SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of the
Commission only (as permitted by
Rule 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CORTEX PHARMACEUTICALS
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
CORTEX PHARMACEUTICALS, INC.
15231 Barranca Parkway
Irvine, California 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 11, 2001
To the Stockholders of Cortex Pharmaceuticals, Inc.:
The Annual Meeting of Stockholders of Cortex Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), will be held at the offices of the
Company, 15231 Barranca Parkway, Irvine, California, on Tuesday, December 11,
2001 at 9:00 a.m. Pacific Time, to consider and vote on the following matters
described in the attached Proxy Statement:
(1) The election of five (5) directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and duly qualified
(Proposal 1);
(2) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 2002 (Proposal 2);
and
(3) Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on October 24, 2001,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any postponement and adjournment thereof. The
stock transfer books will not be closed.
The Board of Directors welcomes the personal attendance of stockholders at
the meeting. However, please sign and return the enclosed proxy, which you may
revoke at any time prior to its use, whether or not you expect to attend the
meeting. A self-addressed, postage prepaid envelope is enclosed for your
convenience. Your proxy will not be used if you attend the meeting and choose to
vote in person.
By Order of the Board of Directors
Maria S. Messinger, CPA
Secretary
Irvine, California
November 5, 2001
CORTEX PHARMACEUTICALS, INC.
15231 Barranca Parkway
Irvine, California 92618
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 11, 2001
9:00 a.m.
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Solicitation and Revocation of Proxies
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Cortex Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and the Company will bear the cost of such solicitation.
Solicitation of proxies will be primarily by mail, although some of the
officers, directors and employees of the Company may solicit proxies personally
or by telephone. The Company will reimburse brokerage houses and other
custodians, nominees or fiduciaries for their expenses in sending proxy
materials to their principals.
The persons named as proxies were designated by the Board of Directors and
are directors of the Company. All properly executed proxies will be voted
(except to the extent that authority to vote has been withheld) and where a
choice has been specified by the stockholder as provided in the proxy it will be
voted in accordance with the specification so made. Proxies submitted without
specification will be voted FOR the election as directors of the nominees
---
proposed by the Board of Directors and FOR the ratification of Ernst & Young LLP
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as the Company's independent auditors.
Any stockholder may revoke a proxy at any time before it is voted at the
meeting by a proxy bearing a later date. A proxy may also be revoked by any
stockholder by delivering written notice of revocation to the Secretary of the
Company or by voting in person at the meeting.
This Proxy Statement and proxy are being mailed to stockholders of the
Company on or about November 5, 2001. The mailing address of the executive
offices of the Company is 15231 Barranca Parkway, Irvine, California 92618.
Voting at the Meeting
Only record holders of Common Stock of the Company at the close of business
on October 24, 2001, will be entitled to notice of, and to vote at, the meeting.
As of the record date, there were 16,629,887 shares of the Company's Common
Stock outstanding. Each share is entitled to one vote at the meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions are
counted in tabulating the votes cast on proposals presented to stockholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
1
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect the five (5)
proposed nominees named below unless contrary instructions are given in the
proxy. The election of directors shall be by the affirmative vote of the holders
of a plurality of the shares voting in person or by proxy at the meeting. Each
director is to hold office until the next annual meeting and until his successor
is elected and qualified. The Board of Directors is currently comprised of six
(6) members. However, effective as of the date of this Annual Meeting of
Stockholders, in accordance with the terms of the Company's bylaws, the Board of
Directors has approved a decrease in the number of members constituting the
Board of Directors from six (6) to five (5).
The names and certain information concerning the persons nominated by the
Board of Directors to become directors at the meeting are set forth below. The
Company's Board of Directors recommends that you vote FOR the election of each
---
of the nominees named below. It is intended that shares represented by the
proxies will be voted FOR the election to the Board of Directors of the persons
---
named below unless authority to vote for nominees has been withheld in the
proxy. Broker non-votes and proxies marked "withheld" as to one or more of the
nominees will result in the respective nominees receiving fewer votes. However,
the number of votes otherwise received by the nominee will not be reduced by
such action. Although each of the persons named below has consented to serve as
a director if elected and the Board of Directors has no reason to believe that
any of the nominees named below will be unable to serve as a director, if any
nominee withdraws or otherwise becomes unavailable to serve, the persons named
as proxies will vote for any substitute nominee designated by the Board of
Directors. The following information regarding the nominees is relevant to your
consideration of the slate proposed by the Board of Directors:
Nominees for Director
Robert F. Allnutt, 66, has been a director since December 1995 and Chairman
of the Board since February 1999. Since February 1995, Mr. Allnutt has been a
senior counselor for APCO Worldwide, Inc., a public affairs and strategic
communications company. Mr. Allnutt was Executive Vice President of the
Pharmaceutical Manufacturers Association from 1985 until 1995 and was Vice
President for Governmental Relations of Communications Satellite Corporation
from May 1984 until May 1985. Prior to 1984, Mr. Allnutt held numerous positions
in the Federal Government for 25 years, including 15 years at NASA, where his
positions included Associate Deputy Administrator, the third ranking position in
the agency. Mr. Allnutt is a director of Questcor Pharmaceuticals, Inc., a
developer and marketer of prescription pharmaceuticals. He also serves as a
member of the Boards of Directors of the Partnership for Caring and of the
National Medals of Science and Technology Foundation. Mr. Allnutt holds a B.S.
in Industrial Engineering from the Virginia Polytechnic Institute and J.D. and
L.L.M. degrees from George Washington University.
Charles J. Casamento, 56, was elected to the Board of Directors of the
Company in July 1997. Since June 1993, Mr. Casamento has been Chairman,
President and Chief Executive Officer of Questcor Pharmaceuticals, Inc., a
biopharmaceutical company based in Union City, California. Prior to that, he was
President and Chief Executive Officer of Interneuron Pharmaceuticals, a
neuropharmaceutical company, from its founding in March 1989 until May 1993.
From January 1986 to March 1989, he was Senior Vice President and General
Manager, Pharmaceuticals & Biochemicals at Genzyme Corp., a biotechnology
company. From 1970 through 1985, Mr. Casamento held senior
2
management positions in marketing, finance and business development at Sandoz,
F. Hoffman-LaRoche, Johnson & Johnson and American Hospital Supply Corp., where
he was Vice President, Business Development and Strategic Planning for the
Critical Care Division. He holds a B.S. in Pharmacy and an M.B.A. from Fordham
University and is a licensed pharmacist.
Carl W. Cotman, Ph.D., 61, is a co-founder of the Company. He has been a
Scientific Director of and consultant to the Company since October 1987, served
as a director of the Company from March 1989 to October 1990, and was reelected
as a director in November 1991. Dr. Cotman has been a Professor of
Psychobiology, Neurology, and Psychiatry at the University of California, Irvine
since 1985. He was a Professor of Psychobiology and Neurology at that University
from 1983 to 1985, and has held various other teaching and research positions at
that University since 1968. He chaired the Scientific Advisory Council of the
American Paralysis Association and is a member of numerous professional
associations and committees, including the Council of the American Society for
Neurochemistry, the National Institute of Aging Task Force, the American
Association for the Advancement of Science and the International Society for
Neurochemistry. Dr. Cotman has served on the editorial boards of numerous
scientific journals and has authored or co-authored seven books and over 400
articles in the fields of neurobiology, memory and cognition, and the recovery
of function after brain injury. Dr. Cotman holds a B.A. in Chemistry from
Wooster College, an M.A. in Analytical Chemistry from Wesleyan University, and a
Ph.D. in Biochemistry from Indiana University.
Vincent F. Simmon, Ph.D., 58, was appointed President and Chief Executive
Officer and a director of the Company in May 1996 and served as the acting Chief
Financial Officer and Secretary of the Company from October 1998 to December
1999. From 1994 to 1995, Dr. Simmon served as Chairman, President and Chief
Executive Officer of Prototek, Inc., a privately-held biopharmaceutical company
focusing on the development of protease inhibitors. From 1990 to 1994, Dr.
Simmon served as President, Chief Executive Officer and a director at Alpha I
Biomedicals, Inc., a biotechnology company. From 1985 to 1990, Dr. Simmon served
as Vice President for Biomedical and Biotechnology Research at W. R. Grace and
Co. From 1979 to 1985, Dr. Simmon served in varying capacities including Senior
Vice President of Research and Development for Genex Corporation, a genetic
engineering company, and from 1973 to 1979 in varying capacities including
Assistant Director, Department of Toxicology for SRI International, a consulting
company. Dr. Simmon has served as a governor of the Emerging Companies Section
of BIO (Biotechnology Industrial Organization) and a director of the Chemical
Industries Institute for Toxicology (Research Triangle Park). Dr. Simmon holds a
B.A. in Biology and Chemistry from Amherst College, a M.S. from the University
of Toledo in Plant Physiology and a Ph.D. in Molecular Biology from Brown
University. Dr. Simmon was a post-doctoral fellow from 1971 to 1973 at Stanford
University. Dr. Simmon sits on the Boards of Directors of LINC (Life Sciences
Industry Council) and Thuris Corporation, a privately-held company.
Davis Temple, Jr., Ph.D., 58, has been a director of and consultant to the
Company since March 1994 and served as co-member of the Office of Chief
Executive Officer of the Company from October 1995 to May 1996. In 1997, Dr.
Temple was appointed as Chief Executive Officer of Cognetix, a privately-held
biopharmaceutical drug discovery and development company. Dr. Temple has served
as the Chairman of Cognetix since January 1999. From 1995 until 1998, he was a
Senior Consultant for Kaufman Brothers, a New York investment bank. Prior to
that, from 1994 to 1995 he was Managing Director at Stover Haley Burns, Inc., a
life science advisory group. From 1990 until 1993, Dr. Temple served as Vice
President, CNS Drug Discovery, of Bristol-Myers Squibb and from 1984 to 1990 he
served as Senior Vice President, CNS Research at Bristol-Myers Company. Dr.
Temple holds a B.S. in Pharmacy and a Ph.D. in Medicinal Chemistry and
Pharmacology from the University of Mississippi. Dr. Temple completed
post-doctorate research at Louisiana State University.
3
Director Not Standing for Reelection
Michael G. Grey, 48, has been a director of the Company since September
1994. Mr. Grey has informed the Company that he will retire from his position as
Director upon expiration of his term at the 2001 Annual Meeting of Stockholders
and will not stand for reelection to the Board in order to pursue other business
interests. Since September 2001, Mr. Grey has served as Chief Business Officer
and a director of Structural GenomiX, a privately-held structural biology
company. From January 1999 to April 2001, Mr. Grey served as President and Chief
Executive Officer of Trega Biosciences, Inc., a company developing and
commercializing products that improve the drug discovery process. From November
1994 until August 1998, Mr. Grey served as President of BioChem Therapeutic
Inc., a wholly-owned subsidiary of BioChem Pharma, an international
biopharmaceutical company. From January 1994 to October 1994, Mr. Grey was
Senior Vice President, Corporate Development of Titan Pharmaceuticals, Inc., a
biopharmaceutical holding company and President and Chief Operating Officer at
Ansan, Inc., an early stage biopharmaceutical company. From 1991 until 1993, Mr.
Grey served as Vice President, Corporate Development of Glaxo, Inc., and from
1989 until 1991, Mr. Grey served as Director of International Licensing of Glaxo
Holdings p.l.c., and was responsible for the worldwide licensing activities of
Glaxo. Since July 1999, Mr. Grey has also served as a member of the Board of
Directors of Epimmune Inc., a developer of vaccines to treat and prevent
infectious diseases and cancer. Mr. Grey holds a B.Sc. in Chemistry from the
University of Notingham.
Director Compensation
From July 1, 2000 to September 18, 2000, each non-employee director (other
than those who joined the Board of Directors to oversee an investment in the
Company) was entitled to receive $1,500 at each Board of Directors meeting
attended, and an additional $750 annual retainer for each committee on which he
served. The Chairman of the Board was entitled to receive $2,500 at each Board
of Directors meeting attended and an additional $750 annual retainer for each
committee on which he served. On September 19, 2000, the Board of Directors
approved certain adjustments to the above-described director compensation. As of
September 19, 2000, in addition to the $750 annual retainer for each committee
on which he or she serves, each non-employee director (other than those who join
the Board of Directors to oversee an investment in the Company) is entitled to
receive $2,500 at each Board of Directors meeting attended, and the Chairman of
the Board is entitled to receive $3,000 at each Board of Directors meeting
attended.
During the fiscal year ended June 30, 2001, under the Company's 1996 Stock
Incentive Plan, as adjusted by the Board of Directors on September 19, 2000,
each non-employee director (other than those who serve on the Board of Directors
to oversee an investment in the Company) is automatically granted options to
purchase 30,000 shares of Common Stock upon commencement of service as a
director and additional options to purchase 10,000 shares of Common Stock on the
date of each Annual Meeting of Stockholders. Non-employee directors who serve on
the Board of Directors to oversee an investment in the Company receive options
to purchase 7,500 shares of Common Stock upon commencement of service as a
director and additional options to purchase 3,000 shares of Common Stock on the
date of each Annual Meeting of Stockholders. These nonqualified options have an
exercise price equal to 100% of the fair market value of the Common Stock on the
date of grant, have a ten-year term and vest in equal increments of 33% on each
anniversary date of the dates of grant, and are otherwise subject to the terms
and provisions of the 1996 Stock Incentive Plan.
4
Executive Officers
Dr. Simmon is the Chief Executive Officer of the Company. Dr. Simmon's
biographical summary has been presented earlier. As of June 30, 2001, the other
Executive Officers of the Company included Maria S. Messinger, James H. Coleman
and Gary A. Rogers.
Maria S. Messinger, 34, was appointed Vice President, Chief Financial
Officer and Corporate Secretary of the Company in December 1999. She has served
as Controller of the Company since September 1994. From August 1989 to September
1994, Ms. Messinger served in a progression of positions at Ernst & Young LLP,
including her most recent position as an Audit Manager. She holds a B.A. from
the School of Business Administration and Economics at California State
University, Fullerton and is a Certified Public Accountant in the state of
California.
James H. Coleman, 60, became Senior Vice President of Business Development
in May 2000. Prior to joining Cortex, Mr. Coleman was President and Senior
Partner of Diversified Healthcare Management, Inc. (DHM), a biopharmaceutical
and biotechnology consulting firm that he founded in 1997. From March 1999 to
May 2000, Cortex was a client of DHM. During 1996, Mr. Coleman served as Vice
President of Commercial Development at CoCensys, Inc., a biotechnology company,
where he directed strategic planning and external business development. Mr.
Coleman was also employed as an executive at Pharmacia & Upjohn, Inc. for over
25 years, where he acquired extensive management expertise in new product
development, global strategic marketing, sales, CNS research and clinical
research trial methodologies. Mr. Coleman holds a B.S. in Applied Biology from
the University of Rhode Island.
Gary A. Rogers, Ph.D., 56, was appointed Senior Vice President,
Pharmaceutical Research in July 2000 and has served as Vice President,
Pharmaceutical Discovery since June 1995. In February 1994, he founded Ligand
Design, a private contract design and synthesis firm located in Santa Barbara.
From 1987 to 1994, Dr. Rogers served as an Associate Research Biochemist at the
University of California, Santa Barbara. Prior to that, he held a succession of
research and faculty positions at universities in the United States and abroad,
including three years as an Adjunct Professor of bio-organic chemistry under Dr.
Paul Boyer at the University of California, Los Angeles and four years as an
Assistant Professor at the University of Texas. Dr. Rogers is a co-inventor of
the AMPAKINE family of AMPA receptor modulating compounds. He holds a B.S.
degree in organic chemistry from the University of California, Los Angeles and a
Ph.D. in bio-organic chemistry from the University of California, Santa Barbara.
Other Key Employees
Ursula V. Staubli, Ph.D., 49, was named Vice President of Biological
Research in June 1999. From June 1993 to May 1999, Dr. Staubli was Associate
Professor at the Center for Neural Science at New York University ("NYU"). While
at NYU, she served as a consultant to the Company. Prior to June 1993, she held
teaching and research positions at McGill University and the University of
California, Irvine. A recipient of numerous pre- and post-doctoral fellowships
and grants, Dr. Staubli has published more than 60 scientific papers. She
received her B.S. in Behavioral Sciences and Ph.D. in Neurobiology from
ETH-Zurich (Swiss Federal Institute of Technology).
5
Scientific Directors
In addition to Dr. Cotman, the other Scientific Director of the Company is
Gary S. Lynch, Ph.D.
Gary S. Lynch, Ph.D., 57, is a co-founder of the Company. He has been a
Scientific Director of and consultant to the Company since October 1987 and
served as a director of the Company from March 1988 to March 1989 and again from
December 1994 to December 1995. Dr. Lynch has been a Professor in the Department
of Psychology at the University of California, Irvine since 1981, and has held
various other teaching and research positions at that University since 1969. He
is a Professor at the University's Center for the Neurobiology of Learning and
Memory. Dr. Lynch is a member of the Neuroscience Society and the International
Brain Research Organization. He also serves on the Advisory board of the
Cognitive Neurosciences Institute. Dr. Lynch has authored or co-authored over
500 articles and a number of books in the areas of neurobiology, cognition and
memory. Dr. Lynch holds a B.A. in Psychology from the University of Delaware and
a Ph.D. in Psychology from Princeton University. He is a co-founder of Synaptic,
Inc. and Thuris Corporation, both privately-held companies.
Board Committees
The Board of Directors of the Company has a standing Compensation Committee
and Audit Committee. The Board of Directors does not have a standing Nominating
Committee. The functions of the Compensation Committee include administering the
Company's stock plans and advising the Board of Directors on officer
compensation and on employee compensation generally. The Compensation Committee
held three (3) meetings during fiscal 2001 and is comprised of Dr. Cotman as
Chairman of the Committee, Mr. Grey and Dr. Temple.
The Audit Committee meets with the Company's independent auditors to
prepare for and to review the results of the annual audit and discuss the
financial statements. The Audit Committee recommends to the Board the
independent auditors to be retained and receives and considers the auditor's
comments as to controls, adequacy of staff and management performance and
procedures in connection with audit and financial controls. During the year
ended June 30, 2001, the Audit Committee consisted of Mr. Allnutt, Mr. Casamento
and Mr. Grey. None of Mr. Allnutt, Mr. Casamento or Mr. Grey are or have been
officers or employees of the Company and in all other respects meet the
qualifications prescribed by the rules of The American Stock Exchange for
members of audit committees. The Audit Committee held one (1) meeting during the
year ended June 30, 2001 to discuss the annual audit with the Company's
independent auditors. However, at each of the six meetings of the Board of
Directors held during the year ended June 30, 2001, the Company provided the
Audit Committee with an update of the Company's financial condition and a review
of its most recent interim financial statements. The Audit Committee operates
under a written charter, a copy of which is attached hereto as Appendix A.
Attendance at Meetings
During the fiscal year ended June 30, 2001, the Board of Directors held a
total of six (6) meetings. No member of the Board of Directors attended fewer
than 75% of the meetings of the Board and of the committees of which he was a
member.
6
Executive Compensation
The following table sets forth summary information concerning compensation
paid or accrued by the Company for services rendered during the three fiscal
years ended June 30, 2001, to the Company's Chief Executive Officer, Chief
Financial Officer, Senior Vice President of Business Development and Senior Vice
President of Pharmaceutical Discovery (collectively, the "Named Executive
Officers").
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
--------------------------------------- ----------------------------
Securities
Underlying
Name and Other Annual Options/ All Other
Principal Position Year Salary Bonus Compensation SARs(#) Compensation($)
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Vincent F. Simmon, Ph.D. 2001 $ 261,385 $ 82,875 $ -- 220,000 $ --
President, Chief 2000 220,000 75,000 -- 150,000 --
Executive Officer 1999 211,370 100,000 (1) -- 330,000 (2) --
Maria S. Messinger, CPA (3) 2001 $ 143,303 $ 30,000 $ -- 40,000 $ --
Vice President, Chief 2000 106,042 25,000 -- 40,000 --
Financial Officer and
Corporate Secretary
James H. Coleman (4) 2001 $ 180,000 $ 40,000 $ -- -- $ --
Senior Vice President, 2000 16,048 -- 150,000(5) 175,000(6) --
Business Development
Gary A. Rogers, Ph.D. (7) 2001 $ 166,380 $ 44,500 $ -- 100,000 $ --
Senior Vice President,
Pharmaceutical Discovery
___________________
(1) According to Dr. Simmon's employment agreement, he is eligible to
receive a bonus of between 15% to 50% of his annual base salary. Dr.
Simmon voluntarily postponed any bonus for the year ended June 30,
1998. The bonus for the year ended June 30, 1999 includes an amount to
adjust for the bonus not paid in fiscal 1998.
(2) Includes stock options to purchase 180,000 shares of the Company's
Common Stock that were repriced in December 1998 from an exercise price
of $5.625 per share to $0.375 per share, which represented the fair
market value of the Company's Common Stock at the time of repricing.
(3) Ms. Messinger was appointed Vice President and Chief Financial Officer
in December 1999. The table includes the compensation paid by the
Company to Ms. Messinger in her capacity as Controller during the
fiscal year ended June 30, 2000, prior to her appointment.
(4) Mr. Coleman was appointed Senior Vice President, Business Development
in May 2000. Prior to his employment at Cortex, Mr. Coleman served as a
consultant to the Company from March 1999.
(5) Other Annual Compensation to Mr. Coleman represents the consulting fees
paid to Diversified Healthcare Management during the fiscal year ended
June 30, 2000.
(6) Includes options to purchase 50,000 shares of Cortex Common Stock
granted to Diversified Healthcare Management, the firm Mr. Coleman
worked for as a consultant to Cortex prior to his employment at the
Company in May 2000.
(7) Dr. Rogers was appointed Senior Vice President, Pharmaceutical
Discovery in July 2000. The table includes compensation paid by the
Company to Dr. Rogers in his capacity as Vice President of
Pharmaceutical Research prior to his appointment.
7
Option Matters
Option Grants. The following table sets forth certain information
concerning grants of stock options to the Company's Named Executive Officers in
the Summary Compensation Table during the fiscal year ended June 30, 2001.
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock Price
Appreciation
Individual Grants For Option Term
---------------------------------------------------------------------------------------- ----------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted(#) Fiscal Year Price($/Sh) Date 5%($) 10%($)
---------------------------------------------------------------------------------------------------------------
Vincent F. Simmon, Ph.D. 120,000 20% $1.52 12/27/10 114,730 290,746
100,000 17% $2.78 06/19/11 174,862 443,132
Maria S. Messinger, CPA 40,000 7% $2.27 04/24/11 57,113 144,735
James H. Coleman -- -- -- -- -- --
Gary A. Rogers, Ph.D. 100,000 17% $2.69 08/15/10 169,201 428,786
_________________________
Option Exercises. The following table sets forth certain information
concerning the exercise of options by the Company's Named Executive Officers
during the fiscal year ended June 30, 2001, including the aggregate value of
gains on the date of exercise. In addition, the table includes the number of
shares covered by both exercisable and unexercisable stock options as of June
30, 2001. Also reported are the values for "in the money" options which
represent the positive spread between the exercise prices of any such existing
stock options and $2.45, the closing price of Common Stock on June 29, 2001, as
reported by The American Stock Exchange.
8
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value Realized($)
(market price Number of Securities Value of Unexercised
at exercise Underlying Unexercised In-the-Money
Shares Acquired less exercise Options at FY-End(#) Options at FY-End($)
Name on Exercise(#) price) Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------------------------------------
Vincent F. Simmon, Ph.D. 0 $ 0 400,000 270,000 $ 765,100 $ 211,178
Maria S. Messinger, CPA 0 0 38,334 66,666 74,609 52,666
James H. Coleman 0 0 91,667 (1) 83,333 0 0
Gary A. Rogers, Ph.D. 0 0 66,000 133,333 130,783 56,833
____________________
(1) Includes options to purchase 50,000 shares of Cortex Common Stock
granted to Diversified Healthcare Management, the firm Mr. Coleman
worked for as a consultant to Cortex prior to his employment at the
Company in May 2000.
Employment and Consulting Agreements
Vincent F. Simmon joined the Company as President and Chief Executive
Officer in May 1996. His employment agreement currently calls for a base salary
of $270,000 per year with an annual bonus, at the discretion of the Board of
Directors of the Company, in cash and/or equity equal to between 15% and 50% of
his base salary, subject to annual review by the Compensation Committee. In
connection with his employment, Dr. Simmon was granted options to purchase
180,000 shares of Common Stock at an exercise price of $5.625 per share,
representing 100% of the fair market value as of the date of grant. The options
vested monthly over a three-year period commencing one month from the date of
grant and have a ten-year term. In December 1998, the exercise price of these
options was restated to $0.375 per share. The restated options vest in three
equal installments over a two-year period, with the first installment vested on
the date of grant.
James H. Coleman joined the Company as Senior Vice President, Business
Development in May 2000. His employment agreement calls for a base salary of
$180,000 per year with an annual bonus, at the discretion of the Board of
Directors of the Company, equal to between 15% and 50% of his base salary. In
connection with his employment, Mr. Coleman was granted options to purchase
125,000 shares of Common Stock at an exercise price of $3.02 per share,
representing 100% of the fair market value as of the date of grant. The options
vest in equal annual installments over a three-year period and have a ten-year
term.
The Company has entered into severance agreements with each of the
Named Executive Officers. In the event of a termination of employment, under
certain circumstances, these severance agreements provide defined benefits to
the Named Executive Officers, including compensation equal to 12 to 18 months of
the Named Executive Officer's then current annual salary.
Drs. Carl W. Cotman and Gary S. Lynch (both of whom are co-founders
and Scientific Directors of the Company) have each entered into a consulting
agreement with the Company. Dr.
9
Lynch receives a consulting fee of $30,000 per year and Dr. Cotman receives a
consulting fee of $23,000 per year. The term of each consulting agreement
commenced in November 1987 and will continue until terminated by the respective
parties thereto. The consulting agreements obligate the respective consultants
to make themselves available to the Company for consulting and advisory services
for an average of three days per month.
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation Committee during the fiscal year
ended June 30, 2001 consisted of Dr. Carl W. Cotman, Michael G. Grey, and Dr.
Davis L. Temple, Jr., none of whom has served as an executive officer or
employee of the Company or any of its subsidiaries for the five years ending
June 30, 2001.
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
The Company's compensation policies applicable to its executive officers
are administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is made up of three non-employee directors. For the
fiscal year ended June 30, 2001, the Compensation Committee was comprised of Dr.
Carl W. Cotman, Mr. Michael G. Grey and Dr. Davis L. Temple, Jr. The Company's
executive compensation programs are designed to attract, motivate and retain the
executive talent needed to optimize stockholder value. The programs are designed
to enhance stockholder value by aligning the financial interests of the
executive officers of the Company with those of its stockholders. The following
report on executive compensation is furnished by the Compensation Committee for
the year ended June 30, 2001.
General Compensation Policy
The Company's compensation policy is designed to attract and retain
qualified key executives critical to the Company's success and to provide such
executives with performance-based incentives tied to the achievement of Company
milestones. One of the primary objectives is to have a substantial portion
of each executive officer's total compensation contingent upon the Company's
performance as well as upon the individual's contribution to the Company's
success as measured by his personal performance. Accordingly, each executive
officer's compensation package is comprised primarily of three elements: (i)
base salary which reflects individual performance and expertise and is designed
to be competitive with salary levels in the industry; (ii) variable performance
awards payable in cash and tied to the Company's achievement of certain goals;
and (iii) long-term stock-based incentive awards that strengthen the mutuality
of interests between the executive officers and the Company's stockholders.
Factors
The principal factors that the Compensation Committee considered in
establishing the components of each executive officer's compensation package for
the fiscal year ended June 30, 2001 are summarized below. However, the
Compensation Committee may in its discretion apply different factors,
particularly different measures of financial performance, in setting executive
compensation in future fiscal years.
10
Base Salary
The base salary levels for the executive officers were recommended by the
Compensation Committee and established by the Board of Directors for the fiscal
year ended June 30, 2001 on the basis of the following factors: personal
performance, the estimated salary levels in effect for similar positions at a
select group of companies with which the Company competes for executive talent,
and internal comparability considerations. Although the Compensation Committee
reviewed various compensation surveys, the Compensation Committee did not rely
upon any specific survey for comparative compensation purposes. Instead, the
Compensation Committee made its decisions as to the appropriate market level of
base salary for each executive officer on the basis of its understanding of the
salary levels in effect for similar positions at those companies with which the
Company competes for executive talent.
Annual Incentive Compensation
Executive officers have an opportunity to earn annual incentives based upon
performance targets. The Compensation Committee may also award bonuses in cases
where such performance targets are not met if it determines that the
circumstances warrant such action. For fiscal year ended June 30, 2001, the
performance targets for the executive officers included securing an additional
strategic alliance, obtaining an exchange listing for the Company's Common
Stock, broadening the Company's technology base and achieving progress
milestones in clinical trials. The weight given to each factor varied from
individual to individual. Additionally, each executive officer has a
discretionary portion of the annual incentive linked to achievement of
non-financial goals, which differ depending upon the responsibilities of the
executive officer in question.
Long-term Incentive Compensation
The 1996 Stock Incentive Plan also provides the Compensation Committee with
the ability to align the interests of the executive officer with those of the
stockholders and provide each individual with a significant incentive to manage
the Company from the perspective of an owner with an equity stake in the
business. The number of shares subject to each option grant is based upon the
executive officer's tenure, level of responsibility and relative position in the
Company. Stock options totaling 591,949 shares were granted to employees and
consultants during the fiscal year ended June 30, 2001, of which 360,000 were
granted to the executive officers. The exercise price for the stock options is
no less than the fair market value of the stock on the date of the grant.
Options generally vest at a rate of 33% per year starting on the anniversary
date of the option grant and are contingent upon the officer's continued
employment with the Company. Accordingly, the option will provide a return to
the executive officer only if he or she remains in the Company's employ and the
market price of the Company's Common Stock appreciates over the option term.
11
CEO Compensation
The salary and performance bonus of Dr. Vincent Simmon, the Company's Chief
Executive Officer, is determined in accordance with Dr. Simmon's Employment
Agreement with the Company (see "Employment and Consulting Agreements," above).
Effective May 15, 2001, the Compensation Committee increased Dr. Simmon's base
salary from $255,000 to $270,000. For the fiscal year ended June 30, 2001, Dr.
Simmon was paid a bonus of $82,875. Dr. Simmon's bonus was based upon the
Company's financial performance and on achievement of his individual objectives,
as set by the Compensation Committee at the start of the fiscal year.
Policy Regarding Section 162(m) of the Internal Revenue Code
The Compensation Committee has reviewed the Company's executive
compensation plans to determine if revisions may be necessary due to provisions
of Section 162(m) of the Internal Revenue Code which generally disallows a tax
deduction to public corporations for compensation paid to any of the Company's
executive officers in excess of $1,000,000 during any fiscal year. It is the
current policy of the Compensation Committee to preserve, to the extent
reasonably possible, the Company's ability to obtain a corporate tax deduction
for compensation paid to executive officers of the Company to the extent
consistent with the best interests of the Company and its stockholders. The
Compensation Committee continually reviews the Company's existing executive
compensation plans and will propose changes, if necessary and reasonable, to
ensure compliance with the provisions of Section 162(m) that allow
performance-based compensation to be excluded from the deduction limits.
Respectfully submitted,
Carl W. Cotman, Chairman
Michael G. Grey
Davis Temple, Jr.
Stock Performance Graph
Set forth below is a line graph comparing the cumulative stockholder return
on the Company's Common Stock with the cumulative total return of The American
Stock Exchange Composite Index and an industry peer group identified by the
Company (the "Peer Group Index"). The Peer Group Index consists of Axonyx, Inc.,
Diacrin Inc., Interneuon Pharmaceuticals, Inc., Neotherapeutics, Inc.,
Neurobiological Technologies, Inc., StemCells, Inc., Synaptic Pharmaceuticals
Corporation and Titan Pharmaceuticals, Inc. The Peer Group Index return consists
of the weighted returns of each component issuer according to such issuer's
respective stock market capitalization at the beginning of each period for which
a return is indicated.
The graph assumes an investment of $100 in the Company's Common Stock on
July 1, 1996, and an investment in each of The American Stock Exchange Composite
Index and the Peer Group Index of $100 on July 1, 1996. The graph covers the
five-year period through June 30, 2001.
The calculation of cumulative stockholder return for The American Stock
Exchange Composite Index and the Peer Group Index includes the reinvestment of
dividends. The calculation of cumulative stockholder return on the Company's
Common Stock does not include reinvestment of dividends
12
because the Company did not pay dividends during the measurement period. The
performance shown is not necessarily an indicator of future price performance.
[GRAPHIC]
Notwithstanding anything to the contrary set forth in the Company's
previous 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
Compensation Committee of the Board of Directors on Executive Compensation, the
Report of the Audit Committee of the Board of Directors and the Stock
Performance Graph shall not be incorporated by reference into any such filings.
13
Report of the Audit Committee of the Board of Directors
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended June 30, 2001 with
management. The Audit Committee also has discussed with Ernst & Young LLP, the
Company's independent auditors, the matters required to be discussed by the
Statement on Auditing Standards No. 61 (Communications with Audit Committee). In
addition, the Audit Committee has received the written disclosures and the
letter from Ernst & Young LLP as required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and the Audit
Committee has discussed the independence of Ernst & Young LLP with that firm.
Based on the Audit Committee's review of the matters noted above and its
discussions with the Company's independent auditors and the Company's
management, the Audit Committee recommended to the Board of Directors that the
Company's financial statements be included in the Company's Annual Report on
Form 10-KSB.
Respectfully Submitted,
Robert F. Allnutt
Charles J. Casamento
Michael G. Grey
CERTAIN TRANSACTIONS
The Company's Restated Certificate of Incorporation provides that, pursuant
to Delaware Law, directors of the Company shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. This provision does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctions or other forms
of non-monetary relief remain available under Delaware Law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware Law. The provision also does not affect a director's
responsibility under any other law, such as the federal securities laws. The
Company has entered into Indemnification Agreements with each of its officers
and directors that obligate the Company to indemnify them as permitted by
applicable law.
See "Employment and Consulting Agreements" for a description of certain
arrangements and transactions with executive officers and directors.
14
PRINCIPAL STOCKHOLDERS
The following table sets forth, to the knowledge of the Company,
certain information regarding the beneficial ownership of the Company's Common
Stock as of September 30, 2001, by (i) each person known by the Company to be
the beneficial owner of more than 5% of the outstanding Common Stock, (ii) each
of the Company's directors and nominees, (iii) each of the named executive
officers in the Summary Compensation Table and (iv) all of the Company's
executive officers and directors as a group. Except as indicated in the
footnotes to this table, the Company believes that the persons named in this
table have sole voting and investment power with respect to the shares of Common
Stock indicated.
Directors, Shares Percent of
Officers and 5% Beneficially Common Stock
Stockholders (1) Owned (2) Beneficially Owned (2)
----------------------------------------------------------------------------
Robert F. Allnutt 61,500(3) *
Charles J. Casamento 27,000(4) *
James H. Coleman 139,384(5) *
Carl W. Cotman, Ph.D. 98,000(6) 1.1
Michael G. Grey 38,000(7) *
Maria S. Messinger, CPA 38,334(8) *
Gary A. Rogers, Ph.D. 179,201(9) 1.1
Vincent F. Simmon, Ph.D. 501,100(10) 2.9
Davis L. Temple, Jr., Ph.D. 60,500(11) *
All officers and directors
as a group (9 persons) 1,227,686(12) 7.0
* Less than one percent
(1) Except as otherwise indicated, the address of such beneficial owner is
at the Company's principal executive offices, 15231 Barranca Parkway,
Irvine, California 92618.
(2) Applicable percentage of ownership at September 30, 2001 is based upon
16,629,887 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to
shares shown as beneficially owned. Shares of Common Stock subject to
options or warrants currently exercisable or exercisable within 60 days
of September 30, 2001 are deemed outstanding for computing the shares
and percentage ownership of the person holding such options or warrants,
but are not deemed outstanding for computing the percentage ownership of
any other person or entity.
(3) Includes 35,500 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(4) Includes 27,000 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(5) Includes 91,667 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(6) Includes 84,667 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(7) Includes 38,000 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(8) Includes 38,334 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
15
(9) Includes 99,334 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(10) Includes 400,000 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(11) Includes 60,500 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
(12) Includes 875,002 shares that may be purchased upon exercise of options
within 60 days of September 30, 2001.
The Company is not aware of any arrangements that may at a subsequent date
result in a change of control of the Company.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has recommended, and the Board of Directors has
selected, Ernst & Young LLP, independent auditors, to audit the financial
statements of the Company for the fiscal year ending June 30, 2002. In
determining whether the proposal has been approved, abstentions will be counted
as votes against the proposal and broker non-votes will not be counted as votes
for or against the proposal or as votes present and voting on the proposal. If
this proposal is not approved, the Audit Committee shall reconsider the proposal
and submit its recommendation to the Board of Directors.
Ernst & Young LLP has audited the Company's financial statements since its
fiscal year ended June 30, 1991. Its representatives are expected to be present
at the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. The
Company's Board of Directors recommends that you vote FOR the ratification of
Ernst & Young LLP as its independent auditors for the fiscal year ending June
30, 2002.
Audit Fees
The aggregate fees billed by Ernst & Young LLP for professional services
for the audit of the Company's financial statements for the fiscal year ended
June 30, 2001 and the review of financial statements included in the Company's
Forms 10-QSB for fiscal 2001 were $39,100.
Financial Information Systems Design and Implementation Fees
Ernst & Young did not provide, and it did not bill and it was not paid any
fees for, financial information systems design and implementation services in
fiscal 2001.
All Other Fees
The aggregate fees billed to the Company for all other services rendered by
Ernst & Young LLP to the Company in fiscal 2001 were $15,010.
The Audit Committee has determined that the provision of services, in
addition to audit services, rendered by Ernst & Young LLP and the fees paid
therefor in fiscal 2001 were compatible with maintaining Ernst & Young LLP's
independence.
16
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 2002 Annual
Meeting of Stockholders and presentation in the Company's proxy statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company's offices, 15231 Barranca Parkway, Irvine, California 92618, addressed
to the Secretary, no later than July 8, 2002 in order to be considered for
inclusion in the Company's proxy statement relating to the meeting. Matters
pertaining to such proposals, including the number and length thereof,
eligibility of persons entitled to have such proposals included and other
aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
Additionally, under Rule 14a-4, as promulgated under the Securities and
Exchange Act of 1934, as amended, if a stockholder fails to notify the Company
of a proposal at least 45 days prior to the month and day of mailing of the
prior year's proxy statement, then the Company will be allowed to use its
discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement. With respect to the
Company's 2002 Annual Meeting of Stockholders, a stockholder proposal not
previously submitted for the Company's proxy statement may be submitted until
September 21, 2002; thereafter, the Company will use its voting authority as
described above.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and ten-percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 2001, all of the Company's
officers, directors and ten-percent stockholders complied with all applicable
Section 16(a) filing requirements.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting of Stockholders that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return envelope. Please act promptly
to ensure that you will be represented at this important meeting.
17
THE COMPANY WILL PROVIDE WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS, A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED JUNE 30, 2001. REQUESTS SHOULD BE MAILED TO THE SECRETARY, CORTEX
PHARMACEUTICALS, INC., 15231 BARRANCA PARKWAY, IRVINE, CALIFORNIA 92618.
By Order of the Board of Directors
Maria S. Messinger, CPA
Secretary
November 5, 2001
APPENDIX A
Charter of the Audit Committee of the Board of Directors of Cortex
Pharmaceuticals, Inc.
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance and accounting.
Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the organization. The
Audit Committee has the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems necessary in the
performance of its duties.
II. Audit Committee Composition and Meetings
The Audit Committee shall be comprised of two (2) or more
directors as determined by the Board, a majority of whom shall meet the
independence and experience requirements of the Nasdaq Stock Market, and be free
from any relationship that would interfere with the exercise of his or her
independent judgment.
If the Company's securities are listed on the Nasdaq Stock
Market, and the Company files its reports with the Securities and Exchange under
Regulation S-K rather than Regulation S-B, (i) the Audit Committee shall be
comprised of at least three (3) directors, (ii) all members shall meet the
independence and experience requirements of the requirements of the Nasdaq Stock
Market, (iii) all members shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements,
and (iv) at least one member of the Committee shall have accounting or related
financial management expertise.
Audit Committee members shall be appointed by the Board. If an
Audit Committee Chair is not designated or present, the members of the Committee
may designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least twice times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall prepare
and/or approve an agenda in advance of each meeting. The Committee should meet
privately in executive session at least annually with management, the director
of the internal auditing department, the independent auditors, and as a
committee to discuss any matters that the Committee or each of these groups
believe should be discussed. In addition, the Committee, or at least its Chair,
should communicate with management and
the independent auditors quarterly to review the Company's financial statements
and significant findings based upon the auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for approval and have the
document published as may be required by SEC regulations.
2. Review the Company's annual audited financial statements
prior to filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding accounting
principles, practices, and judgments.
3. In consultation with the management, the independent
auditors, and the internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and report
such exposures. Review significant findings prepared by the independent auditors
and the internal auditing department together with management's responses.
4. Review with financial management and the independent
auditors the company's quarterly financial results prior to the release of
earnings and/or the company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the independent auditors
in accordance with SAS 61. The Chair of the Committee may represent the entire
Audit Committee for purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the
Audit Committee and the Board of Directors.
6. Review the independence and performance of the auditors and
annually recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances warrant.
7. Approve the fees and other significant compensation to be
paid to the independent auditors.
8. On an annual basis, review and discuss with the independent
auditors all significant relationships they have with the Company that could
impair the auditors' independence.
9. Review the independent auditors audit plan -- discuss
scope, staffing, locations, reliance upon management, and internal audit and
general audit approach.
10. Prior to releasing the year-end earnings, discuss the results
of the audit with the independent auditors and discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS 61.
11. Consider the independent auditors' judgments about the
quality and appropriateness of the Company's accounting principles as applied in
its financial reporting.
Internal Audit Department and Legal Compliance
12. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal audit department,
as needed
13. Review the appointment, performance, and replacement of the
senior internal audit executive.
14. Review significant reports prepared by the internal audit
department together with management's response and follow-up to these reports.
15. On at least an annual basis, review with the Company's
counsel, any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with applicable
laws and regulations, and inquiries received from regulators or governmental
agencies.
Other Audit Committee Responsibilities
16. Annually prepare a report to shareholders if required by the
Securities and Exchange Commission. The report should be included in the
Company's annual proxy statement.
17. Perform any other activities consistent with this Charter,
the Company's by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
18. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing activities.
CORTEX PHARMACEUTICALS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
Robert F. Allnutt and Vincent F. Simmon, Ph.D., and each or either of them,
with full power of substitution, are hereby appointed proxies to vote the stock
of the undersigned in Cortex Pharmaceuticals, Inc. at the Annual Meeting of
Stockholders on December 11, 2001, and at any postponement and adjournment
thereof, to be held at 15231 Barranca Parkway, Irvine, California 92618, at 9:00
a.m. Pacific Time.
Management recommends that you vote FOR Proposal 1 and FOR Proposal 2.
----------------------------------------------------------------------
1. PROPOSAL 1 ELECTION OF DIRECTORS.
--------------------------------
[_] FOR all Nominees listed below [_] WITHHOLD AUTHORITY to
(except as indicated to the vote for all Nominees
contrary below) listed below
Robert F. Allnutt, Charles J. Casamento, Carl W. Cotman, Ph.D., Vincent F.
Simmon, Ph.D. and Davis L. Temple, Jr., Ph.D.
INSTRUCTION: To withhold authority to vote for any individual Nominee,
write that Nominee's name in the space provided below.
____________________
2. PROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
------------------------------------------------------------------
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
-----------------------------------------------------------------------
2002.
----
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof, including
procedural and other matters relating to the conduct of the meeting.
[Front of Proxy Card]
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE FIVE DIRECTOR NOMINEES LISTED ABOVE AND
FOR PROPOSAL 2.
Please sign exactly as name appears hereon.
________________________
________________________
Date: _________________, 2001
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
PLEASE IMMEDIATELY DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED
ENVELOPE. THANK YOU FOR YOUR PROMPT ATTENTION TO THIS IMPORTANT MATTER.
[Back of Proxy Card]