UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to § 240.14a-12
NEUROBIOLOGICAL TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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NEUROBIOLOGICAL
TECHNOLOGIES, INC.
2000 Powell Street,
Suite 800
Emeryville, CA 94806
(510) 595-6000
October 9,
2008
Dear Stockholder:
You are cordially invited to attend the 2008 Annual Meeting of
Stockholders of Neurobiological Technologies, Inc. (the
Company
). The meeting will be held at
the Grand Hyatt San Francisco, 345 Stockton Street,
San Francisco, California, on Thursday, November 13,
2008, at 10:00 a.m., local time.
The matters to be considered at the meeting are described in
detail in the attached proxy statement. We will also report on
the activities of the Company immediately following the meeting,
and you will have an opportunity to submit questions or comments
on matters of interest to stockholders generally. Included with
the proxy statement is a copy of the Companys 2008 Annual
Report to Stockholders for the fiscal year ended June 30,
2008.
Please use this opportunity to take part in the affairs of the
Company by voting on the business to come before this meeting.
Regardless of whether you plan to attend the meeting, I urge you
to vote your proxy as soon as possible. Returning the proxy card
does not deprive you of your right to attend the meeting and to
vote your shares in person, and may save the Company from
incurring additional proxy solicitation costs.
The Board of Directors and management look forward to seeing you
at the meeting.
Sincerely yours,
Paul E. Freiman
President and Chief Executive Officer
TABLE OF CONTENTS
NEUROBIOLOGICAL
TECHNOLOGIES, INC.
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held Thursday, November 13, 2008
We will hold our 2008 Annual Meeting of Stockholders (the
Annual Meeting
) at the Grand Hyatt
San Francisco, 345 Stockton Street, San Francisco,
California, on Thursday, November 13, 2008, at
10:00 a.m. local time for the following purposes:
1. To elect three Class III directors, as nominated by
our Board of Directors, to hold office until the 2011 Annual
Meeting of Stockholders.
2. To ratify the selection of Odenberg, Ullakko,
Muranishi & Co. LLP as our independent registered
public accounting firm for the fiscal year ending June 30,
2009.
3. To transact any other business that may properly come
before the meeting or any adjournment or postponement of the
meeting.
The foregoing items of business are more fully described in the
proxy statement accompanying this notice. Proposal 1
relates solely to the election of three Class III directors
nominated by the Board of Directors and does not include any
other matters relating to the election of directors, including
without limitation, the election of directors nominated by any
stockholder of the Company.
Only stockholders of record at the close of business on
September 30, 2008 will be entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement
thereof.
We cordially invite each of our stockholders to attend and vote
at the Annual Meeting in person. However, to assure your
representation at the Annual Meeting, we urge you to mark, sign,
date and return the enclosed proxy as promptly as possible in
the enclosed postage prepaid envelope. Any stockholder attending
the meeting may vote in person even if he or she returns a proxy.
By Order of the Board of Directors,
Stephen C. Ferruolo
Secretary
Emeryville, California
October 9, 2008
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY. A MAJORITY OF
THE SHARES MUST BE REPRESENTED AT THE MEETING, EITHER IN PERSON
OR BY PROXY, TO CONSTITUTE A QUORUM. IF YOU PLAN TO ATTEND THE
MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU SEND IN YOUR PROXY.
NEUROBIOLOGICAL
TECHNOLOGIES, INC.
2000 Powell Street,
Suite 800
Emeryville, CA 94806
(510) 595-6000
PROXY
STATEMENT FOR
2008 ANNUAL MEETING OF STOCKHOLDERS
November 13, 2008, 10:00 a.m., local time
GENERAL
INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of
Neurobiological Technologies, Inc. (the
Company
) for use at the Companys
2008 Annual Meeting of Stockholders (the
Annual
Meeting
), to be held on Thursday,
November 13, 2008, at 10:00 a.m., local time. The
meeting will be held at the Grand Hyatt San Francisco, 345
Stockton Street, San Francisco, California. This proxy
statement and the accompanying form of proxy will be mailed to
our stockholders on or about October 9, 2008.
The purposes of the annual meeting are to elect three
Class III directors, as nominated by our Board of
Directors, and to ratify the appointment of the Companys
independent registered public accounting firm. Only stockholders
of record at the close of business on September 30, 2008
(the
record date
) are entitled to
notice of, and to vote at, the Annual Meeting. At the close of
business on the record date, 26,924,124 shares of Common
Stock, par value $0.001 per share
(Common
Stock)
, were issued and outstanding, and
494,000 shares of Series A Preferred Stock, par value
$0.001 per share
(Preferred Stock)
,
were issued and outstanding. Each share of Common Stock is
entitled to one vote on all matters to be voted upon at the
annual meeting. Each share of Preferred Stock shall be entitled
to the number of votes equal to the number of shares of Common
Stock into which such share of Preferred Stock could be
converted on the record date, which is one (1) share of
Common Stock for every seven (7) shares of Preferred Stock.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of capital stock on the
record date will constitute a quorum for the transaction of
business at the Annual Meeting and any adjournment or
postponement thereof.
We will provide copies of this proxy statement, notice of annual
meeting and accompanying materials to brokerage firms,
fiduciaries and custodians for forwarding to beneficial owners
and will reimburse these persons for their costs of forwarding
these materials. Our directors, officers and employees may
solicit proxies by telephone, facsimile or personal
solicitation. We will not pay additional compensation for any of
these services. In addition, we may retain a proxy solicitation
firm or other third party to assist us in collecting or
soliciting proxies from our stockholders. We expect that the
costs of these services, exclusive of out-of-pocket costs, will
not exceed $10,000.
Abstentions
and Broker Non-Votes
If your shares are held in your name, you must either return the
enclosed proxy card or attend the Annual Meeting in person in
order to vote on the proposals. If your shares are held through
a brokerage firm, bank or other institution and you do not
return your proxy, the brokerage firm, bank or other institution
holding your shares may vote your shares for you or may return a
proxy leaving your shares unvoted (a
broker
non-vote
).
Abstentions and broker non-votes will be counted for the purpose
of determining the presence or absence of a quorum, but their
effect on the outcome of the proposals will vary depending on
the vote required to approve each proposal. With respect to
Proposal No. 1, directors will be elected by a
plurality vote, which means that abstentions
1
and broker non-votes will be disregarded and will have no effect
on the outcome. Proposal No. 2 must be approved by a
majority of the shares present and entitled to vote either in
person or by proxy. As a result, abstentions will have the same
effect as a vote against that proposal and broker non-votes will
have no effect on the outcome of the proposal.
Proxy
Requirements and Voting of Proxies
In order for a proxy to be effective, it must be properly
executed and received prior to the close of voting at the Annual
Meeting or any adjournment or postponement thereof. Each proxy
properly tendered will, unless otherwise directed by the
stockholder, be voted
for
each of the nominees for
director set forth in Proposal No. 1,
for
the
ratification of the selection of Odenberg, Ullakko,
Muranishi & Co. LLP as our independent registered
public accounting firm as set forth in Proposal No. 2
and at the discretion of the proxy holders with regard to all
other matters that may properly come before the Annual Meeting.
As of the date of this proxy statement, the Company was unaware
of any other matters that are expected to come before the
meeting. Any stockholder of record may attend the Annual Meeting
in person and may revoke the enclosed proxy at any time by:
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executing and delivering to the corporate secretary a
later-dated proxy;
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delivering a written revocation to the corporate secretary
before the meeting; or
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voting in person at the Annual Meeting.
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If you hold shares of our stock through a brokerage firm, bank
or other institution, you must contact that institution in order
to revoke or change your proxy or to vote at the Annual Meeting
in person.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Our Board of Directors is currently composed of seven directors.
We have a classified Board of Directors consisting of three
Class III directors, two Class I directors and two
Class II directors (all listed below), who will serve until
the annual meetings of stockholders to be held in 2008, 2009 and
2010, respectively, and until their respective successors are
duly elected and qualified, unless they resign or their seats
become vacant due to death, removal or other cause in accordance
with the bylaws of the Company. At each annual meeting of
stockholders, directors are elected for a term of three years to
succeed those directors whose terms expire at the annual meeting
dates. The terms of the Class III directors will expire on
the date of the upcoming Annual Meeting. Accordingly, three
persons are to be elected to serve as Class III directors
of the Board of Directors at the Annual Meeting.
The Board of Directors, upon the recommendation of the
Nominating and Corporate Governance Committee, has nominated
each of the current Class III members of the Board of
Directors, Abraham D. Cohen, Paul E. Freiman and F. Van Kasper,
and recommended that they be reelected to the Board of
Directors. If any of the nominees declines to serve or becomes
unavailable for any reason, or if a vacancy occurs before the
election (although we know of no reason to anticipate that this
will occur), the proxies may be voted for such substitute
nominee(s) as the Board of Directors may recommend. The proxy
holders cannot vote for more than three persons. If a quorum is
present and voting, the three nominees for Class III
director receiving the highest number of votes will be elected
as Class III directors.
Nominating
Process
Each of the nominees for director was recommended by the
Nominating and Corporate Governance Committee of the Board of
Directors and each nominee is an incumbent director. In
recommending these nominees, the Nominating and Corporate
Governance Committee considered their experience, skills,
judgment, integrity and understanding of the Companys
business and prospects. Additionally, following the retirement
of Drs. Cape and Callaway in fiscal 2008, the Nominating
and Corporate Governance Committee has determined that it would
be beneficial to have one or more directors with a medical or
relevant science background and additional pharmaceutical or
biotechnology industry experience. In anticipation of the Annual
Meeting, the Nominating and Corporate Governance Committee also
wrote to the Companys largest institutional investors,
asking for suggested
2
potential nominees to serve on the Companys board of
directors. No persons were nominated by these stockholders. This
year, the Nominating and Corporate Governance Committee also
considered the two stockholder nominations that were received,
and concluded that these candidates did not have the medical or
relevant science background that the Nominating and Corporate
Governance Committee believes would be beneficial. It is the
policy of the Nominating and Corporate Governance Committee to
consider stockholder nominees using the same criteria that are
used to assess candidates nominated by the Company. Additional
information regarding the Nominating and Corporate Governance
Committees policies and procedures for handling
stockholder nominees is provided below under the caption
Stockholder Proposals.
Vote
Required
The three nominees who receive the greatest number of
affirmative votes of the shares present and entitled to vote in
person or by proxy will be elected as Class III directors.
Neither the holders of Common Stock nor the holders of Preferred
Stock have the right to cumulative voting in the election of
directors. Any shares that are not voted, whether by abstention,
broker non-votes or otherwise, will not affect the election of
directors, except to the extent that the failure to vote for an
individual will result in other nominees receiving a larger
proportion of the votes cast. Holders of proxies solicited by
this proxy statement will vote the proxies received by them as
directed on the proxy card or, if no direction is made, then FOR
the election of the nominees named in this proxy statement.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEES LISTED BELOW.
The following table sets forth both the nominees to be voted
upon at the Annual Meeting, as well as the continuing directors,
the year each such nominee or continuing director was first
elected a director, the age of each nominee and continuing
director, the positions with the Company currently held by each
nominee and continuing director, the year each nominee or
continuing directors current term will expire and each
nominee and continuing directors current class:
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Year Current
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Position(s) with
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Term
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Current Class of
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Nominee or Directors Name and Year First Became a
Director
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Age
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the Company
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Will Expire
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Director
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Nominees for Class III Directors:
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Abraham D. Cohen (1993)
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72
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Chairman of the Board of Directors
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2008
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III
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Paul E. Freiman (1997)
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74
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President, Chief Executive Officer and Director
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2008
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III
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F. Van Kasper (2004)
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71
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Director
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2008
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III
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Continuing Directors:
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Theodore L. Eliot, Jr. (1992)
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80
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Director
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2009
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I
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William A. Fletcher (2007)
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61
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Director
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2009
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I
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Abraham D. Sofaer (1997)
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70
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Director
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2010
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II
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John B. Stuppin (1988)
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75
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Director
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2010
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II
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Class III
Nominees for Election for a Three-Year Term Expiring at the 2011
Annual Meeting
The following persons have been nominated by the Company to be
elected as Class III directors at the 2008 annual meeting.
Abraham E. Cohen
has served as a director of the Company
since March 1993 and has been Chairman of the Board since August
1993. From 1982 to 1992, Mr. Cohen served as Senior Vice
President of Merck & Co., or Merck, and from 1977 to
1988 as President of the Merck Sharp & Dohme
International Division, or MSDI. While at Merck, he played a key
role in the development of Mercks international business,
initially in Asia, then in Europe and, subsequently, as
President of MSDI, which manufactures and markets human health
products outside the United States. Since his retirement from
Merck and MSDI in January 1992, Mr. Cohen has been active
as an international business consultant. He is currently
Chairman and President of Kramex Company and is also chairman
3
of the board of Vasomedical, Inc. Mr. Cohen serves as a
director of the following public companies:
Chugai Pharmaceutical Co., MannKind Corporation and Teva
Pharmaceutical Industries, Ltd.
Paul E. Freiman
joined the Company as a director in April
1997 and was appointed President and Chief Executive Officer in
May 1997. Mr. Freiman has informed the Board of Directors
of his intention to retire as President and Chief Executive
Officer, effective as of December 31, 2008. The Company
expects that Mr. Freiman will continue to serve as a member
of the Board following his retirement. Mr. Freiman is the
former chairman and chief executive officer of Syntex
Corporation, where he was instrumental in the sale of
Syntexs lead product, Naprosyn, and was responsible for
moving the product to over-the-counter status, where it is now
marketed by Procter & Gamble Co. as Aleve.
Mr. Freiman currently serves as chairman of the board of
Penwest Pharmaceuticals Co. He also serves on the boards of
Calypte Biomedical Corporation, NeoPharm, Inc., NovaBay
Pharmaceuticals, Inc., Otsuka America Pharmaceuticals, Inc. and
SciGen Pte. Ltd. He has been chairman of the Pharmaceutical
Manufacturers Association of America, or PhRMA, and has also
chaired a number of key PhRMA committees. Mr. Freiman is
also an advisor to Burrill & Company, a
San Francisco merchant bank. Mr. Freiman holds a
B.S. degree from Fordham University and an honorary
doctorate from the Arnold & Marie Schwartz College of
Pharmacy.
F. Van Kasper
has served as a director of the
Company since January 2004. Mr. Kasper served as Chairman
of Wells Fargo Securities, the institutional brokerage and
investment bank for Wells Fargo & Company, prior to
his retirement in March 2003. Mr. Kasper entered the
brokerage business in 1964 with Merrill Lynch and Co., Inc. and
in 1978 co-founded Van Kasper and Company, a regional investment
bank. As Chairman and Chief Executive Officer of Van Kasper and
Company, he guided its growth from a handful of employees to a
bank with over 350 employees in 15 offices in 4 states
when it was sold in 1999. During his investment career,
Mr. Kasper was elected as a Governor of the National
Association of Securities Dealers and as a Director and Vice
Chairman of the Securities Industry Association. Mr. Kasper
is active in the San Francisco, California area non-profit
community, most recently as a director and member of the
Investment Committee for the University of California
San Francisco Foundation, and serves as Chairman Emeritus
for San Franciscos Exploratorium Museum.
Mr. Kasper holds a B.S. degree from California State
University.
Class I
Directors Continuing in Office until the 2009 Annual
Meeting
Theodore L. Eliot, Jr.
has served as a director of
the Company since August 1992. Previously, he served as a
director of the Company from September 1988 until April 1992,
and as a Vice President from September 1988 until September
1991. Mr. Eliot retired from the United States Department
of State in 1978, after a
30-year
career in which he held senior posts in Washington and was
Ambassador to Afghanistan. He was Dean of the Fletcher School of
Law and Diplomacy from 1978 to 1985 and a director of Raytheon
Co. from 1983 to 1998. He is currently a director of several
non-profit organizations. Mr. Eliot holds B.A. and M.P.A.
degrees from Harvard University.
William A. Fletcher
has served as a director of the
Company since February 2007. Mr. Fletcher has been
Chairman, Teva Pharmaceuticals North America since December
2004. Prior to that, he was President and Chief Executive
Officer of Tevas North American activities from 1985 until
the end of 2004. Mr. Fletcher served as Vice President,
Sales and Marketing of the Pennsylvania-based Lemmon Company
(1980 to 1983) and then as President
(1983-1985)
following the companys acquisition by Teva and WR Grace.
Prior to 1980, Mr. Fletcher was Business Development
Manager and International Marketing Manager of Synthelabo, a
pharmaceutical subsidiary of LOreal in Paris. From 1970 to
1977 he served in various international sales and marketing
positions for Hoffman-LaRoche. He serves as a board member for
several Teva subsidiary companies in North America and Europe,
and is a director of Sportwall International Inc., a growth
company in the interactive fitness industry. Mr. Fletcher
graduated in International Marketing from Woolwich Polytechnic,
London (now Greenwich University) in 1969.
Class II
Directors Continuing in Office until the 2010 Annual
Meeting
Abraham D. Sofaer
has served as a director of the Company
since April 1997. Mr. Sofaer is the first George P. Shultz
Distinguished Scholar & Senior Fellow at the Hoover
Institution, Stanford University, appointed in 1994. He has also
been a Professor of Law (by courtesy) at Stanford Law School.
From 1990 to 1994, Mr. Sofaer was a partner at the law firm
of Hughes, Hubbard & Reed in Washington, D.C.,
where he represented several major U.S. public
4
companies. From 1985 to 1990, he served as the Legal Adviser to
the United States Department of State, where he was principal
negotiator on several international disputes. From 1979 to 1985,
he served as a federal judge in the Southern District of New
York. Mr. Sofaer is registered as a qualified arbitrator
with the International Chamber of Commerce Arbitration Committee
and the American Arbitration Association and is a member of the
National Panel of the Center for Public Resolution of Disputes.
Mr. Sofaer is on the boards of directors of Gen-Probe,
Inc., and Rambus, Inc. and the International Advisory Committee
of Chugai Biopharmaceuticals, Inc. He is president of the
American Friends of the Koret Israel Economic Development Fund
and a director of the Koret Foundation. He also serves as
chairman of the National Museum of Jazz in Harlem.
Mr. Sofaer holds a B.A. degree from Yeshiva College and an
L.L.B. degree from New York University.
John B. Stuppin
is a founder of the Company and has
served as a director of the Company since September 1988.
From September 1987 until October 1990, Mr. Stuppin served
as President of the Company, from November 1990 to August 1993
as co-chairman of the Board, from October 1990 until September
1991 as Executive Vice President, and from April 1991 until July
1994 as Treasurer. He also served as the acting Chief Financial
Officer of the Company from the Companys inception through
December 1993 and served as a part-time employee of the Company
in a business development capacity from December 1990 to
December 2005. Mr. Stuppin is an investment banker and a
venture capitalist. He has over 40 years experience
in the start up and management of companies active in emerging
technologies and has been the president of a manufacturing
company. He is chairman of the board of Energy Focus, Inc.
Mr. Stuppin holds an A.B. degree from Columbia University.
PROPOSAL NO. 2
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board of Directors has selected
Odenberg, Ullakko, Muranishi & Co. LLP
(OUM)
as our independent registered
public accounting firm for the fiscal year ending June 30,
2009, and has directed that we submit the selection of OUM for
ratification by our stockholders at the Annual Meeting.
The Company is not required to submit the selection of our
independent registered public accounting firm for stockholder
ratification. However, if the stockholders do not ratify this
selection, the Audit Committee will reconsider its selection of
OUM. Even if the selection is ratified, our Audit Committee may
direct the appointment of a different independent registered
public accounting firm at any time during the year if the Audit
Committee determines that the change would be in the best
interests of the Company.
Representatives of OUM are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate
stockholder questions.
5
Audit
Fees
The following is a summary of the fees billed to the Company by
OUM for professional services:
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Year Ended June 30,
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2008
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2007
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Audit Fees:
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Consists of fees billed for professional services rendered for
the audit of the Companys financial statements for the
respective fiscal years, reviews of the interim financial
statements included in the Companys quarterly reports and
reviews, consents and comfort letters relating to registration
statements. Audit fees for fiscal year 2007 included the audit
of managements report on the effectiveness of the
Companys internal control over financial reporting, which
was not required for the Company in fiscal 2008
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$
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329,354
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$
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541,946
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Tax Fees:
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Consists of fees billed for tax planning, assistance with the
preparation of tax returns and advice on other tax-related
matters rendered during the respective fiscal years
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18,500
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18,500
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Total All Fees:
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$
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347,854
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$
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560,446
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|
There were no audit-related fees or other fees billed by OUM in
addition to the fees noted in the schedule above. The Audit
Committee reviews audit and non-audit services performed by our
independent registered public accounting firm, as well as the
fees charged for such services. In its review of non-audit
service fees, the Audit Committee considers, among other things,
the possible impact of the performance of such services on our
independent registered accounting firms independence. All
audit-related fees, tax fees and other fees are pre-approved by
the Audit Committee or its Chairman. Additional information
concerning the Audit Committee and its activities can be found
in the following sections of this proxy statement: Board
Meetings and Committees and Report of the Audit
Committee.
Vote
Required
Ratification of the selection of the independent registered
public accounting firm requires the affirmative vote of a
majority of the shares present in person or by proxy and voting
on the proposal.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL NO. 2.
CORPORATE
GOVERNANCE
Director
Independence
Our Board of Directors annually determines the independence of
each of our directors and nominees in accordance with the
independence standards set forth in the NASDAQ Marketplace
Rules. These rules provide that independent
directors are those who are independent of management and free
from any relationship that, in the judgment of the Board of
Directors, would interfere with their exercise of independent
judgment. No director qualifies as independent unless the Board
of Directors affirmatively determines that the director has no
material relationship with us (either directly or as a partner,
stockholder or officer of an organization that has a
relationship with us). Members of the Audit Committee must be
independent and must also satisfy a separate independence
requirement pursuant to the Exchange Act, which requires, among
other things, that they may not accept directly or indirectly
any consulting, advisory or other compensatory fee from us,
other than their directors compensation.
Based on its review, our Board of Directors has determined that
all directors, other than Messrs. Freiman (who is the
Companys President and Chief Executive Officer) and
Stuppin (who served as a part-time employee until December
2005), are independent directors as defined by the
rules of The NASDAQ Stock Market. In making its determination
regarding the independence of the non-employee directors, the
Board of Directors considered,
6
among other things, the stock holdings of the non-employee
directors and to what extent such holdings may affect their
ability to exercise independent judgment. None of these
independent directors is a party to any transaction,
relationship or arrangement not disclosed pursuant to
Item 404(a) of
Regulation S-K.
There are no family relationships among any of our directors or
executive officers.
Code of
Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics
(Code of Conduct)
that applies to all
of our directors, officers and employees. We have posted a copy
of the Code of Conduct on our website at
www.ntii.com
.
You may also request a printed copy of the Code of Conduct,
without charge, by writing us at 2000 Powell Street,
Suite 800, Emeryville, California 94608, Attn: Investor
Relations. In the event of an amendment to, or a waiver from,
any provision of the Code of Conduct that applies to any
director or executive officer, we will publicly disclose any
such amendment or waiver as required by applicable law or
regulations or NASDAQ.
Corporate
Governance Guidelines
Our Nominating and Corporate Governance Committee has adopted
Corporate Governance Guidelines
(Guidelines)
to assist our Board of
Directors in exercising its responsibilities. These Guidelines
reflect our Board of Directors commitment to building
long-term stockholder value with an emphasis on corporate
governance. You may request a printed copy of the Guidelines,
without charge, by writing us at 2000 Powell Street,
Suite 800, Emeryville, California 94608, Attn: Investor
Relations.
Stockholder
Communications
Generally, stockholders who have questions or concerns regarding
the Company should write to us at 2000 Powell Street,
Suite 800, Emeryville, California 94608, Attn: Investor
Relations. However, any stockholders who wish to address
questions regarding the business or affairs of the Company
directly with the Board of Directors, or any individual
director, should direct his or her questions in writing to the
Chairman of the Board at the address set forth above.
BOARD
MEETINGS AND COMMITTEES
During the fiscal year ended June 30, 2008, our Board of
Directors held eleven meetings. Each director attended at least
75% of the meetings of the Board of Directors and meetings of
the committees of which he was a member in our last fiscal year.
Our Board of Directors has standing Audit, Compensation, and
Nominating and Corporate Governance committees. All members of
our Board of Directors serving at the time of the 2007 Annual
Meeting of Stockholders attended that meeting. Although the
Company has no formal policies regarding director attendance at
annual meetings, we expect that most of the members of the Board
of Directors will attend the upcoming Annual Meeting.
Board
Committees
Audit Committee.
Our Audit Committee is
comprised of Messrs. Kasper (Chairman), Eliot and Sofaer.
Our Audit Committee oversees the accounting and financial
reporting processes of the Company and audits of our financial
statements and reviews the effectiveness of our internal control
over financial reporting. In that regard, the Audit
Committees responsibilities are, among other things, to
appoint and provide for the compensation of our independent
registered public accounting firm, to oversee and evaluate its
performance, to review our interim and annual financial
statements, independent audit reports and management letters,
and to perform other duties specified in the Audit Committee
Charter. The Audit Committee met five times in fiscal 2008. Our
Board of Directors has determined that all members of the Audit
Committee satisfy the current independence standards promulgated
by both The NASDAQ Stock Market (including independence
standards for audit committee members) and the SEC. Our Board of
Directors has also determined that Mr. Kasper is an audit
committee financial expert, as the SEC has defined that term in
Item 407 of
Regulation S-K.
7
Compensation Committee.
Our Compensation
Committee is comprised of Messrs. Sofaer (Chairman), Cohen
and Eliot. Our Compensation Committee assists the Board of
Directors with respect to compensation for our executive
officers and independent directors and administers our
equity-based compensation plans. In that regard, the
Compensation Committees responsibilities are, among other
things, to determine the level and form of compensation for our
executive officers, including the Chief Executive Officer, and
directors, to oversee administration of our equity-based
compensation plans, to report annually to our stockholders on
executive compensation, and to perform other duties specified in
the Compensation Committee Charter. The Compensation Committee
met three times in fiscal 2008. Our Board of Directors has
determined that all members of the Compensation Committee
satisfy the current independence standards promulgated by The
NASDAQ Stock Market.
Nominating and Corporate Governance
Committee.
Our Nominating and Corporate
Governance Committee is comprised of Messrs. Stuppin
(Chairman), Fletcher and Sofaer. Our Nominating and Corporate
Governance Committee identifies, evaluates and recommends
individuals for election as directors at each annual or special
meeting of the stockholders, oversees the evaluation of the
Boards performance, develops and recommends to the Board
corporate governance guidelines, and provides oversight with
respect to corporate governance and ethical conduct. Procedures
for the consideration of director nominees recommended by
stockholders are set forth in our amended and restated bylaws.
The Nominating and Corporate Governance Committee met once in
fiscal 2008. Our Board of Directors has determined that all
members of the Nominating and Corporate Governance Committee,
other than Mr. Stuppin, satisfy the current independence
standards promulgated by The NASDAQ Stock Market. Although
Mr. Stuppin does not currently satisfy the independence
standards promulgated by The NASDAQ Stock Market, the Board of
Directors appointed Mr. Stuppin to the Nominating and
Corporate Governance Committee in February 2008 because it
determined that Mr. Stuppins membership on the
Committee was required in the best interests of the Company and
its stockholders due to his experience in business and corporate
governance matters, and the Board of Directors did not believe
that his previous part-time employment with the Company would
interfere with his exercise of independent judgment in carrying
out the responsibilities of a member of the Nominating and
Corporate Governance Committee. Mr. Stuppin is expected to
satisfy the independence standards promulgated by The NASDAQ
Stock Market starting in December 2008.
Charters for our Audit Committee, Compensation Committee, and
Nominating and Corporate Governance Committee are posted on our
website at
www.ntii.com
.
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee was an officer or
employee of the Company, nor was any member of the Compensation
Committee formerly one of our officers during fiscal 2008. None
of our executive officers served (i) as a member of the
compensation committee (or board of directors serving the
compensation function) of another entity, one of whose executive
officers served on the compensation committee or (ii) as a
member of the compensation committee (or board of directors
serving the compensation function) of another entity, one of
whose executive officers served on our Board of Directors.
EXECUTIVE
OFFICERS
Our current executive officers and their respective positions
are set forth in the following table. Biographical information
regarding each executive officer who is not also a director is
set forth following the table.
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Name
|
|
Age
|
|
Position
|
|
Paul E. Freiman
|
|
|
74
|
|
|
President and Chief Executive Officer
|
David E. Levy, M.D.
|
|
|
67
|
|
|
Vice President, Clinical Development
|
Matthew M. Loar
|
|
|
45
|
|
|
Vice President and Chief Financial Officer
|
Karl G. Trass
|
|
|
48
|
|
|
Vice President, Regulatory Affairs & Quality Assurance
|
Warren W. Wasiewksi, M.D.
|
|
|
56
|
|
|
Vice President and Chief Medical Officer
|
David E. Levy, M.D.
was appointed Vice President,
Clinical Development in September 2004 following the
Companys acquisition of Empire Pharmaceuticals, Inc.
(Empire)
. From June 2003 to August
2004, Dr. Levy was
8
international project team leader at Eisai Medical Research,
Inc., where he directed a clinical program to develop a novel,
new therapy in Alzheimers disease as well as acute
ischemic stroke programs. He was a co-founder of Empire and
previously served as an advisor to Empire and as senior director
of medical research at DOV Pharmaceutical, Inc., where he
directed several clinical development programs from June 2001 to
May 2002. From 1991 to 2001, Dr. Levy was with Knoll
Pharmaceuticals, serving initially as senior director and
therapeutic head of clinical CNS and then as senior director of
cardiovascular/ internal medicine. Dr. Levy served as
executive vice chair of neurology from 1988 to 1991 at
Weill-Cornell Medical College and New York Presbyterian Hospital
and continues to serve as adjunct associate professor of
neurology and adjunct associate attending neurologist at these
institutions. Dr. Levy is a fellow of the American Academy
of Neurology, the American College of Physicians, and the Stroke
Counsel of the American Heart Association. Dr. Levy holds a
B.A. degree from Harvard College and an M.D. degree from Harvard
Medical School.
Matthew M. Loar
was appointed Vice President and Chief
Financial Officer in April 2008. Mr. Loar is licensed in
California as a certified public accountant and has over
20 years of financial management experience. Mr. Loar
joined the Company from Osteologix, Inc., where he served as
Chief Financial Officer from September 2006 to April 2008. Prior
to his tenure at Osteologix, Mr. Loar was Chief Financial
Officer of Genelabs Technologies, Inc. beginning in 2001. Prior
to being appointed CFO at Genelabs, Mr. Loar was Vice
President, Finance and Controller for approximately six years.
Earlier, Mr. Loar held finance positions with an
international manufacturing company and was audit manager with a
major public accounting firm. Mr. Loar holds a B.A. degree
from the University of California, Berkeley.
Karl G. Trass
was appointed Vice President, Regulatory
Affairs & Quality Assurance in September 2005.
Mr. Trass has over 15 years of regulatory affairs
experience, including supervising the preparation and filing of
both new drug applications and biologics applications, which
resulted in four compounds receiving FDA marketing approval.
Mr. Trass has extensive experience in a variety of
therapeutic areas, including oncology and cardiovascular, and
has had significant regulatory experience outside of the United
States. From March 2004 to October 2004, Mr. Trass was
Director of Regulatory Affairs with Sangamo BioSciences. He held
the same position at Gilead Sciences, Inc. in Foster City,
California from January 2003 to July 2003, and was Associate
Director of Regulatory Affairs for Tularik, Inc. from December
2000 to December 2002. Earlier, he was Senior Manager for
Regulatory Affairs at Genentech, Inc. and Senior Associate for
Regulatory Affairs with Syntex of Palo Alto. Mr. Trass
holds a B.S. degree from Indiana University.
Warren W. Wasiewski, M.D.
was appointed Chief
Medical Officer in November 2007, and previously served the
Company as Vice President, Clinical Programs beginning in
February 2007. He is a board certified pediatric neurologist
with an extensive clinical career, including 19 years in
pediatric neurology. Prior to joining the Company,
Dr. Wasiewski was employed with AstraZeneca LP from
December 2001 to February 2007, where he began as an Associate
Medical Director and was promoted to Senior Medical Director of
Clinical Research CNS/Emerging Products. Before joining
AstraZeneca, Dr. Wasiewski was Chairman of Pediatrics at
Lancaster General Hospital from 1998 to 2001, and from 1991 to
2001 he was a Consultant Neurologist at Pediatric Neurology
Associates in Lancaster, Pennsylvania, a practice he founded in
1991. Prior to founding Pediatric Neurology Associates, he was
an assistant professor of pediatrics at Penn State Medical
School in Hershey, Pennsylvania. Among his professional
affiliations, Dr. Wasiewski is a Fellow of the American
Academy of Neurology, Fellow of the American Academy of
Pediatrics, a member of Alpha Omega Alpha, the national Medical
Honor Society and a member of the American Heart Association. He
is widely published in areas of disease of the central nervous
system including migraine and stroke. Dr. Wasiewski holds a
B.A. degree from Rutgers College, an M.S. degree from State
University of New York Downstate Medical Center and an M.D.
degree from the State University of New York at Buffalo.
9
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related
Party Transaction Review and Approval
Our Board of Directors has adopted policies and procedures for
the review and approval of related party transactions and has
delegated to the Audit Committee the authority to review and
approve the material terms of any proposed related party
transactions.
Pursuant to our Code of Business Conduct and Ethics, each of our
executive officers, directors and employees must disclose
transactions involving actual or apparent conflicts of
interests, such as related party transactions, to his or her
direct supervisor or the Chief Executive Officer. In order to
avoid such conflicts, our executive officers, directors and
employees may not receive any payments, compensation or gifts,
other than gifts of nominal value, from any entity that does
business or seeks to do business with us. Furthermore, our
executive officers, directors and employees may not use property
or information belonging to us or their position with us for
improper personal gain.
In determining whether to approve or ratify a related-party
transaction, the Audit Committee may consider, among other
factors it deems appropriate, the potential benefits to us, the
impact on a directors or nominees independence or an
executive officers relationship with or service to us,
whether the related party transaction is on terms no less
favorable than terms generally available to an unaffiliated
third party under the same or similar circumstances and the
extent of the related partys interest in the transaction.
In deciding to approve a transaction, the Audit Committee may,
in its sole discretion, impose such conditions as it deems
appropriate on us or the related party in connection with its
approval of any transaction. Any transactions involving the
compensation of executive officers, however, are to be reviewed
and approved by the Compensation Committee. If a related-party
transaction will be ongoing, the Audit Committee may establish
guidelines to be followed in our ongoing dealings with the
related party. Thereafter, the Audit Committee, on at least an
annual basis, will review and assess ongoing relationships with
the related party to see that they are in compliance with the
committees guidelines and that the related-party
transaction remains appropriate.
10
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial
ownership of our common stock as of September 30, 2008
based on information available to us and filings with the SEC by:
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each of our directors and director nominees;
|
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|
|
each of our named executive officers as defined
under the Executive Compensation caption below;
|
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|
|
all of our current directors and executive officers as a
group; and
|
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|
|
each person or group of affiliated persons known by us to be the
beneficial owner of more than 5% of our common stock.
|
Beneficial ownership and percentage ownership are determined in
accordance with the rules of the SEC and include voting or
investment power with respect to shares of stock. This
information does not necessarily indicate beneficial ownership
for any other purpose. Under these rules, shares of common stock
issuable under stock options that are exercisable within
60 days of September 30, 2008 and upon conversion of
shares of Series A Preferred Stock are deemed outstanding
for the purpose of computing the percentage ownership of the
person holding the options or Series A Preferred Stock, but
are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
Unless otherwise indicated and subject to applicable community
property laws, to our knowledge, each stockholder named in the
following table possesses sole voting and investment power over
their shares of common stock, except for those jointly owned
with that persons spouse. Percentage of beneficial
ownership of common stock is based on 26,924,124 shares of
common stock outstanding as of September 30, 2008.
Percentage of beneficial ownership of Series A Preferred
Stock is based on 494,000 shares of Series A Preferred
Stock outstanding as of September 30, 2008. Unless
otherwise noted below, the address of each person listed on the
table is
c/o Neurobiological
Technologies, Inc., 2000 Powell Street, Suite 800,
Emeryville, California 94608.
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Shares
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|
Shares of
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Shares of
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with Right to
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Series A
|
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Percentage
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Common
|
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Acquire
|
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Total
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Percentage
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Preferred
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of Series A
|
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Stock
|
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Within 60
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Beneficial
|
|
of Common
|
|
Stock
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Preferred
|
Name and Address
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Owned
|
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days
|
|
Ownership
|
|
Stock
|
|
Owned
|
|
Stock
|
|
BVF, Inc.(1)
|
|
|
5,288,754
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|
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|
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5,288,754
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19.6
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%
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900 N. Michigan Avenue, Suite 1100
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Chicago, Illinois 60611
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Highland Capital Management, L.P.(2)
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4,951,154
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4,951,154
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18.4
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%
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Two Galleria Tower
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13455 Noel Road, Suite 800
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Dallas, Texas 75240
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SF Capital Partners Ltd.(3)
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3,723,754
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3,723,754
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13.8
|
%
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3600 South Lake Drive
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St. Francis, WI 53235
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Great Point Partners, LLC(4)
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1,792,561
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217,391
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2,009,952
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7.4
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%
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165 Mason Street, 3rd Floor
|
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Greenwich, CT 06830
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Millennium Technology Ventures(5)
|
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1,909,090
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1,909,090
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7.1
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%
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|
|
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747 Third Avenue, 38th Floor
|
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New York, New York 10017
|
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John B. Stuppin
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164,484
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49,282
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213,766
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*
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100,000
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20.2
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%
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Abraham E. Cohen
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118,707
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44,063
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162,770
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*
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Abraham D. Sofaer
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110,931
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46,919
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157,850
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*
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100,000
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20.2
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%
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Paul E. Freiman
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17,386
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86,843
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104,229
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|
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*
|
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|
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F. Van Kasper
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43,600
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53,139
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96,739
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*
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William A. Fletcher
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43,600
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28,570
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72,170
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*
|
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Theodore L. Eliot, Jr.
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2,617
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32,634
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35,251
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*
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David E. Levy, M.D.
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13,115
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12,320
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25,435
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*
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Warren W. Wasiewski, M.D.
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4,762
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|
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4,762
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|
*
|
|
|
|
|
|
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Craig W. Carlson
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1,000
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1,000
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*
|
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|
All current executive officers and directors as a group
(12 persons)(6)
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517,274
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397,698
|
|
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|
914,972
|
|
|
|
3.4
|
%
|
|
|
200,000
|
|
|
|
40.4
|
%
|
11
|
|
|
*
|
|
Less than one percent.
|
|
(1)
|
|
Based on information contained in a Schedule 13D filed
June 26, 2008 by Biotechnology Value Fund, L.P.
(BVF)
, Biotechnology Value
Fund II, L.P.
(BVF2)
, BVF
Investments, L.L.C.
(Investments)
,
Investment 10, L.L.C.
(ILL10)
, BVF
Partners L.P.
(Partners)
and BVF Inc.
(BVF Inc
.). According to the
Schedule 13D, (i) BVF beneficially owned
1,241,336 shares of common stock; (ii) BVF2
beneficially owned 843,807 shares of common stock;
(iii) Investments beneficially owned 2,853,250 shares
of common stock; and (iv) ILL10 beneficially owned
350,361 shares of common stock as of October 29, 2007.
Accordingly, beneficial ownership by Partners and BVF Inc.
includes a total of 5,288,754 shares of common stock.
Pursuant to the operating agreement of Investments, Partners is
authorized, among other things, to invest the funds of Ziff
Asset Management, L.P., the majority member of Investments, in
shares of the common stock and to vote and exercise dispositive
power over those shares of the common stock. Partners and BVF
Inc. share voting and dispositive power over shares of the
common stock beneficially owned by BVF, BVF2, Investments and
those owned by ILL10, on whose behalf Partners acts as an
investment manager and, accordingly, Partners and BVF Inc. have
beneficial ownership of all of the shares of the common stock
owned by such parties.
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(2)
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Based on information contained in a Schedule 13G/A filed
February 14, 2008 by Highland Capital Management, L.P.
(Highland)
, Strand Advisors, Inc.
(Strand)
and James Dondero
(Dondero)
. According to the
Schedule 13G/A, (i) Highland beneficially owned
4,951,154 shares of common stock; (ii) Strand
beneficially owned 4,951,154 shares of common stock; and
(iii) Dondero beneficially owned 4,951,154 shares of
common stock as of December 31, 2007. Highland Capital
principally serves as an investment adviser and/or manager to
other persons; Highland Capital may be deemed to beneficially
own shares owned and/or held by and/or for the account of and/or
benefit of other persons. Strand serves as the general partner
of Highland Capital; Strand may be deemed to beneficially own
shares owned and/or held by and/or for the account of and/or
benefit of Highland Capital. Dondero is the President and a
director of Strand; Dondero may be deemed to beneficially own
shares owned and/or held by and/or for the account of and/or
benefit of Strand.
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(3)
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Based on information contained in a Schedule 13G filed
November 9, 2007 by Michael A. Roth
(Roth)
and Brian J. Stark
(Stark)
(together,
Reporting Persons)
. According to the
Schedule 13G, Roth and Stark beneficially owned
3,723,754 shares of common stock as of October 30,
2007, which represents an aggregate of 3,723,754 shares of
common stock held directly by SF Capital Partners Ltd.
(SF Capital)
. The Reporting Persons
direct the management of Stark Offshore Management LLC
(Stark Offshore)
, which acts as the
investment manager and has sole power to direct the management
of SF Capital. As the Managing Members of Stark Offshore, Roth
and Stark possess voting and dispositive power over all of the
foregoing shares. Thus, Roth and Stark may be deemed to be the
beneficial owners of the foregoing shares.
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(4)
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Based on information contained in a Schedule 13G/A filed
February 14, 2008 by Great Point Partners, LLC
(Great Point)
, Jeffrey R.
Jay, M.D.
(Jay)
and
Mr. David Kroin
(Kroin)
.
According to the Schedule 13G, (i) Great Point
beneficially owned 2,009,952 shares of common stock;
(ii) Jay beneficially owned 2,009,952 shares of common
stock; and (iii) Kroin beneficially owned
2,009,952 shares of common stock as of December 31,
2007. Biomedical Value Fund, L.P.
(BMVF)
is the direct beneficial owner
of 1,085,371 shares (the
BMVF
Shares)
, consisting of 967,980 shares of
common stock and warrants to purchase 117,391 shares of
common stock. Great Point is the investment manager of BMVF, and
by virtue of such status may be deemed to be the beneficial
owner of the BMVF Shares. Each of Jay, as senior managing member
of Great Point, and Kroin, as special managing member of Great
Point, has voting and investment power with respect to the BMVF
Shares, and therefore may be deemed to be the beneficial owner
of the BMVF Shares. Biomedical Offshore Value Fund, Ltd.
(BOVF)
is the direct beneficial owner
of 924,581 shares (the
BOVF
Shares)
, consisting of 824,581 shares of
common stock and warrants to purchase 100,000 shares of
common stock. Great Point is the investment manager of BOVF, and
by virtue of such status may be deemed to be the beneficial
owner of the BOVF Shares. Each of Jay, as senior managing member
of Great Point, and Kroin, as special managing member of Great
Point, has voting and investment power with respect to the BOVF
Shares, and therefore may be deemed to be the beneficial owner
of the BOVF Shares.
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(5)
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Based on information contained in a Schedule 13G filed
November 8, 2007 by Daniel Burstein and Samuel L. Schwerin
on behalf of Millennium Technology Ventures. According to the
Schedule 13G, (i) Daniel Burstein beneficially owned
1,818,181 shares of common stock; and (ii) Samuel L.
Schwerin beneficially owned 1,909,090 shares of common
stock as of October 30, 2007. Mr. Schwerin and
Mr. Burstein have shared control
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of the entity indirectly controlling each of Millennium
Technology Value Partners (RCM), L.P., a Delaware limited
partnership
(Millennium RCM LP)
and
Millennium Technology Value Partners, L.P., a Delaware limited
partnership
(Millennium LP)
.
Therefore, each of Mr. Schwerin and Mr. Burstein have
shared dispositive and voting power with respect to, and are the
beneficial owners of, an aggregate of 1,818,181 shares of
the Companys common stock, including 914,923 shares
of common stock (representing 3.4% of the Companys issued
and outstanding shares) owned directly by Millennium RCM LP and
903,258 shares of common stock (representing 3.4% of the
Companys issued and outstanding shares) owned directly by
Millennium LP. In addition, Mr. Schwerin is the direct
beneficial owner of 90,909 shares of common stock of the
Company, for which he has sole dispositive and voting power.
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(6)
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Includes the directors and named executive officers, plus two
additional executive officers not listed in the table.
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SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors, and persons who
own more than 10% of a registered class of our equity securities
to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Executive officers, directors
and greater than 10% stockholders are required by SEC
regulations to furnish us with copies of all reports filed under
Section 16(a). To the Companys knowledge, based
solely on the review of copies of the reports furnished to the
Company, all executive officers, directors and greater than 10%
stockholders were in compliance with all applicable
Section 16(a) filing requirements in fiscal 2008, except
that (i) a Form 4 was not timely filed for
Dr. Levy in connection with his purchase of
10,000 shares of Common Stock that occurred on
October 30, 2007. The Form 4 was subsequently filed on
November 13, 2007, and (ii) a Form 3 was not
timely filed for Dr. Wasiewski in connection with his
becoming a Section 16 reporting person on
September 17, 2007. The Form 3 was subsequently filed
on May 16, 2008.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The following compensation discussion and analysis describes the
material elements of compensation awarded to, earned by, or paid
in fiscal 2008 to each of the executive officers identified
below in the Summary Compensation Table, who are referred to
collectively as our named executive officers. The
Compensation Committee assists our Board of Directors in the
discharge of its responsibilities regarding compensation of our
executives, including the named executive officers. Our Chief
Executive Officer generally makes recommendations to the
Compensation Committee regarding the corporate goals and
objectives relevant to executive compensation and
executives performance in light of such goals and
objectives, and recommends the executives compensation
levels to the Compensation Committee based on such evaluations.
Regarding officer compensation for fiscal 2008, the Compensation
Committee, after considering the report regarding equity
compensation at peer companies provided by Radford
Surveys & Consulting and after considering peer
company compensation data, then made recommendations to our
Board of Directors for final approval.
Compensation
Philosophy and Objectives
Our compensation program is designed to attract, inspire,
motivate and reward executives responsible for attaining the
financial and strategic objectives essential to our long-term
success and growth in stockholder value. The key objectives of
the compensation program are to:
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attract and retain executives who are talented, qualified and
capable of achieving our business objectives;
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inspire and motivate executives to achieve operating goals
through an emphasis on performance-based compensation;
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provide a strong, direct link between our financial and
strategic goals and executive compensation;
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align the interests of our executives and stockholders; and
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fairly reward executives for their efforts.
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13
The Compensation Committee evaluates individual executive
performance with a goal of setting compensation at levels the
committee believes are comparable with executives in other
companies of similar size and stage of development operating in
the biopharmaceutical industry, while taking into account our
relative performance and our own strategic goals. We strive to
provide a total compensation package to senior management that
is competitive in the marketplace, recognizes individual
performance and provides opportunities to earn rewards based on
achievement of short-term and long-term corporate objectives.
In the biopharmaceutical industry, many traditional measures of
corporate performance, such as earnings per share or sales
growth, may not readily apply in reviewing performance of
executives. Because of our current stage of development, we have
not used profitability or short-term market value of our stock
as a significant factor in review of executives
performance and setting compensation. As such, we evaluate other
indications of performance, such as progress of our drug
development programs and corporate development activities, our
success in recruiting and retaining highly qualified personnel
and our success in securing capital sufficient to enable us to
continue drug development activities. These considerations
necessarily involve an assessment by the Compensation Committee
of both individual and corporate performance.
The primary elements of our executive compensation program are
(i) base compensation or salary, (ii) annual cash
bonuses and (iii) equity-based awards granted pursuant to
our 2003 Equity Incentive Plan. In addition, we provide our
executive officers a variety of benefits that are available
generally to all salaried employees, including participation in
our 2003 Employee Stock Purchase Plan. We view these components
as related but distinct. The Compensation Committee determines
the appropriate level for each compensation component based in
part, but not exclusively, on competitive benchmarking
consistent with recruiting and retention goals, its view of
internal equity and consistency, and individual performance. We
believe that, as is common in the biotechnology and
pharmaceutical industries, stock-based awards, salary and cash
bonuses are all necessary to attract and retain employees. We
have not adopted any formal or informal policies or guidelines
for allocating compensation between long-term and short-term
compensation, or between cash and non-cash compensation.
Competitive
Market; Benchmarking
While we do not believe that it is appropriate to establish
compensation levels based solely on benchmarking, we believe
that information regarding pay practices at other companies is
nevertheless useful in two respects. First, we recognize that
compensation practices must be competitive in the marketplace.
Second, independent marketplace information is one of the many
factors that we consider in assessing the reasonableness of
compensation. Accordingly, our Compensation Committee retained
Radford Surveys & Consulting
(Radford)
, a compensation consultant
recognized in the biotechnology industry to review our policies
and procedures with respect to executive compensation for fiscal
2008.
Additionally, the Compensation Committee conducts an annual
benchmark review of the benefits of our executive officers,
based on the Radford Benefits Survey. This survey provides data
on cost of benefits, health and welfare plans, flexible
benefits, retirement plans, paid time off, HR practices,
relocation practices and other benefits.
Cash
Compensation Elements
Base Salary.
We seek to provide our executive
officers with competitive annual base salaries in order to
attract and retain talented individuals. The base salary
component of our executive officer compensation program is not
designed to incentivize our near-term performance (as
performance-based cash bonuses are designed to do), but rather
to provide the baseline level of compensation to executive
officers. In most cases, the base salary component will
represent the largest annual form of compensation to executive
officers, although we have no formal policy regarding the
allocation between base salary and other forms of compensation.
In making decisions regarding base salary levels, the
Compensation Committee will consider and evaluate the total
compensation package, including possible performance-based cash
bonuses and periodic equity awards, received or to be received
by a particular executive officer, and seek to ensure that the
executive officers total compensation package is fair,
reasonable and
14
competitive. In determining appropriate salary levels for a
given executive officer, the Compensation Committee considers
the following factors:
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individual performance of the executive, as well as our overall
performance, during the prior year;
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level of responsibility;
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breadth, scope and complexity of the position;
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internal review of the executives compensation relative to
other executives to ensure internal equity; and
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executive officer compensation levels at other similar companies
to ensure competitive compensation.
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Salaries for executive officers are determined on an individual
basis at the time of hire and are set to be competitive with
comparable businesses in our industry. Adjustments to base
salary are considered annually in light of each officers
performance, our performance and compensation levels at other
companies within our industry, as well as upon promotion or
other change in job responsibilities. The Chief Executive
Officer assists the Compensation Committee in its annual review
of the base salaries of other executive officers based on the
foregoing criteria.
The base salaries actually paid to each of the named executive
officers in fiscal 2008 is set forth below in the Summary
Compensation Table.
Cash Bonus.
We also provide executive officers
with discretionary annual cash bonuses, which are specifically
designed to reward executives for our overall performance as
well as their individual performance in a given year. The
Compensation Committee considers the performance of the officer,
as well as the Companys performance, for the preceding
fiscal year in deciding whether to award a discretionary bonus
and, if one is to be awarded, the size of the bonus. All cash
bonuses are awarded retrospectively. We currently have no formal
policy regarding the payment of discretionary cash bonuses, and
such bonuses are only paid if and when the Compensation
Committee or the Board deems appropriate based upon the
circumstances, although the Compensation Committee may establish
targeted payouts and performance goals that would be considered
by the Committee in making its determination.
For fiscal 2008 the Board approved a bonus plan for
Mr. Freiman and Drs. Wasiewski and Levy, wherein
specified cash bonus payments would be tied to the
Companys ability to complete its analysis of interim
clinical trial data from the ongoing ASP trials of Viprinex for
the treatment of acute ischemic stroke. If the interim data
analysis were completed by September 30, 2008, then the
Company would pay bonuses of up to 100% of base salary for
Mr. Freiman and Dr. Wasiewski and up to 50% of base
salary for Dr. Levy, if not completed by September 30,
2008, then the Compensation Committee and the Board would have
the discretion to determine an appropriate bonus payout. Because
the enrollment of patients into the Companys clinical
trial was not sufficient to complete the interim analysis by
September 30, 2008, the Company did not award any bonus
amounts relating to these goals. However, the Compensation
Committee determined that other specific progress regarding
enrollment into the clinical trials had been made, although not
to the level that would qualify for the higher bonus
percentages. The Compensation Committee and Board of Directors
also determined that other key business objectives were met, and
on September 11, 2008, the Board of Directors awarded
bonuses of 25% of base salary for Mr. Freiman and
Dr. Wasiewski, and 10% of base salary for Dr. Levy.
Equity
Awards
Stock Options and Restricted Stock.
As an
additional component of our compensation program, executive
officers are eligible to receive equity compensation in the form
of stock options or restricted stock awards. The Compensation
Committee grants stock options to executive officers to aid in
their retention, to motivate them to assist with the achievement
of corporate objectives and to align their interests with those
of our stockholders by creating a return tied to the performance
of our stock price. In determining the timing and size of stock
option grants, the Compensation Committee considers the
contributions and responsibilities of each executive,
appropriate incentives for the promotion of our long-term
growth, grants made to other executives in the industry holding
comparable positions, our performance relative to corporate
objectives, and recent growth or decline in stockholder value.
15
Under the terms of our 2003 Equity Incentive Plan, or the Plan,
pursuant to which all new equity grants are currently made, the
exercise price of any stock options awarded under the Plan must
be equal to at least 100% of the fair market value of our common
stock (the closing sales price on the NASDAQ Capital Market) on
the date of grant. We do not have any program, plan or
obligation that requires us to grant equity awards on specified
dates, although we usually make annual grants to existing
officers and employees during the first quarter of each fiscal
year and to new hires upon commencement of their employment, nor
do we have in place any program, plan or practice to time stock
option grants to our executive officers in coordination with the
release of material nonpublic information. Stock option grants
may occasionally be considered following a significant change in
job responsibilities or to meet other special retention or
performance objectives. No such grants were made during fiscal
2008. Authority to make equity grants to non-executive employees
rests with the Compensation Committee. With respect to executive
officers, recommendations for equity grants are made by our
Chief Executive Officer to the Compensation Committee, which in
turn makes recommendations to the Board for final approval. The
Compensation Committee considers recommendations of the Chief
Executive Officer in all such decisions, except for compensation
of the Chief Executive Officer.
We believe that periodic equity awards serve as useful
performance recognition mechanisms with respect to key
employees, as most awards are subject to time-based vesting
provisions. Occasionally the granting or vesting of a stock
award may be made contingent on achievement of certain specific
performance conditions. We believe that such periodic equity
awards encourage executive officers to remain with us and also
focus on our long-term performance.
In November 2007, following the completion of an underwritten
stock offering, our Board of Directors, upon recommendation of
the Compensation Committee, considered the retentive value of
the Companys outstanding equity awards following our
one-for-seven reverse-split, which had the effect of reducing
the number of shares underlying outstanding equity awards and
increasing the exercise price of outstanding options. The Board
of Directors and the Compensation Committee also considered the
underlying value of the outstanding equity awards and data
regarding outstanding and authorized equity awards at other
biotechnology companies. Following these considerations, the
Compensation Committee and Board of Directors made proposals for
special one-time option grants to our directors and employees,
including our executive officers, which would be granted
following stockholder approval of an amendment to the Plan,
increasing the number of shares authorized for issuance
thereunder. This amendment to the Plan was submitted to the
stockholders for approval in April 2008. In May 2008, based on
feedback received from certain stockholders, the proposed awards
to our directors and Chief Executive Officer were reduced in
size, and a minimum exercise price above the then-current market
price was also established for certain grants. On May 30,
2008, the amendment to the Plan was approved by the stockholders
and the proposed option grants were awarded to the directors and
employees.
Our Plan also permits the award of restricted stock. No
restricted stock awards were granted to officers in fiscal 2008.
Employee Stock Purchase Plan.
Our 2003
Employee Stock Purchase Plan, or the Purchase Plan, provides
eligible employees, including executive officers, with the
opportunity to purchase common stock at a discount through
payroll deductions during defined six-month accumulation
periods. The price at which the stock is purchased is equal to
the lower of 85% of the fair value of the stock on the last
trading day before the commencement of the applicable offering
period or 85% of the fair value of the common stock on the last
trading day of the accumulation period. Participating employees
may end their participation at any time during an offering
period, and they will be paid their payroll deductions
accumulated to that date. Participation ends automatically upon
termination of employment and payroll deductions credited to the
participating employees account are returned to such
employee without interest. In fiscal 2008, none of the named
executive officers purchased shares under the Purchase Plan.
Other
Benefits
Executive officers are eligible to participate in all of our
employee benefit plans, such as medical, dental, vision, group
life, disability and accidental death and dismemberment
insurance, in each case on the same basis as other employees,
subject to applicable law. We also provide vacation and other
paid holidays to all employees,
16
including executive officers, all of which we believe to be
comparable to those provided at peer companies. These benefit
programs are designed to enable us to attract and retain our
workforce in a competitive marketplace. Health, welfare and
vacation benefits ensure that we have a productive and focused
workforce through reliable and competitive health and other
benefits.
Our retirement savings plan (401(k) Plan) is a tax-qualified
retirement savings plan, pursuant to which all employees,
including the named executive officers, are able to contribute a
portion of their annual compensation, subject to limits
prescribed by the Internal Revenue Service. In fiscal 2008, we
contributed $500 to the 401(k) accounts of Dr. Levy and
Mr. Carlson.
Additionally, we have agreed to reimburse up to $10,000 of
Dr. Levys annual professional insurance fees. We also
maintain an apartment in Edgewater, New Jersey for
Dr. Wasiewski, our Vice President and Chief Medical
Officer, in lieu of paying relocation expenses upon his
commencement of employment with us.
Change-in-Control
Arrangements
Our Plan provides that the time-based (but not
performance-based) vesting of all outstanding equity awards will
fully accelerate in the event of a change in
control, which term is defined below under the heading
Potential Payments Upon Termination or Change in
Control.
Information regarding the potential value of these payments is
provided below for the named executive officers under the
heading Potential Payments Upon Termination or Change in
Control.
Compensation
of our Named Executive Officers
Mr. Freiman, our President and Chief Executive Officer, is
compensated with a base salary and, depending on performance and
our financial condition, an annual cash bonus
and/or
stock
option award. After conducting its annual review in September
2008, in which it considered the report provided by Radford and
peer-company compensation data as well as Company performance in
fiscal 2008, the Board of Directors awarded Mr. Freiman a
bonus of $100,000. The Board of Directors also increased
Mr. Freimans base salary by 5%, from $400,000 to
$420,000. In May 2008, Mr. Freiman was awarded an option
under the Plan for the purchase of 300,000 shares of common
stock. The exercise price of Mr. Freimans option was
set at $3.00 per share, which price was above the closing price
of the Companys common stock on the date of grant, as
quoted on the Nasdaq Capital Market ($2.08). The option grant
was intended only to provide a return to Mr. Freiman if and
to the extent the Companys stock price increased above
$3.00 per share. The option has a term of seven years and vests
and becomes exercisable in equal monthly installments over four
years, subject to a six-month cliff.
Dr. Wasiewski, our Vice President and Chief Medical
Officer, is compensated with a base salary and, depending on
performance and our financial condition, an annual cash bonus
and/or
stock
option award. Dr. Wasiewskis base salary was set at
$305,000 upon his promotion to Chief Medical Officer in November
2007. In May 2008, Dr. Wasiewski was awarded an option to
purchase 250,000 shares of our common stock under the Plan.
The option has an exercise price of $2.08 per share, has a term
of seven years and vests and becomes exercisable in equal
monthly installments over four years, subject to a six-month
cliff. In September 2008, Dr. Wasiewski was awarded a bonus
of $76,250 for his performance in fiscal 2008 and his annual
salary was increased approximately 5% to $320,000.
Dr. Levy, our Vice President, Clinical Development, is
compensated with a base salary and, depending on performance and
our financial condition, an annual cash bonus
and/or
stock
option award. In May 2008, Dr. Levy was awarded an option
to purchase 125,000 shares of our common stock under our
2003 Equity Incentive Plan. The option has an exercise price of
$2.08 per share, has a term of seven years and vests and becomes
exercisable in equal monthly installments over four years,
subject to a six-month cliff. In September 2008, Dr. Levy
was awarded a bonus of $25,625 for his performance in fiscal
2008 and his annual salary was increased approximately 2% to
$261,500.
At the time of his resignation in March 2008,
Mr. Carlsons base salary was $250,000. He received a
one-time severance payment of $125,000. Mr. Carlson was not
employed by the Company in September 2008 when fiscal 2008 bonus
determinations were made, and accordingly was not awarded a
bonus for performance in fiscal 2008.
17
Tax
Considerations Deductibility of Executive
Compensation
In making compensation decisions affecting our executive
officers, the Compensation Committee considers our ability to
deduct under applicable federal corporate income tax law
compensation payments made to executives. Specifically, the
Compensation Committee considers the requirements and impact of
Section 162(m) of the Internal Revenue Code, which limits
the tax deductibility to us of compensation in excess of
$1.0 million in any year for certain executive officers,
except for qualified performance-based compensation
under the Section 162(m) rules. The Compensation Committee
considers the Section 162(m) rules as a factor in
determining compensation, but will not necessarily limit
compensation to amounts deductible under Section 162(m). No
executive compensation exceeded $1.0 million for fiscal
2008.
Role
of Executives in Determining Compensation
Our Compensation Committee reviews the performance and
compensation of our Chief Executive Officer on an annual basis
and establishes our Chief Executive Officers compensation
level. Our Chief Executive Officer is not present for these
discussions related to his compensation. For the remaining
executives, the Chief Executive Officer makes recommendations to
the Compensation Committee based upon individual experience and
breadth of knowledge, internal considerations, and other
subjective factors that the committee takes into account when
determining executive compensation.
Allocation
of Compensation
There is no pre-established policy or target for the allocation
of compensation. The factors described above, as well as the
overall compensation philosophy, is reviewed to determine the
appropriate level and mix of compensation. Historically, and in
fiscal 2008, the largest portion of compensation to named
executive officers was granted in the form of base salary.
Timing
of Compensation
As discussed elsewhere, compensation, including salary base
adjustments, for our named executive officers is reviewed
annually, usually in the first quarter of the fiscal year.
Minimum
Stock Ownership Requirements
There are no minimum stock ownership guidelines for our
executives or employees, although executives are encouraged to
own shares of the Company and the equity compensation program is
designed in part to foster these levels of increased ownership.
Conclusion
Our compensation policies are designed and are continually being
developed to retain and motivate our executive officers and to
reward them for outstanding individual and corporate performance.
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed with management the Compensation Discussion and
Analysis required by Item 402(b) of
Regulation S-K.
Based on this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement.
Compensation Committee
Abraham D. Sofaer, Chairman
Abraham Cohen
Theodore L. Eliot, Jr.
18
Summary
Compensation Table
The following table summarizes compensation paid, awarded or
earned for services rendered during fiscal 2008 by our Chief
Executive Officer, our two other most highly compensated
executive officers whose salary and bonus for fiscal 2008
exceeded $100,000, and one additional individual who would have
been among the Companys two most highly compensated
executive officers, other than the Chief Executive Officer, but
for the fact that he was not serving as an executive officer at
the end of the last completed fiscal year. We refer to these
four executive officers as our named executive officers.
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Non-Equity
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Fiscal
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Incentive Plan
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Option
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All Other
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Name and Principal Position(s)
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Year
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Salary
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Compensation(1)
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Awards(2)
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Compensation(3)
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Total
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Paul E. Freiman
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2008
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$
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400,000
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$
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100,000
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$
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223,603
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$
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$
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723,603
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President, Chief Executive
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2007
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395,833
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150,000
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295,443
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841,276
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Officer and Director
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warren W. Wasiewski, M.D.(4)
|
|
|
2008
|
|
|
|
295,000
|
|
|
|
76,250
|
|
|
|
65,872
|
|
|
|
36,875
|
|
|
|
473,997
|
|
Vice President and Chief
|
|
|
2007
|
|
|
|
98,013
|
|
|
|
70,000
|
|
|
|
20,991
|
|
|
|
111,414
|
|
|
|
300,418
|
|
Medical Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David E. Levy, M.D.
|
|
|
2008
|
|
|
|
256,500
|
|
|
|
25,625
|
|
|
|
81,717
|
|
|
|
10,500
|
|
|
|
374,342
|
|
Vice President, Clinical
|
|
|
2007
|
|
|
|
255,208
|
|
|
|
25,000
|
|
|
|
77,357
|
|
|
|
10,500
|
|
|
|
368,065
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig W. Carlson(5)
|
|
|
2008
|
|
|
|
187,500
|
|
|
|
|
|
|
|
71,616
|
|
|
|
125,500
|
|
|
|
384,616
|
|
Former Vice President and
|
|
|
2007
|
|
|
|
219,712
|
|
|
|
43,000
|
|
|
|
65,619
|
|
|
|
|
|
|
|
328,331
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Company awarded non-equity incentive plan amounts related to
fiscal 2007 performance in November 2007, following completion
of an underwritten public offering which raised $60 million
(before expenses). The Company awarded non-equity incentive plan
amounts related to fiscal 2008 performance in September 2008.
|
|
(2)
|
|
Option awards are valued based on a Black-Scholes option pricing
model as used in our consolidated financial statements pursuant
to Statement of Accounting Standards No. 123R,
Share-Based Payment. The Black-Scholes option
pricing model reflects certain assumptions regarding variable
factors such stock price volatility and the term of the option.
Stock options have value to the recipient only as a result of
appreciation in the price of our common stock. For the purposes
of establishing the value shown in the table, the model assumed
a dividend yield of zero, risk-free interest rates of 3.4%,
volatility factor of 75%, and an expected life of the options of
4
3
/
4
years. For financial reporting purposes, we also used an
estimated forfeiture rate, but this rate has not been included
in the balances in the table because the forfeiture rate is an
overall estimate for the organization as a whole and cannot be
attributed specifically to any of our executive officers.
|
|
(3)
|
|
All other compensation for Dr. Wasiewski for both fiscal
2008 and fiscal 2007 consists of expenses related to the rental
of an apartment near our New Jersey office location. In fiscal
2007, Dr. Wasiewski also received a sign-on bonus of
$100,000 payable in installments after he accepted employment
with us. All other compensation for Dr. Levy for both
fiscal 2008 and fiscal 2007 consists of $10,000 towards payment
of his professional insurance and a 401(k) matching contribution
of $500 in each fiscal year. All other compensation for
Mr. Carlson consists of a severance payment of $125,000 in
fiscal 2008 and a 401(k) matching contribution of $500.
|
|
(4)
|
|
Dr. Wasiewski was hired on February 20, 2007.
|
|
(5)
|
|
Mr. Carlson resigned effective March 31, 2008.
|
19
Outstanding
Equity Awards at Fiscal Year-End
The following table shows information regarding outstanding
equity awards at June 30, 2008 for our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Paul E. Freiman
|
|
|
8,348
|
|
|
|
3,794
|
|
|
$
|
26.95
|
|
|
|
9/22/2015
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
3.00
|
|
|
|
5/30/2015
|
|
|
|
|
20,088
|
|
|
|
1,340
|
|
|
|
27.79
|
|
|
|
9/23/2014
|
|
|
|
|
15,403
|
|
|
|
6,025
|
|
|
|
17.57
|
|
|
|
9/19/2013
|
|
|
|
|
10,714
|
|
|
|
|
|
|
|
43.32
|
|
|
|
5/10/2010
|
|
|
|
|
21,428
|
|
|
|
|
|
|
|
5.60
|
|
|
|
12/02/2009
|
|
|
|
|
7,142
|
|
|
|
|
|
|
|
4.38
|
|
|
|
3/17/2009
|
|
|
|
|
21,428
|
|
|
|
|
|
|
|
4.90
|
|
|
|
9/22/2008
|
|
David E. Levy, M.D.
|
|
|
10,668
|
|
|
|
1,474
|
|
|
|
26.95
|
|
|
|
9/22/2015
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
2.08
|
|
|
|
5/30/2015
|
|
|
|
|
625
|
|
|
|
803
|
|
|
|
17.57
|
|
|
|
9/19/2013
|
|
Warren W. Wasiewski
|
|
|
|
|
|
|
250,000
|
|
|
|
2.08
|
|
|
|
5/30/2015
|
|
|
|
|
4,762
|
|
|
|
9,523
|
|
|
|
19.25
|
|
|
|
2/20/2014
|
|
Craig W. Carlson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Exercises
During the fiscal year ended June 30, 2008, none of our
named executive officers or directors exercised any stock
options.
Pension
Benefits
We do not have a defined benefit plan. Our named executive
officers did not participate in, or otherwise receive any
special benefits under, any pension or retirement plan sponsored
by us during fiscal 2008.
Nonqualified
Deferred Compensation
During fiscal 2008, our named executive officers did not
contribute to, or earn any amounts with respect to, any defined
contribution or other plan sponsored by us that provides for the
deferral of compensation on a basis that is not tax-qualified.
Potential
Payments upon Termination or Change in Control
There are no severance or change in control agreements in place
for any of our named executive officers. Our 2003 Equity
Incentive Plan provides that the time-based (but not
performance-based) vesting of all outstanding equity awards will
fully accelerate in the event of a change in
control, which is defined under the plan as (A) any
merger, consolidation or other transaction to which we or an
affiliate are a party and in which our beneficial stockholders,
immediately before the transaction, beneficially own securities
representing 50% or less of our total combined voting power or
value immediately after the transaction or (B) any other
transaction or corporate event deemed by the Board to constitute
a change in control including, but not limited to, (i) a
transaction or series of transactions in which any person or
entity, including a group as contemplated by
Section 13(d)(3) of the Exchange Act, acquires
securities holding 30% or more of our total combined voting
power or value, or (ii) as a result of or in connection
with a contested election of our directors, the persons who were
our directors immediately before the election cease to
constitute a majority of the Board.
20
Assuming that a change in control occurred as of the end of
fiscal 2008, and based on our closing stock price on the last
day of trading that year ($1.42), the named executive officers
would have received no change in control benefits because the
exercise prices of then outstanding options was higher than the
closing price of our stock.
Director
Compensation
The Company pays the following quarterly cash retainer fees to
each non-employee director in lieu of fees based on meeting
attendance:
|
|
|
Chairman of the Board
|
|
$10,000 per quarter
|
Chairman of the Audit Committee
|
|
$8,750 per quarter
|
All other non-employee directors
|
|
$7,500 per quarter
|
On May 30, 2008, upon the recommendation of the Board, the
stockholders of the Company approved an amendment to our Plan
to, among other things, provide that non-employee directors will
receive an annual automatic grant of an option to purchase
15,000 shares commencing on the date of the 2008 annual
meeting of stockholders. Prior to May 30, 2008, each
non-employee director annually received an option to acquire
1,428 shares of the Companys common stock upon
re-election at the annual meeting of stockholders. The options
have an exercise price equal to 100% of the fair market value of
the Companys common stock, as reflected by the closing
price of our stock on the grant date. The options have ten-year
terms and vest and become fully exercisable upon the earlier of
(i) the first anniversary of the grant date, provided that
the optionee is a director at such time, and (ii) a change
in control, as defined in the Plan.
Additionally, upon approval of the amendment to the Plan, the
following one-time option grants were made to the each of the
non-employee directors:
|
|
|
Chairman of the Board
|
|
60,000 shares
|
Chairman of the Audit Committee
|
|
52,000 shares
|
All other non-employee directors
|
|
40,000 shares
|
Each of these options was granted has an exercise price of $3.00
per share and a ten-year term. These options vested 50% upon
grant and will vest 25% on each of the first and second
anniversaries of the date of grant, such that the shares are
fully vested after two years from the date of grant. Because the
common stock of the Company traded at $2.08 per share on the
date of the grant, the exercise price of the grants was at a 44%
premium to the trading price of the common stock at the time of
the grants.
The following table shows for fiscal 2008 certain information
with respect to the compensation of all of the Companys
non-employee directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Option
|
|
|
|
|
Name
|
|
Cash
|
|
|
Awards(1)
|
|
|
Total
|
|
|
Abraham E. Cohen
|
|
$
|
40,000
|
|
|
$
|
50,854
|
|
|
$
|
90,854
|
|
Theodore L. Eliot, Jr.
|
|
|
30,000
|
|
|
|
36,835
|
|
|
|
66,835
|
|
William A. Fletcher
|
|
|
30,000
|
|
|
|
95,112
|
|
|
|
125,112
|
|
F. Van Kasper
|
|
|
35,000
|
|
|
|
81,388
|
|
|
|
116,388
|
|
Abraham D. Sofaer
|
|
|
30,000
|
|
|
|
36,835
|
|
|
|
66,835
|
|
John B. Stuppin
|
|
|
30,000
|
|
|
|
48,957
|
|
|
|
78,957
|
|
|
|
|
(1)
|
|
Option awards are valued based on a Black-Scholes option pricing
model as used in our consolidated financial statements pursuant
to Statement of Accounting Standards No. 123R,
Share-based Payment. The Black-Scholes option
pricing model reflects certain assumptions regarding variable
factors such stock price volatility and the term of the option.
Stock options have value to the recipient only as a result of
appreciation in the price of our common stock. For the purposes
of establishing the value shown in the table, the model assumed
a dividend yield of zero, risk-free interest rates of 4.7%,
volatility factor of 80%, and an expected life of the options of
4
1
/
2
years. For financial reporting purposes, we also used an
estimated forfeiture rate, but this rate has not been included
in the balances in the table because the forfeiture rate is an
overall estimate for the organization as a whole and cannot be
attributed specifically to any of our directors.
|
21
Equity
Compensation Plan Information
The following table provides certain information as of
June 30, 2008 with respect to shares of our common stock
that may be issued under our equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
Weighted-Average
|
|
|
Remaining Available for
|
|
|
|
to be Issued upon
|
|
|
Exercise
|
|
|
Future Issuance under Equity
|
|
|
|
Exercise of
|
|
|
Price of Outstanding
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
and Rights
|
|
|
Reflected in Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security
holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Plans
|
|
|
1,759,000
|
|
|
$
|
6.34
|
|
|
|
1,926,000
|
|
Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
Equity compensation plans not approved by security
holders Inducement stock option grant provided
under NASDAQ Marketplace Rule 4350
|
|
|
150,000
|
|
|
|
2.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,909,000
|
|
|
$
|
6.04
|
|
|
|
1,967,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our equity compensation plans do not contain evergreen
provisions.
22
REPORT OF
THE AUDIT COMMITTEE
The following Report of the Audit Committee shall not be
deemed to be soliciting material or to be
filed with the SEC nor shall this information be
incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference into a filing.
The Audit Committee is appointed by the Board of Directors to
oversee the qualifications, independence and performance of the
Companys independent registered public accounting firm,
manage relations with the Companys independent registered
public accounting firm, pre-approve audit and non-audit services
to be performed by the Companys independent registered
public accounting firm and evaluate policies and procedures
relating to internal accounting functions and controls. We
operate under a written Audit Committee Charter that has been
adopted by the Board of Directors, and the Audit
Committees responsibilities are more fully described in
the Audit Committee Charter, a copy of which is attached hereto
as Annex A. Each of the members of the
Audit Committee, Messrs. Kasper (Chairman), Eliot and
Sofaer meets the independence requirements promulgated by the
National Association of Securities Dealers and the SEC.
We are not professional accountants or auditors, and our
functions are not intended to duplicate or to certify the
activities of management or our independent registered public
accounting firm, nor can we certify that the independent
registered public accounting firm is independent
under applicable rules. We serve a board-level oversight role in
which we provide advice, counsel and direction to management and
the auditors on the basis of the information we receive, our
discussions with management and the auditors, and our experience
in business, financial and accounting matters.
We oversee the Companys accounting and financial reporting
processes on behalf of the Board of Directors. The
Companys management has the primary responsibility for the
financial statements and the accounting and reporting processes,
including the Companys system of internal controls. In
fulfilling our oversight responsibilities, we reviewed and
discussed with management the audited financial statements
included in the Annual Report on
Form 10-K
for the fiscal year ended June 30, 2008. This review
included a discussion of the quality and the acceptability of
the Companys financial and disclosure reporting and
controls, including the nature and extent of disclosures in the
financial statements. We also reviewed the progress and results
of the testing of internal control over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
We also reviewed with the Companys independent registered
public accounting firm, which is responsible for expressing an
opinion on the conformity of the audited financial statements
with accounting principles generally accepted in the United
States of America, its judgments as to the quality and the
acceptability of the Companys financial reporting and such
other matters as are required to be discussed with the Committee
under generally accepted auditing standards, including Statement
on Auditing Standards No. 114. We have received the written
disclosures and the letter from the independent registered
public accounting firm required by the Public Company Accounting
Oversight Board. We discussed with the independent registered
public accounting firm its independence from management and the
Company, including the matters required by the applicable rules
of the Public Company Accounting Oversight Board.
In addition to matters discussed above, we discussed with the
Companys independent registered public accounting firm the
overall scope, plans and estimated costs of its audit. We met
with representatives from the independent registered public
accounting firm, with and without management present, to discuss
the results of their examinations, their evaluation of the
Companys internal controls, and the overall quality of the
Companys financial reporting.
In reliance on the reviews and discussions referred to above, we
recommended to the Board of Directors that the Companys
audited financial statements be included in the Companys
Annual Report on
Form 10-K
for the fiscal year ended June 30, 2008.
Audit Committee
F. Van Kasper, Chairman
Theodore L. Eliot, Jr.
Abraham D. Sofaer
23
OTHER
BUSINESS
We know of no other matters to be submitted to a vote of
stockholders at the Annual Meeting. If any other matter is
properly brought before the Annual Meeting or any adjournment
thereof, it is the intention of the persons named in the
enclosed proxy to vote the shares they represent in accordance
with their judgment. In order for any stockholder to nominate a
candidate or to submit a proposal for other business to be acted
upon at the Annual Meeting, he or she must provide timely
written notice to Secretary of the Company in the form
prescribed by our bylaws.
STOCKHOLDER
PROPOSALS
Stockholder proposals, including director nominees, intended to
be included in next years annual meeting proxy materials
must be received by the Secretary of the Company at 2000 Powell
Street, Suite 800, Emeryville, California 94608, no later
than June 11, 2009 (the
Proxy
Deadline)
. The form and substance of these
proposals must satisfy the requirements established by the
Companys bylaws and the SEC.
Additionally, stockholders who intend to present a stockholder
proposal at any annual meeting of stockholders must provide the
Secretary of the Company with written notice of the proposal not
less than 45 or more than 75 days prior to the first
anniversary of the date on which the Company first mailed its
proxy for the preceding years annual meeting of
stockholders; provided, however, that if the date of the annual
meeting is advanced more than 30 days prior to or delayed
by more than 30 days after the anniversary of the preceding
years annual meeting, notice of the proposed stockholder
action must be received on the later of (i) the 90th day
prior to such annual meeting or (ii) the 10th day
following the day of such notice or disclosure. Notice must be
tendered in the proper form prescribed by the Companys
bylaws. Proposals not meeting the requirements set forth in our
bylaws will not be entertained at the meeting.
Any person who wishes to be considered by the Nominating and
Corporate Governance Committee for election to the Board at next
years annual meeting must provide the Secretary of the
Company with a completed and signed biographical questionnaire
on or before the Proxy Deadline. Stockholders can obtain a copy
of this questionnaire from the Secretary of the Company upon
written request. The Nominating and Corporate Governance
Committee is not required to consider director nominations
received after this date, or without the required questionnaire.
ANNUAL
REPORT
Our annual report to stockholders for the fiscal year ended
June 30, 2008, including audited financial statements,
accompanies this proxy statement. Copies of our Annual Report on
Form 10-K
for fiscal 2008 and the exhibits thereto are available from the
Company without charge upon written request of a stockholder.
Copies of these materials are also available online through the
Securities and Exchange Commission at
www.sec.gov
. We may
satisfy SEC rules regarding delivery of proxy statements and
annual reports by delivering a single proxy statement and annual
report to an address shared by two or more Company stockholders.
This delivery method can result in meaningful cost savings for
us. In order to take advantage of this opportunity, we may
deliver only one proxy statement and annual report to multiple
stockholders who share an address, unless we receive contrary
instructions prior to the mailing date. We undertake to deliver
promptly upon written or oral request a separate copy of the
proxy statement
and/or
annual report, as requested, to a stockholder at a shared
address to which a single copy of these documents was delivered.
If you hold stock as a record stockholder and prefer to receive
separate copies of a proxy statement or annual report either now
or in the future, please notify us at 2000 Powell Street,
Suite 800, Emeryville, California 94608, Attn: Investor
Relations. If your stock is held through a brokerage firm or
bank and you prefer to receive separate copies of a proxy
statement or annual report either now or in the future, please
contact your brokerage firm or bank.
24
HOUSEHOLDING
OF ANNUAL DISCLOSURE DOCUMENTS
The SEC has approved a rule governing the delivery of annual
disclosure documents. This rule allows the Company to send a
single set of its Annual Report and this Proxy Statement to any
household at which two or more stockholders of the Company
reside, if it believes that the stockholders are members of the
same family. Some banks, brokers and other intermediaries may be
participating in this practice of householding proxy
statements and annual reports. This rule benefits both the
Company and its stockholders as it reduces the volume of
duplicate information received at a stockholders house and
helps reduce the Companys expenses. Each stockholder,
however, will continue to receive individual proxy cards or
voting instruction forms.
Stockholders who have previously received a single set of
disclosure documents may request their own copy this year or in
future years by contacting their bank, broker or other nominee
record holder. The Company will also deliver a separate copy of
the Annual Report and the Proxy Statement to any stockholder
upon written request to Neurobiological Technologies, Inc., 2000
Powell Street, Suite 800, Emeryville, California 94608,
Attn: Investor Relations, or upon oral request by
calling
(510) 595-6000.
Similarly, stockholders who have previously received multiple
copies of disclosure documents may write to the address or call
the phone number listed above to request delivery of a single
copy of these materials in the future.
25
Annex A
NEUROBIOLOGICAL
TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
(Adopted by the Board of Directors on September 11,
2008)
The purpose of the Audit Committee (the
Committee
) of the board of directors (the
Board
) of Neurobiological Technologies, Inc.
(the
Company
) is to:
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oversee the accounting and financial reporting processes of the
Company and audits of its financial statements and review the
effectiveness of the Companys internal control over
financial reporting;
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take, or recommend that the Board take, appropriate action to
oversee the qualifications, independence and performance of the
Companys independent auditors; and
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prepare the report required by the rules of the Securities and
Exchange Commission (the
SEC
) to be included
in the Companys annual proxy statement.
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The Committee shall be composed of three or more directors, as
determined by the Board, each of whom shall (1) be
independent as defined in Rule 4200(a)(15)
under the Marketplace Rules of the National Association of
Securities Dealers, Inc.; (2) meet the criteria for
independence set forth in
Rule 10A-3(b)(1)
promulgated under Section 10A(m)(3) of the Securities
Exchange Act of 1934, as amended (the
Exchange
Act
) and the applicable rules and regulations (the
Regulations
) of the SEC, subject to the
exemptions provided in
Rule 10A-3(c)
under the Exchange Act; and (3) not have participated in
the preparation of the financial statements of the Company or a
current subsidiary of the Company at any time during the past
three years.
Each member of the Committee must be able to read and understand
fundamental financial statements, including a companys
balance sheet, income statement, and cash flow statement. At
least one member of the Committee shall be an audit
committee financial expert, as that term is defined in the
Regulations, and shall have past employment experience in
finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background
which results in the individuals financial sophistication,
including being or having been a chief executive officer, chief
financial officer or other senior officer with financial
oversight responsibilities.
The members of the Committee shall be appointed by the Board and
may be replaced or removed by the Board with or without cause.
Resignation or removal of a director from the Board, for
whatever reason, shall automatically and without any further
action constitute resignation or removal, as applicable, from
the Committee. Any vacancy on the Committee, occurring for
whatever reason, may be filled only by the Board. The Board
shall designate one member of the Committee to be Chairman of
the committee.
III. Compensation
A member of the Committee may not, other than in his or her
capacity as a member of the Committee, the Board or any other
committee established by the Board, receive directly or
indirectly from the Company any consulting, advisory or other
compensatory fee from the Company.
The Committee shall meet as often as it determines is
appropriate to carry out its responsibilities under this
charter, but not less frequently than quarterly. A majority of
the members of the Committee shall constitute a quorum for
purposes of holding a meeting and the Committee may act by a
vote of a majority of the members present at such meeting.
A-1
The Committee shall meet at least once each year in separate
executive sessions with management and the independent auditor
to discuss matters that any of them or the Committee believes
could significantly affect the financial statements and should
be discussed privately.
The Committee shall have such direct and independent interaction
with members of management, including the Companys chief
financial officer and chief accounting officer, as the Committee
believes appropriate.
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V.
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Responsibilities
and Authority
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The Committee shall review and reassess the adequacy of this
Charter annually and recommend to the Board any amendments or
modifications to the Charter that the Committee deems
appropriate.
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B.
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Matters
Relating to Selection, Performance and Independence of
Independent Auditor
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The Committee shall be directly responsible for: the
appointment, retention and termination, and for determining the
compensation, of a registered public accounting firm
(as that term is defined in Section 2(a) of the
Sarbanes-Oxley Act of 2002) to serve as the Companys
independent auditor engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or
attest services for the Company; overseeing the work of the
independent auditor (including the resolution of any
disagreements between management and the independent auditor
regarding financial reporting); evaluating the performance of
the independent auditor and, if so determined by the Committee,
replacing the independent auditor; it being acknowledged that
the independent auditor is ultimately accountable to the Board
and Committee, as representatives of the stockholders.
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The Committee shall instruct the independent auditor that the
independent auditor shall report directly to the Committee.
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The Committee shall pre-approve all auditing services and the
terms thereof (which may include providing comfort letters in
connection with securities underwritings) and non-audit services
(other than non-audit services prohibited under
Section 10A(g) of the Exchange Act or the applicable rules
of the SEC or the Public Company Accounting Oversight Board) to
be provided to the Company by the independent auditor;
provided
,
however
, the pre-approval requirement is
waived with respect to the provision of non-audit services for
the Company if the de minimus provisions of
Section 10A(i)(1)(B) of the Exchange Act are satisfied.
This authority to pre-approve non-audit services may be
delegated to one or more members of the Committee, who shall
present all decisions to pre-approve an activity to the full
Committee at a subsequent Committee meeting.
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The Committee may review and approve the scope and staffing of
the independent auditors annual audit plan(s).
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The Committee shall ensure the receipt of, and evaluate the
written disclosures and the letter that the independent auditor
submits to the Committee regarding the auditors
independence in accordance with the applicable rules of the
PCAOB, discuss such reports with the auditor, oversee the
independence of the independent auditor and, if so determined by
the Committee in response to such reports, take appropriate
action to address issues raised by such evaluation.
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The Committee shall coordinate with the independent auditor to
ensure the regular rotation of the audit partners (including,
without limitation, the lead and concurring partners) as
required under the Exchange Act and
Regulation S-X.
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C.
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Audited
Financial Statements and Annual Audit
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The Committee shall meet with management and with the
independent auditor, together and separately, to discuss the
annual financial statements and the report of the independent
auditor thereon, and to discuss significant issues encountered
in the course of the audit work, including: restrictions on the
scope of activities; access to required information; significant
matters regarding internal controls over financial
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A-2
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reporting, including any additional audit procedures performed
in light of any significant deficiencies or material weaknesses
in the design or operation of internal control over financial
reporting identified during the course of the annual audit, and
the adequacy of disclosures about changes in internal control
over financial reporting; the adequacy of the disclosure of
off-balance sheet transactions, arrangements, obligations and
relationships in reports filed with the SEC; and the
appropriateness of the presentation of any non-GAAP financial
measures (as defined in the Regulations) included in any report
filed with the SEC or in any public disclosure or release.
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The Committee shall instruct the independent auditor to report
to the Committee on all critical accounting policies of the
Company, all material alternative accounting treatments of
financial information within generally accepted accounting
principles that have been discussed with management,
ramifications of the use of such alternative accounting
treatments and disclosures and the accounting treatment
preferred by the independent auditor, and other material written
communication between the independent auditor and management,
and discuss these matters with the independent auditor and
management.
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The Committee shall discuss with the independent auditors those
matters brought to the attention of the Committee by the
independent auditors pursuant to Statement on Auditing Standards
No. 114, as it may be modified or supplemented.
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The Committee shall review and discuss with management and the
independent auditor managements report on internal control
over financial reporting, and, if applicable, the independent
auditors review of the effectiveness of the Companys
internal control over financial reporting and its attestation
report, prior to the filing of the
Form 10-K.
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If brought to the attention of the Committee, the Committee
shall discuss with the CEO and CFO of the Company (1) all
significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Companys
ability to record, process, summarize and report financial
information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act, within
the time periods specified in the SECs rules and forms,
and (2) any fraud involving management or other employees
who have a significant role in the Companys internal
control over financial reporting.
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The Committee shall review the management letter delivered by
the independent auditor in connection with the audit, if
applicable.
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The Committee shall, following such review and discussions, if
so determined by the Committee, recommend to the Board that the
annual financial statements be included in the Companys
annual report on
Form 10-K.
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The Committee shall prepare the Committee report required by
Item 407(d) of
Regulation S-K
of the Exchange Act (or any successor provision) to be included
in the Companys annual proxy statement.
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The Committee shall review significant changes to the
Companys accounting principles and practices proposed by
the independent auditor or management.
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The Committee shall the review the scope and results of internal
audits, if any.
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D.
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Unaudited
Quarterly Financial Statements
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The Committee shall discuss with management and the independent
auditor, prior to the filing of the Companys Quarterly
Reports on
Form 10-Q,
(1) the Companys quarterly financial statements
(provided, however, that this responsibility may be delegated to
a member of the Committee who is a financial expert),
(2) such issues as may be brought to the Committees
attention by the independent auditor pursuant to Statement on
Auditing Standards No. 100, and (3) any significant
financial reporting or other issues that have been identified in
connection with the interim review of such financial statements.
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A-3
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E.
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Procedures
for Addressing Complaints and Concerns
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The Committee shall establish procedures for (1) the
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters and (2) the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
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F.
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Regular
Reports to the Board
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The Committee shall regularly report to and review with the
Board any issues that arise with respect to the quality or
integrity of the Companys financial statements, the
Companys compliance with legal or regulatory requirements,
the performance and independence of the independent auditors,
managements assessment of internal control over financial
reporting, the performance of the internal audit function and
any other matters that the Committee deems appropriate or is
requested to review for the benefit of the Board.
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The Committee shall provide minutes of Committee meetings to the
Board, and report to the Board on any significant matters
arising from the Committees work.
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The Committee is authorized, on behalf of the Board, to do any
of the following as it deems necessary or appropriate:
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A.
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Engagement
of Advisors
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The Committee may engage independent counsel and such other
advisors it deems necessary or advisable to carry out its
responsibilities and powers, and, if such counsel or other
advisors are engaged, shall determine the compensation or fees
payable to such counsel or other advisors.
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The Committee shall conduct an appropriate review of all related
party transactions for potential conflict of interest situations
on an ongoing basis, and the approval of the Committee shall be
required for all such transactions. The Committee may establish
such policies and procedures as it deems appropriate to
facilitate such review.
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The Committee may form and delegate authority to subcommittees
consisting of one or more of its members as the Committee deems
appropriate to carry out its responsibilities and exercise its
powers.
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The Committee may perform such other oversight functions outside
of its stated purpose as may be requested by the Board from time
to time.
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In performing its oversight function, the Committee shall be
entitled to rely upon advice and information that it receives in
its discussions and communications with management, the
independent auditor and such experts, advisors and professionals
as may be consulted with by the Committee.
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The Committee is authorized to request that any officer or
employee of the Company, the Companys outside legal
counsel, the Companys independent auditor or any other
professional retained by the Company to render advice to the
Company attend a meeting of the Committee or meet with any
members of or advisors to the Committee.
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The Committee may conduct or authorize such inquiries into
matters within the Committees scope of responsibility as
the Committee deems appropriate.
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The Committee may perform each of the responsibilities of the
Committee described above.
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A-4
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The Committee may appoint a chair of the Committee, unless a
chair is designated by the Board.
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Cause the officers of the corporation to provide such funding as
the Committee shall determine to be appropriate for payment of
compensation to the Companys independent auditor and any
legal counsel or other advisers engaged by the Committee, and
payment of ordinary administrative expenses of the audit
committee that are necessary or appropriate in carrying out its
duties.
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Notwithstanding the responsibilities and powers of the Committee
set forth in this Charter, the Committee does not have the
responsibility of planning or conducting audits of the
Companys financial statements or determining whether the
Companys financial statements are complete, accurate and
in accordance with GAAP. Such responsibilities are the duty of
management and, to the extent of the independent auditors
audit responsibilities, the independent auditor. In addition, it
is not the duty of the Committee to conduct investigations or to
ensure compliance with laws and regulations.
A-5
NEUROBIOLOGICAL TECHNOLOGIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul E. Freiman and Matthew M. Loar proxies, and hereby authorizes
each of them to represent and vote as designated on the other side, all the shares of stock of
Neurobiological Technologies, Inc. (the Company) standing in the name of the undersigned with all
powers which the undersigned would possess if present at the Annual Meeting of Stockholders of the
Company to be held on Thursday, November 13, 2008 or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned.
If no direction is made, this proxy will be voted FOR the election of the nominees described in the
accompanying proxy statement, FOR the other proposals described therein and in the discretion of
the proxy holders on all other matters that may come before the meeting.
(Continued, and to be marked, dated and signed, on the other side)
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY.
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Please mark
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your votes
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as indicated
þ
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ITEM 1 ELECTION OF CLASS III DIRECTORS
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Nominees:
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¡
Abraham D. Cohen
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FOR ALL NOMINEES
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¡
Paul E. Freiman
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WITHHOLD AUTHORITY FOR ALL NOMINEES
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¡
F. Van Kasper
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FOR ALL EXCEPT
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(See instructions below)
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Instruction
: To withhold authority to vote for any individual nominee(s), mark FOR ALL
EXCEPT and fill in the circle next to each nominee you wish to withhold
ITEM 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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FOR
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AGAINST
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ABSTAIN
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and to vote at the discretion of the proxy holders with respect to any other matter that may
properly come before the meeting.
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Signature(s) of stockholder
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Date
, 2008
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Please sign exactly as your name or names appear on this Proxy. When share are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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