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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO._________)
FILED BY THE REGISTRANT /x/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ALKERMES, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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ALKERMES, INC.
CAMBRIDGE, MASSACHUSETTS 02139
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 26, 2001
TO THE SHAREHOLDERS:
The annual meeting of shareholders of Alkermes, Inc. (the "Company")
will be held at the offices of the Company, 64 Sidney Street, Cambridge,
Massachusetts 02139, on Thursday, July 26, 2001, at 10:00 a.m. for the following
purposes:
1. To elect seven members of the Board of Directors, each to
serve until the next annual meeting of shareholders and
until his successor is duly elected and qualified.
2. To approve an amendment to the 1999 Stock Option Plan to
increase to 9,900,000 the number of shares issuable upon
the exercise of options granted thereunder, an increase of
2,500,000 shares.
3. To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed June 6, 2001 as the record date for
determining the holders of Common Stock entitled to notice of and to vote at the
meeting. Consequently, only holders of Common Stock of record on the transfer
books of the Company at the close of business on June 6, 2001 will be entitled
to notice of and to vote at the meeting.
Please complete, date and sign the enclosed proxy and return it
promptly in the enclosed, self-addressed envelope requiring no postage if mailed
in the United States. If you attend the meeting, you may vote in person.
Morris Cheston, Jr.
Secretary
June 22, 2001
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ALKERMES, INC.
PROXY STATEMENT
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of
Alkermes, Inc., a Pennsylvania corporation ("Alkermes" or the "Company"), in
connection with its 2001 annual meeting of shareholders to be held at the
offices of the Company, 64 Sidney Street, Cambridge, Massachusetts 02139, at
10:00 a.m., on July 26, 2001 (the "Meeting"). Copies of this Proxy Statement and
the accompanying proxy are being mailed on or after June 27, 2001 to the holders
of record of Common Stock on June 6, 2001 (the "Record Date"). The proxy may be
revoked by a shareholder at any time prior to its use by giving notice of such
revocation to the Secretary of the Company, by appearing at the Meeting and
voting in person or by returning a later dated proxy. The expense of this
solicitation will be paid by the Company. Some of the officers and regular
employees of the Company may solicit proxies personally and by telephone. In
addition, the Company has retained the services of Georgeson Shareholder to
solicit proxies, at an estimated cost of $5,500.
Unless specific instructions are given to the contrary, the persons
named in the accompanying proxy will vote FOR the election of the nominees named
herein to the Company's Board of Directors and FOR the amendment to increase the
number of shares available under the 1999 Stock Option Plan. With respect to all
other matters, the persons named in the accompanying proxy will vote as stated
herein. See "Other Business."
Holders of Common Stock of record at the close of business on the
Record Date will be entitled to cast one vote per share so held of record on
such date on all items of business properly presented at the Meeting, except
that the holders have cumulative voting rights in the election of directors.
Therefore, each shareholder is entitled to cast as many votes in the election of
directors as shall be equal to the number of shares of Common Stock held by such
shareholder on the Record Date, multiplied by the number of directors to be
elected. A shareholder may cast all such votes for a single nominee or may
distribute votes among nominees as the shareholder sees fit.
The Company had 63,303,238 shares of Common Stock outstanding on the
Record Date. The presence at the Meeting, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter will constitute a quorum for the
purposes of consideration and action on such matter.
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting to serve one-year
terms until the 2002 annual meeting of shareholders and until their respective
successors are elected and shall qualify. The persons named in the accompanying
proxy intend to vote for the election of Floyd E. Bloom, Robert A. Breyer, John
K. Clarke, Richard F. Pops, Alexander Rich, Paul Schimmel and Michael A. Wall,
unless authority to vote for one or more of such nominees is specifically
withheld in the proxy. All of the nominees are currently directors of the
Company. The persons named in the proxy will have the right to vote cumulatively
and to distribute their votes among such nominees as they consider advisable.
The Board of Directors is informed that all the nominees are willing to serve as
directors, but if any of them should decline to serve or become unavailable for
election at the Meeting, an event which the Board of Directors does not
anticipate, the persons named in the proxy will vote for such nominee or
nominees as may be designated by the Board of Directors, unless the Board of
Directors reduces the number of directors accordingly.
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The seven nominees for director receiving the highest number of votes
cast by shareholders entitled to vote thereon will be elected to serve on the
Board of Directors. Votes that are withheld will be counted in determining the
presence of a quorum, but will have no effect on the vote.
Set forth below is information regarding the nominees, as of June 6,
2001, including their recent employment, positions with the Company, other
directorships and age.
Dr. Bloom, age 64, is a founder of Alkermes and has been a director
of Alkermes since 1987. Dr. Bloom has been active in neuropharmacology for more
than 30 years, holding positions at Yale University, the National Institute of
Mental Health and The Salk Institute. Since 1983, he has been at The Scripps
Research Institute where he is currently Chairman, Department of
Neuropharmacology. Dr. Bloom is currently serving as Chief Executive Officer of
Neurome, Inc. while on sabbatical from The Scripps Research Institute. Dr. Bloom
served as Editor-in-Chief of Science from 1995 to May 2000. He holds an A.B.
(Phi Beta Kappa) from Southern Methodist University and an M.D. (Alpha Omega
Alpha) from Washington University School of Medicine in St. Louis. He is a
member of the National Academy of Science, the Institute of Medicine and the
Royal Swedish Academy of Science.
Mr. Breyer, age 57, has been a director and President of Alkermes
since July 1994 and served as the Chief Operating Officer of Alkermes from July
1994 to February 2001. From August 1991 to December 1993, Mr. Breyer was
President and General Manager of Eli Lilly Italy, a subsidiary of Eli Lilly and
Company. From September 1987 to August 1991, he was Senior Vice President,
Marketing and Sales of IVAC Corporation, a medical device company and a
subsidiary of Eli Lilly and Company.
Mr. Clarke, age 47, has served as a director of Alkermes since 1987.
He is a general partner of DSV Partners III and DSV Management, the general
partner of DSV Partners IV. DSV Partners III and DSV Partners IV are venture
capital investment partnerships. Mr. Clarke has been associated with DSV since
1982. Mr. Clarke has been the managing general partner of Cardinal Health
Partners, a venture capital fund, since October 1997. Mr. Clarke is a director
and Chairman of Cubist Pharmaceuticals, Inc., and a director of a number of
private health care companies.
Mr. Pops, age 39, has been a director and the Chief Executive Officer
of Alkermes since February 1991. Mr. Pops currently serves on the Board of
Directors of Neurocrine Biosciences, Inc., the Biotechnology Industry
Organization (BIO), the Massachusetts Biotechnology Council (MBC) and The Brain
Tumor Society (a non-profit organization).
Dr. Rich, age 76, is a founder of Alkermes and has been a director of
Alkermes since 1987. Dr. Rich has been a professor at the Massachusetts
Institute of Technology since 1958, and is the William Thompson Sedgwick
Professor of Biophysics and Biochemistry. Dr. Rich earned both an A.B. (magna
cum laude) and an M.D. (cum laude) from Harvard University. Dr. Rich is a member
of the National Academy of Sciences and a Senior Member of the Institute of
Medicine. Dr. Rich is Co-Chairman of the Board of Directors of Repligen
Corporation, a biopharmaceutical company.
Dr. Schimmel, age 60, is a founder of Alkermes and has been a
director of Alkermes since 1987. Dr. Schimmel is the Ernest and Jean Hahn
Professor of Molecular Biology and Chemistry and a member of the Skaggs
Institute for Chemical Biology at The Scripps Research Institute. Dr. Schimmel
was the John D. and Catherine T. MacArthur Professor of Biophysics and
Biochemistry at the Massachusetts Institute of Technology, where he was employed
from 1967 through 1997. A member of the National Academy of Sciences and the
American Academy of Arts and Sciences, Dr. Schimmel graduated from Ohio Wesleyan
University, completed his doctorate at Cornell University and the Massachusetts
Institute of Technology and did post doctoral work at Stanford University. Dr.
Schimmel
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is Co-Chairman of the Board of Directors of Repligen Corporation, is a director
of Cubist Pharmaceuticals, Inc. and is a member of the Scientific Advisory Board
of Illumina, Inc.
Mr. Wall, age 72, is a founder of Alkermes and has been Chairman of
the Board of Alkermes since 1987. From April 1992 until June 1993, he was a
director and Chairman of the Executive Committee of Centocor, Inc. ("Centocor"),
a biopharmaceutical company. From November 1987 to June 1993, he was Chairman
Emeritus of Centocor. Mr. Wall is a director of Kopin Corporation, a
manufacturer of high definition imaging products.
The Board of Directors held five meetings during the last fiscal
year. Each of the Company's directors attended at least 75% of the aggregate of
all Board of Directors' meetings and meetings of all committees of which the
director was a member, held during the year. The standing committees of the
Board are the Audit Committee, the Compliance Committee, the Compensation
Committee, the Compensation Sub-Committee and the Limited Compensation
Sub-Committee. The Board does not have a standing nominating committee.
The Audit Committee, consisting of Floyd E. Bloom, John K. Clarke and
Alexander Rich, met twice during the last fiscal year. The Audit Committee is
governed by a charter, a copy of which is attached to this Proxy Statement as
Appendix A, and is responsible for oversight of the quality and integrity of the
accounting, auditing and reporting practices of the Company.
The Compliance Committee, consisting of Floyd E. Bloom, John K.
Clarke and Alexander Rich, met three times during the last fiscal year. The
Compliance Committee is responsible for overseeing the development,
implementation, administration and enforcement of Company compliance programs to
ensure that the Company is in compliance with applicable laws and regulations.
The Compensation Committee, consisting of John K. Clarke, Paul
Schimmel and Michael A. Wall, met twice during the last fiscal year and
otherwise acted by unanimous written consent. The Compensation Committee is
responsible for reviewing matters pertaining to the compensation of employees
of, and consultants to, the Company, fixing the cash compensation of officers of
the Company and administering, and making grants and awards to employees and
consultants under, the Company's stock option and restricted stock award plans.
The Compensation Sub-Committee is responsible for making grants and
awards under the Company's stock option and restricted stock award plans to
"directors and officers" as defined under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Sub-Committee, consisting of John K. Clarke and Paul Schimmel, acted by
unanimous written consent. The Limited Compensation Sub-Committee consisting of
John K. Clarke and formed in May 2001, has the authority to make individual
grants of options under certain of the Company's stock option plans to purchase
no more than 5,000 shares of Common Stock to certain of the Company's employees.
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APPROVAL OF AMENDMENT TO 1999 STOCK OPTION PLAN
The Company's 1999 Stock Option Plan (the "1999 Plan") authorizes the
grant of options to officers, employees and directors of, and consultants to,
the Company or any of its subsidiaries to purchase up to 7,400,000 shares of
Common Stock. As of June 6, 2001, options to purchase 1,547,300 shares remained
available for grant under the 1999 Plan. In May 2001, the Board of Directors
amended the 1999 Plan, subject to shareholder approval, to increase the
aggregate number of shares authorized for issuance upon exercise of options
granted under the 1999 Plan to 9,900,000. This amendment was designed to enhance
the flexibility of the Compensation Committee and the Compensation
Sub-Committees of the Board of Directors in granting stock options to the
Company's officers, employees, directors and consultants and to ensure that the
Company can continue to grant stock options to such persons at levels determined
to be appropriate by the Compensation Committee and the Compensation
Sub-Committees based on comparable company and other market data. The resolution
to be presented to the shareholders approving the proposed amendment to the 1999
Plan is attached as Appendix B to this Proxy Statement and is incorporated
herein by reference.
The affirmative vote of a majority of the votes cast by all holders
of Common Stock entitled to vote will be required to approve the proposed
amendment to the 1999 Plan. Abstentions will be counted as present for purposes
of determining the presence of a quorum for purposes of this proposal, but will
not be counted as votes cast. Broker non-votes (shares held by a broker or
nominee as to which the broker or nominee does not have the authority to vote on
a particular matter) will not be counted as present for purposes of determining
the presence of a quorum for purposes of this proposal and will not be voted.
Accordingly, neither abstentions nor broker non-votes will have any effect on
the outcome of the vote on this proposal.
The Board of Directors recommends that you vote FOR the approval of
the amendment to the 1999 Plan.
PRINCIPAL FEATURES OF THE 1999 PLAN
The purpose of the 1999 Plan is to enable the Company to offer to
certain officers, employees and directors of, and consultants to, the Company or
any of its subsidiaries options to acquire equity interests in the Company,
thereby helping to attract, retain and reward such persons and strengthen the
mutuality of interests between such persons and the Company's shareholders.
Administration
The 1999 Plan is administered by the Compensation Committee by
delegation from the Board of Directors. The Compensation Committee has further
delegated administration of the 1999 Plan with respect to options granted to
directors and executive officers of the Company ("Reporting Persons") to the
Compensation Sub-Committee. Additionally, the Compensation Committee has
delegated to the Limited Compensation Sub-Committee the authority to make
individual grants of options to purchase no more than 5,000 shares of Common
Stock to employees who are non-Reporting Persons. The total number of options to
be granted in any year under the 1999 Plan to participants, the selection and
number of participants to receive options, the type and number of options
granted to each participant and the other terms and provisions of such options
are wholly within the discretion of the Compensation Committee and the
Compensation Sub-Committees, subject to the limitations set forth in the 1999
Plan. Therefore, the benefits and amounts that will be received by participants
under the 1999 Plan are not currently determinable.
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Eligible Participants
The Company's, and any of its subsidiaries', officers, employees,
directors and consultants are eligible to be granted options under the 1999
Plan. The Company estimates that there are currently 420 persons who are
eligible to receive options under the 1999 Plan.
Number of Shares Subject to the 1999 Plan
Up to 7,400,000 shares of Common Stock may be issued under the 1999
Plan. The proposed amendment, which has been adopted by the Board of Directors,
increases the number of shares which may be issued upon exercise of options
which may be granted under the 1999 Plan to 9,900,000. Such options may either
be "incentive stock options" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or may be non-qualified stock options.
The 1999 Plan will terminate on June 2, 2009 unless sooner terminated by the
Board of Directors.
Stock Options
Under the terms of the 1999 Plan, the option exercise price may not
be less than 100% (or, with respect to incentive stock options, 110% if the
optionee owns more than 10% of the total combined voting power of all classes of
stock of the Company) of the fair market value of the underlying stock at the
time the option is granted. Options granted under the 1999 Plan are generally
nontransferable, unless otherwise determined by the Compensation Committee, and
expire upon the earlier of an expiration date fixed by the Compensation
Committee and set forth in each individual option award certificate, ten years
(or with respect to incentive stock options, five years, if the optionee owns
more than 10% of the total combined voting power of all classes of stock of the
Company) from the date of grant, and either three months after the date the
optionee ceases to be an officer, employee or director of, or consultant to, the
Company or its subsidiaries or one year after the optionee dies or becomes
disabled. Options which have expired or which have been canceled unexercised
will be available for future grant under the 1999 Plan.
Under the 1999 Plan, the price payable upon exercise of options may
be paid in cash, or in shares of stock of the Company duly owned by the
participant or by reduction in the number of shares of Common Stock issuable
upon such exercise, based, in each case, on the fair market value of the Common
Stock on the date of exercise.
OPTIONS OUTSTANDING, EXERCISABLE AND AVAILABLE FOR FUTURE GRANT
As of June 6, 2001, options to purchase 5,806,801 shares were
outstanding under the 1999 Plan, of which 679,780 were exercisable. The exercise
prices for the outstanding options ranged from $16.69 to $48.03 per share. On
June 6, 2001, the average of the high and low sales prices of a share of Common
Stock as reported on the Nasdaq National Market was $35.11. As of June 6, 2001,
options to purchase 1,547,300 shares (plus any options that expire unexercised
or are cancelled in the future) were available for future grant, exclusive of
the additional shares covered by the proposed amendment.
FEDERAL INCOME TAX CONSEQUENCES
The Federal income tax discussion set forth below is intended for
general information only and does not address the rates of taxation applicable
to specific categories of taxpayers or classes of income. State and local income
tax consequences are not discussed and may vary from locality to locality.
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Under present Treasury regulations, a participant who is granted a
non-qualified option will not realize taxable income at the time the option is
granted. In general, a participant will be subject to tax for the year of
exercise on an amount of ordinary income equal to the excess of the fair market
value of the shares on the date of exercise over the option exercise price, and
the Company will receive a corresponding deduction. In the case of a participant
who is an employee, withholding and employment taxes will be imposed on the
amount of ordinary income recognized. The participant's basis in the shares so
acquired will be equal to the option exercise price plus the amount of ordinary
income upon which he is taxed. Upon subsequent disposition of the shares, the
participant will realize capital gain or loss, long-term or short-term,
depending upon the length of time the shares are held after the option is
exercised.
A participant is not taxed at the time an incentive option is
granted. The tax consequences upon exercise and later disposition depend upon
whether the participant was an employee of the Company or one of its
subsidiaries at all times from the date of grant until three months preceding
exercise (one year in the case of death or permanent and total disability) and
on whether the participant holds the shares for more than one year after
exercising the option and two years after the date of grant of the option.
If the participant satisfies both the employment rule and the holding
rule, for regular tax purposes the participant will not realize income upon
exercise of an incentive option and the Company will not be allowed an income
tax deduction at any time. The difference between the option exercise price and
the amount realized upon disposition of the shares by the participant will
generally constitute a long-term capital gain or a long-term capital loss, as
the case may be.
If the participant meets the employment rule but disposes of the
shares before satisfying the holding rule (a "disqualifying disposition"), the
participant generally recognizes as ordinary income, in the year of the
disqualifying disposition, the excess of the fair market value of the shares at
the date of exercise over the option price. In the case of a sale, any excess of
the sales price over the fair market value at the date of exercise will be
recognized by the participant as capital gain (long-term or short-term depending
on the length of time the stock was held after the option was exercised). If,
however, the sales price is less than the fair market value at the date of
exercise, then the ordinary income recognized by the participant generally is
limited to the excess of the sales price over the option price. In the case of
any disqualifying disposition, the Company's tax deduction is limited to the
amount of ordinary income recognized by the participant.
Under guidance issued by the Internal Revenue Service, incentive
options exercised before January 1, 2003 will not be subject to FICA or FUTA tax
withholding upon exercise, and no income tax withholding will be imposed upon
any disposition of stock acquired upon such exercise. The Internal Revenue
Service, however, intends to issue further guidance on the application of FICA,
FUTA, and income tax withholding relating to incentive options. The Internal
Revenue Service anticipates that this guidance will require FICA and FUTA tax
withholding upon the exercise of incentive options. However, the Internal
Revenue Service has indicated that its future guidance may continue to exempt
amounts realized upon the disposition of stock acquired upon exercise of
incentive options from income tax withholding.
Different consequences will apply for a participant subject to the
alternative minimum tax.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the Company's audited
financial statements with both the Company's management and the Company's
independent auditors, Deloitte & Touche LLP. The Company's management has
advised the Audit Committee that the audited financial statements were prepared
in accordance with generally accepted accounting principles.
The Audit Committee has discussed with Deloitte & Touche LLP certain
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees. The Audit Committee has also discussed with
Deloitte & Touche LLP their independence from the Company and its management.
The Audit Committee has received the written disclosures and letter from
Deloitte & Touche LLP required by Independence Standards Board Standard No. 1,
Independence with Audit Committees, disclosing all relationships between
Deloitte & Touche LLP and its related entities and the Company. In addition to
the information provided by Deloitte & Touche LLP, the Audit Committee
considered the level of non-audit services provided by Deloitte & Touche LLP in
determining that they were independent.
Based on the review and discussions described above, the Audit
Committee has recommended to the Company's Board of Directors that the Company's
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended March 31, 2001 for filing with the Securities and
Exchange Commission.
Floyd E. Bloom
John K. Clarke
Alexander Rich
AUDIT FEES
For the year ended March 31, 2001, the Company paid Deloitte & Touche
LLP, its independent auditors, aggregate fees as follows:
Audit Fees $166,000
Financial Information Systems
Design and Implementation Fees $0
All Other Fees $97,000
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation paid by
the Company during its last three fiscal years to its Chief Executive Officer
and to each of the four other most highly compensated executive officers of the
Company whose total annual salary and bonus exceeded $100,000 during the fiscal
year ended March 31, 2001 (collectively, the "Named Executive Officers").
Long-Term
Annual Compensation Compensation
------------------------------------------ ------------
Securities
Name and Principal Fiscal Underlying All Other
Position Year Salary($) Bonus($) Options(1)(#) Compensation($)
------------------ ------ --------- -------- ------------- ---------------
Richard F. Pops 2001 406,462 175,000 500,000 275,100 (2)(3)
Chief Executive Officer 2000 395,192 175,000 500,000 274,800 (2)(3)
1999 354,904 150,000 200,000 5,374 (2)
Robert A. Breyer 2001 294,685 100,000 200,000 184,800 (2)(3)(4)
President 2000 285,000 100,000 200,000 184,558 (2)(3)(4)
1999 257,942 75,000 100,000 6,900 (2)(4)
James L. Wright 2001 211,335 70,000 70,500 113,100 (2)(3)
Senior Vice President, Research 2000 202,102 40,000 80,000 112,800 (2)(3)
and Development 1999 182,119 30,000 60,000 3,594 (2)
James M. Frates 2001 259,119 60,000 100,000 5,100 (2)
Vice President, Chief Financial 2000 246,029 40,000 100,000 4,800 (2)
Officer and Treasurer 1999 161,420 15,000 250,000 (5) 3,069 (2)
Michael J. Landine 2001 232,654 35,000 70,000 5,100 (2)
Vice President, Corporate 2000 219,861 30,000 80,000 4,712 (2)
Development 1999 200,000 0 0 5,670 (2)
--------------------
(1) Alkermes granted no LSARs.
(2) Includes 401(k) match.
(3) Includes compensation as a result of the Company's forgiveness of
one-half of an "incentive loan" made on October 16, 1998, pursuant to
the Company's Incentive Loan Program.
(4) Includes a payment of $1,500 to Mr. Breyer for opting out of the
Company's health insurance plan.
(5) Includes an option to purchase 200,000 shares of Common Stock granted
upon joining the Company in June 1998.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock options
granted during the fiscal year ended March 31, 2001 to each of the Named
Executive Officers.
Individual Grants
------------------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities Percent of Total Annual Rates of
Underlying Options Granted Exercise or Stock Price
Options to Employees in Base Price Expiration Appreciation for
Name Granted (#) Fiscal Year ($/Share) Date Option Term
---- ----------- ---------------- ----------- ---------- -----------------------------
5% ($) 10% ($)
------ -------
Richard F. Pops 500,000 14.86 29.31 11/20/10 9,216,451 23,356,296
Robert A. Breyer 200,000 5.94 29.31 11/20/10 3,686,580 9,342,518
James L. Wright 70,000 2.08 29.31 11/20/10 1,290,303 3,269,881
500 * 28.06 12/20/10 8,823 22,360
James M. Frates 100,000 2.97 29.31 11/20/10 1,843,290 4,671,259
Michael J. Landine 70,000 2.08 29.31 11/20/10 1,290,303 3,269,881
--------------------
* Represents less than one percent (1%)
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth the number of shares acquired upon
exercise of options exercised by the Named Executive Officers during the fiscal
year ended March 31, 2001, the value realized upon exercise of such options, the
number of shares issuable on exercise of options held by such persons at the end
of the last fiscal year and the value of such unexercised options as of such
date.
Shares Number of Securities Underlying Value of Unexercised
Acquired on Value Unexercised Options/SARs at In-the-Money Options/SARs
Name Exercise (#) Realized($) FY-End (#) at FY-End($)(1)
---- ------------ ----------- ------------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Richard F. Pops 362,334 13,076,528 492,666 1,015,000 6,539,862 4,127,463
Robert A. Breyer 233,048 7,722,519 231,952 420,000 3,250,810 1,866,950
James L. Wright 48,000 1,407,662 94,734 170,500 1,540,267 934,750
James M. Frates 48,417 1,544,805 93,583 300,000 1,048,254 2,082,750
Michael J. Landine 145,000 4,506,497 103,000 150,000 1,284,797 594,800
--------------------
(1) Value is measured by the difference between the closing price of
Common Stock on the Nasdaq National Market on March 30, 2001,
$21.9375, and the exercise price of the options.
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EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL AGREEMENTS
Under agreements between Messrs. Pops, Breyer and Frates and the
Company in the event their employment with the Company is terminated for any
reason other than as a result of their taking certain actions against, or that
have a significant deleterious effect on, the Company, Mr. Pops shall be
entitled to receive a payment equal to two-thirds of his then-current annual
base salary and Messrs. Breyer and Frates shall each be entitled to receive
payments at the monthly rate of his then current annual base salary for up to
nine months or until he finds other employment, whichever occurs first.
Messrs. Pops and Landine have been granted LSARs in connection with a
portion of the stock options previously granted to them. Each LSAR provides that
after the occurrence of one of several triggering events, including a
reorganization or merger of the Company, a sale of the assets of the Company or
the acquisition by a person or group of more than 51% of the Common Stock, the
optionee will receive an amount in cash equal to the amount by which the fair
market value per share of Common Stock issuable upon exercise of the option on
the date such a triggering event occurs exceeds the exercise price per share of
the option to which the LSAR relates. A triggering event shall be deemed to have
occurred only when the fair market value of the shares subject to the underlying
option exceeds the exercise price of such option. When a triggering event
occurs, the related option will cease to be exercisable.
The Company has entered into Change-in-Control Agreements with each
of Messrs. Pops, Breyer, Frates and Landine and Dr. Wright. Under the terms of
these agreements, each of the aforementioned executives are entitled to receive
certain compensation and benefits in the event of a "change-in-control" of the
Company, which, in summary, is defined as: the acquisition by a person, entity
or group (with certain exceptions) of beneficial ownership of 50% or more of the
Company's common stock; a change in a majority of the incumbent directors on the
Board of Directors; a reorganization, merger or consolidation of the Company; or
a liquidation, dissolution or sale of all or substantially all of the assets of
the Company.
In the event of a change-in-control, each of Messrs. Pops, Breyer,
Frates and Landine and Dr. Wright will be entitled to continue their employment
with the Company for a period of two years following the change-in-control at a
monthly base salary at least equal to the highest monthly base salary paid to
him by the Company in the twelve-month period immediately preceeding the
change-in-control, an annual cash bonus at least equal to the annual bonus paid
to him for the last calendar year prior to the change-in-control and continued
participation in the Company's welfare and benefit plans.
In the event the Company terminates any of these executives without
cause during such two-year period or if any of these executives terminates his
employment for "good reason" (e.g., material diminution in the executive's
responsibilities, assignment to the executive of responsibilities not consistent
with his position or transfer of the executive to a location more than 40 miles
from his then current place of employment) each is entitled to receive a
prorated bonus (based upon the prior year's annual bonus) for the year in which
the date of termination occurs. Additionally, each of Messrs. Breyer, Frates and
Landine and Dr. Wright will receive a lump sum payment equal to the executive's
base salary plus his annual bonus for the last calendar year before the date of
termination and continued participation in the Company's welfare and benefit
plans (or reimbursement therefor) for one year following the date of
termination; Mr. Pops will receive a lump sum payment equal to two times his
base salary plus his annual bonus for the last calendar year before the date of
termination and continued participation in the Company's welfare and benefit
plans (or reimbursement therefor) for two years following the date of
termination. Each executive is also entitled to a "gross-up payment" equal to
the excise tax imposed upon the severance payments under the Agreement in the
event any payment or benefit to the Executive,
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whether pursuant to the Agreement or otherwise, is considered an "excess
parachute payment" and subject to an excise tax under the Code.
COMPENSATION OF DIRECTORS
Each non-employee director automatically receives options to purchase
20,000 shares of Common Stock under the Company's Stock Option Plan for
Non-Employee Directors (the "Director Plan") each year on the date of the
Company's annual meeting of shareholders. Such options are exercisable at the
fair market value of the Common Stock on the date such options are granted and
vest in full six (6) months following their grant. Except for such stock
options, for a one-time grant to one non-employee director in 1996 of options to
purchase 20,000 shares of Common Stock under the Director Plan and for a
one-time grant to each non-employee director in December 1999 of options to
purchase 15,000 shares of Common Stock under the Company's 1999 Omnibus Stock
Option Plan, directors do not receive compensation for services on the Board of
Directors or any committee thereof. All of the directors, however, are
reimbursed for their expenses for each Board and committee meeting attended. In
addition, Floyd E. Bloom, Alexander Rich, Paul Schimmel and Michael A. Wall
receive consulting fees from Alkermes. During the fiscal year ended March 31,
2001, Alkermes paid consulting fees to Drs. Bloom, Rich and Schimmel and Mr.
Wall aggregating $30,000, $30,000, $48,000 and $80,000, respectively. Consulting
fees are currently being paid to each of Drs. Bloom and Rich at the rate of
$2,500 per month, to Dr. Schimmel at the rate of $4,000 per month and to Mr.
Wall at the rate of $6,667 per month. Alkermes believes that the terms of such
consulting arrangements are no less favorable to Alkermes than those they could
have received from an independent third party.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, the Compensation Committee consisted of
John K. Clarke, Paul Schimmel and Michael A. Wall. The Compensation
Sub-Committee consists of John K. Clarke and Paul Schimmel. Mr. Wall and Dr.
Schimmel are consultants to Alkermes. See "Compensation of Directors."
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is responsible for
reviewing and establishing the cash compensation of, and the Compensation
Sub-Committee (the "Sub-Committee") is responsible for reviewing and
establishing compensation in the form of stock options and restricted stock
awards to, the Company's executive officers.
EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation program is designed to attract,
retain and motivate experienced and well-qualified executive officers who will
promote the Company's research and product development and commercialization
efforts. In establishing executive compensation levels, the Committee is guided
by a number of considerations. Because the Company is still in the process of
developing its portfolio of product candidates, and because of the volatile
nature of biotechnology stocks, the Committee believes that traditional
performance criteria, such as revenue growth, net income, profit margins and
share price are inappropriate for evaluating and rewarding the efforts of the
Company's executive officers. Rather, the Committee bases executive compensation
on the achievement of certain product development, corporate partnering,
financial, strategic planning and other goals of the Company and the executive
officers. In establishing compensation levels, the Committee also evaluates each
officer's individual performance using certain subjective criteria, including an
evaluation of each officer's initiative, contribution to overall corporate
performance and managerial ability. No specific numerical weight is given to any
of the above-noted subjective or objective performance criteria. In making its
evaluations, the Committee consults on an informal basis with other members of
the Board of Directors and, with respect to officers other than the Chief
Executive Officer, reviews the recommendations of the Chief Executive Officer.
Another consideration which affects the Committee's decisions
regarding executive compensation is the high demand for well-qualified personnel
in the biotechnology industry. Given such demand, the Committee strives to
maintain compensation levels which are competitive with the compensation of
other executives in the industry. To that end, the Committee reviews data
obtained from a generally available outside survey of compensation and benefits
in the biotechnology industry, an internally prepared survey based on peer
biotechnology companies' proxy statements and personal knowledge regarding
executive compensation at comparable companies.
A third factor which affects compensation levels is the Committee's
belief that stock ownership by management is beneficial in aligning management's
and shareholders' interests in the enhancement of shareholder value. In
accordance with such belief, the Sub-Committee seeks to provide a significant
portion of executive compensation in the form of stock options. The
Sub-Committee has not, however, targeted a range or specific number of options
for each executive position. Rather, it makes its decisions based on the
above-mentioned surveys and the general experience of the Sub-Committee members.
COMPENSATION MIX
The Company's executive compensation packages generally include three
components: base salary; a discretionary annual cash bonus; and stock options.
The Committee generally reviews and establishes the base salary and bonus of
each executive officer at of the end of each calendar year.
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Base Salary
The Committee seeks to establish base salaries which are competitive
for each position and level of responsibility with those of executive officers
at various other biotechnology companies of comparable size and stage of
development.
Discretionary Cash Bonus
The Committee believes that discretionary cash bonuses are useful on
a case by case basis to motivate and reward executive officers. Bonuses for
executive officers are not guaranteed, but are awarded from time to time,
generally annually, only in the discretion of the Committee; cash bonuses are
used to bring annual cash compensation into a competitive range with comparable
positions at comparable companies. Criteria for bonuses for executive officers
range from success in attracting capital to success in conducting clinical
trials, entering into new and expanded collaborations and establishing the
Company's manufacturing capabilities.
Stock Options
Grants of stock options under the Company's stock option plans are
designed to promote the identity of the long-term interests between the
Company's executives and its shareholders and to assist in the retention of
executives. Since stock options granted by the Company generally become
exercisable over a four-year period, their ultimate value is dependent upon the
long-term appreciation of the Company's stock price and the executive's
continued employment with the Company. In addition, grants of stock options may
result in an increase in executive officers' equity interests in the Company,
thereby providing such persons with the opportunity to share in the future value
they are responsible for creating.
When granting stock options, the Sub-Committee considers the relative
performance and contributions of each officer compared to that of other officers
within the Company with similar levels of responsibility. The number of options
granted to each executive officer is generally determined by the Sub-Committee
on the basis of data obtained from a generally available outside survey of stock
option grants in the biotechnology industry, an internally prepared survey of
peer biotechnology companies' proxy statements and personal knowledge of the
Sub-Committee members regarding executive stock option grants at comparable
companies.
Section 162(m) of the Code limits the deductibility of annual
compensation over $1 million to the Chief Executive Officer and the other Named
Executive Officers unless certain conditions are met. The Company's Chief
Executive Officer and the other Named Executive Officers have not received
annual compensation over $1 million, and the Company has not yet determined what
measures, if any, it should take to comply with Section 162(m).
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing Mr. Pops' compensation package, the Committee seeks
to maintain a level of total current compensation that is competitive with that
of chief executives of certain other companies in the biotechnology industry at
comparable stages of development. In addition, in order to align Mr. Pops'
interests with the long-term interests of the Company's shareholders, the
Committee and the Sub-Committee attempt to make a significant portion of the
value of his total compensation dependent on the long-term appreciation of the
Company's stock price.
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At the Company's current stage of development, the Committee believes
that Mr. Pops' performance as Chief Executive Officer of the Company must be
evaluated almost exclusively using subjective criteria, including the
Committee's evaluation of the Company's progress in attracting and retaining
senior management, identifying new product candidates, identifying and securing
corporate collaborators for the development of product candidates, identifying
and acquiring new product development and technology opportunities, identifying
and acquiring companies with interesting technology and product candidates,
advancing the Company's existing product candidates through the complex drug
development and regulatory approval process and raising the necessary capital to
fund its research and development efforts and manufacturing capabilities.
In evaluating and establishing Mr. Pops' current compensation
package, the Committee considered the following accomplishments of the Company
during calendar 2000:
In January 2000, Serono S.A. and the Company signed an agreement to
develop a ProLease sustained-release formulation of recombinant human follicle
stimulating hormone (r-hFSH) for the treatment of infertility.
In February 2000, Eli Lilly and Company and the Company signed an
agreement to develop a pulmonary formulation of human growth hormone based on
the Company's AIR pulmonary delivery system.
In May 2000, Amylin Pharmaceuticals, Inc. and the Company signed an
agreement for the development, manufacture and commercialization of an
injectable long-acting Medisorb formulation of AC2993 (synthetic Exendin-4),
Amylin's second diabetes drug candidate. Additionally, the Company announced a
two-for-one stock split and an increase in the authorized shares of Common
Stock.
In June 2000, the Company's first commercial product, Nutropin Depot,
was shipped to the pediatric endocrine community. Nutropin Depot is the first
long-acting dosage form of recombinant human growth hormone (rhGH) for the
treatment of growth hormone deficiency in children. In addition, the Company and
GlaxoSmithKline signed an agreement to develop multiple product candidates in
four therapeutic areas for respiratory disease based on the Company's AIR
pulmonary delivery system.
In November 2000, the Company dosed the first patients in a Phase II
trial of a long-acting albuterol formulation based on the Company's AIR
pulmonary delivery system. The Company also completed and analyzed results from
the first clinical trial of inhaled insulin based on its AIR pulmonary delivery
system.
In December 2000, the Company presented positive results from the
first clinical trial of Medisorb Naltrexone at the Annual Meeting of the
American College of Neuropsychopharmacology (ACNP). Additionally, the Company
and Serono S.A. completed enrollment and dosing in a Phase I trial of an
injectable sustained-release formulation of recombinant human follicle
stimulating hormone (r-hFSH).
During the year, the Company also initiated a number of feasibility
programs with partners and on internal programs that were not disclosed
publicly.
Given the significant role played by Mr. Pops in each of the
above-noted accomplishments, the Committee increased Mr. Pops' annual base
salary effective January 1, 2001 from $400,000 to $428,000 and granted Mr. Pops
a cash bonus of $175,000. As additional recognition of Mr. Pops' efforts in
calendar 2000, and in furtherance of the Committee's belief that a significant
portion of Mr. Pops' total compensation should be dependent on the long-term
appreciation of the Company's stock
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price, in November 2000, the Sub-Committee granted Mr. Pops options to purchase
500,000 shares of Common Stock. The Committee and Sub-Committee believe that
each of these actions was particularly appropriate given Mr. Pops' performance
during calendar 2000 and in order to maintain his compensation at a competitive
level compared to that of the chief executive officers of other similarly sized
and positioned biotechnology companies.
Compensation Committee
John K. Clarke Paul Schimmel
Michael A. Wall
Compensation Sub-Committee
John K. Clarke Paul Schimmel
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PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock for the last five fiscal
years, with the cumulative total return on the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Pharmaceutical Index, which includes biotechnology companies. The
comparison assumes $100 was invested on March 31, 1996, in the Common Stock and
in each of the foregoing indices and further assumes reinvestment of any
dividends. The Company did not declare or pay any dividends on its Common Stock
during the comparison period.
Nasdaq Stock Market Nasdaq Pharmaceutical
Alkermes, Inc. (U.S.) Index Index
-------------- ------------------- ---------------------
3/31/96 100.00 100.00 100.00
3/31/97 153.41 111.15 91.26
3/31/98 272.58 168.47 108.82
3/31/99 298.60 227.60 137.91
3/31/00 1013.59 423.35 290.77
3/31/01 480.78 169.48 218.85
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MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
ownership of Common Stock as of June 6, 2001 by: (i) each person who is known by
the Company to be the owner of 5% or more of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) each of the Named Executive
Officers, and (iv) all the directors and executive officers of the Company as a
group.
Number of Shares Percentage
Beneficially Owned Beneficially Owned(1)
------------------ ---------------------
FMR Corporation (2).................................................6,543,094 10.34%
82 Devonshire Street
Boston, MA 02109
Citigroup Inc. (3)..................................................6,423,244 10.15
425 Park Avenue
New York, NY 10043
T. Rowe Price Associates, Inc. (4)..................................3,323,300 5.25
100 E. Pratt Street
Baltimore, MD 21202
Floyd E. Bloom (5)....................................................276,500 *
Robert A. Breyer (6)..................................................302,600 *
John K. Clarke (7)....................................................103,936 *
Richard F. Pops (8)...................................................702,182 1.10
Alexander Rich (9)....................................................403,400 *
Paul Schimmel (9).....................................................472,600 *
Michael A. Wall (9)...................................................833,700 1.32
James L. Wright (10)...................................................89,734 *
James M. Frates (11)..................................................146,000 *
Michael J. Landine (12)...............................................214,800 *
All directors and executive officers as a group 3,718,252 5.74
(12 persons) (13)
--------------------
* Represents less than one percent (1%) of the outstanding shares of
Common Stock.
(1) As of June 6, 2001, there were 63,303,238 shares of Common Stock
outstanding.
(2) FMR Corporation holds these shares in its capacity as investment
manager or advisor for various investment companies or institutional
accounts. The holdings are as of December 31, 2000.
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(3) Represents shares over which Salomon Smith Barney Inc., Salomon
Brothers Holding Company Inc., Salomon Smith Barney Holdings Inc.
and/or Citigroup Inc. have shared voting and dispositive power. The
holdings are as of December 31, 2000.
(4) These securities are owned by various individual and institutional
investors for which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of
the securities laws, Price Associates is deemed to be a beneficial
owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such
securities. The holdings are as of December 31, 2000.
(5) Includes 221,500 shares of Common Stock held by The Corey Bloom
Family Trust, of which Dr. Bloom is a Trustee. Also includes, 55,000
shares of Common Stock subject to options which are exercisable.
(6) Includes 215,952 shares of Common Stock subject to options which are
exercisable or will become exercisable within 60 days of June 6,
2001.
(7) Includes 75,000 shares of Common Stock subject to options which are
exercisable.
(8) Includes 495,166 shares of Common Stock subject to options which are
exercisable or which will become exercisable within 60 days of June
6, 2001.
(9) Includes 55,000 shares of Common Stock subject to options which are
exercisable.
(10) Consists of 89,734 shares of Common Stock subject to options which
are exercisable or which will become exercisable within 60 days of
June 6, 2001.
(11) Includes 131,583 shares of Common Stock subject to options which will
become exercisable within 60 days of June 6, 2001.
(12) Includes 111,000 shares of Common Stock subject to options which are
exercisable or which will become exercisable within 60 days of June
6, 2001.
(13) Includes 1,472,435 shares of Common Stock subject to options which
are exercisable or which will become exercisable within 60 days of
June 6, 2001. Also includes 221,500 shares of Common Stock held in
trust.
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CERTAIN TRANSACTIONS
STOCK OPTIONS
During the last fiscal year, executive officers and non-employee
directors were granted options to purchase shares of Common Stock pursuant to
the 1999 Plan and the Stock Option Plan for Non-Employee Directors.
EXECUTIVE OFFICER LOANS
The Company made two loans to David A. Broecker in connection with
hiring him as the Company's new Chief Operating Officer. The first loan, made in
February 2001 in the principal amount of $300,000, is to be paid in full on or
before May 31, 2002 or upon termination of Mr. Broecker's employment. The first
loan does not bear interest. The second loan, made in June 2001 in the principal
amount of $300,000, bears interest at the prime rate. Twenty percent of the
principal of and accrued interest on the second loan will be forgiven annually
on his employment anniversary, or in full upon a change-in-control, so long as
he continues to be employed by the Company. Any balance of the second loan
remaining upon the termination of Mr. Broecker's employment must be paid in
full.
INCENTIVE LOAN PROGRAM
In fiscal 1999, the Compensation Committee approved an incentive loan
program pursuant to which a loan as a percentage of base salary and bonus was
offered to certain officers and key employees approved by the Compensation
Committee, who had been in the employ of the Company for at least eighteen
months. The purpose of the program was to provide at a critical time in the
Company's development a longer-term incentive for key employees to remain in the
Company's employ. If the individual remained in the employ of the Company, half
of the loan was forgiven after one year, with the balance forgiven after two
years. The maximum aggregate dollar amount of loans provided pursuant to the
program was fixed at $2,200,000 with the amount of each individual loan
determined by the Committee. In October 1998, loans were made to Messrs. Pops
and Breyer and Dr. Wright in the principal amounts of $500,000, $330,000 and
$200,000, respectively, and to six other officers and key employees aggregating
$990,000. The program was concluded during fiscal year 2001.
OTHER BUSINESS
The Board of Directors does not intend to present to the Meeting any
business other than the election of directors and the adoption of the amendment
to the 1999 Plan. If any other matter is presented to the Meeting which under
applicable proxy regulations need not be included in this Proxy Statement or
which the Board of Directors did not know a reasonable time before this
solicitation would be presented, the persons named in the accompanying proxy
will have discretionary authority to vote proxies with respect to such matter in
accordance with their best judgment.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent auditors, audited the consolidated
financial statements of the Company for the fiscal year ended March 31, 2001.
Representatives of Deloitte & Touche LLP are expected to attend the Meeting,
will have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions. The Board of
Directors has selected Deloitte & Touche LLP as the independent auditors to
audit the Company's consolidated financial statements for the fiscal year ending
March 31, 2002.
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DEADLINE FOR SHAREHOLDER PROPOSALS
The Company must receive any proposal which a shareholder wishes to
submit at the 2002 annual meeting of shareholders before February 28, 2002 if
the proposal is to be considered by the Board of Directors for inclusion in the
proxy material for that meeting. If any shareholder wishes to present a proposal
to the 2002 annual meeting of shareholders that is not included in the Company's
proxy statement for that meeting and fails to submit such proposal to the
Secretary of the Company on or before May 14, 2002, then the persons named in
the proxy will be allowed to use their discretionary voting authority when the
proposal is raised at the annual meeting, without any discussion of the matter
in the Company's proxy statement. In addition, in accordance with the Company's
bylaws, any nominee for election as a director of the Company at the 2002 annual
meeting of shareholders must be submitted in writing to the Company on or before
March 25, 2002, which is ninety (90) days prior to the date of this year's proxy
statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who beneficially own more than ten percent
of the Common Stock, to file with the Securities and Exchange Commission ("SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock. Executive officers, directors and greater than ten percent shareholders
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
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, for the fiscal year ended
March 31, 2001, all Section 16(a) filing requirements applicable to its
executive officers, directors, officers and greater than ten percent
shareholders were complied with.
By Order of the Board of Directors
Morris Cheston, Jr.
Secretary
June 22, 2001
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APPENDIX A
ALKERMES, INC.
AUDIT COMMITTEE CHARTER
ROLE
The Audit Committee of the Board of Directors shall be responsible to the Board
of Directors for oversight of the quality and integrity of the accounting,
auditing, and reporting practices of the Company and shall perform such other
duties as may be directed by the Board. The Committee shall maintain free and
open communication with the Company's independent auditors and management of the
Company and shall meet in executive session at least annually. In discharging
this oversight role, the Committee is empowered to investigate any matter
brought to its attention, with full power to retain outside counsel or other
experts for this purpose.
MEMBERSHIP AND INDEPENDENCE
The membership of the Committee shall consist of at least three directors who
are generally knowledgeable in financial and auditing matters, including at
least one member with accounting or related financial management expertise. Each
member shall be free of any relationship that, in the opinion of the Board,
would interfere with his or her individual exercise of independent judgment, and
shall meet the director independence requirements for serving on audit
committees as set forth in the NASD's listing standards applicable to companies
quoted on The Nasdaq National Market. The Chairperson of the Audit Committee,
who shall be appointed by the Board of Directors, shall be responsible for
leadership of the Committee, including preparing agendas for and presiding over
meetings, making Committee assignments and reporting to the Board of Directors.
The chairperson will also maintain regular liaison with the Chief Executive
Officer, Chief Financial Officer and Director of Finance of the Company and the
lead independent audit partner.
RESPONSIBILITIES
Internal Control
- Discuss with management and the independent auditors the quality and
adequacy of the Company's computer systems (and their security),
internal accounting controls and personnel.
- Review with the independent auditors and management any management
letter issued by the independent auditors and management's responses
thereto.
Financial Reporting
- Keep informed of important new pronouncements from the accounting
profession and other regulatory bodies, as well as other significant
accounting and reporting issues, that may have an impact on the
Company's accounting policies and/or financial statements.
- Review the audited financial statements and management's discussion
and analysis of financial condition and results of operations
("MD&A") and discuss them with management and the independent
auditors. These discussions shall include consideration of the
quality of the Company's accounting policies and principles as
applied in its financial reporting, including review of estimates,
reserves and accruals, review of judgment areas, review of audit
adjustments, whether or not recorded, and such other
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inquiries as may be appropriate. Based on the review, the Committee
shall make a recommendation to the Board as to the inclusion of the
Company's audited financial statements in the Company's annual report
on Form 10-K.
External Audit
- Review the performance of the independent auditors and recommend to
the Board the independent auditors to be engaged to audit the
financial statements of the Company and, if appropriate, the
termination of that relationship. In doing so, the Committee will
request from the auditors a written affirmation that the auditors are
independent, discuss with the auditors any relationships that may
impact the auditors' independence (including non-audit services), and
recommend to the Board any actions necessary to oversee the auditors'
independence.
- Oversee the independent auditors relationship by discussing with the
independent auditors the nature, scope and rigor of the audit
process, receiving and reviewing audit reports, and providing the
auditors full access to the Committee (and the Board) to report on
appropriate matters.
Reporting to Board of Directors
- Report Audit Committee activities to the full Board and issue
annually a report (including appropriate oversight conclusions) to be
included in the Company's proxy statement for its annual meeting of
shareholders.
- Review the Audit Committee Charter with the Board of Directors
annually.
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APPENDIX B
1999 STOCK OPTION PLAN
RESOLVED, that the first sentence of Section 4.1 of the 1999 Stock
Option Plan be, and hereby is, amended to read in full as follows:
"The maximum aggregate number of shares of Common Stock that may be
issued under the Plan is Nine Million Nine Hundred Thousand (9,900,000) (subject
to increase or decrease pursuant to Section 4.2), which may be either authorized
and unissued shares of Common Stock or authorized and issued shares of shares of
Common Stock reacquired by the Company."
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APPENDIX C
ALKERMES, INC.
1999 STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the 1999 Stock Option Plan (the "Plan") is to enable
Alkermes, Inc. (the "Company") to offer to certain officers, employees,
directors and consultants of the Company or any of its Subsidiaries options to
acquire equity interests in the Company, thereby helping to attract, retain and
reward such persons, and strengthen the mutuality of interests between such
persons and the Company's shareholders.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the
following meanings:
2.1 "Administrator" shall mean the Board or, if the Board has
delegated its responsibility to administer the Plan pursuant to Section 3.1, the
committee and/or subcommittee of the Board to which such responsibility has been
delegated.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Change of Control" shall mean
(a) The acquisition, directly or indirectly, other than from the
Company, by any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, it subsidiaries, and
any employee benefit plan of the Company or its subsidiaries which acquires
beneficial ownership of voting securities of the Company) (a "Third Party") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the election of
directors; or
(b) Individuals who, as of December 14, 2000, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to such date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Directors who are directors at the time of such vote shall be, for purposes of
this Agreement, an Incumbent Director; or
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(c) Consummation of (i) a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation (other than the acquiror) do not, immediately thereafter,
beneficially own more than 50% of the combined voting power of the reorganized,
merged or consolidated company's then outstanding voting securities entitled to
vote generally in the election of directors, or (ii) a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company (whether such assets are held directly or indirectly) to a Third
Party.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.5 "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company.
2.6 "Disability" shall mean a disability that results in a
Participant's Termination of Employment, as determined pursuant to standard
Company procedures.
2.7 "Effective Date" shall mean the date on which the Plan is adopted
by the Board.
2.8 "Fair Market Value" for purposes of the Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the average of the high and low sales
prices of a share of Common Stock as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if not listed or traded on any such exchange, on the Nasdaq Stock Market
("Nasdaq"), or, if such sales prices are not available, the average of the bid
and asked prices per share reported on Nasdaq, or, if such quotations are not
available, the fair market value as determined by the Board, which determination
shall be conclusive.
2.9 "Incentive Stock Option" shall mean any Stock Option that is
intended to be and is designated as an "incentive stock option" within the
meaning of Section 422 of the Code.
2.10 "Non-Qualified Stock Option" shall mean any Stock Option that is
not an Incentive Stock Option.
2.11 "Participant" shall mean an officer, employee, director or
consultant of the Company or a Subsidiary to whom an Option has been granted
under the Plan.
2.12 "Stock Option" or "Option" shall mean any option to purchase
shares of Common Stock granted pursuant to Article VI of the Plan.
2.13 "Subsidiary" shall mean any corporation, limited partnership,
limited liability company or any other entity of which the Company owns more
than 50% of the voting stock or equity or a controlling interest.
2.14 "Termination of Employment" shall mean, as appropriate, (a) the
termination of a Participant's employment with the Company and its subsidiaries
for reasons
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other than a military or personal leave of absence granted by the Company, (b)
termination of a Participant's consulting relationship with the Company or (c)
termination of a Participant's service as a member of the Board.
ARTICLE III
ADMINISTRATION
3.1 The Administrator. The Plan shall be administered and
interpreted by the Board; provided, however, that the Board may delegate this
responsibility to a committee, which may in turn delegate this responsibility to
a subcommittee thereof, each such committee and subcommittee to be comprised of
two or more members of the Board; and provided further, however, that
notwithstanding the foregoing, the Board may also delegate to a committee, which
may in turn delegate to a subcommittee thereof, each such committee and
subcommittee to be comprised of one or more members of the Board, the authority
to grant from time to time Options to purchase not more than 5,000 shares of
Common Stock to each person eligible under Article V (who is not subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934,
as amended).
3.2 Awards. The Administrator shall have full authority to grant,
pursuant to the terms of the Plan, Stock Options to persons eligible under
Article V. In particular, the Administrator shall have the authority:
(a) to select the officers, employees, directors and consultants
to whom Stock Options may from time to time be granted;
(b) to determine whether and to what extent Stock Options are to
be granted to one or more officers, employees, directors and consultants
eligible to receive Options under Article V;
(c) to determine the number of shares of Common Stock to be
covered by each Option granted pursuant to Article VI; and
(d) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option granted under Article VI (including, but
not limited to, the option price, the option term, installment exercise or
waiting period provisions and provisions relating to the waiver or acceleration
thereof).
3.3 Guidelines. Subject to Article VII hereof, the Administrator
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Option
granted under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan. The Administrator may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
Option in the manner and to the extent it shall deem necessary to carry out the
purposes of the Plan. Notwithstanding the foregoing, no action of the
Administrator under this Section 3.3 shall impair the rights of any Participant
without the Participant's consent, unless otherwise required by law.
3.4 Decisions Final. Any decision, interpretation or other action
made or taken in good faith by the Administrator arising out of or in connection
with the Plan shall be final, binding and conclusive on the Company, all
Participants, officers, employees, directors and consultants, and their
respective heirs, executors, administrators, successors and assigns.
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ARTICLE IV
SHARE LIMITATION
4.1 Shares. The maximum aggregate number of shares of Common Stock
that may be issued under the Plan is Nine Million Nine Hundred Thousand
(9,900,000) (subject to increase or decrease pursuant to Section 4.2), which may
be either authorized and unissued shares of Common Stock or authorized and
issued shares of Common Stock reacquired by the Company. If any Option granted
under the Plan shall expire, terminate or be cancelled for any reason without
having been exercised in full, the number of shares of Common Stock not
purchased under such Option shall again be available for the purposes of the
Plan.
4.2 Changes. In the event of any merger, reorganization,
consolidation, recapitalization, dividend (other than a regular cash dividend),
stock split, or other change in corporate structure affecting the Common Stock,
such substitution or adjustment shall be made in the maximum aggregate number of
shares which may be issued under the Plan, the maximum number of shares with
respect to which Options may be granted to any individual during any year, and
the number and option price of shares subject to outstanding Options, as may be
determined to be appropriate by the Board, in its sole discretion, provided that
the number of shares subject to any Option shall always be a whole number.
ARTICLE V
ELIGIBILITY
5.1 Employees. Officers and other employees of the Company or any of
its Subsidiaries are eligible to be granted both Incentive Stock Options and
Non-Qualified Stock Options under the Plan.
5.2 Directors and Consultants. Directors and consultants of the
Company or any of its Subsidiaries are eligible to be granted Non-Qualified
Stock Options, but may not receive Incentive Stock Options unless they are
employees of the Company or a Subsidiary corporation within the meaning of
Section 424 of the Code.
ARTICLE VI
GRANT OF STOCK OPTIONS
6.1 Grants. The Administrator shall have the authority to grant to
any person, to the extent eligible under Article V, one or more Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not qualify as
an Incentive Stock Option shall constitute a separate Non-Qualified Stock
Option.
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6.2 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code, or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under such Section 422 of the Code.
6.3 Terms of Options. Options granted under the Plan shall be subject
to the following terms and conditions and shall contain such additional terms
and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable:
(a) Stock Option Certificate. Each Stock Option shall be
evidenced by, and subject to the terms of, a Stock Option Certificate executed
by the Company. The Stock Option Certificate shall specify whether the Option is
an Incentive Stock Option or a Non-Qualified Stock Option, the number of shares
of Common Stock subject to the Stock Option, the option price, the option term,
and the other terms and conditions applicable to the Stock Option.
(b) Option Price. The option price per share of Common Stock to
be delivered upon exercise of a Stock Option shall be determined by the
Administrator at the time of grant, but shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted.
(c) Option Term. The term of each Stock Option shall be fixed by
the Administrator at the time of grant, but no Stock Option shall be exercisable
more than ten years after the date it is granted.
(d) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Administrator at the time of grant; provided, however, that the
Administrator may waive any installment exercise or waiting period provisions,
in whole or in part, at any time after the date of grant, based on such factors
as the Administrator shall deem appropriate in its sole discretion.
(e) Method of Exercise. Subject to such installment exercise and
waiting period provisions as may be imposed by the Administrator, Stock Options
may be exercised in whole or in part at any time during the option term by
delivering to the Company written notice of exercise specifying the number of
shares of Common Stock to be purchased and the aggregate option price therefor.
The notice of exercise shall be accompanied by payment in full of the option
price and, if requested by the Company, by the representation described in
Section 9.2. Payment of the option price may be made (i) in cash or by check
payable to the Company, (ii) unless otherwise determined by the Administrator on
or after the date of grant, in shares of Common Stock duly owned by the
Participant (and for which the Participant has good title, free and clear of any
liens and encumbrances) or (iii) in the case of an Option that is not an
Incentive Stock Option unless otherwise determined by the Administrator on or
after the date of grant, by reduction in the number of shares of Common Stock
issuable upon such exercise, based, in each case, on the Fair Market Value of
the Common Stock on the date of exercise. Upon satisfaction of the conditions
provided herein, a stock certificate representing the number of shares of
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Common Stock to which the Participant is entitled shall be issued and delivered
to the Participant.
(f) Death. Unless otherwise determined by the Administrator on or
after the date of grant, in the event of a Participant's Termination of
Employment by reason of death, any Stock Option held by such Participant which
was exercisable on the date of death may thereafter be exercised by the legal
representative of the Participant's estate until the earlier of one year after
the date of death or the expiration of the stated term of such Stock Option, and
any Stock Option not exercisable on the date of death shall be forfeited.
(g) Disability. Unless otherwise determined by the Administrator
on or after the date of grant, in the event of a Participant's Termination of
Employment by reason of Disability, any Stock Option held by such Participant
that was exercisable on the date of such Termination of Employment may
thereafter be exercised by the Participant until the earlier of one year after
such date or the expiration of the stated term of such Stock Option, and any
Stock Option not exercisable on the date of such Termination of Employment shall
be forfeited. If the Participant dies during such one-year period, any
unexercised Stock Options held by the Participant at the time of death may
thereafter be exercised by the legal representative of the Participant's estate
until the earlier of one year after the date of the Participant's death or the
expiration of the stated term of such Stock Option. If an Incentive Stock Option
is exercised after the expiration of the exercise period that applies for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(h) Termination of Employment. Unless otherwise determined by the
Administrator on or after the date of grant, in the event of a Participant's
Termination of Employment by reason of retirement or for any reason other than
death or Disability, any Stock Option held by such Participant which was
exercisable on the date of such Termination of Employment may thereafter be
exercised by the Participant until the earlier of three months after such date
or the expiration of the stated term of such Stock Option, and any Stock Option
not exercisable on the date of Termination of Employment shall be forfeited.
(i) Change of Control. Notwithstanding the provisions of Section
4.2, in the event of a Change of Control, all outstanding Stock Options shall
immediately become fully exercisable, and upon payment by the Participant of the
option price (and, if requested, delivery of the representation described in
Section 9.2), a stock certificate representing the Common Stock covered thereby
shall be issued and delivered to the Participant; provided, however, that the
exercisability of the Stock Options shall not be accelerated if, in the opinion
of the Board, such acceleration would prevent pooling of interests accounting
treatment for the Change of Control transaction and such accounting treatment is
desired by the parties to such transaction. This Section 6.3(i) shall apply to
any outstanding Stock Options which are Incentive Stock Options to the extent
permitted by Code Section 422(d), and any outstanding Incentive Stock Options in
excess thereof shall, immediately upon the occurrence of such a Change of
Control be treated for all purposes of the Plan as Non-Qualified Stock Options
and shall be immediately exercisable as set forth in this Section 6.3(i).
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(j) Merger and Other Fundamental Transactions. In the event the
Company is succeeded by another company in a reorganization, merger,
consolidation, acquisition of property or stock, separation or liquidation, the
successor company shall assume all of the outstanding Options granted under this
Plan or shall substitute new options for them, which shall provide that each
Participant, at the same cost, shall be entitled upon the exercise of each such
option to receive such securities as the Board of Directors (or equivalent
governing body) of the succeeding, resulting or other company shall determine to
be equivalent, as nearly as practicable, to the nearest whole number and class
of shares of stock or other securities to which the Participant would have been
entitled under the terms of the agreement governing the reorganization, merger,
consolidation, acquisition of property or stock, separation or liquidation as
if, immediately prior to such event, the Participant had been the holder of
record of the number of shares of Common Stock which were then subject to the
outstanding Option granted under this Plan.
(k) Non-Transferability of Options. Unless otherwise determined
by the Administrator on or after the date of grant, Stock Options shall not be
transferrable by the Participant otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant.
(l) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the date of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any Subsidiary or parent corporation
(each within the meaning of Section 424 of the Code) exceeds $100,000, such
Options shall be treated as Options which are not Incentive Stock Options.
(m) Ten-Percent Shareholder Rule. Notwithstanding any other
provision of the Plan to the contrary, no Incentive Stock Option shall be
granted to any person who, immediately prior to the grant, owns stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Company or any Subsidiary or parent corporation (each within the meaning
of Section 424 of the Code), unless the option price is at least 110% of the
Fair Market Value of the Common Stock on the date of grant and the Option, by
its terms, expires no later than five years after the date of grant.
Should any of the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Board may amend the Plan accordingly,
without the necessity of obtaining the approval of the shareholders of the
Company.
6.4 Rights as Shareholder. A Participant shall not be deemed to be
the holder of Common Stock, or to have any of the rights of a holder of Common
Stock, with respect to shares subject to an Option, unless and until the Option
is exercised and a stock certificate representing such shares of Common Stock is
issued to the Participant.
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ARTICLE VII
TERMINATION OR AMENDMENT
7.1 Termination or Amendment of Plan. The Board may at any time
amend, discontinue or terminate the Plan or any part thereof (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in Article IX) or amend any Option previously
granted, prospectively or retroactively (subject to Article IV); provided,
however, that, in either case unless otherwise required by law, the rights of a
Participant with respect to Options granted prior to such amendment,
discontinuance or termination may not be impaired without the consent of such
Participant and, provided further, that the Company will seek the approval of
the Company's shareholders for any amendment if such approval is necessary to
comply with the Code, Federal or state securities laws or any other applicable
rules or regulations.
ARTICLE VIII
UNFUNDED PLAN
8.1 Unfunded Status. The Plan is intended to constitute an "unfunded"
plan for incentive compensation. With respect to any payment not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonassignment. Except as otherwise provided in the Plan, any
Option granted hereunder and the rights and privileges conferred thereby shall
not be sold, transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of an Option, right or privilege contrary to
the provisions hereof, or upon the levy of any attachment or similar process
thereon, such Option and the rights and privileges conferred thereby shall
immediately terminate and the Option shall immediately be forfeited to the
Company.
9.2 Legend. The Company may require each person acquiring shares upon
exercise of an Option to represent to the Company in writing that the
Participant is acquiring the shares for the Participant's own account and
without a view to the distribution thereof. The stock certificates representing
such shares may include any legend which the Company deems appropriate to
reflect any restrictions on transfer.
All certificates representing shares of Common Stock delivered under
the Plan shall be subject to such stop transfer orders and other restrictions as
the Company may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange
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Commission, any stock exchange or stock market upon which the Common Stock is
then listed or traded, any applicable Federal or state securities law, and any
applicable corporate law, and the Company may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
9.3 Other Plans. Nothing contained in the Plan shall prevent the
Company from adopting other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
9.4 No Right to Employment. Neither the Plan nor the grant of any
Option shall give any Participant or other officer, employee, consultant or
director any right with respect to continuance of office, employment, consulting
relationship or directorship, as the case may be, with the Company or any
Subsidiary, nor shall the Plan impose any limitation on the right of the Company
or any Subsidiary by which a Participant is employed to terminate a
Participant's office, employment or consulting relationship at any time. Neither
the Plan nor the grant of any Option shall give any director the right to
continue as a member of the Board or obligate the Company to nominate any
director for reelection by the Company's shareholders.
9.5 Withholding of Taxes. The Company shall have the right to reduce
the number of shares of Common Stock otherwise deliverable upon exercise of an
Option by an amount that would have a Fair Market Value equal to the amount of
all Federal, state and local taxes required to be withheld, or to deduct the
amount of such taxes from any cash payment otherwise to be made to the
Participant, pursuant to the Plan or otherwise. In connection with such
withholding, the Company may make such arrangements as are consistent with the
Plan as it may deem appropriate.
9.6 Listing and Other Conditions.
(a) If the Common Stock is listed on a national securities
exchange or Nasdaq, the issuance of any shares of Common Stock upon exercise of
an Option shall be conditioned upon such shares being listed on such exchange or
Nasdaq. The Company shall have no obligation to issue any shares of Common Stock
unless and until such shares are so listed, and the right to exercise any Option
shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion
that any sale or delivery of shares of Common Stock upon exercise of an Option
is or may in the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Options, and the right to exercise any Option shall be
suspended until, in the opinion of such counsel, such sale or delivery shall be
lawful or shall not result in the imposition of excise taxes.
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(c) Upon termination of any period of suspension under this
Section 9.6, any Option affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall extend the term of
any Option.
9.7 Governing Law. The Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the Commonwealth
of Pennsylvania without regard to the conflict of law principles thereof.
9.8 Construction. Wherever any words are used in the Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
9.9 Liability of the Board. No member of the Board nor any employee
of the Company or any of its Subsidiaries shall be liable for any act or action
hereunder, whether of omission or commission, by any other member of the Board
or officer or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in circumstances
involving bad faith, gross negligence or fraud, for anything done or omitted to
be done by himself or herself.
9.10 Costs. The Company shall bear all expenses incurred in
administering the Plan, including expenses related to the issuance of Common
Stock upon exercise of Options.
9.11 Severability. If any part of the Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.
9.12 Successors. The Plan shall be binding upon and inure to the
benefit of any successor or successors of the Company.
9.13 Headings. Article and section headings contained in the Plan are
included for convenience only and are not to be used in construing or
interpreting the Plan.
ARTICLE X
TERM OF PLAN
10.1 Effective Date. The Plan shall be effective as of the Effective
Date, but the grant of any Option hereunder is subject to the express condition
that the Plan be approved by the shareholders of the Company within 12 months
after the Effective Date.
10.2 Termination Date. Unless sooner terminated, the Plan shall
terminate ten years after the Effective Date and no Options may be granted
thereafter. Termination of the Plan shall not affect Options granted before such
date.
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PROXY
ALKERMES, INC.
CAMBRIDGE, MASSACHUSETTS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 26, 2001
The undersigned shareholder of Alkermes, Inc. hereby appoints James M.
Frates and Christopher P. Ciulla, and each of them, attorneys and proxies, with
power of substitution in each of them, to vote and act for and on behalf of the
undersigned at the annual meeting of shareholders of the Company to be held at
the offices of the Company, 64 Sidney Street, Cambridge, Massachusetts 02139, at
10:00 a.m., July 26, 2001, and at all adjournments thereof, according to the
number of shares which the undersigned would be entitled to vote if then
personally present, as indicated hereon and in their discretion upon such other
business as may come before the meeting, all as set forth in the notice of the
meeting and in the proxy statement furnished herewith, copies of which have been
received by the undersigned; hereby ratifying and confirming all that said
attorneys and proxies may do or cause to be done by virtue hereof.
IT IS AGREED THAT UNLESS OTHERWISE MARKED ON THE OTHER SIDE, SAID
ATTORNEYS AND PROXIES ARE APPOINTED WITH AUTHORITY TO VOTE FOR THE DIRECTORS AND
THE PROPOSAL LISTED ON THE OTHER SIDE HEREOF.
(PLEASE FILL IN, SIGN AND DATE ON THE OTHER SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE)
----------- ----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------- ----------
38
[ x ] Please mark
votes as in
this example.
1. To elect seven members of the Board of Directors, each to serve until
the next annual meeting of shareholders and until his successor is duly
elected and qualified. Nominee: Floyd E. Bloom, Robert A. Breyer, John
K. Clarke, Richard F. Pops, Alexander Rich, Paul Schimmel and Michael
A. Wall
WITHHELD
FOR ALL FROM ALL
NOMINEES [ ] NOMINEES [ ]
[ ] _________________________________
For all nominees except as noted above
2. To approve an amendment to the 1999 Stock Option Plan to increase to
9,900,000 the number of shares issuable upon the exercise of options
granted thereunder, an increase of 2,500,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
To transact such other business as may properly come before the
meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) hereon. All holders must sign.
When signing in a fiduciary capacity, please indicate full title as such. If a
corporation or partnership, please sign in full corporate or partnership name by
authorized person.
Signature:____________________ Date:__________
Signature:____________________ Date:__________
2