SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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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 Rule 14a-12
INTROGEN THERAPEUTICS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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INTROGEN THERAPEUTICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 5, 2001
To the Stockholders:
We cordially invite you to attend Introgen's 2001 Annual Meeting of
Stockholders to be held on Wednesday, December 5, 2001 at 10:00 a.m. local time
at the Houstonian Hotel, located at 111 North Post Oak Lane, Houston, Texas
77024. At the Annual Meeting we will:
1. Elect two Class I directors to the Board of Directors for a term of
three years;
2. Ratify the amendment to Introgen's Bylaws that increased the number
of authorized directors from five (5) to six (6) and increased the number
of Class II directors from one (1) to two (2);
3. Amend Introgen's Certificate of Incorporation to permit Introgen's
Board of Directors to amend Section 3.2 of Introgen's Bylaws relating to
the number and classes of directors;
4. Ratify the approval of Introgen's 2000 Stock Option Plan for
purposes of Rule 162(m) of the Internal Revenue Code of 1986, as amended;
5. Ratify the appointment of Arthur Andersen LLP as Introgen's
independent public accountants for the six month period ending December 31,
2001 and the fiscal year ending December 31, 2002; and
6. Transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Stockholders who owned Introgen stock at the close of business on October
9, 2001 may attend and vote at the Annual Meeting. If you cannot attend the
Annual Meeting, you may vote electronically using the Internet as instructed on
the enclosed Proxy Card or by mailing the Proxy Card in the enclosed postage
prepaid envelope. Any stockholder attending the Annual Meeting may vote in
person, even though he or she has already returned a Proxy Card.
Sincerely,
/s/ RODNEY VARNER
--------------------------------------
Rodney Varner
Secretary
Austin, Texas
October 26, 2001
INTROGEN THERAPEUTICS, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
Our Board of Directors is soliciting proxies for our 2001 Annual Meeting of
Stockholders. This Proxy Statement contains important information for you to
consider when deciding how to vote on the matters brought before the Annual
Meeting. Please read it carefully.
This Proxy Statement, a Proxy Card and the 2001 Annual Report to
Stockholders were mailed to stockholders on or about October 26, 2001.
QUESTIONS AND ANSWERS
Q: WHAT IS THE RECORD DATE FOR THE ANNUAL MEETING AND HOW MAY SHARES OF OUR
COMMON STOCK WERE OUTSTANDING ON THE RECORD DATE?
A: Our Board of Directors set October 9, 2001 as the record date for the
Annual Meeting. On October 9, 2001, approximately 21,442,382 shares of our
common stock were outstanding.
Q: WHO IS ENTITLED TO VOTE AND HOW MANY VOTES DO I HAVE?
A: All stockholders who owned shares of our common stock on October 9, 2001
are entitled to vote at the Annual Meeting. Every stockholder is entitled
to one (1) vote for each share of common stock held.
Q: HOW DO I VOTE?
A: You may vote in person by attending the meeting or by completing and
returning a proxy by mail or electronically using the Internet. To vote
your proxy by mail, mark your vote on the enclosed Proxy Card, then follow
the directions on the Proxy Card. To vote your proxy using the Internet,
see the instructions on the Proxy Card, and have the Proxy Card available
when you access the Internet web site. The home page will prompt you to
enter you control number, then follow the instructions to record your vote.
If you do not mark any selections, your shares will be voted as recommended
by our Board of Directors. Whether you plan to attend the meeting or not,
we encourage you to vote by proxy as soon as possible.
Q: CAN I CHANGE MAY VOTE?
A: You can revoke your proxy before the time of voting at the Annual Meeting
in several ways:
- by mailing a revised proxy dated later than the prior proxy;
- by voting again at the Internet web site;
- by voting in person at the meeting; or
- by notifying our corporate secretary in writing that you are revoking
your proxy.
Your revocation must be received before the Annual Meeting to be counted.
Q: WHAT CONSTITUTES A "QUORUM" FOR THE ANNUAL MEETING?
A: At least a majority of the shares of our common stock outstanding as of the
record date must be present at the Annual Meeting or by proxy in order to
hold the Annual Meeting and conduct business. This is called a quorum.
Shares are counted as present at the Annual Meeting if you are either (i)
present and vote in person at the Annual Meeting or (ii) have properly
submitted a proxy via mail or Internet. Abstentions, broker non-votes and
votes withheld from director nominees are considered as shares present at
the Annual Meeting for the purposes of determining a quorum. A broker
non-vote occurs when a broker or other nominee who holds shares for another
does not vote on a particular item because
the nominee does not have discretionary voting authority for that item and
has not received voting instructions from the owner of the shares.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: For Proposal I, the two (2) individuals receiving the highest number of
"FOR" votes will be elected. To pass, Proposals II and III require the
affirmative "FOR" vote of at least two-thirds of the shares of our common
stock outstanding and entitled to vote on the record date and Proposals IV
and V require the affirmative "FOR" vote of at least a majority of the
shares of our common stock present at the Annual Meeting and entitled to
vote.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees or you
may elect to have your vote "WITHHELD" with respect to one or more of the
nominees. Votes that are withheld will be excluded entirely and will have
no effect in the election of directors. Similarly, if you do not vote and
hold your shares in a brokerage account in your broker's name (this is
called "street name"), and if your broker does not have discretionary
authority to vote in the election of directors, your shares will have no
effect in the election of directors. On the other proposals, you may vote
"FOR," "AGAINST" or "ABSTAIN." If you abstain from voting on the other
proposals, it has the same effect as a vote against the proposal. If you
hold your shares in "street name" and you do not vote, or your broker does
not have discretionary authority to vote, your shares will not be counted
in the tally of the number of shares cast on Proposals IV and V, and
therefore may have the effect of reducing the number of shares needed to
approve that proposal. However, with respect to Proposals II and III,
because your broker will not have discretionary authority to vote on these
proposals if you do not instruct your broker specifically, your failure to
direct the vote will have the effect of a vote cast "AGAINST." Finally, if
you just sign your Proxy Card with no further instructions, your shares
will be counted as a vote "FOR" each director and "FOR" the ratification of
the amendment to our Bylaws, the amendment of our Certificate of
Incorporation, the ratification of approval of the 2000 Stock Option Plan,
and the ratification of the independent public accountants.
Q: WHO IS SOLICITING MY VOTE AND WHO PAYS FOR THE SOLICITATION OF PROXIES?
A: This Proxy Statement is furnished in connection with the solicitation of
your vote by our Board of Directors. We pay the costs of soliciting proxies
from stockholders. We have hired Georgeson Shareholder Communications, Inc.
to help us solicit proxies from brokers, bank nominees and other
institutional owners. We expect to pay Georgeson Shareholder
Communications, Inc. a fee of $6,500 for its services and will reimburse
Georgeson Shareholder Communications, Inc. for certain out-of-pocket
expenses. We may also reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
the voting materials to the beneficial owners. Directors, officers and
regular employees may solicit proxies on behalf of Introgen personally, by
telephone or by facsimile, without additional compensation.
Q: HOW DOES THE BOARD OF DIRECTORS RECOMMENDED VOTING ON THE PROPOSALS?
A: Our Board of Directors recommends that you vote your shares "FOR" each of
the nominees to the Board of Directors, "FOR" the ratification of the
amendment to our Bylaws, "FOR" the amendment of our Certificate of
Incorporation, "FOR" the approval of our 2000 Stock Option Plan, and "FOR"
the ratification of the appointment of Arthur Andersen LLP as our
independent public accountants.
Q: WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING OF
STOCKHOLDERS DUE?
A: We recently changed our fiscal year end from June 30 to December 31. We
anticipate holding our 2002 annual meeting of stockholders in May 2002.
Stockholder proposals for the 2002 annual meeting of stockholders must be
received by us within a reasonable time before we print and mail our proxy
materials for the 2002 annual meeting of stockholders, which we anticipate
will occur in March 2002. In addition, notice of any stockholder proposals
must given in accordance with our Bylaws. If a stockholder
2
fails to give notice of a stockholder proposal as required by our Bylaws,
the stockholder will not be permitted to present the proposal to the
stockholders for a vote at the meeting.
Q: WHERE ARE YOUR PRINCIPAL EXECUTIVE OFFICES?
A: Our principal executive offices are located at 301 Congress Avenue, Suite
1850, Austin, Texas 78701. Our telephone number is (512) 708-9310.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of our common stock
as of the record date by (i) all persons known to us to be the beneficial owners
of more than 5% of our common stock, based on statements filed by such persons
pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as
amended, and the records of Equiserve, N.A., our transfer agent, (ii) each of
the executive officers named in the table under "Executive
Compensation -- Summary Compensation Table," and (iii) all current directors and
executive officers as a group.
Except as otherwise noted, and subject to applicable community property
laws, the persons named in this table have, to our knowledge, sole voting and
investing power for all of the shares of common stock held by them.
This table lists applicable percentage ownership based on 21,442,382 shares
of common stock outstanding as of September 26, 2001. Options to purchase shares
of our common stock that are exercisable within 60 days of September 26, 2001
are deemed to be beneficially owned by the persons holding these options for the
purpose of computing percentage ownership of that person, but are not treated as
outstanding for the purpose of computing any other person's ownership
percentage.
Unless otherwise indicated, the address for each stockholder on this table
is c/o Introgen Therapeutics, Inc., 301 Congress Avenue, Suite 1850, Austin,
Texas 78701.
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED
---------------- ------------ ------------
Rhone-Poulenc Rorer International (Holdings) Inc.(1)........ 6,312,614 26.54%
500 Arcola Road
Collegeville, PA 19426
John N. Kapoor, Ph.D.(2).................................... 3,540,557 16.45%
225 Deerpath, #250
Lake Forest, IL 60045
David G. Nance(3)........................................... 2,539,031 11.67%
The Board of Regents of The University of Texas System...... 1,236,398 5.77%
201 West 7th Street
Austin, TX 78701
Mahendra G. Shah, Ph.D.(4).................................. 420,051 1.94%
William H. Cunningham, Ph.D.(5)............................. 14,933 *
Charles E. Long(6).......................................... 19,333 *
Elise T. Wang(7)............................................ 9,333 *
James W. Albrecht, Jr.(8)................................... 163,072 *
J. David Enloe, Jr.(9)...................................... 108,000 *
G. Thomas Finnegan III(10).................................. -- *
Shawn L. Gallagher(11)...................................... 162,310 *
James A. Merritt, M.D.(12).................................. 169,382 *
David L. Parker, Ph.D., J.D.(13)............................ 118,883 *
All directors and executive officers as a group (12
people)(14)............................................... 7,264,885 33.88%
3
---------------
* Less than 1% of the outstanding shares of common stock.
(1) In December 1999, Rhone-Poulenc S.A., the ultimate parent company of
Rhone-Poulenc Rorer Pharmaceuticals Inc., combined with Hoechst AG, and the
parties have combined Hoechst Marion Roussel, the pharmaceutical business
of Hoechst AG, with that of Rhone-Poulenc Rorer to form Aventis Pharma.
Rhone-Poulenc Rorer Pharmaceuticals Inc. is now known as Aventis
Pharmaceuticals Products Inc. The share number includes 2,343,721 shares of
our common stock issuable within 60 days of September 26, 2001 upon
conversion of Series A non-voting convertible preferred stock held by
Aventis Pharmaceuticals Products Inc.
(2) Consists of 359,245 shares held by EJ Financial Enterprises, Inc.,
1,792,106 shares held by EJ Financial Investments IV, L.P., 1,331,604
shares held by EJ Financial Investments VI, L.P., and 76,800 shares held by
Dr. Kapoor subject to stock options that are exercisable within 60 days of
September 26, 2001. EJ Financial Investments IV, L.P. and EJ Financial
Investments, VI, L.P. are partnerships controlled by their general partner,
EJ Financial Enterprises. Dr. Kapoor is President of EJ Financial
Enterprises. Dr. Kapoor disclaims beneficial ownership of the shares held
by EJ Financial Enterprises, EJ Financial Investments IV, L.P. and EJ
Financial Investment VI, L.P.
(3) Consists of 1,346,979 shares held by Developtech Resources Corporation,
18,130 shares held by Domecq Technologies, Inc., 850,496 shares held by
Debouchement, Ltd., and 323,426 shares held by Mr. Nance subject to stock
options that are exercisable within 60 days of September 26, 2001. Mr.
Nance is President and Chief Executive Officer of Developtech Resources
Corporation, Domecq Technologies, Inc., and Debouchement, Ltd. Mr. Nance
holds the right to vote for each entity and has dispositive control over
the shares.
(4) Consists of 238,272 shares subject to stock options that are exercisable
within 60 days of September 26, 2001 and an option to purchase from EJ
Financial Enterprises, Inc. a total of 181,779 shares of our common stock.
(5) Consists of 14,933 shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(6) Includes 9,333 shares subject to stock options that are exercisable within
60 days of September 26, 2001.
(7) Consists of 9,333 shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(8) Includes 161,472 shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(9) Consists of 108,000 shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(10) Mr. Finnegan has no shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(11) Includes 151,872 shares subject to stock options that are exercisable
within 60 days of September 26, 2001.
(12) Includes 70,272 shares subject to stock options that are exercisable within
60 days of September 26, 2001.
(13) Includes 96,672 shares subject to stock options that are exercisable within
60 days of September 26, 2001.
(14) Includes shares described in the notes above, as applicable to our
directors and current executive officers.
4
EXECUTIVE OFFICERS
The following sets forth information concerning the persons currently
serving as our executive officers, including information as to each executive
officer's age as of the record date, position and business experience.
NAME AGE POSITION
---- --- --------
David G. Nance........................ 50 President and Chief Executive Officer
James W. Albrecht, Jr. ............... 47 Chief Financial Officer
J. David Enloe, Jr. .................. 38 Vice President, Operations
G. Thomas Finnegan III................ 34 Vice President, Finance and Corporate
Development
Shawn L. Gallagher.................... 40 Vice President, Product Development
James A. Merritt, M.D. ............... 50 Vice President, Clinical Affairs
David L. Parker, Ph.D., J.D. ......... 47 Vice President, Intellectual Property
Please see "Election of Directors" for additional information with respect
to Mr. Nance.
James W. Albrecht, Jr. joined Introgen in November 1994 as our Vice
President, Operations and Administration, and has served as our Chief Financial
Officer since September 1995. From 1993 to 1996, he operated a consulting
business providing chief financial officer services to the technology and real
estate industries. Mr. Albrecht was previously with Arthur Andersen LLP as an
accountant and is a Certified Public Accountant.
J. David Enloe, Jr. joined Introgen in March 1995. He has served as our
General Business Manager and Vice President, Administration, and is currently
Vice President, Operations. From 1989 to 1995, he held various positions at
Centrilift, a division of Baker Hughes, Inc., an energy services company,
including Region General Manager, Southeast Asia, and was with Arthur Andersen
LLP as an accountant prior to that time. Mr. Enloe is a Certified Public
Accountant.
G. Thomas Finnegan III joined Introgen in March 2001 as Vice President of
Finance and Corporate Development. From 1999 to March 2001, Mr. Finnegan was
associated with the Health Care Investment Banking division of SG Cowen. Prior
to that Mr. Finnegan was an investment-banking associate for Merrill Lynch &
Co., and prior to that was an equity analyst for Forstmann Partners LP. Mr.
Finnegan earned an M.B.A. from the Goizueta School of Business at Emory
University and a B.A. in finance from the University of South Carolina.
Shawn L. Gallagher joined Introgen in August 1996 as our Vice President,
Manufacturing, and is currently Vice President, Product Development. From 1995
to 1996, he served as Director of Operations at Magenta Corporation, a
biotechnology services company, now BioReliance Corp. From 1991 to 1995, he held
various manufacturing management positions at ImmunoGen, Inc., a biotechnology
company. Mr. Gallagher received a M.S. in chemical engineering from the
University of California at San Diego.
James A. Merritt, M.D. joined Introgen in February 1996 as our Vice
President, Clinical Affairs. From 1994 to 1995, he served as Vice President of
Medical Affairs at Viagene, Inc., a biotechnology company. From 1990 to 1994,
Dr. Merritt held various positions with IDEC Pharmaceuticals Corp., most
recently as Senior Director, Clinical Sciences. Dr. Merritt has served on the
editorial board of the Journal of Anti-Cancer Drugs since 1990. He received his
M.D. from the University of Vermont and is board certified in internal medicine
and medical oncology.
David L. Parker, Ph.D., J.D. joined Introgen in March 1999 as our Vice
President, Intellectual Property. Since January 2000, Dr. Parker has been a
partner with the law firm Fulbright & Jaworski LLP. From 1992 to January 2000,
he was a shareholder of the patent law firm Arnold White & Durkee Professional
Corporation and was previously an associate with that firm. Since 1997, Dr.
Parker has served as an adjunct professor at The University of Texas School of
Law. Dr. Parker received his Ph.D. in molecular pharmacology and molecular
biology from Baylor College of Medicine and his J.D. from The University of
Texas School of Law.
5
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
Our Board of Directors is divided into three classes, with the term of
office of one class expiring each year. We currently have six directors with two
directors in each class. The terms of office of our Class I directors, William
H. Cunningham, Ph.D. and Elise T. Wang, expire at this Annual Meeting. The terms
of office of our Class II directors, Mahendra G. Shah, Ph.D. and Charles E.
Long, will expire at the 2002 Annual Meeting and the terms of office of our
Class III directors, John N. Kapoor, Ph.D. and David G. Nance, will expire at
the 2003 Annual Meeting. At the 2001 Annual Meeting, stockholders will elect two
directors for a term of three years.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
The following sets forth information concerning the nominees for election
as directors at the Annual Meeting, including information as to each nominee's
age as of the record date and business experience.
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------
William H. Cunningham(1)(2)......... 57 Professor, The University of Texas 2000
at Austin
Elise T. Wang(1).................... 42 Managing Director, Salomon Smith 2001
Barney
---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
William H. Cunningham, Ph.D. has served as a member of our Board of
Directors since July 2000. Dr. Cunningham served as Chancellor and Chief
Executive Officer of The University of Texas System from 1992 to 2000, in
addition to holding the Lee Hage and Joseph D. Jamail Regents Chair in Higher
Education Leadership. He served as President of The University of Texas at
Austin, a component institution of the University of Texas System from 1985 to
1992. He is currently a Professor of Marketing at The University of Texas at
Austin. Dr. Cunningham serves on a number of public commissions, private
corporate boards and in a number of advisory roles to corporations. Dr.
Cunningham serves as a disinterested director on the board of directors of John
Hancock Advisers, Inc. He also serves on the board of directors of Jefferson
Pilot Corporation and Southwest Airlines, Inc., both of which are
publicly-traded Fortune 500 corporations. Dr. Cunningham received his Ph.D. and
M.B.A. from Michigan State University. In 1993, he received an Honorary Doctor
of Laws Degree and the Distinguished Alumnus Award from Michigan State
University.
Elise T. Wang has served as a member of our Board of Directors since
January 2001. She is currently Managing Director, U.S. Equity Research Division,
at Salomon Smith Barney. Ms. Wang was formerly managing director and senior
research analyst in the Health Care Equity Research Group at PaineWebber
Incorporated, where she covered the biotechnology industry for the past nine
years. Prior to joining PaineWebber Health Care Equity research group in January
of 1996, Ms. Wang was vice president in the Health Sciences Group of
PaineWebber's Investment Banking Division with responsibility for providing
financial advisory services to biotechnology and other health care sectors. Ms.
Wang joined PaineWebber Development Corporation in 1987, became vice president
in 1992 and joined Investment Banking in 1993. Ms. Wang received her M.B.A. from
Harvard Graduate School of Business.
6
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
The following sets forth information concerning the directors whose terms
of office continue after the Annual Meeting, including information as to each
director's age as of the record date and business experience.
NAME OF NOMINEE AGE POSITION/PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- ----------------------------- --------------
David G. Nance..................... 50 President, Chief Executive Officer 1993
and Director
John N. Kapoor, Ph.D. ............. 58 Chairman of the Board; Chairman of 1993
the Board of EJ Financial
Enterprises, Inc.
Charles E. Long(1)(2).............. 61 Director; Retired 2001
Mahendra G. Shah, Ph.D. ........... 56 Director; Chief Executive Officer 1993
and Chairman of the Board of
Directors of First Horizon
Pharmaceutical Corporation
---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
David G. Nance has served as a member of our Board of Directors and as our
President and Chief Executive Officer since our inception in June 1993. From
1992 to 1996, Mr. Nance served as the Managing Partner of Texas Biomedical
Development Partners, the investment group that founded us.
John N. Kapoor, Ph.D. has served as Chairman of our Board of Directors
since our inception in June 1993. In 1990, Dr. Kapoor founded EJ Financial
Enterprises, Inc., a healthcare investment company and is presently the chairman
of its board of directors. He is also presently chairman of the board of
directors of Akorn, Inc., NeoPharm, Inc. and OptionCare, Inc. and is a director
of Integrated Surgical Systems, Inc. Dr. Kapoor received his Ph.D. in medicinal
chemistry from the State University of New York at Buffalo.
Charles E. Long has served as a member of our Board of Directors since
January 2001. Mr. Long is former vice chairman of Citicorp and its principal
subsidiary, Citibank. Mr. Long held various positions during his career with
Citicorp, which began in 1972. From 1982 to 1998 he headed Citicorp's External
Affairs Division, which includes the Government Relations Division in
Washington, D.C. From 1976 to 1982, he was responsible for managing Citicorp's
international consumer banking business, as well as legal and external affairs
for consumer banking worldwide. Mr. Long is a trustee of the Eisenhower Exchange
Fellowship, the Midwest Research Institute and the National Forest Foundation.
He has served as an officer, director or trustee on a number of corporate,
charitable and public boards, including vice chairman of Georgetown University,
vice chairman and director of Woodrow Wilson House Museum and Ford's Theater in
Washington, D.C. Mr. Long is a director of Atlas Copco North America and Stora
Enzo North America. Mr. Long is also a member of the board of directors of
Gendux AB, our wholly-owned subsidiary.
Mahendra G. Shah, Ph.D. has served as a member of our Board of Directors
since our inception in June 1993. From 1993 to 1999, Dr. Shah served as our Vice
President, Corporate and Business Development. From 1991 to January 2001, he
served as Vice President, Corporate Development of EJ Financial Enterprises,
Inc., a healthcare investment company. Dr. Shah presently serves as the chief
executive officer and chairman of the board of directors of First Horizon
Pharmaceutical Corporation. Dr. Shah received a Ph.D. in industrial pharmacy
from St. John's University.
There are no family relationships among any of our directors or executive
officers.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors held a total of three meetings and acted by written
consent three times during the fiscal year ended June 30, 2001. During that
period, the Board of Directors had a standing Audit Committee,
7
Compensation Committee and Executive Committee. In addition, in connection with
our initial public offering, the Board of Directors had a Pricing Committee. The
Board of Directors does not have a standing Nominating Committee.
The Audit Committee, which currently consists of directors William H.
Cunningham, Ph.D., Charles E. Long and Elise T. Wang, met three times during the
fiscal year ended June 30, 2001. The Audit Committee monitors our system of
internal controls, provides our Board of Directors with the results of its
examinations and recommendations derived therefrom, outlines to the Board of
Directors improvements made, or to be made, in internal accounting controls,
recommends the appointment of independent auditors and provides to our Board of
Directors such additional information and materials as it may deem necessary to
make our Board of Directors aware of significant financial matters which require
the attention of our Board of Directors.
The Compensation Committee, which currently consists of directors William
H. Cunningham and Charles E. Long, acted by written consent five times during
the fiscal year ended June 30, 2001. The Compensation Committee administers our
2000 Stock Option Plan, reviews forms of compensation to be provided to our
officers and employees, including stock compensation and loans, grants options
to purchase our common stock to our employees, executive officers and directors,
and reviews and makes recommendations to the Board of Directors regarding all
forms of compensation to be provided to the members of the Board of Directors,
including stock compensation and loans.
The Executive Committee, which currently consists of directors David G.
Nance and John N. Kapoor, Ph.D., acted by written consent one time during the
fiscal year ended June 30, 2001. The Executive Committee acts on behalf of our
Board of Directors to the extent permitted under Delaware law.
The Pricing Committee, which consisted of directors David G. Nance and John
N. Kapoor, Ph.D., met once during the fiscal year ended June 30, 2001. The
Pricing Committee approved the underwriting agreement in connection with our
initial public offering, the number of shares to be offered in the initial
public offering and the price of the shares to be offered in the initial public
offering.
No director attended fewer than 75% of the total number of meetings of the
Board of Directors or the total number of meetings held by all committees of the
Board of Directors on which he or she served during the fiscal year ended June
30, 2001.
BOARD COMPENSATION
Each non-employee director is granted an option to purchase 33,600 shares
of our common stock (exercisable at fair market value on the date of grant) upon
becoming a director. The option vests ratably each month after the date of grant
of such option, so that the entire option is fully vested three years from the
date of grant. Each incumbent director is annually granted an option to purchase
9,600 shares of our common stock (exercisable at fair market value on the date
of grant) on the date of our annual meeting of stockholders. That option vests
ratably each month after the date of grant of such option, so that the entire
option is fully vested one year from the date of grant. Directors do not receive
any cash or other additional compensation, other than reimbursement of their
out-of-pocket expenses, for services provided as a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF ALL NOMINEES TO THE BOARD OF DIRECTORS NAMED ABOVE.
PROPOSAL TWO
RATIFICATION OF AMENDMENT TO BYLAWS
Following our initial public offering in October 2000 and prior to the
amendment described in this proposal, our Bylaws set the number of authorized
directors at five. Those five directors were separated into three classes, each
with three year terms. The term of office of the first class, which consists of
two directors, expires at the Annual Meeting; the term of office of the second
class, which prior to the amendment of our Bylaws described in this proposal
consisted of one director, expires at the 2002 annual meeting of stockholders;
8
and the term of office of the third class, which consists of two directors,
expires at the 2003 annual meeting of stockholders.
In January 2001, we were successful in attracting two well-qualified
director candidates whose skills and experience will benefit us. Our Board of
Directors determined that our interests and the interests of our stockholders
would be best served by appointing these candidates to our Board of Directors.
However, in order to appoint these candidates to our Board of Directors, our
Bylaws had to be amended to increase the number of authorized directors from
five to six and to increase the number of directors comprising Class II from one
to two. The director candidates were appointed by our Board of Directors to fill
an existing vacancy in Class I of our Board of Directors and to fill the vacancy
created by the amendment of our Bylaws described in this proposal in Class II of
our Board of Directors. Each director so appointed will serve for the remainder
of the full term of such director's class.
Prior to the amendment described above, Section 3.2 of our Bylaws read as
follows:
"3.2 NUMBER OF DIRECTORS
The board of directors shall consist of five (5) members. The number
of directors may be changed by an amendment to this bylaw, duly adopted by
the board of directors or by the stockholders, or by a duly adopted
amendment to the certificate of incorporation. Upon the closing of the
first sale of the corporation's common stock pursuant to a firmly
underwritten registered public offering (the "IPO"), the directors shall be
divided into three classes, with the term of office of the first class,
which class shall initially consist of three directors, to expire at the
first annual meeting of stockholders held after the IPO; the term of office
of the second class, which shall initially consist of three directors, to
expire at the second annual meeting of stockholders held after the IPO; the
term of office of the third class, which class shall initially consist of
four directors, to expire at the third annual meeting of stockholders held
after the IPO; and thereafter for each such term to expire at each third
succeeding annual meeting of stockholders held after such election.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office
expires."
Section 3.2 was amended in January 2001 to read as follows:
"3.2 NUMBER OF DIRECTORS
The board of directors shall consist of six (6) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment
to the certificate of incorporation. The directors shall be divided into
three classes, with the term of office of the first class, which class
shall consist of two directors, to expire at the 2001 annual meeting of
stockholders; the term of office of the second class, which class shall
consist of two directors, to expire at the 2002 annual meeting of
stockholders; the term of office of the third class, which class shall
initially consist of two directors, to expire at the 2003 annual meeting of
stockholders; and thereafter for each such term to expire at each third
succeeding annual meeting of stockholders held after such election.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office
expires."
Article XI of our Restated Certificate of Incorporation filed with the
Delaware Secretary of State on October 17, 2000 requires the affirmative vote of
at least two-thirds of our outstanding voting securities to amend Section 3.2 of
our Bylaws. Accordingly, we are proposing that our stockholders ratify the
amendment to our Bylaws described in this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE AMENDMENT TO OUR BYLAWS.
9
PROPOSAL THREE
AMENDMENT OF CERTIFICATE OF INCORPORATION
As noted above, Article XI of our Restated Certificate of Incorporation
provides that any amendment, repeal, or modification of Section 3.2 (Number of
Directors) of the Bylaws requires the approval of two-thirds of our outstanding
shares. Our Board of Directors recommends amending Article XI of our Restated
Certificate of Incorporation to permit the Board of Directors to amend or modify
Section 3.2 of our Bylaws without the further approval of the stockholders. The
text of the amendment to our Restated Certificate of Incorporation is attached
hereto as Exhibit A.
If Proposal III is approved by our stockholders, Article XI of our Restated
Certificate of Incorporation will read as follows:
"No action shall be taken by the stockholders of the Corporation
except at an annual or special meeting of the stockholders called in
accordance with the Corporation's Bylaws and no action shall be taken by
the stockholders by written consent. The affirmative vote of at least
two-thirds of the then outstanding voting securities of the Corporation,
voting together as a single class, shall be required for the amendment,
repeal or modification of the provisions of Article IX, Article X or
Article XII of this Restated Certificate of Incorporation or Sections 2.3
(Special Meeting), 2.4 (Notice of Stockholders' Meeting), 2.5 (Advanced
Notice of Stockholder Nominees and Stockholder Business), 2.10 (Voting) or
2.12 (Stockholder Action by Written Consent Without a Meeting) of the
Corporation's Bylaws. The affirmative vote of at least two-thirds of the
then outstanding voting securities of the Corporation, voting together as a
single class, shall be required for the amendment, repeal or modification
by the stockholders of Section 3.2 (Number of Directors) of the
Corporation's Bylaws."
The proposed amendment to Article IX of our Restated Certificate of
Incorporation will enable our Board of Directors to take timely advantage of the
availability of well-qualified candidates for appointment to the Board of
Directors, in particular, candidates from outside Introgen whose skills and
experience will benefit us. Any such candidate appointed as a director by our
Board of Directors would serve the remainder of the full term of the class of
our Board of Directors to which such director is appointed. At the end of the
full term of such director's class, the director would stand for election at our
next annual meeting. We do not currently have any plans to increase the size of
our Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE AMENDMENT OF OUR RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL FOUR
RATIFICATION OF APPROVAL OF 2000 STOCK OPTION PLAN
GENERAL
This section provides a summary of the terms of the 2000 Stock Option Plan
(the "Stock Plan") and the proposal to ratify the approval of the Stock Plan.
We are soliciting the ratification of the approval of the Stock Plan to
continue to use the Stock Plan to achieve our goals as set forth below and to
continue to receive a federal income tax deduction for compensation paid under
the Stock Plan. Our Board of Directors and stockholders approved the Stock Plan
prior to our October 2000 initial public offering. A total of 5,170,058 shares
of our common stock is currently reserved for issuance under the Stock Plan.
Annual increases in this total number of reserved shares occur on the first day
of each fiscal year equal to the lesser of 1,600,000 shares of our common stock,
5% of the outstanding shares of our capital stock or a lesser amount determined
by the Board of Directors. The Stock Plan is unchanged since our stockholders
last approved the plan in September 2000.
The Stock Plan is intended to promote our long-term success and increase
stockholder value by attracting, motivating and retaining excellent employees,
non-employee directors and consultants who provide
10
significant services to us. The Stock Plan also is intended to align the
interests of participants with the interests of our stockholders by encouraging
participants to own more of our stock.
SUMMARY OF THE 2000 STOCK OPTION PLAN
General. The purpose of the Stock Plan is to attract and retain the best
available personnel for positions of substantial responsibility with us, to
provide additional incentive to our employees, directors and consultants and to
promote the success of our business. Options and stock purchase rights may be
granted under the Stock Plan. Options granted under the Stock Plan may be either
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or nonstatutory stock options.
Administration. The Stock Plan may generally be administered by the Board
of Directors or a committee appointed by the Board of Directors (the
"Administrator").
Eligibility; Limitations. Nonstatutory stock options and stock purchase
rights may be granted under the Stock Plan to our employees, directors and
consultants. Incentive stock options may be granted only to employees. The
Administrator, in its discretion, selects the employees, directors and
consultants to whom options and stock purchase rights may be granted, the time
or times at which such options and stock purchase rights shall be granted, and
the number of shares subject to each such grant.
Section 162(m) of the Code places limits on the federal income tax
deductibility of compensation paid to certain of our executive officers. In
order to preserve our ability to deduct the compensation income associated with
options and stock purchase rights granted to such persons, the Stock Plan
provides that it shall be administered by a committee of two or more "outside
directors" within the meaning of Section 162(m), and that no employee, director
or consultant may be granted, in any fiscal year, options and stock purchase
rights to purchase more than 1,000,000 shares of our common stock.
Notwithstanding this limit, in connection with an individual's initial
employment with us, an employee, director or consultant may be granted options
or stock purchase rights to purchase up to an additional 1,000,000 shares of our
common stock.
Terms and Conditions of Options. Each option is evidenced by a stock
option agreement between us and the optionee, and is subject to the following
additional terms and conditions:
- Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an
incentive stock option may not be less than 100% of the fair market value
of our common stock on the date such option is granted; provided,
however, the exercise price of an incentive stock option granted to a 10%
or greater stockholder may not be less than 110% of the fair market value
of our common stock on the date such option is granted. The fair market
value of our common stock is generally determined with reference to the
closing sale price for our common stock (or the closing bid if no sales
were reported) on the last market trading day prior to the date the
option is granted.
- Exercise of Option; Form of Consideration. The Administrator determines
when options become exercisable, and may in its discretion, accelerate
the vesting of any outstanding option. Stock options granted under the
Stock Plan generally vest and become exerciseable over a four year
period. The means of payment for shares issued upon exercise of an option
is specified in each option agreement. The Stock Plan permits payment to
be made by cash, check, promissory note, other shares of our common stock
(with some restrictions), cashless exercises, a reduction in the amount
of any liability to the optionee, any other form of consideration
permitted by applicable law, or any combination thereof.
- Term of Option. The term of an incentive stock option may be no more
than ten (10) years from the date of grant, provided that in the case of
an incentive stock option granted to a 10% or greater stockholder, the
term of the option may be no more than five (5) years from the date of
grant. No option may be exercised after the expiration of its term.
- Termination of Employment. If an optionee's employment or consulting
relationship terminates for any reason (other than death or disability),
then all options held by the optionee under the Stock Plan generally
expire on the earlier of the date set forth in his or her notice of grant
or three months
11
following the date of such termination. To the extent the option is
exercisable at the time of such termination, the optionee may exercise
all or part of his or her option at any time before its expiration.
- Death or Disability. If an optionee's employment or consulting
relationship terminates as a result of death or disability, then all
options held by such optionee under the Stock Plan generally expire on
the earlier of 12 months from the date of such termination or the
expiration date of such option. The optionee (or the optionee's estate or
the person who acquires the right to exercise the option by bequest or
inheritance), may exercise all or part of the option at any time before
such expiration to the extent that the option was exercisable at the time
of such termination.
- Nontransferability of Options. Unless determined otherwise by the
Administrator, options granted under the Stock Plan are not transferable
other than by will or the laws of descent and distribution, and may be
exercised during the optionee's lifetime only by the optionee.
- Other Provisions. The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the Stock Plan as may be
determined by the Administrator.
- Stock Purchase Rights. Stock purchase rights, which represent the right
to purchase our common stock, may be issued under the Stock Plan. Unless
the Administrator determines otherwise, upon the exercise of a stock
purchase right, the purchaser, under a restricted stock purchase
agreement, shall grant to us a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser's employment with
us for any reason, including death or disability. The purchase price for
unvested shares repurchased pursuant to the restricted stock purchase
agreement shall be the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to us. The
repurchase option shall lapse at a rate determined by the Administrator.
- Adjustments Upon Changes in Capitalization. In the event that our common
stock changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in our
capital structure effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares
of stock subject to the Stock Plan, the number and class of shares of
stock subject to any option or stock purchase right outstanding under the
Stock Plan, and the exercise price of any such outstanding option or
stock purchase right.
In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may, in its discretion,
provide that each optionee shall fully vest in and have the right to exercise
all of the optionee's options and stock purchase rights, including those not
otherwise exercisable, until the date ten days prior to the consummation of the
liquidation or dissolution.
In the event of our merger with or into another corporation, or the sale of
substantially all of our assets, each outstanding option or stock purchase right
shall be assumed or an equivalent option or right substituted by the successor
corporation. If the successor corporation refuses to assume the options and
stock purchase rights or to substitute substantially equivalent options and
stock purchase rights, the optionee shall fully vest in and have the right to
exercise the option or stock purchase right as to all the optioned stock,
including shares not otherwise exercisable. In such event, the Administrator
shall notify the optionee that the option or stock purchase right is fully
exercisable for fifteen days from the date of such notice and that the option or
stock purchase right terminates upon expiration of such period. In addition, if
a merger or sale of our assets constitutes a change in control (as defined
below), then the optionee shall fully vest in and have the right to exercise the
option or stock purchase right as to all the optioned stock, irrespective of any
assumption or substitution by the successor corporation.
A "change in control" is defined as any merger or reorganization with or
into another corporation, entity or person, or the sale of all or substantially
all our assets to another corporation, entity or person, unless after such
merger, reorganization or sale of assets, 51% of the capital stock or equity
interest in such other corporation, entity or person is owned by persons who
owned an aggregate 51% of our capital stock immediately prior to such merger,
reorganization or sale of assets.
12
Amendment and Termination of the Stock Plan. The Board of Directors may
amend, alter, suspend or terminate the Stock Plan, or any part thereof, at any
time and for any reason. However, we will obtain stockholder approval for any
amendment to the Stock Plan to the extent necessary to comply with Section
162(m) and Section 422 of the Code, or any similar rule or statute. No such
action by our Board of Directors or stockholders may alter or impair any option
or stock purchase right previously granted under the Stock Plan without the
written consent of the optionee. Unless terminated earlier, the Stock Plan shall
terminate ten years from the date of its original approval by the Board of
Directors or the date of any increase in the number of shares reserved for
issuance under the Stock Plan, whichever is later.
OPTIONS GRANTED TO CERTAIN INDIVIDUALS AND GROUPS
The number of options that any employee or other service provider receives
is in the discretion of the Administrator and thus cannot be determined in
advance. The following table sets forth the total number of shares of our common
stock subject to options granted under the Stock Plan during the fiscal year
ended June 30, 2001 and the average per share exercise price of the options.
NUMBER OF AVERAGE PER
OPTIONS SHARE EXERCISE
NAME OF INDIVIDUAL OR GROUP GRANTED PRICE(1)
--------------------------- --------- -----------------
David G. Nance............................................. 50,000 $5.00
James A. Merritt, M.D. .................................... 40,000 5.00
James W. Albrecht, Jr. .................................... 40,000 5.00
Shawn L. Gallagher......................................... 40,000 5.00
David L. Parker, Ph.D., J.D. .............................. 40,000 5.00
G. Thomas Finnegan III..................................... 150,000 3.50
All executive officers, as a group......................... 400,000 4.44
All directors who are not executive officers, as a group... 100,800 4.33
All employees who are not executive officers, as a group... 151,299 4.75
---------------
(1) All options were granted with an exercise price equal to 100% of the fair
market value on the date of grant.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long-term capital gain or loss. Taxes on net capital gains
for shares held for more than 12 months are currently capped at 20%. Capital
losses are allowed in full against capital gains and up to $3,000 against other
income. If these holding periods are not satisfied, the optionee recognizes
ordinary income at the time of disposition equal to the difference between the
exercise price and the lower of the fair market value of the shares at the date
of the option exercise or the sale price of the shares. Any gain or loss
recognized on such a premature disposition of the shares in excess of the amount
treated as ordinary income is treated as long-term or short-term capital gain or
loss, depending on the holding period. We are entitled to a deduction in the
same amount as the ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by one of our
employees is subject to tax withholding. We are entitled to a deduction in the
same amount as the ordinary income recognized by the optionee. Upon a
disposition of such shares by the optionee, any difference between the sale
price and the optionee's exercise price, to the extent not recognized as taxable
income as provided above, is treated as long-term or short-term
13
capital gain or loss, depending on the holding period. Taxes on net capital
gains for shares held for more than 12 months are currently capped at 20%.
Capital losses are allowed in full against capital gains and up to $3,000
against other income.
Stock Purchase Rights. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to our right to
repurchase the stock upon the purchaser's termination of employment with us. At
such times, the purchaser will recognize ordinary income measured as the
difference between the purchase price and the fair market value of the stock on
the date the stock is no longer subject to a substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the difference
between the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee will be subject to
tax withholding.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS AND US WITH RESPECT TO THE
GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE STOCK PLAN. IT
DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF THE
EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY
RESIDE.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF OUR STOCK PLAN.
PROPOSAL FIVE
RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to approval by our
stockholders, Arthur Andersen LLP, independent public accountants, to audit our
books, records and accounts for the six month period ending December 31, 2001
and the fiscal year ending December 31, 2002. (On September 26, 2001, the Board
of Directors elected to change our fiscal year end from June 30 to December 31.
The six month audit is necessitated by our change from a June 30 fiscal year end
to a December 31 fiscal year end.). Arthur Andersen LLP has audited our
financial statements since our inception.
AUDIT FEES
The estimated aggregate fees billed and to be billed for professional
services rendered for the audit of our annual financial statements for the
fiscal year ended June 30, 2001, and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q for that fiscal year, are
approximately $74,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP did not render professional services relating to
financial information systems design and implementation for the fiscal year
ended June 30, 2001.
ALL OTHER FEES
The aggregate fees billed by Arthur Andersen LLP for services rendered to
us for the fiscal year ended June 30, 2001, other than the services described
above under "Audit Fees," were approximately $305,000.
14
These fees related primarily to services provided in connection with our October
2000 initial public offering and the preparation of tax returns and related
consultation.
A representative of Arthur Andersen LLP is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS OUR INDEPENDENT PUBLIC
ACCOUNTANTS.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid by us during the fiscal
years ended June 30, 2001, 2000 and 1999 to our Chief Executive Officer and our
four other most highly compensated executive officers whose total salary and
bonus exceed $100,000 (collectively, the "Named Executive Officers"):
LONG-TERM
COMPENSATION
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (# OF SHARES) COMPENSATION
--------------------------- ---- --------- ------- ------------- ------------
David G. Nance........................... 2001 $300,208 $8,835 50,000 --
President and Chief Executive Officer 2000 271,337 -- 77,840
1999 265,494 500 174,400
James A. Merritt, M.D. .................. 2001 200,000 5,841 40,000 --
Vice President, Clinical Affairs 2000 196,337 250 21,888
1999 191,743 500 86,400
David L. Parker, Ph.D., J.D. ............ 2001 190,000 5,257 40,000 --
Vice President, Intellectual Property 2000 190,000 250 21,888
1999 71,538 500 182,400
James W. Albrecht, Jr. .................. 2001 180,000 5,257 40,000 --
Chief Financial Officer 2000 176,397 -- 21,888
1999 175,869 500 105,600
Shawn L. Gallagher....................... 2001 180,000 5,257 40,000 --
Vice President, Product Development 2000 166,337 250 21,888
1999 156,660 500 105,600
15
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth grants of stock options made during the
fiscal year ended June 30, 2001 to each Named Executive Officer.
INDIVIDUAL GRANTS
------------------------------------ POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE TERM(2)(3)
OPTIONS IN FY OR BASE EXPIRATION -----------------------
NAME GRANTED 2001(1) PRICE DATE 5% 10%
---- ---------- ---------- ---------- ---------- ---------- ----------
David G. Nance.............. 50,000 7.67% $5.00 3/8/2011 $262,500 $275,000
James A. Merritt, M.D. ..... 40,000 6.14% 5.00 3/8/2011 210,000 220,000
David L. Parker, Ph.D.,
J.D. ..................... 40,000 6.14% 5.00 3/8/2011 210,000 220,000
James W. Albrecht, Jr. ..... 40,000 6.14% 5.00 3/8/2011 210,000 220,000
Shawn L. Gallagher.......... 40,000 6.14% 5.00 3/8/2011 210,000 220,000
---------------
(1) Based on the grant of stock options representing 651,890 shares to employees
during the last fiscal year.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast possible future appreciation, if any, of our
stock price. We did not use an alternative formula for a grant date
valuation, as we do not believe that any formula will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.
(3) These options vest as to one-quarter of the shares each year, starting one
year after the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, for each of the Named Executive Officers,
the number of options exercised during the fiscal year ended June 30, 2001 and
the year-end value of unexercised options:
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
NUMBER OF UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
David G. Nance................ -- -- 256,093 180,547 $1,224,125 $863,015
James A. Merritt, M.D. ....... 96,000 $82,464 48,672 99,616 232,652 476,164
David L. Parker, Ph.D.,
J.D. ....................... -- -- 96,672 147,616 462,092 705,604
James W. Albrecht, Jr. ....... -- -- 135,072 109,216 645,644 522,052
Shawn L. Gallagher............ -- -- 125,472 109,216 599,756 522,052
---------------
(1) Based on a fair market value of $4.78 per share, which was the closing price
of our common stock on June 29, 2001, as reported on the NASDAQ National
Market.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
We have an employment agreement with David G. Nance, under which he serves
as our President and Chief Executive Officer. Under this agreement, Mr. Nance
received an initial base salary of $275,000 per annum. Effective August 1, 2000,
his base salary was raised 10%, and was raised an additional 10% effective
August 1, 2001. His base salary will be raised an additional 10% effective
August 1, 2002. Under this agreement, Mr. Nance was granted options to purchase
80,000 shares of our common stock upon the completion of our initial public
offering in October 2000 and on August 1, 2001. He will be granted options to
purchase 80,000 shares of our common stock on August 1, 2002. Such options are
exercisable at a price determined by the Administrator of the Stock Plan, and
are fully vested when granted. The agreement
16
continues through July 31, 2003 and renews automatically for one year terms
until either party gives timely written notice of non-renewal.
All of the options granted under our 1995 Stock Plan and the 2000 Stock
Option Plan shall immediately vest and become exercisable upon our merger or
reorganization with or into another corporation, entity or person, or the sale
of all or substantially all our assets to another corporation, entity or person,
unless after such merger, reorganization or sale of assets, 51% of the capital
stock or equity interest in such other corporation, entity or person is owned by
persons who owned an aggregate 51% of our capital stock immediately prior to
such merger, reorganization or sale of assets.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We sold and issued 100,000 shares of a new class of Series A Non-Voting
Convertible Preferred Stock, $.001 par value, to Aventis Pharmaceuticals
Products Inc. for $25,000,000 pursuant to a purchase agreement executed on June
30, 2001. We received the cash payment and issued the shares on July 2, 2001.
Aventis Pharmaceuticals Products Inc. is an affiliate of Rhone-Poulenc Rorer
International (Holdings) Inc., which holds greater than five percent of our
outstanding common stock.
Mahendra G. Shah, Ph.D., one of our directors, was, until January 1, 2001,
an employee of EJ Financial Enterprises, Inc., one of our stockholders. John N.
Kapoor, Ph.D., the Chairman of our Board of Directors, is the sole stockholder
of EJ Financial Enterprises. We have a consulting agreement with EJ Financial
Enterprises pursuant to which EJ Financial Enterprises provides services to us
for $175,000 per year. The Agreement provides for the assistance of EJ Financial
Enterprises with our business development, license negotiation, market analysis
and general corporate development. This agreement is automatically renewable
each July 1 for one-year terms, unless either party gives 30 days' advance
notice of termination.
We have a consulting agreement with an individual primarily responsible for
the creation of one of our technologies, who, during the fiscal year ended June
30, 2001, was the beneficial owner of five percent or more of our outstanding
stock. Under this consulting agreement, we paid this individual fees of
$145,800, $150,000 and $150,000 during the years ended June 30, 1999, 2000 and
2001, respectively, and we are obligated to pay the individual fees of $150,000
per year, with such compensation increasing annually, starting October 1, 2001,
in varying increments until it reaches $200,000 per year, subject to adjustment
for inflation. The agreement continues until September 2009, but we may
terminate the agreement upon one year's advance notice.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In the last fiscal year none of the members of the Compensation Committee
are currently, or have ever been at any time since our formation, one of our
officers or employees. No member of the Compensation Committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more officers serving as a member of our Board of Directors or
Compensation Committee.
17
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of two independent directors and
operates under a written charter adopted by the Board of Directors. The members
of the Compensation Committee are William H. Cunningham, Ph.D. and Charles E.
Long. The Compensation Committee is responsible for recommending to the Board of
Directors the compensation programs and levels of pay for executive officers,
and also advises management on pay programs and levels for other employees. The
Compensation Committee believes it has fulfilled its responsibilities under its
charter during the latest fiscal year.
Compensation Philosophy and Objectives. Our basic philosophy is to align
executive compensation with increases in stockholder value through achievement
of certain milestones, including milestones related to our preclinical and
clinical development. This is primarily accomplished through the use of stock
options, which provide compensation in direct proportion to increases in
stockholder value, and profit sharing. In addition, we believe it is important
to emphasize teamwork, entrepreneurship and active participation by all
employees. This is accomplished through providing options to a majority of
full-time, exempt domestic employees and similarly situated international
employees, and through cash incentives, through which both executives and
employees receive cash bonuses based on company-wide financial goals.
Executive Compensation Programs. Our executive compensation programs
consist of three principal elements: base salary, cash bonus and stock options.
We emphasize incentive compensation in the form of stock options and bonuses,
rather than base salary. The Compensation Committee has adopted a guideline that
executives should be paid competitive base salaries. The Board of Directors sets
the annual base salary for executives after consideration of the recommendations
of the Compensation Committee. Prior to making its recommendations, the
Compensation Committee reviews historical compensation levels of the executives,
evaluations of past performance, assessments of expected future contributions of
the executives, competitive pay levels and programs provided by other comparable
companies, and general industry pay practices. In making its determinations, the
Committee does not utilize any particular indices or formulae to arrive at each
executive's recommended pay level.
Total compensation for executive officers also includes long-term
incentives in the form of stock options, which are generally provided through
initial stock option grants at the date of hire and periodic additional stock
option grants. Stock options are instrumental in promoting the alignment of
long-term interests between our executive officers and stockholders due to the
fact that executives realize gains only if the stock price increases over the
fair market value at the date of grant and the executives exercise their
options. In determining the amount of such grants, the Committee evaluates the
job level of the executive, responsibilities of the executive, and competitive
practices in the industry. Options are generally granted at 100% of fair market
value at the date of grant. Options vest ratably over a period of four years.
The long-term value realized by executives through option exercises can be
directly linked to the enhancement of stockholder value.
Chief Executive Officer Compensation. The compensation of our chief
executive officer is determined using the same philosophy and policies as for
all executive officers. The compensation includes base salary, cash bonus and
stock options. Our chief executive officer currently has an employment agreement
that is described under "Executive Compensation -- Employment Contracts and
Change-In-Control Arrangements."
18
Section 162(m). Section 162(m) of the Internal Revenue Code of 1986, as
amended, imposes a limit on tax deductions for annual compensation in excess of
one million dollars paid by a corporation to its chief executive officer and the
other four most highly compensated executive officers. Deductions are, however,
permitted if certain conditions are met, including a requirement that the plan
under which such compensation is paid be reapproved by stockholders every five
years. None of the compensation paid by us in the fiscal year ended June 30,
2001 was subject to the limitation on deductibility. The Compensation Committee
will continue to assess the impact of Section 162(m) on its compensation
practices and determine what further action, if any, is appropriate.
COMPENSATION COMMITTEE
William H. Cunningham, Ph.D.
Charles E. Long
THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SECURITIES AND EXCHANGE
COMMISSION, NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY
PAST OR FUTURE FILING UNDER THE SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO
THE EXTENT WE SPECIFICALLY INCORPORATE IT BY REFERENCE INTO ANY SUCH FILING.
19
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of three "independent" directors in
compliance with the Marketplace Rules of the Nasdaq Stock Market and operates
under a written charter adopted by the Board of Directors, which is attached
hereto as Exhibit B. The members of the Audit Committee are William H.
Cunningham, Ph.D., Charles E. Long and Elise T. Wang. The Audit Committee
believes it has fulfilled its responsibilities under this charter during the
latest fiscal year.
Management is responsible for our internal controls and the financial
reporting process. Arthur Andersen LLP, our independent public accountants, is
responsible for performing an independent audit of our consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
The Audit Committee has reviewed and discussed our audited financial
statements for the fiscal year ended June 30, 2001 with our management and
Arthur Andersen LLP. The Audit Committee also discussed with the Arthur Andersen
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended.
The Audit Committee has also received the written disclosures from Arthur
Andersen LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee has
discussed the independence of Arthur Andersen LLP with that firm.
Based upon the Audit Committee's discussion with management and Arthur
Andersen LLP and the report of Arthur Andersen LLP to the Audit Committee, the
Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in our Annual Report on Form 10-K for the year
ended June 30, 2001, filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
William H. Cunningham, Ph.D.
Charles E. Long
Elise T. Wang
THE FOREGOING AUDIT COMMITTEE REPORT SHALL NOT BE DEEMED TO BE "SOLICITING
MATERIAL" OR TO BE "FILED" WITH THE SECURITIES AND EXCHANGE COMMISSION, NOR
SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY PAST OR FUTURE
FILING UNDER THE SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT WE
SPECIFICALLY INCORPORATE IT BY REFERENCE INTO ANY SUCH FILING.
20
STOCK PRICE PERFORMANCE GRAPH
The following line graph compares the cumulative total return to
stockholders of our common stock from October 12, 2000 (the date of our initial
public offering) to June 30, 2001 to the cumulative total return over such
period of (i) Nasdaq National Market System Composite Index and (ii) the S&P
Biotechnology Index. The graph assumes that $100 was invested on October 12,
2000 in our common stock at its initial public offering price of $8.00 per share
and in each of the other two indices as of September 30, 2000, and the
reinvestment of all dividends, if any.
The information contained in the Performance Graph shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that
we specifically incorporate it by reference into any such filing. The graph is
presented in accordance with Securities and Exchange Commission requirements.
Stockholders are cautioned against drawing any conclusions from the data
contained therein, as past results are not necessarily indicative of future
performance.
COMPARISON OF 8 MONTH CUMULATIVE TOTAL RETURN*
AMONG INTROGEN THERAPEUTICS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P BIOTECHNOLOGY INDEX
[PERFORMANCE GRAPH]
-------------------------------------------------------------------------
10/12/00 or
9/30/00 6/29/01
-------------------------------------------------------------------------
Introgen Therapeutics $100.00 $59.75
Nasdaq National Market 100.00 58.92
S&P Biotechnology 100.00 84.67
* $100 invested on 10/12/00 in stock or on 9/30/00 in indices -- including
reinvestment of dividends. Fiscal year ending June 30.
21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors, and
persons who own more than 10% of a registered class of our equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5
with the Securities and Exchange Commission. Such officers, directors and 10%
stockholders are also required by the Securities and Exchange Commission rules
to furnish us with copies of all Section 16(a) forms they file. Based solely on
its review of the copies of such forms we received, we believe that, during the
fiscal year ended June 30, 2001, all Section 16(a) filing requirements
applicable to our officers, directors and 10% stockholders were satisfied,
except for a Form 4 filing for J. David Enloe, Jr., filed two days after the
deadline of June 11, 2001.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting. If any other matter should properly come before the Annual
Meeting, however, the enclosed Proxy Card confers discretionary authority with
respect to such matter.
By Order of the Board of Directors
/s/ RODNEY VARNER
--------------------------------------
Rodney Varner
Secretary
Austin, Texas
October 26, 2001
22
EXHIBIT A
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
INTROGEN THERAPEUTICS, INC.
---------------------
Introgen Therapeutics, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. That Article XI of the Corporation's Restated Certificate of
Incorporation which currently reads:
"No action shall be taken by the stockholders of the Corporation except at
an annual or special meeting of the stockholders called in accordance with
the Corporation's Bylaws and no action shall be taken by the stockholders
by written consent. The affirmative vote of at least two-thirds of the then
outstanding voting securities of the Corporation, voting together as a
single class, shall be required for the amendment, repeal or modification
of the provisions of Article IX, Article X or Article XII of this Amended
and Restated Certificate of Incorporation or Sections 2.3 (Special
Meeting), 2.4 (Notice of Stockholders' Meeting), 2.5 (Advanced Notice of
Stockholder Nominees and Stockholder Business), 2.10 (Voting), or 2.12
(Stockholder Action by Written Consent Without a Meeting), or 3.2 (Number
of Directors) of the Corporation's Bylaws."
is amended to read as follows:
"No action shall be taken by the stockholders of the Corporation except at
an annual or special meeting of the stockholders called in accordance with
the Corporation's Bylaws and no action shall be taken by the stockholders
by written consent. The affirmative vote of at least two-thirds of the then
outstanding voting securities of the Corporation, voting together as a
single class, shall be required for the amendment, repeal or modification
of the provisions of Article IX, Article X or Article XII of this Restated
Certificate of Incorporation or Sections 2.3 (Special Meeting), 2.4 (Notice
of Stockholders' Meeting), 2.5 (Advanced Notice of Stockholder Nominees and
Stockholder Business), 2.10 (Voting) or 2.12 (Stockholder Action by Written
Consent Without a Meeting) of the Corporation's Bylaws. The affirmative
vote of at least two-thirds of the then outstanding voting securities of
the Corporation, voting together as a single class, shall be required for
the amendment, repeal or modification by the stockholders of Section 3.2
(Number of Directors) of the Corporation's Bylaws."
2. This Certificate of Amendment of the Corporation's Restated Certificate
of Incorporation has been duly approved by the Corporation's Board of Directors
in accordance with Section 228 the Delaware General Corporation Law.
3. This Certificate of Amendment of the Corporation's Restated Certificate
of Incorporation has been duly approved by the required vote of stockholders in
accordance with Section 242 of the Delaware General Corporation Law.
A-1
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Chief Executive Officer and President, this day
of December, 2001.
INTROGEN THERAPEUTICS, INC.
BY:
------------------------------------
David G. Nance
Chief Executive Officer and President
A-2
EXHIBIT B
INTROGEN THERAPEUTICS, INC.
A DELAWARE CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
PURPOSES
The purpose of the Audit Committee of the Board of Directors of Introgen
Therapeutics, Inc., a Delaware corporation (the "Company"), shall be to make
such examinations as are necessary to monitor our system of internal controls,
to provide our Board of Directors with the results of its examinations and
recommendations derived therefrom, to outline to the Board of Directors
improvements made, or to be made, in internal accounting controls, to nominate
independent 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 Board of
Director's attention.
In addition, 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, each of whom:
1. Will be an independent director;
2. 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 of whom 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 with financial oversight
responsibilities.
RESPONSIBILITIES
The responsibilities of the Audit Committee shall include:
1. Reviewing on a continuing basis the adequacy of our system of
internal controls;
2. Reviewing on a continuing basis the activities, organizational
structure and qualifications of our internal audit function;
3. Reviewing the independent auditors' proposed audit scope, approach
and independence;
4. Conducting a post-audit review of the financial statements and
audit findings, including any significant suggestions for improvements
provided to management by the independent auditors;
5. Reviewing the performance of the independent auditors, who shall be
accountable to the Board of Directors and the Audit Committee;
6. Recommending the appointment of independent auditors to the Board
of Directors;
7. Reviewing fee arrangements with the independent auditors;
8. Reviewing before release the audited financial statements and
Management's Discussion and Analysis in our annual report on Form 10-K;
B-1
9. Reviewing before release the unaudited quarterly operating results
in our quarterly earnings release;
10. Overseeing compliance with the requirements of the Securities and
Exchange Commission for disclosure of independent auditor's services and
audit committee members and activities;
11. Overseeing of compliance with our Standards of Business Conduct
and with the Foreign Corrupt Practices Act;
12. Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on our financial statements;
13. Providing oversight and review of our asset management policies,
including an annual review of our investment policies and performance for
cash and short-term investments;
14. If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
15. Reviewing related party transactions for potential conflicts of
interest;
16. Providing a report in our Proxy Statement in accordance with the
requirements of Item 306 of Regulations S-K and S-B and Item 7(e)(3) of
Schedule 14A; and
17. Performing other oversight functions as requested by the full
Board of Directors.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors may delegate to it and
will report, at least annually, to the Board of Directors regarding the
Committee's examinations and recommendations.
MEETINGS
The Audit Committee will meet at least quarterly. The Audit Committee may
establish its own schedule and shall provide such schedule to the Board of
Directors in advance.
The Audit Committee will meet separately with our president and separately
with our chief financial officer at least annually to review the financial
controls of the Company. The Audit Committee will meet with the independent
auditors of the Company at such times as it deems appropriate to review the
independent auditor's examination and management report.
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.
B-2
APPENDIX
(DETACH HERE)
PROXY
INTROGEN THERAPEUTICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, DECEMBER 5, 2001
The undersigned hereby constitutes and appoints David G. Nance and James W.
Albrecht, Jr. and each of them, as Proxies of the undersigned, with full power
to appoint his substitute, and authorizes each of them to represent and to vote
all shares of common stock of Introgen Therapeutics, Inc. (the "Company") held
of record by the undersigned as of the close of business on Tuesday, October 9,
2001, at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024, at 10:00
a.m., local time, on Wednesday, December 5, 2001, and at any adjournments or
postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE TWO NOMINEES OF THE BOARD OF DIRECTORS
LISTED IN PROPOSAL 1. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF. A STOCKHOLDER WISHING TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS NEED ONLY SIGN AND DATE
THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF A COPY OF THE ACCOMPANYING
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS, THE PROXY STATEMENT WITH RESPECT
THERETO AND THE COMPANY'S 2001 ANNUAL REPORT TO STOCKHOLDERS, AND HEREBY REVOKES
ANY PROXY OR PROXIES HERETOFORE GIVEN. THIS PROXY MAY BE REVOKED AT ANY TIME
BEFORE IT IS EXERCISED.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES).
----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------
INTROGEN THERAPEUTICS, INC.
C/O EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
----------------
VOTE BY INTERNET
----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND PROXY CARD.
2. GO TO THE WEBSITE
http://www.eproxyvote.com/ingn
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER LOCATED ON YOUR PROXY CARD
ABOVE YOUR NAME.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/ingn anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY INTERNET
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
------------------------------------------------------------------------------------------------------------------------------------
To transact such other business as may properly come
1. Election of two (2) Class I directors to serve for a before the Annual Meeting including any motion to
three (3) year term. adjourn to a later date to permit further solicitation
NOMINEES: (01) WILLIAM H. CUNNINGHAM, PH.D. and (02) ELISE T. WANG of proxies if necessary or before any adjournment
thereof.
THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED
FOR WITHHELD AS SPECIFIED ABOVE, BUT IF NO SPECIFICATION IS MADE THEY
BOTH [ ] [ ] FROM BOTH WILL BE VOTED FOR ITEMS 1, 2, 3, 4 AND 5 AND AT THE
NOMINEES NOMINEES DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING.
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE FULL
NAME AND 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. IF SHARES ARE HELD BY JOINT
--------------------------------------- TENANTS OR COMMUNITY PROPERTY, ALL JOINT OWNERS SHOULD
For both nominees except as noted above SIGN.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
FOR AGAINST ABSTAIN
MARK HERE [ ] MARK HERE [ ]
2. Ratify the amendment to Introgen's Bylaws [ ] [ ] [ ] IF YOU PLAN FOR ADDRESS
that increased the number of authorized TO ATTEND CHANGE AND
directors from five (5) to six (6) and THE MEETING NOTE BELOW
increased the number of Class II directors
from one (1) to two (2).
3. Amend Introgen's Certificate of [ ] [ ] [ ]
Incorporation to permit Introgen's Board of
Directors to amend Section 3.2 of Introgen's
Bylaws relating to the number and classes of
directors.
4. Ratify Introgen's 2000 Stock Option Plan for [ ] [ ] [ ]
purposes of Rule 162(m) of the Internal
Revenue Code of 1986, as amended.
5. Ratify the appointment of Arthur Andersen [ ] [ ] [ ]
LLP as Introgen's independent public
accountants for the six month period ending
December 31, 2001 and the fiscal year ending
December 31, 2002.
Signature: Date: Signature: Date:
------------------------------------------ ------------- ------------------------------ -----------