SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Cortex Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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CORTEX PHARMACEUTICALS, INC.
15241 BARRANCA PARKWAY
IRVINE, CALIFORNIA 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 12, 1996
To the Stockholders of Cortex Pharmaceuticals, Inc.:
The Annual Meeting of Stockholders of Cortex Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), will be held at the offices of the
Company, 15241 Barranca Parkway, Irvine, California, on Thursday, December 12,
1996 at 9:00 a.m. Pacific Time, to consider and vote on the following matters
described in the attached Proxy Statement:
(1) The election of seven (7) directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and duly qualified
(Proposal 1);
(2) The approval (recommended by the Board of Directors) of the Company's
1996 Stock Incentive Plan (Proposal 2);
(3) To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending June 30, 1997; and
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on October 25, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any postponement and adjournment thereof. The
stock transfer books will not be closed.
The Board of Directors welcomes the personal attendance of stockholders at
the meeting. HOWEVER, PLEASE SIGN AND RETURN THE ENCLOSED PROXY, which you may
revoke at any time prior to its use, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. A self-addressed, postage prepaid envelope is enclosed for your
convenience. Your proxy will not be used if you attend the meeting and choose to
vote in person.
By Order of the Board of Directors
D. Scott Hagen
Secretary
Irvine, California
November 12, 1996
CORTEX PHARMACEUTICALS, INC.
15241 BARRANCA PARKWAY
IRVINE, CALIFORNIA 92618
---------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 12, 1996
9:00 a.m.
---------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Cortex Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and the Company will bear the cost of such solicitation.
Solicitation of proxies will be primarily by mail, although some of the
officers, directors and employees of the Company may solicit proxies personally
or by telephone. The Company has retained Shareholder Communications Corporation
("SCC") as its proxy solicitation agent, and has agreed to pay SCC a fee of
$10,000 plus out-of-pocket expenses. The Company will also reimburse brokerage
houses and other custodians, nominees or fiduciaries for their expenses in
sending proxy materials to their principals.
The persons named as proxies were designated by the Board of Directors and
are directors of the Company. All properly executed proxies will be voted
(except to the extent that authority to vote has been withheld) and where a
choice has been specified by the stockholder as provided in the proxy it will be
voted in accordance with the specification so made. Proxies submitted without
specification will be voted FOR the election as directors of the nominees
proposed by the Board of Directors, FOR the Company's 1996 Stock Incentive Plan,
and FOR the ratification of Ernst & Young LLP as the Company's independent
auditors.
Any stockholder may revoke a proxy at any time before it is voted at the
meeting by a proxy bearing a later date. A proxy may also be revoked by any
stockholder by delivering written notice of revocation to the Secretary of the
Company or by voting in person at the meeting.
This Proxy Statement and proxy are being mailed to stockholders of the
Company on or about November 12, 1996. The mailing address of the executive
offices of the Company is 15241 Barranca Parkway, Irvine, California 92618.
VOTING AT THE MEETING
Only record holders of Common Stock of the Company at the close of business
on October 25, 1996, will be entitled to notice of, and to vote at, the meeting.
As of the record date, there were 7,763,350 shares of the Company's Common Stock
outstanding. Each share is entitled to one vote at the meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions are counted in
tabulating the votes cast on proposals presented to stockholders, whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved.
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect the seven (7)
proposed nominees named below unless contrary instructions are given in the
proxy. The election of directors shall be by the affirmative vote of the holders
of a plurality of the shares voting in person or by proxy at the meeting. Each
director is to hold office until the next annual meeting and until his successor
is elected and qualified.
The names and certain information concerning the persons nominated by the
Board of Directors to become directors at the meeting are set forth below. THE
COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH
OF THE NOMINEES NAMED BELOW. It is intended that shares represented by the
proxies will be voted FOR the election to the Board of Directors of the persons
named below unless authority to vote for nominees has been withheld in the
proxy. Although each of the persons named below has consented to serve as a
director if elected and the Board of Directors has no reason to believe that any
of the nominees named below will be unable to serve as a director, if any
nominee withdraws or otherwise becomes unavailable to serve, the persons named
as proxies will vote for any substitute nominee designated by the Board of
Directors. The following information regarding the nominees is relevant to your
consideration of the slate proposed by the Board of Directors:
NOMINEES FOR DIRECTOR
ROBERT F. ALLNUTT, 59, was elected a director in December 1995. Mr.
Allnutt was Executive Vice President of the Pharmaceutical Manufacturers
Association from May 1985 until February 1995 and was Vice President for
Government Relations of Communications Satellite Corporation from May 1984 until
May 1985. Prior to 1984, Mr. Allnutt held numerous positions in the Federal
Government for 25 years, including 15 years at NASA, where his positions
included Associate Deputy Administrator, the third ranking position in the
agency. Mr. Allnutt is a director of Penederm, Inc., a developer and marketer
of specialized dermatology products. Mr. Allnutt also serves as a member of the
Board of Directors of the National Health Council and the National Council on
the Aging. Mr. Allnutt holds a B.S. in Industrial Engineering from the Virginia
Polytechnic Institute and J.D. and L.L.M. degrees from George Washington
University.
JEROME M. ARNOLD, 55, was elected as a director in December 1993 and served
as co-member of the Office of the Chief Executive of the Company from October
1995 to May 1996. Mr. Arnold is an Executive Vice President of Houtz-Strawn
Associates, Inc., an executive search firm. From July 1994 to December 1995,
Mr. Arnold was Chief Operating Officer, Clinics and Analytical Laboratories
Worldwide, Pharmaco LSR Inc., a contract research organization. Prior to that,
he was President and Chief Executive Officer of CIBUS Pharmaceuticals, Inc., a
pharmaceutical company located in Redwood City, California, from August 1992 to
June 1994. From March to August 1992, Mr. Arnold was Vice President of Market
Planning and Development at Cato Research Ltd., and Executive Vice President of
Operations of Research Triangle Pharmaceuticals Ltd., a contract clinical
research organization and a pharmaceutical company in its developmental stage,
respectively, both of which are operating divisions of Cato Holdings, a
privately-held firm. From June 1991 to December 1991, Mr. Arnold was Vice
President of Marketing and Sales of Serono Laboratories, Inc., with
responsibility for marketing, sales and business development. From 1988 to May
1991, Mr. Arnold was Vice President and General Manager of the hospital products
division of Burroughs
3
Wellcome Co. Mr. Arnold holds B.A. and B.S. degrees from Merrimack College,
and an M.B.A. degree from Suffolk University and has completed the Executive
Program at the University of North Carolina Graduate School of Business
Administration.
CARL W. COTMAN, PH.D., 56, has been a Scientific Director of and consultant
to the Company since October 1987, served as a director of the Company from
March 1989 to October 1990, and was reelected as a director in November 1991.
Dr. Cotman has been a Professor of Psychobiology, Neurology, and Psychiatry at
the University of California, Irvine since 1985. He was a Professor of
Psychobiology and Neurology at that University from 1983 to 1985, and has held
various other teaching and research positions at that University since 1968. He
chaired the Scientific Advisory Council of the American Paralysis Association
and is a member of numerous professional associations and committees, including
the Council of the American Society for Neurochemistry, the National Institute
of Aging Task Force, the American Association for the Advancement of Science and
the International Society for Neurochemistry. Dr. Cotman has served on the
editorial boards of numerous scientific journals and has authored or co-authored
seven books and over 400 articles in the fields of neurobiology, memory and
cognition, and the recovery of function after brain injury. Dr. Cotman holds a
B.A. in Chemistry from Wooster College, an M.A. in Analytical Chemistry from
Wesleyan University, and a Ph.D. in Biochemistry from Indiana University.
MICHAEL G. GREY, 43, has been a director of the Company since September
1994. In November 1994, Mr. Grey became President of BioChem Therapeutic, Inc.,
a wholly owned subsidiary of BioChem Pharma, an international biopharmaceutical
company. From January 1994 to October 1994, Mr. Grey was Senior Vice President,
Corporate Development of Titan Pharmaceuticals, Inc. a biopharmaceutical holding
company and President and Chief Operating Officer at Ansan, Inc., an early stage
biopharmaceutical company. From 1991 until 1993, Mr. Grey served as Vice
President, Corporate Development of Glaxo, Inc., and from 1989 until 1991,
Mr. Grey served as Director of International Licensing of Glaxo Holdings p.l.c.,
and was responsible for the worldwide licensing activities of Glaxo, Inc. Mr.
Grey holds a B.Sc. degree in Chemistry from the University of Notingham.
HARVEY S. SADOW, PH.D., 74, has been a director of the Company since March
1988 and Chairman of the Board of Directors since January 1991. Dr. Sadow was
President and Chief Executive Officer of Boehringer Ingelheim Corporation, a
major health care company, from 1971 until his retirement in January 1988 and
was Chairman of the Board of that company from 1988 through December 1990.
Dr. Sadow was Chairman of the University of Connecticut Foundation, the
President's Council of the American Lung Association, and the Connecticut Law
Enforcement Foundation and was a member of the Board of Directors of the
Pharmaceutical Manufacturers Association ("PMA") and Chairman of the Board of
the PMA Foundation. Dr. Sadow is also a member of several other professional
committees and societies, including the American Society for Clinical
Pharmacology and Therapeutics. He has published extensively in the field of
treatment of diabetes mellitus. Dr. Sadow is Chairman of Cholestech Corporation,
a developer, manufacturer and seller of lipid measuring diagnostic products; a
director of Penederm, Inc., a developer and marketer of specialized products in
the dermatology area; a director of Cytel Corporation, a biotechnology firm; a
director of Houghten Pharmaceuticals, Inc., a biotechnology company; a director
of Anika Research Corp., a developer of hyaluronidase products for medical use;
and a director of several privately-held companies in the health care field.
Dr. Sadow holds a B.S. from the Virginia Military Institute, an M.S. from the
University of Kansas, and a Ph.D. from the University of Connecticut.
4
VINCENT F. SIMMON, PH.D., 53, was appointed President and Chief Executive
Officer and a director of the Company in May 1996. From November 1994 until
December 1995, Dr. Simmon served as Chairman, President and Chief Executive
Officer of Prototek, Inc., a biopharmaceutical company, focusing on the
development of protease inhibitors. From March 1990 to November 1994, Dr.
Simmon served as President, Chief Executive Officer and a director at Alpha I
Biomedicals, Inc., a biotechnology company. From February 1985 to March 1990,
Dr. Simmon served as Vice President for Biomedical and Biotechnology Research at
W. R. Grace and Co. From 1979 to 1985, Dr. Simmon served in varying capacities
including Senior Vice President of Research and Development for Genex
Corporation, a genetic engineering company, and from 1973 to 1979 in varying
capacities including Assistant Director, Department of Technology for SRI
International, a consulting company. Dr. Simmon has served as a governor of the
Emerging Companies Section of BIO (Biotechnology Industrial Organization) and a
director of the Chemical Industries Institute for Toxicology (Research Triangle
Park). Dr. Simmon holds a B. A. degree in Biology and Chemistry from Amherst
College, a M. S. degree from the University of Toledo in Plant Physiology and a
Ph. D. degree in Molecular Biology from Brown University. Dr. Simmon was a
post-doctoral fellow in 1971-1973 at Stanford University.
DAVIS L. TEMPLE, JR., PH.D., 53, has been a director of and consultant to
the Company since March 1994, and served as co-member of the Office of the Chief
Executive of the Company from October 1995 to May 1996. Dr. Temple served as a
Managing Director at Stover Haley Burns, Inc., a life science advisory group
from January 1994 until November 1995. Since that time he has been a Senior
Consultant for Kaufman Brothers, a New York Investment Bank. From 1990 until
1993, Dr. Temple served as Vice President, CNS Drug Discovery, of Bristol-Myers
Squibb and from 1984 to 1990 he served as Senior Vice President, CNS Research at
Bristol-Myers Company. Dr. Temple holds a B.S. degree in Pharmacy from Louisiana
State University and a Ph.D. degree in Medicinal Chemistry and Pharmacology from
the University of Mississippi.
EXECUTIVE OFFICER
In addition to Dr. Simmon, the other executive officer of the Company is
D. Scott Hagen.
D. SCOTT HAGEN, 41, has been Vice President and Chief Financial Officer of
the Company since January 1992, and was Vice President-Finance and
Administration from September 1988 through December 1991. He also served as
Acting President and Chief Operating Officer from October 31, 1995 to May 15,
1996. Mr. Hagen has been Secretary since August 1991. From 1981 to August
1988, he was employed by Chembiomed Ltd., a Canadian biopharmaceutical company,
where he served in a progression of scientific and administrative positions.
Mr. Hagen holds a B.Sc. in Biochemistry and an M.B.A. from the University of
Alberta in Edmonton, Canada, where he also completed two years of graduate level
study in biochemistry.
SCIENTIFIC DIRECTOR
In addition to Dr. Cotman, the other Scientific Director of the Company is
Gary S. Lynch, Ph.D.
GARY S. LYNCH, PH.D., 53, has been a Scientific Director of and consultant
to the Company since October 1987, and served as a director of the Company from
March 1988 to March 1989 and from December 1994 to December 1995. Dr. Lynch has
been a Professor in the Department of
5
Psychobiology at the University of California, Irvine, since 1981, and has
held various other teaching and research positions at that University since
1969. He is a Professor at the University's Center for the Neurobiology of
Learning and Memory. Dr. Lynch is a member of the Neuroscience Society and
the International Brain Research Organization. He also serves on the
Advisory Board of the Cognitive Neurosciences Institute. Dr. Lynch has
authored and co-authored over 400 articles and a number of books in the areas
of neurobiology, cognition, and memory. Dr. Lynch holds a B.A. in Psychology
from the University of Delaware and a Ph.D. in Psychology from Princeton
University.
BOARD COMMITTEES
The Board of Directors of the Company has a standing Compensation
Committee, Audit Committee and Stock Option Committee. The Board of Directors
does not have a standing nominating committee. The functions of the Compensation
Committee include advising the Board of Directors on officer compensation and on
employee compensation generally. The Compensation Committee held one meeting
during fiscal 1996, and currently consists of Dr. Cotman as Chairman of the
Committee, Mr. Arnold and Dr. Temple. The Audit Committee has the responsibility
of recommending to the Board of Directors the appointment of the Company's
outside auditors, examining the results of audits and reviewing internal
accounting controls. The Audit Committee held one meeting during fiscal 1996 and
currently consists of Dr. Sadow as Chairman, Mr. Allnutt and Mr. Grey. The
function of the Stock Option Committee is to administer the Company's stock
plans. The Stock Option Committee held two meetings during fiscal 1996, and
currently consists of Mr. Arnold as Chairman and Mr. Grey.
As a result of the resignation of Alan Steigrod as Chief Executive Officer
and President on October 31, 1995, and the appointment of Mr. Hagen as Acting
Chief Operating Officer and President, the Board created a committee of
directors to serve as the Office of the Chief Executive on an interim basis.
The committee was composed of Mr. Arnold and Dr. Temple. Such committee
participated in the management of the Company until appointment of a permanent
Chief Executive Officer in May 1996.
ATTENDANCE AT MEETINGS
During the fiscal year ended June 30, 1996, the Board of Directors held a
total of nine meetings. No member of the Board of Directors attended fewer than
75% of the meetings of the Board and of the committees of which he was a member.
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning compensation
paid or accrued by the Company for services rendered during the three fiscal
years ended June 30, 1996, to the Company's Chief Executive Officer and to the
other executive officer employed by the Company as of June 30, 1996.
6
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
-------------------------------------------------- ------------------------------
Securities
Underlying
Name and Other Annual Options/ All Other
Principal Position Year Salary Bonus Compensation (3) SARs(#) Compensation($)
- -----------------------------------------------------------------------------------------------------------------
Vincent F. Simmon, Ph.D. (1) 1996 $ 25,000 $20,410 $ 3,613 180,000 $ --
President and Chief 1995 -- -- -- -- --
Executive Officer 1994 -- -- -- -- --
D. Scott Hagen 1996 $ 128,751 $18,750 $ 14,663 11,000 $ --
Vice President, 1995 124,583 15,000 9,346 15,000 --
Chief Financial Officer 1994 114,035 25,000 9,577 -- --
and Secretary
Alan A. Steigrod (2) 1996 $ 66,667 $31,500 $ 53,077 -- $ --
President and Chief 1995 207,440 -- 12,559 195,600(4) --
Executive Officer 1994 196,602 74,000 17,483 119,500 --
- -------------------
(1) Dr. Simmon was appointed President and Chief Executive Officer on May 15,
1996.
(2) Mr. Steigrod resigned as President and Chief Executive Officer on October
31, 1995.
(3) Represents accrued or paid-out vacation pay, sick pay and/or relocation
reimbursements, and in the case of Mr. Steigrod, includes $50,000 in
severance pay.
(4) Represents options issued to replace 195,600 canceled options.
7
OPTION MATTERS
OPTION GRANTS. The following table sets forth certain information
concerning grants of stock options to each of the Company's executive
officers named in the Summary Compensation Table during the fiscal year ended
June 30, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted(#) Fiscal Year Price($/Sh) Date
- --------------------------------------------------------------------------------
Vincent F. Simmon, Ph.D. 180,000 74% $5.625 05/15/06
D. Scott Hagen 11,000 5% $7.25 02/19/06
Alan A. Steigrod -- 0% -- --
OPTION EXERCISES. The following table sets forth certain information
concerning the exercise of options by each of the Company's executive
officers named in the Summary Compensation Table during the fiscal year ended
June 30, 1996, including the aggregate value of gains on the date of
exercise. In addition, the table includes the number of shares covered by
both exercisable and unexercisable stock options as of June 30, 1996. Also
reported are the values for "in the money" options which represent the
positive spread between the exercise prices of any such existing stock
options and $4 3/8, the last sale price of Common Stock on June 28, 1996, as
reported by Nasdaq.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value Realized($)
(market price Number of Securities Value of Unexercised
at exercise Underlying Unexercised In-the-Money
Shares Acquired less exercise Options at FY-End(#) Options at FY-End($)
Name on Exercise(#) price) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
Vincent F. Simmon, Ph.D. 0 $ 0 4,999 175,001 $ 0 $ 0
D. Scott Hagen 0 0 26,950 23,050 30,938 14,062
Alan A. Steigrod 194,300 173,077 0 0 0 0
8
EMPLOYMENT AND CONSULTING AGREEMENTS
On May 15 1996, the Company entered into a one-year employment agreement
with Dr. Simmon. Under the agreement, Dr. Simmon is entitled to a base salary of
$200,000 per year with an annual bonus at the discretion of the Board of
Directors of the Company, in cash and/or equity equal to between 15% and 50% of
his base salary, subject to annual review by the Compensation Committee. In
addition, Dr. Simmon received a one-time bonus of $20,410 to accommodate certain
expenses incurred in connection with relocation.
In February 1993, the Company entered into a three-year employment
agreement with Mr. Steigrod. Under the agreement, Mr. Steigrod was entitled to a
base salary of $210,000 per year with an annual bonus at the discretion of the
Board of Directors of the Company, in cash and/or equity equal to between 15%
and 50% of his base salary. Mr. Steigrod's employment agreement was terminated
in connection with his resignation in October 1995.
Mr. Hagen entered into a three-year employment agreement with the Company,
commencing September 1, 1988. The employment agreement was renewed for
additional one-year terms as of September 1, 1991, 1992, 1993 and 1994, and was
amended and extended effective January 1, 1996 for a term ending December 31,
1996. The agreement currently provides for a base salary of $132,500 with an
annual bonus of between $10,000 and $30,000. In the event that Mr. Hagen's
employment is terminated other than for cause or as a result of his voluntary
resignation, death or disability, he will receive a severance payment equal to
six months' salary.
Drs. Carl W. Cotman and Gary S. Lynch (both of whom are co-founders and
Scientific Directors of the Company) have each entered into a consulting
agreement with the Company. Dr. Lynch receives a consulting fee of $65,000 per
year and Dr. Cotman receives a consulting fee of $33,000 per year. The term of
each consulting agreement commenced in November 1987 and will continue until
terminated by the respective parties thereto. The consulting agreements obligate
the respective consultants to make themselves available to the Company for
consulting and advisory services for an average of three days per month. In
June 1995, Dr. Cotman voluntarily reduced his annual consulting fees by $10,000.
On December 15, 1994, the Committee granted options to purchase 20,000 shares of
Common Stock with an exercise price of $3.125 per share, the then fair market
value, and vesting over a four-year period to Dr. Cotman. On the same date, Dr.
Lynch was granted options to purchase 70,000 shares of Common Stock at the same
exercise price, and with the same vesting period. On January 4, 1996, the Stock
Option Committee granted options to Dr. Lynch to purchase 100,000 shares of
Common Stock with an exercise price of $3.50 per share, the then fair market
value, vested in full. Dr. Lynch will be entitled to additional option grants
in connection with the Company's success in corporate partnering its
AMPAKINE-Registered Trademark- technology.
Dr. Davis L. Temple, a director of the Company, entered into a consulting
agreement with the Company that includes the payment of consulting fees of
$10,000 for each six months of service. On February 27, 1995, the Stock Option
Committee, in recognition of his contributions to the Company, granted Dr.
Temple options to purchase 20,000 shares of the Company's common stock at an
exercise price of $2.125 per share, representing the fair market value of the
common stock on that date.
9
DIRECTOR COMPENSATION
Each non-employee director (other than those who join the Board of
Directors to oversee an investment in the Company) receives $1,500 at each Board
of Directors meeting attended, and an additional $750 annual retainer for each
committee on which he or she serves.
Under the Company's 1989 Incentive Stock Option, Nonqualified Stock Option
and Stock Purchase Plan, each non-employee director (other than those who serve
on the Board of Directors to oversee an investment in the Company) is
automatically granted options to purchase 15,000 shares of Common Stock upon
commencement of service as a director and additional options to purchase 2,500
shares of Common Stock on the date of each Annual Meeting of Stockholders.
These nonqualified options have an exercise price equal to 100% of the fair
market value of the Common Stock on the date of grant, have a ten-year term and
vest in equal increments of 25% on the anniversary dates of the dates of grant.
Non-employee directors who serve on the Board of Directors to oversee an
investment in the Company receive options to purchase 5,000 shares of Common
Stock upon commencement of service as a director and additional options to
purchase 1,000 shares of Common Stock on the date of each Annual Meeting of
Stockholders. These nonqualified options have an exercise price equal to 100%
of the fair market value of the Common Stock on the date of grant, have a
ten-year term and vest in equal increments of 25% on the last day of each
calendar quarter following the dates of grant. In accordance with such plan, in
December 1995, an aggregate of 30,000 options were granted to the non-employee
directors of the Company. In connection with the adoption of the 1996 Stock
Incentive Plan (see Proposal 2), the formula to determine options to be granted
to directors will be modified subject to approval by the Company's stockholders.
CERTAIN TRANSACTIONS
The Company's Restated Certificate of Incorporation provides that, pursuant
to Delaware Law, directors of the Company shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. This provision does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctions or other forms
of non-monetary relief remain available under Delaware Law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware Law. The provision also does not affect a director's
responsibility under any other law, such as the federal securities laws. The
Company has entered into Indemnification Agreements with each of its officers
and directors that obligate the Company to indemnify them as permitted by
applicable law.
See "Employment and Consulting Agreements" for a description of certain
arrangements and transactions with executive officers and directors.
10
PRINCIPAL STOCKHOLDERS
The following table sets forth, to the knowledge of the Company, certain
information regarding the beneficial ownership of the Company's Common Stock as
of September 30, 1996, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of
the Company's directors and nominees, (iii) each of the named executive officers
in the Summary Compensation Table and (iv) all of the Company's executive
officers and directors as a group. Except as indicated in the footnotes to this
table, the Company believes that the persons named in this table have sole
voting and investment power with respect to the shares of Common Stock
indicated.
DIRECTORS, SHARES PERCENT OF
OFFICERS, AND 5% BENEFICIALLY COMMON STOCK
STOCKHOLDERS OWNED BENEFICIALLY OWNED
- -------------------------------------------------------------------------------
Robert F. Allnutt 1,000 *
Jerome M. Arnold 7,125 (1) *
Carl W. Cotman, Ph.D. 116,793 (2) 1.5
Michael G. Grey 5,625 (3) *
D. Scott Hagen 27,350 (4) *
Harvey S. Sadow, Ph.D. 31,792 (5) *
Vincent F. Simmon, Ph.D. 44,599 (6) *
Alan A. Steigrod 0 *
Davis L. Temple, Jr., Ph.D. 14,000 (7) *
Quantum Partners LDC 1,050,000 13.8
Soros Fund Management
888 Seventh Avenue, 33rd Floor
New York, NY 10106
All officers and directors
as a group (8 persons) 248,284 3.2
- -----------------
* Less than one percent
(1) Includes 7,125 shares that may be purchased upon exercise of options within
60 days of September 30, 1996.
(2) Includes 18,793 shares that may be purchased upon exercise of options
within 60 days of September 30, 1996.
(3) Includes 5,625 shares that may be purchased upon exercise of options within
60 days of September 30, 1996.
(4) Includes 26,950 shares that may be purchased upon exercise of options
within 60 days of September 30, 1996.
(5) Includes 21,792 shares that may be purchased upon exercise of options
within 60 days of September 30, 1996.
(6) Includes 29,999 shares that may be purchased upon exercise of options
within 60 days of September 30, 1996.
(7) Includes 14,000 shares that may be purchased upon exercise of options
within 60 days of September 30, 1996.
The Company is not aware of any arrangements that may at a subsequent date
result in a change of control of the Company.
11
PROPOSAL TWO
APPROVAL OF THE 1996 STOCK INCENTIVE PLAN
Subject to approval by the Company's stockholders, the Board of Directors
adopted the 1996 Stock Incentive Plan ("1996 Plan") on October 25, 1996. The
primary purposes of the 1996 Plan are (a) to enhance the Company's ability to
attract and retain the services of qualified employees, officers and directors
(including non-employee officers and directors), and consultants and other
service providers upon whose judgment, initiative and efforts the successful
conduct and development of the Company's business largely depends, and (b) to
provide additional incentives to such persons or entities to devote their utmost
effort and skill to the advancement and betterment of the Company, by providing
them an opportunity to participate in the ownership of the Company and thereby
have an interest in the success and increased value of the Company. There are
an aggregate of 939,538 shares subject to issuance under outstanding options
granted under the Company's 1989 Incentive Stock Option, Nonqualified Stock
Option and Stock Purchase Plan, 1989 Special Nonqualified Stock Option and Stock
Purchase Plan and Executive Stock Plan (the "Prior Plans"). On adoption of the
1996 Plan, no further options will be granted under the Prior Plans.
Approval of the 1996 Plan will require the affirmative vote of the holders
of a majority of the shares of outstanding Common Stock present or represented
at the Annual Meeting of Stockholders and entitled to vote thereat. Proxies
solicited by management for which no specific direction is included will be
voted FOR approval of the 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE 1996 PLAN.
The essential features of the 1996 Plan are summarized below. This summary
does not purport to be a complete description of the 1996 Plan. The Company's
stockholders may obtain a copy of the 1996 Plan upon written request to the
Secretary of the Company.
SUMMARY OF 1996 PLAN
The 1996 Plan was adopted by the Board of Directors on October 25, 1996
subject to approval by the Company stockholders. The 1996 Plan provides for the
grant by the Company of options and/or rights to purchase up to an aggregate
initially equal to 613,132 shares. There shall be added to the number of shares
which may be issued under the 1996 Plan any shares underlying lapsed or expired
options granted under the Prior Plans, plus, on the last day of each fiscal year
of the Company, a number of shares equal to twenty percent (20%) of the increase
in the number of shares of Common Stock outstanding since the last day of the
previous fiscal year (except in the case of fiscal year ending June 30, 1997, in
which case the added shares of Common Stock shall equal twenty percent (20%) of
the increase in the number of shares of Common Stock outstanding since October
25, 1996). As of the Record Date, approximately eight officers and directors of
the Company, and 20 other employees were eligible to participate. The 1996 Plan
expires October 25, 2006, unless terminated earlier by the Board of Directors.
The 1996 Plan provides that it is to be administered by the Board of
Directors or a committee, consisting of two (2) or more members, appointed by
the Board (the "Administrator"). The Administrator has broad discretion to
determine the persons entitled to receive options and/or rights to purchase
under the 1996 Plan, the terms and conditions on which options and/or rights to
purchase are granted and the number of shares subject thereto. The
Administrator also has discretion to determine the nature of the consideration
to be paid upon the exercise of an option and/or right to purchase granted under
the 1996 Plan.
12
Options granted under the 1996 Plan may be either "incentive stock
options," within the meaning of Section 422 of the Internal Revenue Code (the
"Code"), or "nonqualified stock options," as determined by the Administrator.
Options may be granted under the 1996 Plan for terms of up to ten (10) years.
The exercise price of incentive options shall not be less than the fair market
value of such shares on the date on which the incentive option is granted;
provided, however, that the exercise price with respect to incentive options
shall not be less than 110% of fair market value if the person to whom shares
are granted owns 10% or more of the outstanding stock of the Company. The
exercise price of the shares of Common Stock covered by each nonqualified option
granted under the 1996 Plan shall not be less than 85% of fair market value of
such shares on the date on which the nonqualified option is granted. No
optionee may be granted incentive stock options under the 1996 Plan to the
extent that the aggregate fair market value (determined as of the date of grant)
of the shares of Common Stock with respect to which incentive options are
exercisable for the first time by the optionee during any calendar year would
exceed $100,000. There is a limitation on the amount of nonqualified stock
options and/or rights to purchase which may be granted to any participant under
the 1996 Plan of no more than 500,000 shares of Common Stock that may be
acquired in any one calendar year.
There is no minimum purchase price for restricted shares to be issued under
the 1996 Plan. Without limiting the generality of the foregoing, the
Administrator may determine to issue restricted shares as consideration for
continued employment or the achievement of specified performance goals or
objectives.
Neither options nor rights to purchase granted under the 1996 Plan are
assignable. Each Option shall vest and be exercisable in one or more
installments at such time or times and subject to such conditions, including
without limitation the achievement of specified performance goals or objectives,
as shall be determined by the Administrator.
In the event that the Company at any time proposes to merge into,
consolidate with or enter into any other reorganization (including the sale of
substantially all of its assets or a "reverse" merger in which the Company is
the surviving entity pursuant to which the ownership of the outstanding voting
capital shall change by at least 50%), the vesting of all options and restricted
shares shall be automatically accelerated, and the Administrator may, in its
discretion, provide for additional adjustments to such terms in order to
preserve, but not to increase, the benefits to persons then holding incentive
options, nonqualified options or rights to purchase.
Payment for shares upon exercise of an option or upon issuance of
restricted stock must be made in full at the time of exercise, or issuance with
respect to restricted stock.
The form of consideration payable upon exercise of an option shall, at the
discretion of the Administrator, be (i) by tender of United States dollars in
(a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the
Optionee that have been held by the Optionee for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d) the Optionee's promissory note in a form and on terms acceptable
to the Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
13
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Company; or (i) any combination of the foregoing methods of
payment or any other consideration or method of payment as shall be permitted
by applicable corporate law.
The Purchase Price per share of Restricted Stock by each Right to Purchase
shall be determined by the Administrator. Subject to any legal restrictions,
payment of the Purchase Price upon acceptance of a Right to Purchase Restricted
Stock may be made, in the discretion of the Administrator, by: (a) cash; (b)
check; (c) the surrender of shares of Common Stock owned by the Optionee that
have been held by the Optionee for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise; (d)
the Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
As of the Record Date, no options have been granted under the 1996 Plan.
AMENDMENT AND TERMINATION OF THE 1996 PLAN
The 1996 Plan may be altered, amended, suspended or terminated by the Board
at any time. In addition, to the extent necessary and desirable to comply with
Section 422 of the Code (or any other applicable law or regulation), the Company
shall obtain stockholder approval of any amendment or modification to the 1996
Plan. No amendment, modification or termination of the 1996 Plan shall affect
or impair any rights or obligations under any option or right to purchase
restricted stock granted prior to the date of such amendment, modification or
termination without the consent of the holder of such option or right to
purchase restricted stock. Unless previously terminated by the Board, the 1996
Plan will terminate on October 25, 2006.
FORMULA GRANTS TO NON-EMPLOYEE DIRECTORS
Each non-employee director (other than those who serve on the Board of
Directors to oversee an investment in the Company) shall be automatically
granted (i) Nonqualified Options to purchase 15,000 shares of Common Stock upon
commencement of service as a director of the Company, and (ii) Nonqualified
Options to purchase 6,000 shares of Common Stock at each annual meeting of the
Company's stockholders (including any meeting coincident with the commencement
of service as a director). Non-employee directors who serve on the Board of
Directors to oversee an investment in the Company shall automatically receive
Nonqualified Options to purchase 7,500 shares of Common Stock upon commencement
of service as a director and additional Nonqualified Options to purchase 3,000
shares of Common Stock on the date of each Annual Meeting of Stockholders
(including any meeting coincident with the commencement of service as a
director). These nonqualified options have an exercise price equal to 100% of
the fair market value of the Common Stock on the date of grant, have a ten-year
term and vest in equal increments of 33 1/3% on each anniversary date of the
dates of grant, and will otherwise be subject to the terms and provisions of the
1996 Plan.
14
SUMMARY OF FEDERAL TAX CONSEQUENCES
The Company believes the following is a brief summary of the tax effects
under the Code that may accrue to participants in the 1996 Plan. State and
local income taxes, which may vary from locality to locality, are not discussed.
INCENTIVE OPTIONS. No taxable income is recognized by an optionee or the
Company upon either the grant or exercise of an incentive stock option. When an
optionee sells or otherwise disposes of the shares acquired upon the exercise of
an incentive stock option, the entire gain or loss realized will be treated as
long-term capital gain if the disposition occurs more than one year after the
option was exercised and more than two years after the date of grant of the
option. If, however, the disposition occurs before either the one-year or
two-year periods have elapsed (a "disqualifying disposition"), any gain realized
will be taxed as ordinary income in an amount equal to the difference between
the option price and either the fair market value of the shares at the time of
exercise or the sale price, whichever is less, and the balance, if any, will be
treated as capital gain. Any loss realized upon a disqualifying disposition
will be treated as a capital loss. Special rules may apply in specific
circumstances, such as the use of already-owned stock to exercise an incentive
stock option. The Company will be entitled to a deduction for federal income
tax purposes only to the extent that an optionee recognizes ordinary income upon
a disqualifying disposition of shares. The difference between the option price
and the fair market value of the shares acquired at the time of exercise of an
incentive stock option will be an item of tax preference to an optionee for
purposes of computing the alternative minimum tax under Section 55 of the
Internal Revenue Code.
NONQUALIFIED OPTIONS. No taxable income is recognized by an optionee upon
the grant of a nonqualified stock option. Upon exercise, however, the purchaser
will recognize ordinary income in the amount by which the fair market value of
the shares purchased exceeds, on the date of exercise, the purchase price paid
for such shares. The income recognized by the optionee will be subject to
income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company is entitled to a tax
deduction in an amount equal to the ordinary income recognized by the optionee,
provided that the applicable withholding requirements are satisfied.
If the exercise price of a nonqualified option is paid by the optionee in
cash, the tax basis of the shares acquired will be equal to the cash paid plus
the amount of income recognized by the optionee as a result of such exercise.
If the exercise price is paid by delivering shares of Common Stock of the
Company already owned by the optionee or by a combination of cash and already-
owned shares, no current taxable gain or loss will be recognized by the optionee
on the already-owned shares exchanged (however, the optionee will nevertheless
recognize ordinary income to the extent that the fair market value of the shares
purchased on the date of exercise exceeds the price paid, as described above).
The new shares received by the optionee equal in number to the old shares
exchanged will have the same tax basis and holding period as the optionee's
basis and holding period in the old shares. The balance of the shares received
will have a tax basis equal to any cash paid by the optionee plus the amount of
income recognized by the optionee as a result of such exercise, and they will
have a holding period commencing on the date of exercise.
RESTRICTED SHARES. The receipt of restricted shares will not result in a
taxable event to the participant or the Company until the Company's repurchase
rights with respect to such shares expire, unless the participant makes an
election under Section 83(b) of the Internal Revenue Code to be taxed as of the
date of purchase. If a Section 83(b) election is made, the participant will
recognize ordinary income in an amount equal to the excess of the fair market
value of such shares on the date of purchase over the amount paid for
15
such shares. The election must be filed with the Internal Revenue Service
not later than 30 days after the date of purchase. If no Section 83(b)
election is made, a taxable event will occur on each date on which the
participant's ownership rights vest (I.E., when the Company's repurchase
rights expire) as to the number of shares that vest on that date, and the
holding period for long-term capital gain purposes will not commence until
the date on which the shares vest. The participant will recognize ordinary
income on each date on which shares vest in an amount equal to the excess of
the fair market value of such shares on that date over the amount paid for
such shares. The Company is entitled to a tax deduction in an amount equal
to the ordinary income recognized by the participant.
TAX WITHHOLDING
Under the Plan, the Company has the power to withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy federal,
state and local withholding tax requirements with respect to any options
exercised or restricted stock granted under the 1996 Plan.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the fiscal
year ending June 30, 1997, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. Ernst &
Young LLP's representatives are expected to be present at the meeting with
the opportunity to make a statement if they desire to do so and are expected
to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1997 Annual Meeting of Stockholders of the
Company must be received at the Company's offices, 15241 Barranca Parkway,
Irvine, California 92618, addressed to the Secretary, no later than July 15,
1997.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and ten-percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 1996, all of the Company's
officers, directors and ten-percent stockholders complied with all applicable
Section 16(a) filing requirements.
16
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting of Stockholders that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum consisting
of a majority of the outstanding shares entitled to vote is represented at
the meeting, no business can be transacted. Therefore, PLEASE BE SURE TO DATE
AND SIGN YOUR PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK CERTIFICATE
AND RETURN IT IN THE ENCLOSED POSTAGE PREPAID RETURN ENVELOPE. PLEASE ACT
PROMPTLY TO ENSURE THAT YOU WILL BE REPRESENTED AT THIS IMPORTANT MEETING.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS, A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-KSB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE
FISCAL YEAR ENDED JUNE 30, 1996. REQUESTS SHOULD BE MAILED TO THE SECRETARY,
CORTEX PHARMACEUTICALS, INC., 15241 BARRANCA PARKWAY, IRVINE, CALIFORNIA
92618.
By Order of the Board of Directors
D. Scott Hagen
Secretary
November 12, 1996
17
CORTEX PHARMACEUTICALS, INC.
1996 STOCK INCENTIVE PLAN
This 1996 STOCK INCENTIVE PLAN (the "Plan") is hereby established by CORTEX
PHARMACEUTICALS, INC., a Delaware corporation (the "Company") and adopted by its
Board of Directors as of the 25th day of October, 1996 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.
2.2 AFFILIATED COMPANY. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.3 BOARD. "Board" means the Board of Directors of the Company.
2.4 CHANGE IN CONTROL. "Change in Control" shall mean (i) the
acquisition, directly or indirectly, by any person or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of more than fifty percent (50%) of the outstanding
securities of the Company; (ii) a merger or consolidation in which the Company
is not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated; (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company; (iv) a complete liquidation or dissolution of the
Company; or (v) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such merger.
2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.6 COMMITTEE. "Committee" means a committee of two or more members of
the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
2.7 COMMON STOCK. "Common Stock" means the Common Stock of the Company,
subject to adjustment pursuant to Section 4.2 hereof.
2.8 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.
2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per share
of Common Stock payable upon exercise of an Option.
2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on a
Nasdaq market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the closing sale price on the date of valuation on
such Nasdaq market system or principal stock exchange on which the Common Stock
is then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on such Nasdaq market system or such exchange on the next preceding
day on which a closing sale price is quoted.
(b) If the Common Stock is not then listed or admitted to trading on
a Nasdaq market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the average of the closing bid and asked prices
of the Common Stock in the over-the-counter market on the date of valuation.
(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.
2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
2
2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.
2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in
Section 5.6 below, it shall to that extent constitute a Nonqualified Option.
2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement" means
an Option Agreement with respect to a Nonqualified Option.
2.17 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.
2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
2.20 OPTIONEE. "Optionee" means a Participant who holds an Option.
2.21 PARTICIPANT. "Participant" means an individual or entity who holds an
Option, a Right to Purchase or Restricted Stock under the Plan.
2.22 PURCHASE PRICE. "Purchase Price" means the purchase price per share
of Restricted Stock payable upon acceptance of a Right to Purchase.
2.23 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.
2.24 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.
2.25 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.
2.26 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.
3
2.27 10% STOCKHOLDER. "10% Stockholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 INCENTIVE OPTIONS. Officers and other employees of the Company or of
an Affiliated Company (including members of the Board if they are employees of
the Company or of an Affiliated Company) are eligible to receive Incentive
Options under the Plan.
3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.
3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Rights to Purchase or Options in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 500,000 shares.
ARTICLE 4.
PLAN SHARES
4.1 SHARES SUBJECT TO THE PLAN. The total number of shares of Common
Stock which may be issued under the Plan shall be initially equal to 613,132
shares. There shall be added to the number of shares which may be issued under
the Plan (i) any shares underlying lapsed or expired options granted under the
Company's 1989 Incentive Stock Option, Nonqualified Stock Option and Stock
Purchase Plan, 1989 Special Nonqualified Stock Option and Stock Purchase Plan
and Executive Stock Plan, (the "Prior Plans"), plus, on the last day of each
fiscal year of the Company, a number of shares equal to twenty percent (20%) of
the increase in the number of shares of Common Stock outstanding since the last
day of the previous fiscal year (except in the case of fiscal year ending June
30, 1997, in which case the added shares of Common Stock shall equal twenty
percent (20%) of the increase in the number of shares of Common Stock
outstanding since October 25, 1996), subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option or Right to Purchase
granted or offered under the Plan can no longer under any circumstances be
exercised, or (b) any shares of Common Stock are reacquired by the Company
pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or
Stock Purchase Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.
4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or
4
kind of shares or other securities of the Company by reason of a
recapitalization, stock split, combination of shares, reclassification, stock
dividend, or other change in the capital structure of the Company, then
appropriate adjustments shall be made by the Administrator to the aggregate
number and kind of shares subject to this Plan, and the number and kind of
shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements in order to preserve, as
nearly as practical, but not to increase, the benefits to Participants.
ARTICLE 5.
OPTIONS
5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement, which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Incentive Option is granted is a 10% Stockholder on the date
of grant, the Exercise Price shall not be less than 110% of Fair Market Value on
the date the Option is granted.
5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Optionee that have
been held by the Optionee for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise;
(d) the Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such shares to forward
the Exercise Price directly to the Company; (h) provided that a public market
for the Common Stock exists, a "margin" commitment from the Optionee and an
NASD Dealer whereby the Optionee irrevocably elects to exercise the Option
and to pledge the shares so purchased to the NASD Dealer in a margin account
as security for a loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
shares to forward the Exercise
5
Price directly to the Company; or (i) any combination of the foregoing
methods of payment or any other consideration or method of payment as shall
be permitted by applicable corporate law.
5.4 TERM AND TERMINATION OF OPTIONS. The term and termination of each
Option shall be as fixed by the Administrator, but no Option may be exercisable
more than ten (10) years after the date it is granted. An Incentive Option
granted to a person who is a 10% Stockholder on the date of grant shall not be
exercisable more than five (5) years after the date it is granted.
5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and be
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.
5.7 NONTRANSFERABILITY OF OPTIONS. Unless otherwise permitted by the
Administrator, no Option shall be assignable or transferable except by will or
the laws of descent and distribution, and during the life of the Optionee shall
be exercisable only by such Optionee.
5.8 RIGHTS AS STOCKHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a stockholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.
5.9 NON-EMPLOYEE DIRECTORS. Each director of the Company who is not an
employee or executive officer of the Company and who does not serve on the Board
of Directors to oversee an investment in the Company, shall automatically be
granted (i) Nonqualified Options to purchase fifteen thousand (15,000) shares of
the Common Stock upon commencement of service as a director of the Company, and
(ii) Nonqualified Options to purchase six thousand (6,000) shares of Common
Stock at each annual meeting of the Company's stockholders (including any
meeting coincident with the commencement of service as a director). Each
director of the Company who is not an employee or executive officer of the
Company and who serves on the Board of Directors to oversee an investment in the
Company, shall automatically be granted Nonqualified Options to purchase (i)
seven thousand five hundred (7,500) shares of Common Stock upon commencement of
service as a director of the Company, and (ii) three thousand (3,000) shares at
each annual meeting of the Company's stockholders (including any meeting
coincident with the commencement of service as a director). Nonqualified
Options to be granted to non-employee directors of the Company shall (i) have an
exercise price equal to one hundred percent (100%) of the fair market value on
the date of grant of the options, as determined in accordance with the terms of
the Plan, (ii) have a ten (10) year term, (iii) subsequently vest in increments
of thirty-three and one-third percent (33 1/3%) on each anniversary of the date
of grant, and (iv) otherwise be subject to the terms and provisions of the Plan.
6
ARTICLE 6.
RIGHTS TO PURCHASE
6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an
Offeree entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.
6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights with
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 PAYMENT OF PURCHASE PRICE. Subject to any legal restrictions,
payment of the Purchase Price upon acceptance of a Right to Purchase Restricted
Stock may be made, in the discretion of the Administrator, by: (a) cash;
(b) check; (c) the surrender of shares of Common Stock owned by the Offeree that
have been held by the Offeree for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise;
(d) the Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
6.4 RIGHTS AS A STOCKHOLDER. Upon complying with the provisions of
Section 6.2 hereof, an Offeree shall have the rights of a stockholder with
respect to the Restricted Stock purchased pursuant to the Right to Purchase,
including voting and dividend rights, subject to the terms, restrictions and
conditions as are set forth in the Stock Purchase Agreement. Unless the
Administrator shall determine otherwise, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company in accordance
with the terms of the Stock Purchase Agreement.
6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement or by the Administrator.
In the event of termination of a Participant's employment, service as a director
of the Company or Service Provider status for any reason whatsoever (including
death or disability), the Stock Purchase Agreement may provide, in the
discretion of the Administrator, that the Company shall have the right,
exercisable at the discretion of the Administrator, to repurchase (i) at the
original Purchase Price, any shares of Restricted Stock which have not vested as
of the date of termination, and (ii) at Fair Market Value, any shares of
7
Restricted Stock which have vested as of such date, on such terms as may be
provided in the Stock Purchase Agreement.
6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.
6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.
6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be
assignable or transferable except by will or the laws of descent and
distribution or as otherwise provided by the Administrator.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate
such responsibilities in whole or in part to a committee consisting of two
(2) or more members of the Board (the "Committee"). Members of the Committee
may be appointed from time to time by, and shall serve at the pleasure of,
the Board. As used herein, the term "Administrator" means the Board or, with
respect to any matter as to which responsibility has been delegated to the
Committee, the term Administrator shall mean the Committee.
7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law,
the Administrator shall have full power and authority: (a) to determine the
persons to whom, and the time or times at which, Incentive Options or
Nonqualified Options shall be granted and Rights to Purchase shall be
offered, the number of shares to be represented by each Option and Right to
Purchase and the consideration to be received by the Company upon the
exercise thereof; (b) to interpret the Plan; (c) to create, amend or rescind
rules and regulations relating to the Plan; (d) to determine the terms,
conditions and restrictions contained in, and the form of, Option Agreements
and Stock Purchase Agreements; (e) to determine the identity or capacity of
any persons who may be entitled to exercise a Participant's rights under any
Option or Right to Purchase under the Plan; (f) to correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
Option Agreement or Stock Purchase Agreement; (g) to accelerate the vesting
of any Option or release or waive any repurchase rights of the Company with
respect to Restricted Stock; (h) to extend the exercise date of any Option or
acceptance date of any Right to Purchase; (i) to provide for rights of first
refusal and/or repurchase rights; (j) to amend outstanding Option Agreements
and Stock Purchase Agreements to provide for, among other things, any change
or modification which the Administrator could have provided for upon the
grant of an Option or Right to Purchase or in furtherance of the powers
provided for herein; and (k) to make all other determinations necessary or
advisable for the administration of the Plan, but only to the extent not
contrary to the express provisions of the Plan. Any action, decision,
interpretation or determination made in good faith by the Administrator in
the exercise of its authority conferred upon it under the Plan shall be final
and binding on the Company and all Participants.
8
7.3 LIMITATION ON LIABILITY. No employee of the Company or member of
the Board or Committee shall be subject to any liability with respect to
duties under the Plan unless the person acts fraudulently or in bad faith.
To the extent permitted by law, the Company shall indemnify each member of
the Board or Committee, and any employee of the Company with duties under the
Plan, who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed proceeding, whether civil, criminal,
administrative or investigative, by reason of such person's conduct in the
performance of duties under the Plan.
ARTICLE 8.
CHANGE IN CONTROL
8.1 CHANGE IN CONTROL. In the event of a Change in Control of the
Company, the Administrator in its discretion may, at any time an Option or Right
to Purchase is granted, or at any time thereafter, take one or more of the
following actions: (A) provide for the purchase of each Option or Right to
Purchase for an amount of cash or other property that could have been received
upon the exercise of the Option or Right to Purchase had the Option been
currently exercisable, (B) adjust the terms of the Options and Rights to
Purchase in a manner determined by the Administrator to reflect the Change in
Control, (C) cause the Options and Rights to Purchase to be continued or
assumed, or new rights substituted therefor, by the surviving or another entity,
through the continuance of the Plan and the continuation or assumption of
outstanding Options and Rights to Purchase, or the substitution for such Options
and Rights to Purchase of new options and new rights to purchase of comparable
value covering shares of a successor corporation, with appropriate adjustments
as to the number and kind of shares and Exercise Prices, in which event the Plan
and such Options and Rights to Purchase, or the new options and rights to
purchase substituted therefor, shall continue in the manner and under the terms
so provided or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the
Change in Control and the Administrator shall cause written notice of the
proposed transaction to be given to all Participants not less than fifteen (15)
days prior to the anticipated effective date of the proposed transaction.
Whether or not provision is made for continuance of the Plan and the
continuance, assumption or substitution of outstanding Options or Rights to
Purchase, concurrent with the effective date of the Change of Control all
Options, Rights of Purchase and Restricted Stock shall be accelerated and
concurrent with such date the holders of such Options and Rights to Purchase
shall have the right to exercise such Options and Rights of Purchase in respect
to any or all shares subject thereto.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend
or terminate the Plan in such respects as the Board may deem advisable. No
such alteration, amendment, suspension or termination shall be made which
shall substantially affect or impair the rights of any Participant under an
outstanding Option Agreement or Stock Purchase Agreement without such
Participant's consent. The Board may alter or amend the Plan to comply with
requirements under
9
the Code relating to Incentive Options or other types of options which give
Optionee more favorable tax treatment than that applicable to Options granted
under this Plan as of the date of its adoption. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the Administrator
so determines and if permitted by applicable law, be subject to the more
favorable tax treatment afforded to an Optionee pursuant to such terms and
conditions.
9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights
to Purchase then outstanding shall continue in effect in accordance with
their respective terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 WITHHOLDING. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to
satisfy any applicable Federal, state, and local tax withholding requirements
with respect to any Options exercised or Restricted Stock issued under the
Plan.
ARTICLE 11.
MISCELLANEOUS
11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits
under the Plan may not be assigned or alienated, whether voluntarily or
involuntarily. Any unauthorized attempt at assignment, transfer, pledge or
other disposition shall be without effect.
11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to interfere
with the right of the Company or any Affiliated Company to discharge any
Participant at any time.
11.3 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
10
CORTEX PHARMACEUTICALS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
Harvey S. Sadow, Ph.D. and Vincent F. Simmon, Ph.D., and each or either of
them, with full power of substitution, are hereby appointed proxies to vote the
stock of the undersigned in Cortex Pharmaceuticals, Inc. at the Annual Meeting
of Stockholders on December 12, 1996, and at any postponement and adjournment
thereof, to be held at 15241 Barranca Parkway, Irvine, California 92618, at
9:00 a.m. Pacific Time.
MANAGEMENT RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1, FOR PROPOSAL 2, AND FOR
PROPOSAL 3.
1. PROPOSAL 1 ELECTION OF DIRECTORS.
/ / FOR all Nominees listed below / / WITHHOLD AUTHORITY to
(except as indicated to the vote for all Nominees
contrary below) listed below
Robert F. Allnutt, Jerome M. Arnold, Carl W. Cotman, Ph.D., Michael G.
Grey, Harvey S. Sadow, Ph.D., Vincent F. Simmon, Ph.D. and Davis L. Temple,
Jr., Ph.D.
INSTRUCTION: To withhold authority to vote for any individual Nominee, write
that Nominee's name in the space provided below.
-------------------------------
2. PROPOSAL 2 APPROVAL OF THE COMPANY'S 1996 STOCK INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL 3 RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
1997.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including procedural and other matters relating to the conduct of the meeting.
[Front of Proxy Card]
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE SEVEN DIRECTOR NOMINEES LISTED ABOVE,
FOR PROPOSAL 2, AND FOR PROPOSAL 3.
Please sign exactly as name appears hereon.
-----------------------
-----------------------
Date: , 1996
---------------
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE IMMEDIATELY DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
THANK YOU FOR YOUR PROMPT ATTENTION TO THIS IMPORTANT MATTER.
[Back of Proxy Card]