options or Non-Qualified Stock Options, to the extent that
they are exercisable on the date of termination, by the Optionee (or the
Optionee's legal representative) within twelve (12) months after the date
of termination or such other time period as may be specified in the
applicable stock option agreement (but in no event later than the
expiration date of the term of such Stock Option as set forth in Section
5(4) above). To the extent an Optionee was not entitled to exercise a Stock
Option at the date of termination, or if an Optionee does not exercise such
Stock Option to the extent so entitled within the time specified herein,
the Stock Option shall terminate unless as otherwise provided in the
applicable stock option agreement.
SECTION 6. OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS.
(1) Eligibility Generally. Non-employee directors of the Company or any
Parent, Subsidiary or Affiliate of the Company shall be granted automatic Stock
Options pursuant and subject to Sections 6(2) and (3) below. In addition to the
foregoing, Stock Options may be granted to such non-employee directors of the
Company or any Parent, Subsidiary or Affiliate of the Company as the
Administrator shall select from time to time in its sole discretion, and subject
to such terms and conditions as the Administrator shall determine, in its sole
discretion. Directors may be granted more than one Stock Option under the Plan.
(2) Eligibility for Automatic Stock Options. Each non-employee director,
upon his or her first election or appointment to the Board, will be granted a
Stock Option to purchase 30,000 Shares. At the Company's Annual Meeting of
Shareholders following the second anniversary of his or her election or
appointment to the Board, and at each subsequent Annual Meeting of Shareholders,
each such director will be granted an additional Stock Option to purchase 15,000
Shares.
(3) Terms and Conditions of Automatic Stock Options. The terms and
conditions of the automatic Stock Option grants to non-employee directors of the
Company or any Parent, Subsidiary or Affiliate of the Company pursuant to
Section 6(2) and this Section 6(3) are as follows:
(a) Date of Grant. The dates of grant of the automatic Stock Options
shall be the dates described in Section 6(2) above. The stock option
agreement representing the Stock Option will be delivered to the Optionee
within a reasonable time after the granting of the Stock Option.
(b) Exercise Price. The exercise price of the automatic Stock Option
shall be the Fair Market Value of the Shares at the time that the Stock
Option is granted.
(c) Vesting and Exercise Period. The automatic Stock Options shall be
fully vested and exercisable in their entirety immediately upon grant for
the term set forth in the applicable stock option agreement; provided,
however, that no Stock Option shall be exercisable after the expiration of
ten (10) years from the date the Stock Option is granted.
(d) Limitation on Exercise. If the Optionee ceases to be a director
for any reason except death, the Optionee may exercise his or her Stock
Options, to the extent (and only to the extent) that they are exercisable
on the date of termination until the expiration dates of the Stock Options,
which shall be ten (10) years from the dates the Stock Options are granted.
If the Optionee ceases to be a director because of death, the Optionee's
legal representative may exercise his or her Stock Options to the extent
(and only to the extent) that they are exercisable on the date of
termination, within twelve (12) months after the date of termination, but
not after the expiration of ten (10) years from the date the Stock Options
are granted. To the extent an Optionee or an Optionee's legal
representative was not entitled to exercise a Stock Option at the date of
termination, or if an Optionee or an Optionee's legal representative does
not exercise such Stock Option to the extent so entitled within the time
specified herein, the Stock Option shall terminate unless as otherwise
provided in the applicable stock option agreement.
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SECTION 7. MODIFICATION, EXTENSION AND RENEWAL OF STOCK OPTIONS.
The Administrator shall have the power to modify, extend or renew
outstanding Stock Options and to authorize the grant of new Stock Options in
substitution therefor, provided that any such action may not, without the
written consent of an Optionee, impair any rights under any Stock Option
previously granted except as provided in Section 3 hereof. Any outstanding
Incentive Stock Option that is modified, extended, renewed or otherwise altered
shall be treated in accordance with Section 424(h) of the Code. The
Administrator shall not have the power to reduce the exercise price of
outstanding Stock Options.
SECTION 8. PRIVILEGES OF STOCK OWNERSHIP.
No Optionee shall have any of the rights of a shareholder with respect to
any Shares subject to a Stock Option until such Stock Option is properly
exercised. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to such date, except as provided in
this Plan. Upon written request, the Company shall provide to each Optionee a
copy of the annual financial statements of the Company at such time after the
close of each fiscal year of the Company as such statements are released by the
Company to its common shareholders generally.
SECTION 9. NO OBLIGATION TO EMPLOY.
Nothing in this Plan nor any Stock Option granted under this Plan shall
confer on any Optionee any right to continue in the employ of, as a director of,
or other relationship with, the Company or any Parent, Subsidiary or Affiliate
of the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Optionee's employment or
other relationship at any time, with or without cause.
SECTION 10. CHANGE IN CONTROL; ASSUMPTION OF STOCK OPTIONS BY SUCCESSORS.
In the event of a Change in Control, any or all outstanding Stock Options
shall, unless otherwise provided in an applicable stock option agreement or
other agreement, accelerate and become exercisable in full upon the occurrence
of the Change in Control and shall expire immediately following the occurrence
of the Change in Control. To the extent required by applicable law, the
aggregate Fair Market Value of Incentive Stock Options which first become
exercisable in the year of such Change in Control cannot exceed $100,000, and
any remaining accelerated options shall be treated as Non-Qualified Stock
Options.
SECTION 11. ADOPTION AND SHAREHOLDER APPROVAL.
This Plan shall become effective on April 23, 2001, the date the Plan was
adopted by the Board (the "Effective Date"). This Plan shall be approved by the
shareholders of the Company, in any manner permitted by applicable corporate
law, within twelve months before or after the date this Plan was adopted by the
Board. Upon the Effective Date, the Board may grant Stock Options pursuant to
this Plan; provided that, in the event that shareholder approval is not obtained
within the time period provided herein, all Stock Options granted hereunder
shall terminate. No Stock Option that is issued as a result of any increase in
the number of shares authorized to be issued under this Plan shall be exercised
prior to the time such increase has been approved by the shareholders of the
Company and all such Stock Options granted pursuant to such increase shall
similarly terminate if such shareholder approval is not obtained.
SECTION 12. TERM OF PLAN.
Stock Options may be granted pursuant to this Plan from time to time within
a period of ten (10) years from the Effective Date.
SECTION 13. AMENDMENT OR TERMINATION OF PLAN.
Subject to Section 7 above, the Administrator may at any time terminate or
amend this Plan in any respect, including but not limited to, amendment of any
form of grant, exercise agreement or instrument to be
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executed pursuant to this Plan; provided, however, that the Administrator shall
not, without the approval of the shareholders of the Company, amend this Plan in
any manner that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder or pursuant to the Exchange Act or Rule 16b-3
(or its successor) promulgated thereunder, to the extent the Administrator
intends the Plan to comply with such foregoing requirement or law.
SECTION 14. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to an Optionee by the
Company, nothing contained herein shall give any Optionee or persons any rights
that are greater than those of a general creditor of the Company.
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ANNEX C
GENELABS TECHNOLOGIES, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 23, 2001
1. ESTABLISHMENT OF PLAN
The purpose of the Genelabs Technologies, Inc. 2001 Employee Stock Purchase
Plan (the "Plan") is to grant options for purchase of common stock, no par value
(the "Common Stock") of Genelabs Technologies, Inc. (the "Company") to eligible
employees of the Company and its Subsidiaries (as hereinafter defined). For
purposes of this Plan, "Parent Corporation" and "Subsidiary" (collectively,
"Subsidiaries") shall have the same meanings as "parent corporation" and
"subsidiary corporation" in Sections 424(e) and 424(f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code"). The Company intends the
Plan to qualify as an "employee stock purchase plan" under Section 423 of the
Code (including any amendments to or replacements of such Section), and the Plan
shall be so construed. Any term not expressly defined in the Plan but defined
for purposes of Section 423 of the Code shall have the same definition herein. A
total of 2,000,000 shares of the Company's Common Stock are reserved for
issuance under the Plan subject to certain adjustments as provided under Section
14 of the Plan.
2. PURPOSE
The purpose of the Plan is to provide employees of the Company and
Subsidiaries designated by the Board of Directors of the Company (the "Board")
as eligible to participate in the Plan with a convenient means of acquiring an
equity interest in the Company through payroll deductions, to enhance such
employees' sense of participation in the affairs of the Company and
Subsidiaries, and to provide an incentive for continued employment.
3. ADMINISTRATION
This Plan shall be administered by the Administrator. For purposes of this
plan, the "Administrator" shall mean the Board, or if and to the extent the
Board does not administer the Plan, a committee appointed by the Board (the
"Committee"). If the Committee is not comprised of "disinterested persons"
("Disinterested Persons") as defined in Rule 16b-3(d) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), at the time
the Company is registered under the Exchange Act, unless otherwise determined by
the Administrator, the Administrator shall appoint a Committee consisting of not
less than three (3) persons (who need not be members of the Board), each of whom
is a Disinterested Person. After registration of the Company under the Exchange
Act, unless otherwise determined by the Administrator or the Board, Committee
members who are not Disinterested Persons may not vote on any matters affecting
the administration of this Plan, but any such member may be counted for
determining the existence of a quorum at any meeting of the Committee. Subject
to the provisions of the Plan and the limitations of Section 423 of the Code or
any successor provision in the Code, all questions of interpretation or
application of the Plan shall be determined by the Administrator and its
decisions shall be final and binding upon all participants. Members of the Board
shall receive no compensation for their services in connection with the
administration of the Plan, other than standard fees as established from time to
time by the Board for services rendered by Board members serving on Board
committees. All expenses incurred in connection with the administration of the
Plan shall be paid by the Company.
4. ELIGIBILITY
Any employee of the Company or the Subsidiaries is eligible to participate
in the Plan except the following:
(a) employees who are not employed by the Company or Subsidiaries on
the day before the Offering Date (as hereinafter defined);
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(b) employees who are customarily employed for less than twenty (20)
hours per week;
(c) employees who are customarily employed for less than five (5)
months in a calendar year; or
(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own
stock or hold options to purchase stock or who, as a result of being
granted an option under the Plan with respect to such Offering Period,
would own stock or hold options to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or any of its Subsidiaries.
5. OFFERING DATES
The offering periods of the Plan (each, an "Offering Period") shall be of
twenty-four (24) months duration commencing on January 1 and July 1 of each year
and ending on June 30 and December 31 of each year. Each Offering Period shall
consist of four (4) six-month purchase periods (individually, a "Purchase
Period") during which payroll deductions of the participants are accumulated
under the Plan. The first business day of each Offering Period is referred to as
the "Offering Date." The last business day of each Offering Period is referred
to as the "Purchase Date." Notwithstanding the foregoing, if the fair market
value of the Company's Common Stock on any Purchase Date is equal to or is less
than such fair market value on an Offering Date, then the Offering Period(s) for
such Offering Date(s) shall immediately terminate and a new Offering Period
shall commence for those employees participating in such terminated Offering
Period(s) (See also Section 11(c) hereof). The Administrator shall have the
power to change the duration of Offering Periods or Purchase Periods with
respect to offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period or Purchase Period to be affected.
6. PARTICIPATION IN THE PLAN
Eligible employees may become participants in an Offering Period under the
Plan upon the commencement of the next Purchase Period after satisfying the
eligibility requirements by delivering a subscription agreement to the Company's
or Subsidiary's (whichever employs such employee) Treasury Department (the
"Treasury Department") not later than the business day before such Offering
Period begins unless an earlier time for filing the subscription agreement
authorizing payroll deductions is set by the Administrator for all eligible
employees with respect to a given Offering Period. An eligible employee who does
not deliver a subscription agreement to the Treasury Department by such date
after becoming eligible to participate in such Offering Period shall not
participate in that Offering Period or any subsequent Offering Period unless
such employee enrolls in the Plan by filing a subscription agreement with the
Treasury Department not later than the business day preceding the beginning of a
subsequent Offering Period. Once an employee becomes a participant in an
Offering Period, such employee will automatically participate in the next
Offering Period unless the employee withdraws from the Plan or terminates
further participation in a Purchase Period as set forth in Section 11 hereof.
Such participant is not required to file any additional subscription agreement
in order to continue participation in the Plan.
7. GRANT OF OPTION ON ENROLLMENT
Enrollment by an eligible employee in the Plan with respect to an Offering
Period will constitute the grant (as of the Offering Date) by the Company to
such employee of an option to purchase on the Purchase Date up to that number of
shares of Common Stock of the Company determined by dividing the amount
accumulated in such employee's payroll deduction account during such Purchase
Period by the lesser of (i) eighty-five percent (85%) of the fair market value
of a share of the Company's Common Stock on the Offering Date or (ii)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Purchase Date; provided, however, that the number of shares
of the Company's Common Stock subject to any option granted pursuant to this
Plan shall not exceed the limitations provided under Sections 10(a) and 10(b)
below. Fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 8 hereof.
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8. PURCHASE PRICE
The purchase price per share at which a share of Common Stock will be sold
during any Offering Period shall be eighty-five percent (85%) of the lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date.
For purposes of the Plan, the term "fair market value" on a given date
shall mean the closing price from the previous day's trading of a share of the
Company's Common Stock as reported on the National Association of Securities
Dealers Automated Quotation ("Nasdaq") System or such other system or exchange
to which the shares of the Company's Common Stock are admitted to trading or
quotation, as determined by the Administrator.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF SHARES
(a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Purchase Period. The deductions are made as a
percentage of the participant's compensation in one percent (1%) increments not
less than one percent (1%) nor greater than fifteen percent (15%), not to exceed
$25,000 per year or such other limit set by the Administrator. Compensation
shall mean all cash compensation including, but not limited to, base salary,
wages, commissions, overtime, shift premiums and bonuses, plus draws against
commissions; provided, however, that for purposes of determining a participant's
compensation, any election by such participant to reduce his or her regular cash
remuneration under Sections 125 or 401(k) of the Code shall be treated as if the
participant did not make such election. Payroll deductions shall commence on the
first payday following the Offering Date and shall continue to the end of the
Purchase Period unless sooner altered or terminated as provided in the Plan.
(b) A participant may decrease (but not increase) the rate of payroll
deductions during a Purchase Period by filing with the Treasury Department a new
authorization for payroll deductions, in which case the new rate shall become
effective for the next payroll period commencing more than fifteen (15) days
after the Treasury Department's receipt of the authorization and shall continue
for the remainder of the Purchase Period unless changed as described below. Such
change in the rate of payroll deductions may be made at any time during a
Purchase Period, but not more than one change may be made effective during any
Purchase Period. A participant may increase or decrease the rate of payroll
deductions for any subsequent Purchase Period by filing with the Treasury
Department a new authorization for payroll deductions not later than the
business day before the beginning of such Purchase Period. An increase or
decrease in a participant's payroll deduction does not start a new Offering
Period.
(c) All payroll deductions made for a participant are credited to his or
her account under the Plan and are deposited with the general funds of the
Company. No interest accrues on the payroll deductions. All payroll deductions
received or held by the Company or a Subsidiary, respectively, may be used by
the Company or a Subsidiary, respectively, for any corporate purposes, and
neither the Company nor a Subsidiary shall be obligated to segregate such
payroll deductions.
(d) On each Purchase Date, so long as the Plan remains in effect and
provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company or a Subsidiary,
respectively, that the participant wishes to withdraw from that Purchase Period
under the Plan and have all payroll deductions accumulated in the account
maintained on behalf of the participant as of that date returned to the
participant, the Company shall apply the funds then in the participant's account
to the purchase of whole shares of Common Stock reserved under the option
granted to such participant with respect to the Purchase Period to the extent
that such option is exercisable on the Purchase Date. The purchase price per
share shall be as specified in Section 8 of the Plan. Any cash remaining in a
participant's account after such purchase of shares shall be refunded to such
participant in cash, without interest; provided, however, that any amount
remaining in such participant's account on a Purchase Date which is less than
the amount necessary to purchase a full share of Common Stock of the Company
shall be carried forward, without interest, into the next Purchase Period. In
the event that the Plan has been oversubscribed, all funds not used
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to purchase shares on the Purchase Date shall be returned to the participant,
without interest. No Common Stock shall be purchased on a Purchase Date on
behalf of any employee whose participation in the Plan has terminated prior to
such Purchase Date.
(e) As promptly as practicable after the Purchase Date, the Company shall
arrange the delivery to each participant of a certificate representing the
shares purchased upon exercise of his or her option; provided, however, that the
Administrator may deliver certificates to a broker or brokers that hold such
certificate in a street name for the benefit of each such participant.
(f) During a participant's lifetime, such participant's option to purchase
shares hereunder is exercisable only by him or her. The participant will have no
interest or voting right in shares covered by his or her option until such
option has been exercised. Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED
(a) No employee shall be entitled to purchase stock under the Plan at a
rate which, when aggregated with his or her rights to purchase stock under all
other employee stock purchase plans of the Company or any Subsidiary, exceeds
$25,000 in fair market value, determined as of the Offering Date (or such other
limit as may be imposed by the Code) for each calendar year in which the
employee participates in the Plan.
(b) No employee shall be entitled to purchase more than the Maximum Share
Amount (as defined below) on any single Purchase Date. Not less than thirty (30)
days prior to the commencement of any Purchase Period, the Administrator may, in
its sole discretion, set a maximum number of shares which may be purchased by
any employee at any single Purchase Date (hereinafter the "Maximum Share
Amount"). If a new Maximum Share Amount is set, then all participants must be
notified of such Maximum Share Amount not less than fifteen (15) days prior to
the commencement of the next Purchase Period. Once the Maximum Share Amount is
set, it shall continue to apply with respect to all succeeding Purchase Dates
and Purchase Periods unless revised by the Administrator as set forth above.
(c) If the number of shares to be purchased on a Purchase Date by all
employees participating in the Plan exceeds the number of shares then available
for issuance under the Plan, the Company will make a pro rata allocation of the
remaining shares in as uniform a manner as shall be practicable and as the
Administrator shall determine to be equitable. In such event, the Company shall
give written notice of such reduction of the number of shares to be purchased
under a participant's option to each participant affected thereby.
(d) Subject to the provisions of Section 9(d) hereof, any payroll
deductions accumulated in a participant's account which are not used to purchase
stock due to the limitations in this Section 10 shall be returned to the
participant as soon as practicable after the end of the Purchase Period, without
interest.
11. WITHDRAWAL
(a) Each participant may withdraw from a Purchase Period under the Plan by
signing and delivering to the Treasury Department notice on a form provided for
such purpose. Such withdrawal may be elected at any time at least fifteen (15)
days prior to the end of a Purchase Period.
(b) Upon withdrawal from the Plan, the accumulated payroll deductions shall
be returned to the withdrawn participant, without interest, and his or her
interest in the Plan shall terminate. In the event a participant voluntarily
elects to withdraw from the Plan, he or she may not resume his or her
participation in the Plan during the same Purchase Period, but he or she may
participate in any Purchase Period under the Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
the Plan.
(c) For an Offering Period in which a participant is enrolled, if the fair
market value of the Company's Common Stock on the Purchase Date is less than it
was on the Offering Date, the Company will automatically enroll such participant
in the subsequent Offering Period. A participant does not need to file any forms
with the Company to automatically be enrolled in the subsequent Offering Period.
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12. TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement, death or the failure of a participant to remain an eligible
employee, immediately terminates his or her participation in the Plan. In such
event, the payroll deductions credited to the participant's account will be
returned to him or her or, in the case of his or her death, to his or her legal
representative, without interest. For purposes of this Section 12, an employee
will not be deemed to have terminated employment or failed to remain in the
continuous employ of the Company in the case of sick leave, military leave, or
any other leave of absence approved by the Administrator; provided, however,
that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
13. RETURN OF PAYROLL DEDUCTIONS
In the event a participant's interest in the Plan is terminated by
withdrawal, termination of employment or otherwise, or in the event the Plan is
terminated by the Administrator, the Company shall promptly deliver to the
participant all payroll deductions credited to his or her account. No interest
shall accrue on the payroll deductions of a participant in the Plan.
14. CAPITAL CHANGES; CHANGE IN CONTROL
Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Administrator, whose
determination shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
In the event of a Change in Control of the Company, the Offering Periods
shall terminate on such date as determined by the Administrator and all payroll
deductions on such date shall be used to purchase such number of applicable
shares of Common Stock unless otherwise provided by the Administrator. For
purposes of this Plan, "Change in Control" means a change in the ownership or
control of the Company, effected through any of the following events:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company; any trustee or other fiduciary
holding securities under an employee benefit plan of the Company; or any
company owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of Common Stock of
the Company) is or becomes, after the Effective Date (as defined in Section
25 hereof), the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any
securities acquired directly from the Company or its affiliates)
representing twenty-five percent (25%) or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of
such period constitute the Board, and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of this
definition) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two thirds ( 2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose
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election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least sixty percent (60%) of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than fifty percent
(50%) of the combined voting power of the Company's then outstanding
securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
The Administrator may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.
15. NONASSIGNABILITY
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 22 hereof) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect.
16. REPORTS
Individual accounts will be maintained for each participant in the Plan.
Each participant shall receive promptly after the end of each Purchase Period a
report of his or her account setting forth the total payroll deductions
accumulated, the number of shares purchased, the per share price thereof and the
remaining cash balance, if any, carried forward to the next Purchase Period.
17. NOTICE OF DISPOSITION
Each participant shall notify the Company if the participant disposes of
any of the shares of Common Stock purchased in any Purchase Period pursuant to
this Plan if such disposition occurs within two years from the Offering Date or
within one year from the Purchase Date on which such shares were purchased (the
"Notice Period"). Unless such participant is disposing of any of such shares
during the Notice Period, such participant shall keep the certificates
representing such shares in his or her name (and not in the name of a nominee)
during the Notice Period. The Company may, at any time during the Notice Period,
place a legend or legends on any certificate representing shares acquired
pursuant to the Plan requesting the Company's transfer agent to notify the
Company of any transfer of the shares. The obligation of the participant to
provide such notice shall continue notwithstanding the placement of any such
legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT
Neither this Plan nor the grant of any option hereunder shall confer any
right on any employee to remain in the employ of the Company or any Subsidiary,
or restrict the right of the Company or any Subsidiary to terminate such
employee's employment.
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19. EQUAL RIGHTS AND PRIVILEGES
All eligible employees shall have equal rights and privileges with respect
to the Plan so that the Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 or any successor provision of the Code and the
related regulations. Any provision of the Plan which is inconsistent with
Section 423 or any successor provision of the Code shall, without further act or
amendment by the Company or the Administrator, be reformed to comply with the
requirements of Section 423. This Section 19 shall take precedence over all
other provisions in the Plan.
20. NOTICES
All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
21. SHAREHOLDER APPROVAL OF AMENDMENTS
Any required approval by the shareholders of the Company shall be solicited
substantially in accordance with Section 14(a) of the Exchange Act, and the
rules and regulations promulgated thereunder. Such approval of an amendment
shall be solicited at or prior to the first annual meeting of shareholders held
subsequent to the grant of an option under the Plan to an employee of the
Company. If such shareholder approval is obtained at a duly held shareholders'
meeting, it must be obtained by a majority of all of the outstanding shares of
the Company, or if such shareholder approval is obtained by written consent, it
must be obtained by a majority of all shareholders of the Company; provided,
however, that approval at a meeting or by written consent may be obtained by a
lesser degree of shareholder approval if the Administrator determines, in its
discretion after consultation with the Company's legal counsel, that such lesser
degree of shareholder approval will comply with all applicable laws and will not
adversely affect the qualification of the Plan under Section 423 of the Code or
Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3").
22. 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 a
Purchase Period but prior to delivery to him or her 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 prior to a Purchase Date.
(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 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 discretion, may deliver such shares 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.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES
Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
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24. APPLICABLE LAW
The Plan shall be governed by the substantive laws (excluding the conflict
of laws rules) of the State of California.
25. AMENDMENT OR TERMINATION OF THE PLAN
This Plan shall be effective April 23, 2001 (the "Effective Date"), subject
to approval by the shareholders of the Company within twelve (12) months after
the date the Plan is adopted by the Board and the Plan shall continue until the
earlier to occur of termination by the Administrator, issuance of all of the
shares of Common Stock reserved for issuance under the Plan, or ten (10) years
from the adoption of the Plan by the Board. No purchase of shares of Common
Stock pursuant to the Plan shall occur prior to such shareholder approval. The
Administrator may at any time amend or terminate the Plan, except that any such
termination cannot affect options previously granted under the Plan, nor may any
amendment make any change in an option previously granted which would adversely
affect the right of any participant without such participant's consent, nor may
any amendment be made without approval of the shareholders of the Company
obtained in accordance with Section 21 hereof within 12 months of the adoption
of such amendment (or earlier if required by Section 21) if such amendment
would:
(a) increase the number of shares that may be issued under the Plan;
(b) change the designation of the employees (or class of employees)
eligible for participation in the Plan; or
(c) constitute an amendment for which shareholder approval is required
in order to comply with Rule 16b-3 (or any successor rule) of the Exchange
Act.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GENELABS TECHNOLOGIES, INC.
FOR THE 2001 ANNUAL MEETING OF SHAREHOLDERS
JUNE 21, 2001
THE UNDERSIGNED SHAREHOLDER OF GENELABS TECHNOLOGIES, INC., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated May 18, 2001, and the 2000 Annual
Report to Shareholders and hereby appoints Irene A. Chow and Heather C. Keller,
and each of them, proxies, with full power to each of substitution, on behalf
and in the name of the undersigned, to represent the undersigned at the 2001
Annual Meeting of Shareholders of GENELABS TECHNOLOGIES, INC. to be held on June
21, 2001 at 10:00 a.m., local time, at GENELABS TECHNOLOGIES, INC.'s principal
executive office located at 505 Penobscot Drive, Redwood City, California 94063,
and at any adjournment thereof, and to vote all shares of common stock that the
undersigned would be entitled to vote if then and there personally present on
the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE NOMINATED DIRECTORS AND FOR THE
ADOPTION OF THE 2001 STOCK OPTION PLAN, FOR THE 2001 EMPLOYEE STOCK PURCHASE
PLAN AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
NOMINEES: IRENE A. CHOW H. H. HAIGHT
J. RICHARD CROUT, M.D. ALAN Y. KWAN
THOMAS E. DEWEY, JR. JAMES A. D. SMITH
ARTHUR GRAY, JR. NINA K. WANG
_____FOR ALL NOMINEES _____WITHHELD FROM ALL NOMINEES
------------------------------------------------------
(INSTRUCTION): TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE.
2. APPROVAL OF ADOPTION OF THE 2001 STOCK OPTION PLAN.
______FOR ______AGAINST ______ABSTAIN
3. APPROVAL OF ADOPTION OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
______FOR ______AGAINST ______ABSTAIN
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
This Proxy should be marked, dated and signed by
the stockholder(s) exactly as his or her name appears
hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as
community property, both should sign.
Dated:__________________________, 2001
-------------------------------------
Signature
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Signature