SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material under Rule 14a-12
SUPERGEN, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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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
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the offsetting fee was paid previously. Identify the previous
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[LOGO]
SUPERGEN, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2001
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To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of SuperGen, Inc., a Delaware corporation (the "Company"), will be
held on Wednesday, May 30, 2001 at 2:00 p.m., local time, at 4140 Dublin
Boulevard, Dublin, California 94568 for the following purposes:
1. To elect six (6) directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To ratify and approve an amendment to the Company's 1998 Employee Stock
Purchase Plan increasing the number of shares of Common Stock authorized
for issuance by 200,000 shares for a total of 300,000 shares reserved
under the Plan.
3. To ratify and approve an amendment to the Company's 1996 Directors'
Stock Option Plan increasing the number of shares of Common Stock
authorized for issuance by 300,000 shares for a total of 550,000 shares
reserved under the Plan.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 2001.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only holders of record of the Company's Common Stock at the close of
business on April 16, 2001, the record date, are entitled to notice of and to
vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
JOSEPH RUBINFELD, PH.D.
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR
Dublin, California
April 17, 2001
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE
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SUPERGEN, INC.
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PROXY STATEMENT
FOR
2001 ANNUAL MEETING OF STOCKHOLDERS
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PROCEDURAL MATTERS
GENERAL
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of SuperGen, Inc. ("We," "SuperGen," or the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Wednesday, May 30, 2001 at 2:00 p.m., local time, and at any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held in the
board room at the Company's headquarters located at 4140 Dublin Boulevard, Suite
200, Dublin, California 94568. The telephone number at that location is
(925) 560-0100.
The proxy solicitation materials, which include the Proxy Statement, Proxy
and the Company's 2000 Annual Report to Stockholders, were first mailed to all
stockholders entitled to vote at the Annual Meeting on or about April 20, 2001.
RECORD DATE
Stockholders of record at the close of business on April 16, 2001 (the
"Record Date") are entitled to notice of and to vote at the meeting. As of the
Record Date, 32,773,638 shares of the Company's Common Stock were issued and
outstanding. No shares of preferred stock were outstanding.
REVOCABILITY OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed Proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND VOTING PROCEDURES
Each stockholder is entitled to one vote for each share of Common Stock held
on all matters to be voted on by the stockholders. Votes cast in person or by
proxy will be tabulated by Mellon Investor Services, LLC., the Company's
transfer agent.
Upon the execution and return of the enclosed form of proxy, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy, the
shares represented thereby will be voted as follows:
(i) "FOR" the election of each of the Company's nominees as a director,
(ii) "FOR" ratification and approval of an amendment to the Company's 1998
Employee Stock Option Plan increasing the number of shares of Common
Stock authorized for issuance by 200,000 to 300,000 shares,
(iii) "FOR" ratification and approval of an amendment to the Company's 1996
Directors' Stock Option Plan increasing the number of shares of Common
Stock authorized for issuance by 300,000 to 550,000 shares, and
(iv) "FOR" ratification of the appointment of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending
December 31, 2001.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
A majority of the outstanding shares of Common Stock entitled to vote on the
Record Date, whether present in person or represented by proxy, shall constitute
a quorum for the transaction of business at the Annual Meeting or any
adjournments thereof. Shares that are voted "FOR" or "AGAINST" a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as votes eligible to be cast by the Common Stock present in
person or represented by proxy at the meeting and "entitled to vote on the
subject matter" (the "Votes Cast") with respect to such matter.
Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of shares
is present at a meeting. Neither abstentions nor broker "non-votes" affect the
election of directors as the vote required is a plurality of the votes duly
cast, which means that only affirmative votes will affect the outcome of the
election. Broker "non-votes" are not deemed to be Votes Cast. As a result, while
abstentions are deemed to be Votes Cast and will have the effect of votes in
opposition of a given proposal, broker "non-votes" are not included in the
tabulation of the voting results on issues requiring approval of a majority of
the Votes Cast and, therefore, do not have the effect of votes in opposition in
such tabulations.
A broker "non-vote" occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner.
COSTS OF SOLICITATION OF PROXIES
We will bear the costs of soliciting proxies. We may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Proxies
may also be solicited by certain of the Company's directors, officers and
employees, without additional compensation, personally or by telephone, letter,
e-mail or facsimile.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Our stockholders may submit proposals that they believe should be voted upon
at the Annual Meeting or nominate persons for election to our Board of
Directors. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended ("Rule 14a-8"), some stockholder proposals may be eligible for inclusion
in our 2002 Proxy Statement. Any such stockholder proposals must be submitted in
writing to the attention of the Secretary, SuperGen, Inc., 4140 Dublin
Boulevard, Suite 200, Dublin, California 94568, no later than December 21, 2001.
Stockholders interested in submitting such a proposal are advised to contact
knowledgeable legal counsel with regard to the detailed requirements of
applicable securities laws. The submission of a stockholder proposal does not
guarantee that it will be included in our 2002 Proxy Statement.
Alternatively, under our Bylaws, a nomination or a proposal that the
stockholder does not seek to include in our 2002 Proxy Statement pursuant to
Rule 14a-8 may be submitted in writing to the Secretary, SuperGen, Inc., 4140
Dublin Boulevard, Suite 200, Dublin, California 94568, for the 2002 Annual
Meeting of Stockholders not less than 60 days prior to the meeting. Note,
however, with respect to a proposal and in the event we provide less than
70 days notice or prior public disclosure to stockholders of the date of the
2002 Annual Meeting, any stockholder proposal or nomination not submitted
pursuant to Rule 14a-8 must be submitted to us not later than the close of
business on the tenth day following the day on which notice of the date of the
2002 Annual Meeting was mailed or public disclosure was made. For example, if we
provide notice of our 2002 Annual Meeting on April 17, 2002, for a 2002 Annual
Meeting on May 30, 2002, any such proposal or nomination will be considered
untimely if submitted to us after April 27, 2002. For purposes of the above,
"public
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disclosure" means disclosure in a press release reported by the Dow Jones News
Service, Associated Press or a comparable national news service, or in a
document publicly filed by us with the Securities and Exchange Commission (the
"SEC"). As described in our Bylaws, the stockholder submission must include
certain specified information concerning the proposal or nominee, as the case
may be, and information as to the stockholder's ownership of our Common Stock.
If a stockholder gives notice of such a proposal after the deadline computed in
accordance with our Bylaws (the "Bylaw Deadline"), the stockholder will not be
permitted to present the proposal to the stockholders for a vote at the meeting.
SEC rules also establish a different deadline for submission of stockholder
proposals that are not intended to be included in the Company's Proxy Statement
with respect to discretionary voting (the "Discretionary Vote Deadline"). The
Discretionary Vote Deadline for the 2002 annual meeting is March 3, 2002 (45
calendar days prior to the anniversary of the mailing date of this Proxy
Statement). If a stockholder gives notice of such a proposal after the
Discretionary Vote Deadline, the Company's proxy holders will be allowed to use
their discretionary voting authority to vote against the stockholder proposal
when and if the proposal is raised at the Company's annual meeting.
Because the Bylaw Deadline is not capable of being determined until the
Company publicly announces the date for its next annual meeting, it is possible
that the Bylaw Deadline may occur after the Discretionary Vote Deadline. In such
a case, a proposal received after the Discretionary Vote Deadline but before the
Bylaw Deadline would be eligible to be presented at next year's annual meeting
and the Company believes that its proxy holders would be allowed to use the
discretionary authority granted by the proxy card to vote against the proposal
at the meeting without including any disclosure of the proposal in the Proxy
Statement relating to such meeting.
The Company has not been notified by any stockholder of his or her intent to
present a stockholder proposal from the floor at this year's Annual Meeting. The
enclosed proxy card grants the proxy holders discretionary authority to vote on
any matter properly brought before the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
Our Board of Directors (the "Board") is currently composed of six members.
The directors are elected to serve one-year terms and until their respective
successors are elected and qualified. The Board has nominated the persons set
forth below for election as directors. All of the nominees are current directors
of the Company. Unless otherwise instructed, the holders of proxies solicited by
this Proxy Statement will vote the proxies received by them for such nominees.
In the event that any nominee is unable or declines to serve as a director at
the time of the Annual Meeting, the proxy holders will vote for a nominee
designated by the present Board to fill the vacancy. We are not aware of any
reason that any nominee will be unable or will decline to serve as a director.
VOTE REQUIRED
The six (6) nominees receiving the highest number of affirmative votes of
the shares entitled to be voted shall be elected as directors of the Company.
Votes withheld from any director are counted for purposes of determining the
presence or absence of a quorum but have no other legal effect under Delaware
law.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR NAMED BELOW.
INFORMATION REGARDING NOMINEES
NAME AGE PRINCIPAL OCCUPATION
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President, Chief Executive Officer and Director of the
Joseph Rubinfeld............... 68 Company
Denis Burger(1)................ 57 Chairman and Chief Executive Officer, AVI BioPharma, Inc.
Thomas V. Girardi(2)........... 61 Senior Partner, Girardi & Keese
Walter J. Lack(2).............. 52 Managing Partner, Engstrom, Lipscomb & Lack
James S.J. Manuso(1)(2)........ 52 General Partner, PrimeTech Partners
Daniel Zurr(1)................. 55 President and Chief Executive Officer, Quark Biotech, Inc.
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(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
JOSEPH RUBINFELD, PH.D. co-founded the Company in 1991. He has served as
Chief Executive Officer, President and a director of the Company since its
inception and was Chief Scientific Officer from inception until September 1997.
Dr. Rubinfeld was one of the four initial founders of Amgen, Inc. in 1980 and
served as Vice President and Chief of Operations until 1983. From 1987 to 1990,
he was a Senior Director at Cetus Corporation. From 1968 to 1980, Dr. Rubinfeld
was employed at Bristol-Myers Company International Division ("Bristol-Myers")
in a variety of positions, most recently as Vice President and Director of
Research and Development. While at Bristol-Myers, Dr. Rubinfeld was instrumental
in licensing the original anticancer line of products for Bristol-Myers,
including mitomycin and bleomycin. Prior to that time, Dr. Rubinfeld was a
research scientist with several pharmaceutical and consumer product companies
including Schering-Plough Corporation and Colgate-Palmolive Co. Dr. Rubinfeld is
a member of the Board of Directors of AVI BioPharma, Inc. and NeoTherapeutics,
Inc. He received his B.S. in chemistry from C.C.N.Y., and his M.A. and Ph.D. in
chemistry from Columbia University. Dr. Rubinfeld has numerous patents and/or
publications on a wide range of inventions and developments including the
10-second developer for Polaroid film, manufacture of cephalosporins and the
first commercial synthetic biodegradable detergent. In 1984, Dr. Rubinfeld
received the Common Wealth Award for Invention.
DENIS BURGER, PH.D. has served as a director of the Company since
January 1996. Dr. Burger has served as Chairman and Chief Operating Officer of
AVI BioPharma, Inc., a biotechnology company specializing in gene-targeted
therapeutic and diagnostic products, since February 1992 and as Chief Executive
Officer since February 1996. Dr. Burger was a co-founder of Epitope, Inc., a
biotechnology company, and served as its Chairman from 1981 until 1990. He has
also been the general partner of Sovereign Ventures, LLC, a biotechnology
consulting and merchant banking venture, since 1991. Dr. Burger is a member of
the Board of Directors of AVI BioPharma, Inc. and Trinity Biotech, PLC. He
received his B.A. in Bacteriology and Immunology from the University of
California, Berkeley, and his M.S. and Ph.D. in Microbiology and Immunology from
the University of Arizona, Tucson.
THOMAS V. GIRARDI has served as a director of the Company since May 2000.
Mr. Girardi is senior partner of Girardi & Keese, a law firm specializing in
major business litigation, where he has worked since 1964. Mr. Girardi has
served as National President and Los Angeles Chapter President of the American
Board of Trial Advocates, is a fellow of the International Academy of Trial
Lawyers and the Inner Circle of Advocates, and is a member of the American Board
of Professional Liability Lawyers, International Society of Barristers, and
American Trial Lawyers Association. Mr. Girardi is also a member of the Board of
Directors of Spectrum Laboratories, Inc. He received his B.S. and J.D. from
Loyola Law School and an LLM from New York University.
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WALTER J. LACK has served as a director of the Company since February 2000.
Mr. Lack is managing partner of Engstrom, Lipscomb & Lack, a Los Angeles,
California law firm that he founded in 1974. Mr. Lack has acted as a special
arbitrator for the Superior Court of the State of California since 1976 and for
the American Arbitration Association since 1979. He is a member of the
International Academy of Trial Lawyers and an Advocate of the American Board of
Trial Advocates. Mr. Lack is also a member of the Board of Directors of HCC
Insurance Holdings, Inc., Microvision Inc., and Spectrum Laboratories, Inc.
JAMES S.J. MANUSO, PH.D. has served as a director of the Company since
February 2001. Dr. Manuso is a co-founder and general partner of PrimeTech
Partners, a biotechnology venture management partnership. He is also a
co-founder and chairman of Advance Genetic Systems, Inc., a microarray
technology and functional genomics company. Dr. Manuso co-founded and serves on
the board of EvoRx, Inc., a company applying IN VIVO directed molecular
evolution technologies to the enhancement of drugs' cellular targeting, uptake
and retention. He also serves on the boards of Symbiontics, Inc. and Quark
Biotech, Inc. Prior to co-founding PrimeTech Partners in 1998, Dr. Manuso was
co-founder and President of Manuso, Alexander & Associates, Inc., management
consultants and financial advisors to pharmaceutical and biotechnology
companies. From 1974 to 1983, Dr. Manuso was acting Medical Director and
Director of Health Care Planning and Development for The Equitable Companies.
Dr. Manuso earned a B.A in Economics and Chemistry from New York University, a
Ph.D. in Experimental Psychophysiology from The Graduate Faculty of the New
School University, and an Executive MBA from Columbia Business School.
DANIEL ZURR, PH.D. has been a director of the Company since January 1994.
Dr. Zurr currently serves as President and Chief Executive Officer of Quark
Biotech, Inc. Dr. Zurr served as Scientific Director and Business Development
Director of the Pharmaceutical Division of Israel Chemicals, Ltd., an Israeli
limited liability company, from 1984 to 1995. He also served as Director of
Licensing at G.D. Searle & Company, Ltd., from 1980 to 1983. He was Chief
Executive Officer of Plantex-Ikapharm, an Israeli pharmaceutical company, from
1975 to 1980. Dr. Zurr received his M.Sc. at the Hebrew University of Jerusalem
and his Ph.D. from the Imperial College University of London in 1972.
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 2000, the Board held nine meetings
(including regularly scheduled and special meetings). With the exception of
Denis Burger and Daniel Zurr, all of the incumbent directors attended 75% or
more of the meetings of the Board and committees, if any, upon which such
directors served.
The Board currently has two standing committees: an Audit Committee and a
Compensation Committee. We have no nominating committee or committee performing
similar functions.
AUDIT COMMITTEE. The Audit Committee is composed of three independent
directors, as defined in the applicable listing standards of the Nasdaq National
Market, Mr. Girardi, Mr. Lack and Dr. Manuso. The Audit Committee reviews and
monitors the corporate financial reporting and the internal and external audits
of the Company, including, among other things, the audit and control functions,
the results and scope of the annual audit and other services provided by the
Company's independent accountants, and the Company's compliance with legal
matters that have a significant impact on its financial reports. The Audit
Committee held four meetings during fiscal year 2000. For more information
regarding the functions performed by the Audit Committee, please see "Report of
the Audit Committee," included in this Proxy Statement. The Audit Committee is
governed by a written charter approved by the Board of Directors, a copy of
which is included in Appendix A.
COMPENSATION COMMITTEE. The Compensation Committee is composed of
Dr. Burger, Dr. Manuso and Dr. Zurr. The Compensation Committee reviews the
Company's executive compensation policy, including equity compensation for
senior executives of the Company, and makes recommendations to
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the Board regarding such matters. The Compensation Committee held one meeting
during 2000. See "Report of the Compensation Committee of the Board of
Directors" included in this Proxy Statement.
DIRECTOR COMPENSATION
All non-employee directors of the Company receive $1,000 in compensation for
attendance at each meeting of the Board, and Board Committee members shall each
receive $1,000 for each Board Committee meeting held on a day on which no Board
meeting is held. Directors and Board Committee members are also reimbursed for
all reasonable expenses incurred by them in attending Board and Committee
meetings. We have also adopted the 1996 Directors' Stock Option Plan providing
for stock options to be granted to certain non-employee directors. Under this
plan, each new non-employee director who joins the Company is entitled to
receive an option to purchase 50,000 shares of the Common Stock. All options
granted under the plan will vest as to 20% of the shares upon grant and as to
20% of the shares each year thereafter, provided that the non-employee director
shall continue to serve as a director on such date. Each option has a term of
ten years from the date of grant. The exercise price per share for all options
granted under the plan is 100% of the fair market value of our Common Stock on
the date of grant.
In connection with their first becoming non-employee directors of the
Company, Mr. Lack received an option under the Directors' Plan to purchase
50,000 shares of Common Stock at an exercise price of $52.625 per share on
February 10, 2000, Mr. Girardi received an option under the Directors' Plan to
purchase 50,000 shares of Common Stock at an exercise price of $22.625 per share
on May 30, 2000, and Dr. Manuso received an option under the 1993 Stock Plan to
purchase 50,000 shares of Common Stock at an exercise price of $12.875 per share
on February 7, 2001. For each of the options, 10,000 shares vested upon grant
and 10,000 shares shall vest each year thereafter, provided that the
non-employee director shall continue to serve as a director on such date.
PROPOSAL TWO
AMENDMENT TO 1998 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The 1998 Employee Stock Purchase Plan (the "ESPP") provides our employees
the opportunity to purchase our Common Stock through accumulated payroll
deductions. The ESPP was originally adopted by the Board in March 1998 and
approved by our stockholders in May 1998. Unless terminated sooner, the ESPP
will terminate automatically in March 2008. In February 2001, the Board voted to
increase the number of shares authorized for issuance under the ESPP by 200,000
shares, bringing the total shares currently reserved for issuance under the ESPP
to 300,000 shares. Proposal Two seeks stockholder approval of the increase in
shares authorized under the ESPP. As of March 31, 2001, after giving effect to
the proposed 200,000 share increase, there were 239,970 shares available for
future issuance under the ESPP.
We believe that the ESPP plays a key role in our ability to recruit, reward
and retain executives and key employees. Companies like SuperGen have
historically used stock purchase plans as an important part of recruitment and
retention packages. We compete directly with other companies for experienced
executives and sales personnel and believe that we must be able to offer
comparable packages to attract the caliber of individuals necessary to our
business. Our growth is partly responsible for the need to increase the number
of shares issuable under the ESPP. The total number of employees has increased
from 54 employees as of December 31, 1998 to 105 employees as of March 31, 2001.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of our Common
Stock represented, in person or by proxy, and entitled to vote on this proposal
will be required to ratify and approve the
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amendment to the ESPP. Abstentions will have the same effect as votes against
this proposal. Broker non-votes will not be counted as having been represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE 1998 EMPLOYEE STOCK PURCHASE PLAN.
The essential provisions of the ESPP are outlined below.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
PURPOSE OF THE EMPLOYEE STOCK PURCHASE PLAN
The purpose of the ESPP is to provide employees with an opportunity to
purchase our Common Stock through accumulated payroll deductions.
ADMINISTRATION
The ESPP is administered by the Board or a committee appointed by the Board.
All questions of interpretation or application of the ESPP are determined by the
Board or its appointed committee, and its decisions are final and binding upon
all participants.
ELIGIBILITY
Any person who is employed by us for at least 20 hours per week and more
than five months in any calendar year is eligible to participate in the ESPP.
However, no employee will be granted an option under the ESPP (i) to the extent
that, immediately after the grant, such employee would own capital stock of our
Company and/or hold outstanding options to purchase such stock possessing 5% or
more of the total combined voting power or value of all classes of capital stock
of our Company or of any of our subsidiaries, or (ii) to the extent that his or
her rights to purchase stock under all employee stock purchase plans of our
company and our subsidiaries accrues at a rate which exceeds $25,000 worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
OFFERING PERIODS
The ESPP is implemented by offering periods lasting approximately six months
in duration with a new offering period commencing every six months on the first
trading day on or after May 15th and November 15th of each year. To participate
in the ESPP, each eligible employee must authorize payroll deductions pursuant
to the ESPP. Such payroll deductions may not exceed 20% of a participant's
compensation. Once an employee becomes a participant in the ESPP, Common Stock
will automatically be purchased under the ESPP at the end of each offering
period, unless the participant withdraws or terminates employment earlier, and
the employee will automatically participate in each successive offering period
until such time as the employee withdraws from the ESPP or the employee's
employment with our company terminates.
PURCHASE PRICE
The purchase price per share at which shares will be sold in an offering
under the ESPP is the lower of (i) 85% of the fair market value of a share of
our Common Stock on the first day of an offering period or (ii) 85% of the fair
market value of a share of our Common Stock on the last day of that offering
period. The fair market value of our Common Stock on a given date is generally
the closing sales price as reported on the Nasdaq Stock Market for such date.
7
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions
throughout the offering period. The number of shares of Common Stock a
participant may purchase in each offering period is determined by dividing the
total amount of payroll deductions withheld from the participant's compensation
during that offering period by the purchase price; however, a participant may
not purchase more than 1,500 shares during each offering period. During the
offering period, a participant may discontinue his or her participation in the
ESPP, or may increase or decrease the rate of payroll deductions in an offering
period within limits set by the administrator of the ESPP. All payroll
deductions made for a participant are credited to the participant's account
under the ESPP. Funds received by us pursuant to payroll deductions under the
ESPP may be used for general corporate purposes. A participant may not make any
additional payments into his or her account.
WITHDRAWAL
A participant may terminate his or her participation in the ESPP at any time
by giving us a written notice of withdrawal. In such event, the payroll
deductions credited to the participant's account will be returned, without
interest, to such participant. Payroll deductions will not resume unless a new
subscription agreement is delivered in connection with a subsequent offering
period.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason cancels his or her
participation in the ESPP immediately. In such event the payroll deductions
credited to the participant's account will be returned without interest to such
participant, or in the case of death, to his or her designated beneficiaries or
the executors or administrators of his or her estate.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event a change, such as a stock split or stock dividend, is made in
our capitalization which results in an increase or decrease in the number of
shares of Common Stock without receipt of consideration, appropriate adjustment
will be made in the number of shares reserved for issuance under the ESPP and in
the number of shares subject to outstanding options under the ESPP, as well as
in the price per share of Common Stock covered by such options.
EFFECT OF DISSOLUTION OR LIQUIDATION OF OUR COMPANY
In the event of our liquidation or dissolution, the offering period then in
progress will terminate immediately prior to the consummation of such event
unless otherwise provided by the Board.
EFFECT OF ACQUISITION OF OUR COMPANY
In the event of a sale of all or substantially all of our assets, or our
merger with or into another corporation, outstanding options under the ESPP may
be assumed or equivalent options may be substituted by the successor
corporation. If the successor corporation refuses to assume or substitute for
the outstanding options, the offering period then in progress will be shortened
and a new exercise date will be set.
AMENDMENT AND TERMINATION
The Board may at any time and for any reason amend or terminate the ESPP,
except no such termination will affect options previously granted and no
amendment will make any change in a previously granted option which adversely
affects the rights of any participant. Stockholder approval for amendments to
the ESPP will be obtained in such a manner and to such a degree as required to
8
comply with all applicable laws or regulations. In any event, the ESPP will
terminate in March 2008, unless terminated earlier by the Board.
CERTAIN FEDERAL INCOME TAX INFORMATION.
The following brief summary of the effect of federal income taxation upon
the participant and our company with respect to the shares purchased under the
ESPP does not purport to be complete, and does not discuss the tax consequences
of the participant's death or the income tax laws of any municipality, state or
foreign country in which the participant may reside.
The ESPP, and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of Sections 421 and 423 of the Internal
Revenue Code of 1986, as amended. Under these provisions, no income will be
taxable to a participant until the shares purchased under the ESPP are sold or
otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject to tax in an amount that depends upon the
holding period. If the shares are sold or otherwise disposed of more than two
years from the first day of the applicable offering period and one year from the
applicable date of purchase, the participant will recognize ordinary income
measured as the lesser of (a) the excess of the fair market value of the shares
at the time of such sale or disposition over the purchase price, or (b) an
amount equal to 15% of the fair market value of the shares as of the first day
of the applicable offering period. Any additional gain will be treated as
long-term capital gain. If the shares are sold or otherwise disposed of before
the expiration of these holding periods, the participant will recognize ordinary
income generally measured as the excess of the fair market value of the shares
on the date the shares are purchased over the purchase price. Any additional
gain or loss on such sale or disposition will be long-term or short-term capital
gain or loss, depending on the holding period. We are not generally entitled to
a deduction for amounts taxed as ordinary income or capital gain to a
participant except to the extent of ordinary income recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
periods described above.
PROPOSAL THREE
AMENDMENT TO 1996 DIRECTORS' STOCK OPTION PLAN
GENERAL
The 1996 Directors' Stock Option Plan (the "Directors' Plan") provides for
the granting of non-statutory stock options to our non-employee directors. The
Directors' Plan was originally adopted by the Board in January 1996 and approved
by our stockholders in February 1996. Unless terminated sooner, the Directors'
Plan will terminate automatically in January 2006. In February 2001, the Board
voted to increase the number of shares authorized for issuance under the
Directors' Plan by 300,000 shares, bringing the total shares currently reserved
for issuance under the Directors' Plan to 550,000 shares. Proposal Three seeks
stockholder approval of the increase in shares authorized under the Directors'
Plan. As of March 31, 2001, after giving effect to the proposed 300,000 share
increase, there were 300,000 shares available for future issuance under the
Directors' Plan.
We believe that the Directors' Plan plays a key role in our ability to
recruit and reward members of our Board and to encourage their continued service
on our Board.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of our Common
Stock represented, in person or by proxy, and entitled to vote on this proposal
will be required to ratify and approve the amendment to the Directors' Plan.
Abstentions will have the same effect as votes against this proposal. Broker
non-votes will not be counted as having been represented.
9
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE DIRECTORS' PLAN.
The essential provisions of the Directors' Plan are outlined below.
SUMMARY OF THE DIRECTORS' PLAN
PURPOSES OF THE DIRECTORS' PLAN
The purposes of Directors' Plan are to attract and retain the best available
personnel for service as non-employee directors of our company, to provide
additional incentive to such individuals to serve as directors, and to encourage
their continued service on the Board.
ELIGIBILITY
Only directors who are not employees of our company may receive option
grants under the Directors' Plan, and no person will have any discretion to
select which non-employee directors are granted options. All grants of options
under the Directors' Plan are automatic and nondiscretionary in accordance with
the provisions of the Directors' Plan.
PROCEDURE FOR GRANTS; VESTING SCHEDULE; OPTION TERM
The Directors' Plan provides that each non-employee director is
automatically granted an option to purchase 50,000 shares on the date on which
such individual first becomes a director. Twenty percent (20%) of the shares
subject to the option will vest and be exercisable immediately upon grant and
the remaining shares subject to the option will vest over four years, based on
continued service as a director, at the rate of 20% of the shares on each
one-year anniversary of the date of grant. Each option has a term of ten years
from the date of grant.
EXERCISE PRICE
The exercise price of options granted under the Directors' Plan is 100% of
the fair market value of our Common Stock on the date the option is granted. As
long as our Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market,
its fair market value will be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination.
TERMINATION OF DIRECTORSHIP
If the optionee's status as a director of our company terminates for any
reason (other than as a result of death or disability), the optionee may, but
only within three months following the date of such event, exercise any option
granted under the Plan but only to the extent such option was exercisable on the
date of termination. To the extent that the option is not exercised within such
three-month period, the option terminates.
If the optionee's status as a director of our company terminates as a result
of his or her death or disability, the optionee or his legal representative may,
but only within 12 months following the date of such event, exercise any option
granted under the Directors' Plan to the extent such option was exercisable on
the date of such event. To the extent that the option is not exercised within
such 12-month period, the option terminates.
10
NONTRANSFERABILITY OF OPTIONS
Unless otherwise determined by the Board, an option is not transferable by
the optionee, other than by will or the laws of descent and distribution, and is
exercisable during the optionee's lifetime only by the optionee.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event a change, such as a stock split or stock dividend, is made in
our capitalization which results in an increase or decrease in the number of
issued shares of Common Stock without receipt of consideration, appropriate
adjustment will be made in the number of shares reserved for issuance under the
Directors' Plan, in the price per share of each outstanding option and in the
number of shares subject to each such option.
EFFECT OF DISSOLUTION ON LIQUIDATION OF OUR COMPANY
In the event of our dissolution or liquidation, to the extent an option has
not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.
EFFECT OF ACQUISITION OF OUR COMPANY
In the event of a sale of all or substantially all of our assets, or our
merger with or into another corporation, outstanding options under the
Directors' Plan may be assumed or equivalent options may be substituted by the
successor corporation. Following such assumption or substitution, if the
non-employee director's service to the successor corporation is terminated other
than upon a voluntary resignation by the non-employee director, his or her
option will become fully vested and exercisable and will remain exercisable
unless otherwise terminated. If the options are not assumed or substituted, they
will vest in full and become fully exercisable for a period of 30 days, after
which period they will terminate.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or terminate the Directors' Plan at any time, but no
such amendment or termination will adversely affect any stock options then
outstanding under the Directors' Plan, without the optionee's consent.
Stockholder approval for amendments to the Directors' Plan will be obtained in
such a manner and to such a degree as required to comply with all applicable
laws or regulations. Any such amendment or termination of the Directors' Plan
will not affect options already granted and such options will remain in full
force and effect as if the Directors' Plan had not been amended or terminated.
In any event, the Directors' Plan will terminate in January 2006 unless
terminated earlier by the Board.
CERTAIN FEDERAL INCOME TAX INFORMATION
The following is a summary of the effect of federal income taxation with
respect to the grant and exercise of non-statutory options under the Directors'
plan. It does not purport to be complete and does not discuss the tax
consequences of the optionee's death or the income tax laws of any municipality,
state or foreign country in which a participant may reside.
An optionee will not recognize any taxable income at the time he or she is
granted a non-statutory stock option. However, upon the option's exercise, the
optionee will recognize taxable income, generally measured as the excess of the
then fair market value of the shares purchased over the exercise price. The
Company will be entitled to a tax deduction in the same amount as the ordinary
income recognized by the optionee. Upon resale of such shares by the optionee,
any difference between the
11
sales price and the exercise price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has appointed Ernst & Young LLP as independent auditors of the
Company to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 2001, and recommends that the stockholders vote
for ratification of such appointment.
Ernst & Young LLP has audited our financial statements since March 1994.
Fees for the last annual audit were $118,000 and all other fees were $196,496.
Other fees included $114,000 for audit-related services for SEC registration
statements and accounting consultation, and $82,496 for tax compliance and tax
consultation services. No fees were paid relating to financial information
systems design and implementation.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement, and is expected
to be available to respond to appropriate questions.
VOTE REQUIRED
Ratification of the appointment of Ernst & Young LLP as our independent
auditors will require the affirmative vote of a majority of the outstanding
shares of Common Stock represented, in person or by proxy, and entitled to vote
on this proposal. Abstentions will have the same effect as a vote against this
proposal. Broker non-votes will not be counted as having been represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF APPOINTING
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
12
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
To our knowledge, the following table sets forth the beneficial ownership of
Common Stock of the Company as of March 31, 2001 for the following: (i) each
person or entity who is known by the Company to own beneficially more than 5% of
the outstanding shares of the Company's Common Stock; (ii) each of the Company's
directors; (iii) each of the officers named in the Summary Compensation Table;
and (iv) all directors and current executive officers of the Company as a group.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OWNED(1) OWNED(%)
- ---- ------------ ------------
Abbott Laboratories(2) ............................... 30,560,259 49.0
100 Abbott Park Road
Abbott Park, IL 60064
Tako Ventures, LLC(3)................................. 3,363,413 9.7
Lawrence Ellison
c/o Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065
Joseph Rubinfeld(4) .................................. 2,822,221 8.3
c/o SuperGen, Inc.
4140 Dublin Blvd, Suite 200
Dublin, CA 94568
Denis Burger(5)....................................... 10,000 *
Thomas V. Girardi(6).................................. 203,500 *
Walter J. Lack(6)..................................... 120,000 *
James S.J. Manuso(7).................................. 24,470 *
Daniel Zurr(8)........................................ 30,000 *
Karl L. Mettinger(9).................................. 10,694 *
Edward L. Jacobs(10).................................. 1,459 *
Luigi Lenaz(11)....................................... 5,118 *
Rajesh Shrotriya(12).................................. 1,074 *
Ronald H. Spair(13)................................... 32,162 *
All directors and current executive officers as a
group (7 persons)(14)............................... 3,220,885 9.5
- ------------------------
* Less than 1%.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire at May 30, 2001
through the exercise of any stock option or other right. Unless otherwise
indicated in the footnotes, each person has sole voting and investment
power (or shares such powers with his or her spouse) with respect to the
shares shown as beneficially owned. At March 31, 2001, there were
32,741,011 shares of our Common Stock outstanding.
(2) Includes 29,626,865 shares issuable upon the exercise of a stock option to
purchase shares of Common Stock exercisable at May 30, 2001.
(3) Tako Ventures, LLC is an investment entity controlled by Lawrence J.
Ellison, a former director of the Company. Includes 1,775,000 shares
issuable upon exercise of warrants to purchase shares of Common Stock
exercisable at May 30, 2001.
13
(4) Includes 1,633,500 shares held jointly by Joseph Rubinfeld and Loretta
Kifer, husband and wife, 20,000 shares held individually by Joseph
Rubinfeld, 49,000 shares held by Joseph Rubinfeld and Loretta Kifer as
custodians under the California Uniform Transfers to Minors Act, 1,100,000
shares issuable upon exercise of options to purchase shares of Common Stock
exercisable by Joseph Rubinfeld at May 30, 2001, and options to purchase
19,721 shares of Common Stock exercisable by Loretta Kifer, his wife, at
May 30, 2001.
(5) Represents 10,000 shares issuable upon exercise of stock options to
purchase shares of Common Stock exercisable at May 30, 2001. Does not
include 447,326 shares owned by AVI BioPharma, Inc. ("AVI"). Dr. Burger in
his capacity as Chief Executive Officer of AVI does not have or share
investment control over these shares owned by AVI.
(6) Includes 20,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable at May 30, 2001.
(7) Includes 1,400 shares held individually by James Manuso, 60 shares held
individually by Susan Manuso, his wife, 10 shares held by Sharon Manuso as
custodian under Uniform Grant to Minors Act, and 23,000 shares issuable
upon the exercise of stock options to purchase shares of Common Stock
exercisable by James Manuso at May 30, 2001.
(8) Represents 30,000 shares issuable upon the exercise of a stock option to
purchase shares of Common Stock exercisable at May 30, 2001.
(9) Represents 10,694 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable at May 30, 2001.
(10) Mr. Jacobs resigned his position as Executive Vice President, Commercial
Operations on January 31, 2001.
(11) Dr. Lenaz resigned his position as Senior Vice President, Clinical
Research and Medical Affairs on June 30, 2000.
(12) Dr. Shrotriya resigned his position as Executive Vice President and Chief
Scientific Officer on August 31, 2000.
(13) Includes 28,250 shares issuable upon the exercise of stock options to
purchase shares of Common Stock exercisable at May 30, 2001 and 1,191
shares issuable upon exercise of warrants to purchase shares of Common
Stock exercisable at May 30, 2001. Mr. Spair resigned his position as
Senior Vice President, Chief Financial Officer on December 31, 2000.
(14) See footnotes (4) through (9). Includes 1,233,415 shares issuable upon the
exercise of stock options to purchase shares of Common Stock held by
directors and current executive officers which are exercisable at May 30,
2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities ("10% of Class Stockholders") to file with
the SEC reports of ownership on Form 3 and reports on changes in ownership on
Form 4 or Form 5. Such executive officers, directors and 10% of Class
Stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that, through the Record
Date, its executive officers, directors and 10% of Class Stockholders complied
with all applicable Section 16(a) filing requirements, except that a Form 4 for
Denis Burger for August 2000 was filed late.
14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in January of 1993 and is
currently composed of Dr. Burger, Dr. Manuso, and Dr. Zurr, who are all
directors of the Company. Dr. Burger is Chairman and Chief Executive Officer of
AVI BioPharma, Inc. and Dr. Zurr is President and Chief Executive Officer of
Quark Biotech, Inc. Dr. Rubinfeld is a member of the Boards of Directors of AVI
and Quark Biotech, Inc. and serves on the compensation committee of AVI's board
of directors. No member of the Compensation Committee is or was formerly an
officer, employee or consultant of the Company.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and five other most highly
compensated executive officers (collectively, the "Named Officers") for services
rendered to the Company in all capacities during the last three fiscal years.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(2) BONUS($) OPTIONS(#) ($)
- --------------------------- -------- --------- ------------ -------- ------------ ------------
Joseph Rubinfeld, Ph.D.(1) ... 2000 500,000 8,050 780,000 -- 24,331(3)
President and Chief 1999 361,200 7,500 650,000 -- 4,800
Executive Officer 1998 350,000 7,500 158,800 200,000 4,800
Karl L. Mettinger, M.D.(4) ... 2000 95,104 -- 12,500 60,500 18,652(5)
Senior Vice President, Chief 1999 N/A N/A N/A N/A N/A
Medical Officer 1998 N/A N/A N/A N/A N/A
Edward L. Jacobs(6) .......... 2000 250,000 6,780 68,500 15,000 5,100(7)
Executive Vice President, 1999 155,250 6,303 30,000 85,000 4,800
Commercial Operations 1998 N/A N/A N/A N/A N/A
Luigi Lenaz, M.D.(8) ......... 2000 147,694 -- 30,600 25,000 --
Senior Vice President of 1999 185,000 -- 15,000 10,000 4,800
Clinical Research and 1998 162,400 -- 4,200 50,000 4,800
Medical Affairs
Rajesh Shrotriya, M.D.(9) .... 2000 156,250 4,750 31,700 39,660 93,000(10)
Executive Vice President and 1999 225,000 5,606 -- 61,500 4,800
Chief Scientific Officer 1998 187,775 5,812 4,800 13,500 4,800
Ronald H. Spair(11) .......... 2000 162,215 -- 13,800 -- 5,100(7)
Senior Vice President, Chief 1999 52,125 -- -- 80,000 --
Financial Officer 1998 N/A N/A N/A N/A N/A
- ------------------------
(1) Dr. Rubinfeld's amended Employment Agreement provides for an annual base
salary and a minimum annual performance bonus (a "Minimum Bonus") which may
be drawn in advance from the ensuing year. In 1998 he was paid $158,800
which included the balance of his total 1998 bonus which the Compensation
Committee set at $300,000. In 1999, he was paid a bonus of $650,000, which
included his Minimum Bonus for 1999 of $150,000 and an additional
performance bonus of $500,000 granted by the Compensation Committee.
Effective January 1, 2000, the Compensation Committee increased his annual
base salary to $500,000, increased his Minimum Bonus to $250,000, and
granted him an additional performance bonus of $500,000.
15
Effective January 1, 2001, the Board recommended retaining the same salary
and Minimum Bonus as 2000, but authorized an additional performance bonus
of $200,000.
(2) Represents use of Company leased vehicles or automobile allowance.
(3) Includes 401(k) contribution of $5,100 and accrued vacation payment of
$19,231.
(4) Dr. Mettinger joined the Company in August 2000.
(5) Represents reimbursement of relocation expenses.
(6) Mr. Jacobs joined the Company in March 1999. He resigned his position as of
January 31, 2001.
(7) Represents 401(k) contribution.
(8) Dr. Lenaz resigned his position in June 2000.
(9) Dr. Shrotriya resigned his position in August 2000.
(10) Represents forgiveness of a loan given to Dr. Shrotriya in 1998.
(11) Mr. Spair joined the Company in August 1999. He resigned his position as
of December 31, 2000.
OPTION GRANTS IN 2000
The following table shows, as to the Named Officers, information concerning
stock options granted during 2000. We have never granted any stock appreciation
rights.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM($)(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR(1) PER SHARE($)(2) DATE 5% 10%
- ---- ---------- ---------------- --------------- ---------- --------- ----------
Joseph Rubinfeld, -- -- -- -- -- --
Ph.D...................
Karl L. Mettinger, 50,000 8.2% 25.000 08/15/10 786,118 1,992,178
M.D.................... 5,500 0.9% 11.750 10/23/10 40,642 102,996
5,000 0.8% 12.625 12/26/10 39,699 100,605
Edward L. Jacobs......... 15,000 2.5% 49.938 03/22/10 471,086 1,193,825
Luigi Lenaz, M.D......... 25,000 4.1% 45.500 02/02/10 715,368 1,812,882
Rajesh Shrotriya, M.D.... 25,000 4.1% 45.500 02/02/10 715,368 1,812,882
14,660 2.4% 22.625 05/30/10 208,593 528,616
Ronald H. Spair.......... -- -- -- -- -- --
- ------------------------
(1) Based on a total of options to acquire 607,050 shares granted to employees
in 2000.
(2) Represents the fair market value on the date of grant as determined by the
closing price of our Common Stock on the Nasdaq National Market.
(3) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which is equal to the exercise price of options
granted in 2000, assuming that the stock appreciates in value from the date
of grant until the end of the option term at the annual rates specified (5%
and 10%). Potential Realizable Value is net of the option exercise price.
The assumed rates of appreciation are specified in rules of the SEC and do
not represent the Company's estimate or projection of future stock price.
Actual gains, if any, resulting from stock option exercises and Common Stock
holdings are dependent on the future performance of the Common Stock and
overall stock market conditions, as well as the option holders' continued
employment through the exercise/vesting period. The amounts reflected in
this table may never be achieved.
16
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth, as to the Named Officers, certain
information concerning options exercised during 2000 and the number of shares
subject to both exercisable and unexercisable stock options as of December 31,
2000. Also reported are values for unexercised "in-the-money" options, which
values represent the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of the Company's Common
Stock as of December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---- ----------- ----------- -------------- ---------------- -------------- ----------------
Joseph Rubinfeld,
Ph.D.................. -- -- 1,090,000 10,000 4,657,500 80,000
Karl L. Mettinger,
M.D................... -- -- 10,000 50,500 -- 17,937
Edward L. Jacobs........ 20,000 359,690 18,500 61,500 90,000 219,375
Luigi Lenaz, M.D........ 73,354 586,848 -- -- -- --
Rajesh Shrotriya,
M.D................... 154,848 2,015,848 -- -- -- --
Ronald H. Spair......... -- -- 28,250 -- 108,000 --
- ------------------------
(1) The value of underlying securities is based on the $13.875 per share closing
price of the Company's Common Stock on December 29, 2000 (the last market
trading day in 2000), minus the aggregate exercise price.
EMPLOYMENT AGREEMENTS
We maintain an employment agreement with Joseph Rubinfeld (the "Employment
Agreement"). The Employment Agreement, as restated January 1, 1998, provides for
his employment as President and Chief Executive Officer at an annual base salary
of at least $350,000 commencing October 1, 1997 and an annual minimum
performance bonus, which Minimum Bonus was set by the Board or its Compensation
Committee at $150,000 for 1998 and 1999, and $250,000 for 2000 and 2001, with
the added condition that in each of such years Dr. Rubinfeld be allowed to draw
against the Minimum Bonus for the ensuing year. The annual base salary is set at
$500,000 for 2001. As an additional incentive, under the terms of the Employment
Agreement, we issued Dr. Rubinfeld an option to purchase up to 500,000 shares of
Common Stock at a per share exercise price of $6.00. Of the shares subject to
this option, twenty-five percent (25%) were vested and exercisable as of
March 12, 1996 and an additional 1/36th of the remaining shares vested and
became exercisable at the end of each month thereafter. This option vested in
full in March 1999. The Employment Agreement provides for an employment term
through December 31, 2002.
The Employment Agreement provides for annual adjustments to compensate for
changes in the cost of living, and such additional salary or incentive
compensation as the Compensation Committee of the Board may determine from time
to time. The Employment Agreement provides for participation in our employee
benefit plans and such other plans as we may institute for the benefit of our
executive employees.
CERTAIN TRANSACTIONS
AGREEMENTS WITH ABBOTT LABORATORIES. In December 1999, we entered into an
alliance with Abbott Laboratories under which Abbott will market and distribute
rubitecan and invest in shares of our common stock. We will co-promote rubitecan
with Abbott in the United States and Abbott has exclusive rights to market
rubitecan outside of the United States. In the U.S. market, we will share
profits from product sales equally with Abbott. Outside the U.S. market, Abbott
will pay us royalties and transfer fees based on product sales. We will remain
responsible for pursuing and funding the clinical development of rubitecan and
obtaining regulatory approval for the product in the United States, Canada and
the member states of the European Union.
17
We will receive a number of equity investments and cash payments from Abbott
which, when aggregated, amount to approximately $150 million. Each equity
investment and cash payment is conditioned upon the achievement of certain
developmental and sales milestones. In January 2000, we received a
$26.5 million equity investment from Abbott. In addition, we granted Abbott an
option to purchase up to 49% of the outstanding shares of our Common Stock at an
exercise price of $85 per share which expires in March 2003.
AGREEMENTS WITH AVI BIOPHARMA, INC. Dr. Burger is the Chief Executive
Officer of AVI BioPharma, Inc., and Dr. Rubinfeld is a member of the Board of
Directors of AVI. In December 1999, we entered into an agreement with AVI. Under
the terms of the agreement, we acquired one million shares of AVI common stock,
which amounted to approximately seven and one half percent (7.5%) of AVI's
outstanding common stock, for $2.5 million cash and 100,000 shares of our Common
Stock at $28.25 per share. We also acquired exclusive negotiating rights for the
United States market for Avicine, AVI's proprietary cancer vaccine currently in
late-stage clinical testing against a variety of solid tumors. Avicine is a
non-toxic immunotherapy that neutralizes the effect of a tumor-associated
antigen on cancer cells, while stimulating the body's immune system to react
against the foreign tumor.
In July 2000, we finalized an agreement with AVI to obtain the U.S.
marketing rights for Avicine. We issued 347,826 shares of our Common Stock along
with $5 million in cash to AVI as payment for our investment, in exchange for
1,684,211 shares of AVI common stock. As part of this agreement, we obtained the
right of first discussion to all of AVI's oncology compounds and an option to
acquire an additional 10% of AVI's Common Stock for $35.625 per share. This
option is exercisable for a three-year period commencing on the earlier of the
date the FDA accepts the NDA submitted for Avicine or the date on which the
closing price of AVI's Common Stock exceeds the option exercise price.
Avicine will require significant additional expenditures to complete the
clinical development necessary to gain marketing approval from the FDA and
equivalent foreign regulatory agencies. As part of this agreement, we are
obligated to make additional payments to AVI based on successful achievement of
developmental, regulatory approval, and commercialization milestones over the
next several years that could total $80 million.
INVESTMENT BY TAKO VENTURES, LLC. On June 17, 1997, we entered into an
agreement with Tako Ventures, LLC ("Tako"), an investment entity controlled by
Lawrence J. Ellison, a former director of the Company, for a private placement
in our Common Stock (the "Tako Agreement").
In January 1999, Tako exercised its pre-emptive rights pursuant to the Tako
Agreement and purchased 61,350 shares of unregistered restricted Common Stock
for a total purchase price of $400,002. This transaction reflected a discount of
4% to a weighted average stock price for a specific period of time. We granted
registration rights in connection with this transaction.
In March 1999, we entered into a promissory note with Tako, whereby Tako
agreed to advance us up to $5,000,000 through December 31, 1999. Advances under
this agreement would be secured by substantially all our assets. In connection
with this transaction, we issued Tako a five-year warrant to acquire 500,000
shares of unregistered restricted Common Stock at an exercise price of $11.00
per share. In September 1999, we terminated this promissory note thereby
releasing any security interest that Tako had in our assets.
QUARK BIOTECH, INC. INVESTMENT AND PROPERTY LEASE In May 1997, we made an
equity investment of $500,000 and acquired 125,000 shares of Series C Preferred
Stock of Quark Biotech, Inc. ("QBI"), a privately-held development stage
biotechnology company headquartered in Israel, representing less than 1% of the
outstanding stock of QBI, and in September 1997 were issued a warrant to
purchase 31,250 shares of Series D Preferred Stock. Dr. Rubinfeld, Dr. Manuso,
and Dr. Zurr, directors of the Company, and Mr. Ellison (through Tako Ventures,
LLC), a more than 5% stockholder of the
18
Company, beneficially own an aggregate of 22,944,017 (for Dr. Rubinfeld,
excluding the 125,000 shares held by our Company) shares, or approximately
73.6%, of QBI as of the Record Date. Dr. Rubinfeld, Dr. Manuso, and Dr. Zurr are
also directors of QBI. Dr. Zurr is the President and Chief Executive Officer of
QBI.
In November 1997, we leased approximately one-third of the laboratory square
footage at the SuperGen Pharmaceutical Research Institute ("SPRI") to QBI for
$3,000 per month for three years, plus its pro-rata share of specified common
expenses. We also completed certain building and laboratory improvements and
purchased furniture on behalf of QBI for a total of approximately $750,000, of
which $300,000 was reimbursed by QBI in 1997. In the first quarter of 2000, we
terminated the lease with QBI and took possession of the entire laboratory space
and related property, plant, and equipment at SPRI.
MANAGEMENT INDEBTEDNESS. In June 1998, the Company loaned $85,000 to
Dr. Shrotriya. This loan had an annual interest rate of 5.5%. No payments on the
loan were made. The balance of this loan, including interest, totaling
approximately $93,000, was forgiven by the Board of Directors in May 2000.
In November 2000, the Company loaned $124,000 to Dr. Mettinger. The loan is
secured by a continuing security interest in real property owned by
Dr. Mettinger. The loan has an annual interest rate of 5% and is due and payable
on December 31, 2002.
EMPLOYMENT OF CERTAIN FAMILY MEMBERS. The Company employs a number of
individuals who are immediate family members of Dr. Rubinfeld, President, Chief
Executive Officer, and director of the Company. The employees, their
relationship to Dr. Rubinfeld, and their annual aggregate salary and bonus
amounts for the year ending December 31, 2000 are as follows: Joseph Iovino,
son-in law, $109,700; Susan Iovino, daughter, $60,200; Loretta Kifer, wife,
$114,467; Kevin Rolens, son-in-law, $102,700; Randee Rolens, daughter, $91,685;
and Steven Rubinfeld, son, $156,600. There are no family relationships between
or among any other officers or directors of the Company.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Company's 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, the Committee
reviewed the audit financial statements in the Annual Report 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.
The 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 the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the 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.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audit. The Committee met with the independent
auditors, with and without management present, and discussed the results of
their examinations, their evaluations of the Company's internal controls, and
the overall quality of the Company's financial reporting. The Committee held
four meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in
19
the Annual Report on Form 10-K for the year ended December 31, 2000 for filing
with the Securities and Exchange Commission. The Committee and the Board have
also recommended, subject to stockholder approval, the selection of the
Company's independent auditors.
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Thomas Girardi
Walter Lack
James Manuso
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board (the "Committee") consists of
directors Denis Burger, James Manuso, and Daniel Zurr, none of whom is an
employee or officer of the Company. The Committee was established in
January 1993 and is responsible for reviewing and making recommendations to the
Board regarding all forms of compensation to be provided to the executive
officers and directors of SuperGen, including stock compensation and loans, and
all bonus and stock compensation to all employees. The goal of the Committee is
to ensure that our compensation practices are sufficient to attract the
necessary talent to enable growth from a development stage company into one with
commercialized products.
COMPENSATION COMMITTEE PURPOSES
The Compensation Committee of the Board serves as an administrative arm of
the Board to make decisions on behalf of the Board with respect to all forms of
compensation to executive officers, and all bonus and stock compensation to
employees.
Compensation for officers and key employees includes both cash and equity
elements. Cash compensation consists of base salary, which is determined on the
basis of the level of responsibility, expertise and experience of the employee,
taking into account competitive conditions in the industry. In addition, cash
bonuses may be awarded to officers and other key employees. Such bonuses are
based on accomplishment of designated Company goals.
Ownership of the Company's Common Stock is a key element of executive
compensation. Our officers and other employees are eligible to participate in
the 1993 Plan, which was adopted prior to our initial public offering in
March 1996, and the 1998 Employee Stock Purchase Plan. The Plans permit the
Board or a committee designated by the Board to grant stock options to employees
on such terms as the Board or such committee may determine. Employee option
grants typically vest over a four-year period and thus require the employee's
continuing efforts. The Committee believes that it is in the stockholders'
interests to link employee compensation as closely as possible to equity
appreciation and thus to share with the employees the benefits of their efforts
on behalf of our success.
DESCRIPTION OF 401(k) PLAN
We also maintain a 401(k) Plan to provide retirement benefits through tax
deferred salary deductions for all employees. We may make discretionary
contributions, which will be allocated based upon the relative compensation of
each participant with at least 1,000 hours of service during the plan year and
who are employed on the last day of the plan year. Company contributions vest
ratably over five years. For 2000, we have made a discretionary contribution at
the rate of 3% of each eligible participant's salary as defined.
20
2000 EXECUTIVE COMPENSATION
Executive compensation for 2000 included base salary, cash bonuses,
incentive stock option grants and other compensation. We issued cash bonuses in
recognition of employee's prior service and contributions towards the
achievement of Company goals.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 2000
The compensation for Dr. Rubinfeld for 2000 was intended to reward him for
increasing stockholder value. It included a base salary of $500,000 per annum.
In addition, Dr. Rubinfeld receives a Minimum Bonus which was set by the Board
or its Compensation Committee at $150,000 for each of 1998 and 1999, and
$250,000 for 2000, with the added condition that in each of such years
Dr. Rubinfeld be allowed to draw against the Minimum Bonus for the ensuing year.
In 1997, Dr. Rubinfeld was paid a bonus of $159,000, which included a draw of
$150,000 upon his entire Minimum Bonus for 1998. The Compensation Committee set
his total 1998 bonus at $300,000 and the balance of the total 1998 bonus due him
of $150,000 was paid in 1998. In 1999, he was paid a bonus of $650,000, which
included his Minimum Bonus for 1999 of $150,000 and additional performance bonus
of $500,000 granted by the Compensation Committee. Effective January 1, 2000,
the Compensation Committee increased his annual base salary to $500,000,
increased his Minimum Bonus to $250,000, and granted him an additional
performance bonus of $500,000. In February 2001, the Board granted him an
additional performance bonus of $200,000, and maintained his base salary and
Minimum Bonus at 2000 levels. See "Executive Officer Compensation--Employment
Agreements."
INTERNAL REVENUE CODE SECTION 162(M) IMPLICATIONS FOR EXECUTIVE COMPENSATION
The Committee is responsible for addressing issues raised by Section 162(m)
of the Internal Revenue Code ("Section 162(m)"). This Section limits the
Company's tax deduction for compensation paid to certain executive officers that
does not qualify as "performance-based" to $1 million per executive officer. To
qualify as performance-based under Section 162(m), compensation payments must be
made pursuant to a plan that is administered by a committee of outside directors
and must be based on achieving objective performance goals.
SUMMARY
The Compensation Committee advises the Board regarding our cash and equity
incentive programs for the purpose of attracting and retaining highly skilled
executives who will promote our business goals and providing incentive for these
persons to achieve goals, which are intended to build long-term stockholder
value.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Denis Burger, Chairman
James Manuso
Daniel Zurr
21
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph compares our cumulative total stockholder return with
those of the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index. The
graph assumes that $100 was invested on March 13, 1996 (the effective date of
the Company's initial public offering) in the Company's Common Stock and on
February 29, 1996 in the Nasdaq Composite Index and the Nasdaq Pharmaceutical
Index, including reinvestment of dividends. Note that historic stock price
performance is not necessarily indicative of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SUPERGEN, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ PHARMACEUTICAL
3/13/96 $100.00 $100.00 $100.00
12/96 $272.22 $117.93 $94.05
12/97 $333.33 $144.43 $97.19
12/98 $205.56 $203.68 $123.73
12/99 $652.78 $378.52 $232.55
12/00 $308.33 $227.75 $289.26
22
OTHER MATTERS
We know of no other matters to be submitted to the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to vote the shares they represent as the Board
may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares that you hold. You are therefore urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
THE BOARD OF DIRECTORS
Dublin, California
April 17, 2001
23
APPENDIX A
AUDIT COMMITTEE CHARTER
PURPOSE:
The purpose of the Audit Committee of the Board of Directors of
SuperGen, Inc. (the "Company") shall be:
- to provide oversight and monitoring of Company management and the
independent auditors and their activities with respect to the Company's
financial reporting process;
- to provide the Company's Board of Directors with the results of its
monitoring and recommendations derived therefrom;
- to nominate to the Board of Directors independent auditors to audit the
Company's financial statements and oversee the activities and independence
of the auditors; and
- to provide to the Board of Directors such additional information and
materials as it may deem necessary to make the Board of Directors aware of
significant financial matters that require the attention of the Board of
Directors.
The Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors and will consist of at least three members
of the Board of Directors. On or before June 14, 2001, the members will meet the
following criteria:
1. Each member will be an independent director, in accordance with the
Nasdaq National Market Audit Committee requirements;
2. Each member will be able to read and understand fundamental financial
statements, in accordance with the Nasdaq National Market Audit Committee
requirements; and
3. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background, including a current or past position
as a chief executive or financial officer or other senior officer with
financial oversight responsibilities.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
- Providing oversight and monitoring of Company management and the
independent auditors and their activities with respect to the Company's
financial reporting process;
- Recommending the selection and, where appropriate, replacement of the
independent auditors to the Board of Directors;
- Reviewing fee arrangements with the independent auditors;
- Reviewing the independent auditors' proposed audit scope, approach and
independence;
- Reviewing the performance of the independent auditors, who shall be
accountable to the Board of Directors and the Audit Committee;
- Requesting from the independent auditors of a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independent Standards
A-1
Board Standard No. 1, and engaging in a dialogue with the auditors with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the auditors;
- Directing the Company's independent auditors to review before filing with
the SEC the Company's interim financial statements included in Quarterly
Reports on Form 10-Q, using professional standards and procedures for
conducting such reviews;
- Discussing with the Company's independent auditors the matters required to
be discussed by Statement on Accounting Standard No. 61, as it may be
modified or supplemented;
- Reviewing with management, before release, the audited financial
statements and Management's Discussion and Analysis in the Company's
Annual Report on Form 10-K;
- Providing a report in the Company's Proxy Statement in accordance with the
requirements of Item 306 of Regulation S-K and Item 7(e) (3) of
Schedule 14A;
- Reviewing the Audit Committee's own structure, processes and membership
requirements; and
- Performing such other duties as may be requested by the Board of
Directors.
MEETINGS:
The Audit Committee will meet at least quarterly. The Audit Committee may
establish its own schedule, which it will provide to the Board of Directors in
advance.
The Audit Committee will meet separately with the independent auditors as
well as members of the Company's management as it deems appropriate in order to
review the financial controls of the Company.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
REPORTS:
Apart from the report prepared pursuant to Item 306 of Regulation S-K and
Item 7(e) (3) of Schedule 14A, the Audit Committee will summarize its
examinations and recommendations to the Board from time to time as may be
appropriate, consistent with the Committee's charter.
A-2
Appendix B
SUPERGEN, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED EFFECTIVE FEBRUARY 7, 2001)
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the common stock of the
Company.
(d) "COMPANY" shall mean SuperGen, Inc., a Delaware
corporation, and any Designated Subsidiary of the Company.
(e) "COMPENSATION" shall mean all base straight time gross
earnings, bonuses and commissions, exclusive of payments for overtime, shift
premium and other compensation.
(f) "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which
has been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is an Employee
of the Company for tax purposes whose customary employment with the Company is
at least twenty (20) hours per week and more than five (5) months in any
calendar year. For purposes of the Plan, the employment relationship shall be
treated as continuing intact while the individual is on sick leave or other
leave of absence approved by the Company. Where the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
(h) "ENROLLMENT DATE" shall mean the first day of each
Offering Period.
(i) "EXERCISE DATE" shall mean the last Trading Day of each
Offering Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the
value of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq
B-1
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
on the date of such determination, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable, or;
(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(k) "OFFERING PERIOD" shall mean a period of approximately
six (6) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after May 15 (beginning in
1999) and terminating on the last Trading Day in the period ending the following
November 14, or commencing on the first Trading Day on or after November 15
(beginning in 1998) and terminating on the last Trading Day in the period ending
the following May 14; provided, however, that the first Offering Period under
the Plan shall commence on the first Trading Day on or after May 12, 1998, and
shall terminate on the last Trading Day on or before November 14, 1998. The
duration of Offering Periods may be changed pursuant to Section 4 of this Plan.
(l) "PLAN" shall mean this 1998 Employee Stock Purchase
Plan.
(m) "PURCHASE PRICE" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or on
the Exercise Date, whichever is lower.
(n) "RESERVES" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(o) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(p) "TRADING DAY" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. ELIGIBILITY.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d)
B-2
of the Code) would own capital stock of the Company and/or hold outstanding
options to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after May 15 (beginning in 1999) and November 15 of each year, or on such
other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 20 hereof; provided, however, that the
first Offering Period under the Plan shall commence on the first Trading Day on
or after May 12, 1998, and shall terminate on the last Trading Day on or before
November 14, 1998. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on
the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding twenty percent (20%) of
the Compensation which he or she receives on each pay day during the Offering
Period.
(b) A participant may not make any additional payments into
such account.
(c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase
or decrease the rate of his or her payroll deductions during the Offering
Period by completing or filing with the Company a new subscription agreement
authorizing a change in payroll deduction rate. The Board may, in its
discretion, limit the number of participation rate changes during any
Offering Period. The change in rate shall be effective with the first full
payroll period following five (5) business days after the Company's receipt
of the new subscription agreement unless the Company elects to process a
given change in participation more quickly.
B-3
A participant's subscription agreement shall remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during an Offering Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Offering Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but shall not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.
7. GRANT OF OPTION. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than 1,500
shares (subject to any adjustment pursuant to Section 19), and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The
Option shall expire on the last day of the Offering Period.
8. EXERCISE OF OPTION. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the purchase of
shares shall be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such
participant at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. No fractional shares shall be purchased;
any payroll deductions accumulated in a participant's account which are not
sufficient to purchase a full share shall be retained in the participant's
account for the subsequent Offering Period, subject to earlier withdrawal by
the participant as provided in Section 10 hereof. Any other monies left over
in a participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
B-4
10. WITHDRAWAL.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. TERMINATION OF EMPLOYMENT. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.
12. INTEREST. No interest shall accrue on the payroll deductions of
a participant in the Plan.
13. STOCK.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be three
hundred thousand (300,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 19 hereof. If, on a
given Exercise Date, the number of shares with respect to which options are
to be exercised exceeds the number of shares then available under the Plan,
the Company shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be practicable and as
it shall determine to be equitable.
(b) The participant shall have no interest or voting right
in shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
B-5
14. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. 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 an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent
shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. TRANSFERABILITY. 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 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
18. REPORTS. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
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19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
LIQUIDATION, MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the Reserves, the maximum number of
shares each participant may purchase per Offering Period (pursuant to Section
7), as well as the price per share and the number of shares 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, reverse stock split, stock
dividend, combination or reclassification of 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 Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period then
in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"), and shall terminate immediately prior to the consummation of
such proposed dissolution or liquidation, unless provided otherwise by the
Board. The New Exercise Date shall be before the date of the Company's
proposed dissolution or liquidation. The Board shall notify each participant
in writing, at least ten (10) business days prior to the New Exercise Date,
that the Exercise Date for the participant's option has been changed to the
New Exercise Date and that the participant's option shall be exercised
automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
(c) MERGER OR ASSET SALE. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the option, the
Offering Period then in progress shall be shortened by setting a new Exercise
Date (the "New Exercise Date"). The New Exercise Date shall be before the date
of the Company's proposed sale or merger. The Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
20. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as provided in Section
19 hereof, no such termination can affect options previously granted,
provided that an Offering Period may be terminated by the Board
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of Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 19 hereof, no amendment may make
any change in any option theretofore granted which adversely affects the
rights of any participant. To the extent necessary to comply with Section 423
of the Code (or any other applicable law, regulation or stock exchange rule),
the Company shall obtain stockholder approval in such a manner and to such a
degree as required.
(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
21. 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.
22. CONDITIONS UPON ISSUANCE 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 Securities Exchange Act of 1934, as
amended, 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.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
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EXHIBIT A
SUPERGEN, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application (Complete Line 2) Enrollment Date: ________
_____ Change in Payroll Deduction Rate (Complete Line 3)
_____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in
the SuperGen, Inc. 1998 Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement
and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of $_________ or _____% of my Compensation on each payday (from 1% to
20%) during the Offering Period in accordance with the Employee Stock
Purchase Plan.
3. I hereby authorize a change in payroll deductions from each paycheck to
the amount of $_______ or ____% of my Compensation on each payday (from
0% to 20%) during the Offering Period in accordance with the Employee
Stock Purchase Plan.
4. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
5. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to stockholder approval of the Employee Stock Purchase Plan.
6. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only):
______________________.
7. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the
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shares at the time such shares were purchased by me over the price
which I paid for the shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN
WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF SHARES AND
I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX
WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF
THE COMMON STOCK. The Company may, but will not be obligated to,
with-hold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year
holding period, I understand that I will be treated for federal income
tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only
to the extent of an amount equal to the lesser of (1) the excess of the
fair market value of the shares at the time of such disposition over
the purchase price which I paid for the shares, or (2) 15% of the fair
market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be
taxed as capital gain.
8. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
9. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)
-------------------------------------------------------
(First) (Middle) (Last)
- ---------------------------- -------------------------------------------------
Relationship
-------------------------------------------------
(Address)
Employee's Social
Security Number:
-------------------------------------------------
Employee's Address:
-------------------------------------------------
-------------------------------------------------
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I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
------------------- ------------------------------------------
Signature of Employee
------------------------------------------
Spouse's Signature (If beneficiary other
than spouse)
B-11
EXHIBIT B
SUPERGEN, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the SuperGen,
Inc. 1998 Employee Stock Purchase Plan which began on ___________ 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
------------------------------------------
------------------------------------------
------------------------------------------
Signature:
------------------------------------------
Date:
------------------------------------
B-12
Appendix C
SUPERGEN, INC.
1996 DIRECTORS' STOCK OPTION PLAN
(AS AMENDED EFFECTIVE FEBRUARY 7, 2001)
1. PURPOSES OF THE PLAN. The purposes of this 1996 Directors' Stock
Option Plan are to attract and retain the best available personnel for service
as Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" means the Common Stock of the Company.
(d) "COMPANY" means SuperGen, Inc., a Delaware corporation.
(e) "DIRECTOR" means a member of the Board.
(f) "EMPLOYEE" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(g) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(h) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination, as
reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable, or;
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(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(i) "INSIDE DIRECTOR" means a Director who is an Employee.
(j) "OPTION" means a nonstatutory stock option granted
pursuant to the Plan.
(k) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(l) "OPTIONEE" means a Director who holds an Option.
(m) "OUTSIDE DIRECTOR" means a Director who is not an
Employee; provided, however, that no Director who is a representative of or
affiliated with Israel Chemicals, Ltd. shall be eligible to participate and
receive options under the Plan; provided, further, that neither J. Gregory
Swendsen nor David M. Fineman shall be eligible to participate and receive
options under the Plan.
(n) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "PLAN" means this 1996 Directors' Stock Option Plan.
(p) "SHARE" means a share of the Common Stock, as adjusted
in accordance with Section 10 of the Plan.
(q) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Internal Revenue
Code of 1986.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
10 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 550,000 Shares of Common Stock (the "Pool"). The Shares
may be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. ADMINISTRATION AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) PROCEDURE FOR GRANTS. All grants of Options to Outside
Directors under this Plan shall be automatic and nondiscretionary and shall be
made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
C-2
(ii) Each Outside Director shall be automatically
granted an Option to purchase 50,000 Shares on the date on which the later of
the following events occurs: (A) the effective date of this Plan, as determined
in accordance with Section 6 hereof, or (B) the date on which such person first
becomes an Outside Director, whether through election by the shareholders of the
Company or appointment by the Board to fill a vacancy; provided, however, that
an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a Option.
(iii) Notwithstanding the provisions of subsection
(ii) hereof, any exercise of an Option granted before the Company has obtained
shareholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 16 hereof.
(iv) The terms of each Option granted hereunder shall
be as follows:
(A) the term of the Option shall be ten (10)
years.
(B) the Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be
100% of the Fair Market Value per Share on the date of grant of the Option. In
the event that the date of grant of the Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the Option.
(D) subject to Section 10 hereof, the Option
shall become exercisable as to 20% of the Shares subject to the Option on the
date of its grant and 20% of the Shares subject to the Option on each
anniversary of its date of grant, provided that the Optionee continues to serve
as a Director on such dates.
(v) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.
5. ELIGIBILITY. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4 hereof.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate the Director's relationship with the
Company at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16
C-3
of the Plan. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 11 of the Plan.
7. FORM OF CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case
of Shares acquired upon exercise of an Option, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, (iv) delivery of a
properly executed exercise notice together with such other documentation as the
Company and the broker, if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price, or (v) any combination of the foregoing methods of
payment.
8. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. Subject
to Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her
Option, but only within three (3) months following the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination (but in no event later than the expiration of its ten (10)
year term). To the extent that the
C-4
Optionee was not entitled to exercise an Option on the date of such termination,
and to the extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
(c) DISABILITY OF OPTIONEE. In the event Optionee's status
as a Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her
Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. NON-TRANSFERABILITY OF OPTIONS. Unless determined otherwise by
the Board, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER
OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share covered by each such outstanding Option, and the number
of Shares issuable pursuant to the automatic grant provisions of Section 4
hereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares 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." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
C-5
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation or the sale of substantially all of the
assets of the Company, outstanding Options may be assumed or equivalent options
may be substituted by the successor corporation or a Parent or Subsidiary
thereof (the "Successor Corporation"). If an Option is assumed or substituted
for, the Option or equivalent option shall continue to be exercisable as
provided in Section 4 hereof for so long as the Optionee serves as a Director or
a director of the Successor Corporation. Following such assumption or
substitution, if the Optionee's status as a Director or director of the
Successor Corporation, as applicable, is terminated other than upon a voluntary
resignation by the Optionee, the Option or option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be vested
or exercisable. Thereafter, the Option or option shall remain exercisable in
accordance with Sections 8(c) through (e) above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be vested
or exercisable. In such event the Board shall notify the Optionee that the
Option shall be fully vested and exercisable for a period of thirty (30) days
from the date of such notice, and upon the expiration of such period the Option
shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. Except as set forth in
Section 4, the Board may at any time amend, alter, suspend, or discontinue the
Plan, but no amendment, alteration, suspension, or discontinuation shall be made
which would impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary and desirable
to comply with any applicable law or regulation, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date determined in accordance with Section 4 hereof.
C-6
13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, 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.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
14. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject
to approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
C-7
SUPERGEN, INC.
2001 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SuperGen, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, each dated April 17, 2001 and hereby appoints Joseph
Rubinfeld, its proxy and attorney-in-fact, with full power of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 2001 Annual Meeting of Stockholders of SuperGen, Inc. to be held on
Wednesday, May 30, 2001, at 2:00 p.m. local time, at the Company's
headquarters, 4140 Dublin Boulevard, Suite 200, Dublin, CA 94568 and at any
adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present,
on the matters set forth on the reverse side, and, in their discretion, upon
such other matter or matters which may properly come before the meeting and
any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, "FOR" EACH PROPOSAL LISTED, AND AS SAID PROXY DEEMS ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE OTHER SIDE
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Please mark your votes as indicated in this example /X/
1. ELECTION OF DIRECTORS:
Nominees: Joseph Rubinfeld, Denis Burger, Thomas V. Girardi, Walter J. Lack,
James S.J. Manuso, Daniel Zurr
FOR / / WITHHELD / /
/ / ______________________________________
For all nominees except as noted above
2. PROPOSAL TO RATIFY AND APPROVE AN AMENDMENT TO THE COMPANY'S 1998 EMPLOYEE
STOCK PURCHASE PLAN INCREASING THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY 200,000 SHARES FOR A TOTAL OF 300,000 SHARES
RESERVED UNDER THE PLAN.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO RATIFY AND APPROVE AN AMENDMENT TO THE COMPANY'S 1996
DIRECTORS' STOCK OPTION PLAN INCREASING THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY 300,000 SHARES FOR A TOTAL OF 550,000 SHARES
RESERVED UNDER THE PLAN.
FOR / / AGAINST / / ABSTAIN / /
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
FOR / / AGAINST / / ABSTAIN / /
Please disregard if you have previously provided your consent decision.
By checking the box to the right, I consent to future delivery of annual
reports, proxy statements, prospectuses, and other materials and shareholder
communications electronically via the internet at a web page which will be
disclosed to me. I understand that the Company may no longer distribute
printed materials to me from any future stockholder meeting until such
consent is revoked. I understand that I may revoke my consent at any time by
contacting the Company's transfer agent, Mellon Investor Services LLC,
Ridgefield Park, NJ, and that costs normally associated with electronic
delivery, such as usage and telephone charges as well as any costs I may
incur in printing documents, will be my responsibility.
In their discretion, upon such other matter or matters which may properly
come before the meeting and any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED "FOR" THE ELECTION OF THE SPECIFIED NOMINEES AS
DIRECTORS, "FOR" EACH PROPOSAL LISTED, AND AS SAID PROXY DEEMS ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Signature(s) _____________________________________ Dated ___________, 2001
This Proxy should be marked, dated, signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.
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FOLD AND DETACH HERE