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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
FLEMINGTON PHARMACEUTICAL CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies: N/A
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction: N/A
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(5) Total fee paid: not required
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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FLEMINGTON PHARMACEUTICAL CORPORATION
31 STATE HIGHWAY 12 WEST
FLEMINGTON, NEW JERSEY 08822
908-782-3431
January 16, 2002
Dear Fellow Shareholder:
The 2002 Annual Meeting of Shareholders (the "Annual Meeting") of
Flemington Pharmaceutical Corporation (the "Company") will be held at 10:00 a.m.
on February 15, 2002 at 31 State Highway 12 West, Flemington, New Jersey 08822.
Enclosed you will find a formal Notice of Annual Meeting, Proxy Card and Proxy
Statement, detailing the matters which will be acted upon. Directors and
Officers of the Company will be present to help host the meeting and to respond
to any questions from our shareholders. I hope you will be able to attend.
Please sign, date and return the enclosed Proxy without delay in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person,
even if you have previously mailed a Proxy by withdrawing your Proxy and voting
at the meeting. Any shareholder giving a Proxy may revoke the same at any time
prior to the voting of such Proxy by giving written notice of revocation to the
Secretary, by submitting a later dated Proxy or by attending the Annual Meeting
and voting in person. The Company's Annual Report on Form 10-KSB (including
audited financial statements) for the fiscal year ended July 31, 2001 and the
Company Quarterly Report on Form 10-QSB for the three month period ended October
31, 2001 accompanies this Proxy Statement. All shares represented by Proxies
will be voted at the Annual Meeting in accordance with the specifications marked
thereon, or if no specifications are made, (a) as to Proposal 1, the Proxy
confers authority to vote for all of the five persons listed as candidates for a
position on the Board of Directors, (b) as to Proposal 2, the Proxy confers
authority to vote "FOR" the ratification of Wiss & Company, LLP as the Company's
independent certified public accountants for the fiscal year ending July 31,
2002, (c) as to Proposal 3, the Proxy confers authority to vote "FOR" the
amendment to the Company's 1998 Stock Plan to increase the maximum number of
shares of Company's common stock subject to the plan from 500,000 shares to
1,075,000 shares, and (d) as to any other business which comes before the
Annual Meeting, the Proxy confers authority to vote in the Proxy holder's
discretion.
The Company's Board of Directors believes that a favorable vote for each
candidate for a position on the Board of Directors and for all other matters
described in the attached Notice of Annual Meeting and Proxy Statement is in the
best interest of the Company and its shareholders and unanimously recommends a
vote "FOR" all candidates and all other matters. Accordingly, we urge you to
review the accompanying material carefully and to return the enclosed Proxy
promptly.
Thank you for your investment and continued interest in Flemington
Pharmaceutical Corporation.
Sincerely,
Harry A. Dugger, III, Ph.D.
President and Chief Executive Officer
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FLEMINGTON PHARMACEUTICAL CORPORATION
31 STATE HIGHWAY 12 WEST
FLEMINGTON, NEW JERSEY 08822
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 15, 2002
_____________________
To our Shareholders:
Notice is hereby given that the 2002 Annual Meeting of Shareholders (the
"Annual Meeting") of Flemington Pharmaceutical Corporation, a New Jersey
corporation (the "Company"), will be held at the Company's principal office at
31 State Highway 12 West, Flemington, New Jersey, on Friday, February 15, 2002
at 10:00 a.m., Eastern Standard Time, for the following purposes:
1. To elect five (5) Directors to the Board of Directors to serve until the
2003 Annual Meeting of Shareholders or until their successors have been
duly elected or appointed and qualified;
2. To ratify the appointment of Wiss & Company, LLP as the Company's
independent certified public accountants for the fiscal year ending July
31, 2002; and
3. To approve an amendment to the Company's 1998 Stock Plan to increase the
maximum number of shares of the Company's common stock subject to the plan
from 500,000 shares to 1,075,000 shares.
4. To consider and take action upon such other business as may properly come
before the Annual Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on January 7, 2002,
as the record date for determining the shareholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment(s) thereof.
For a period of ten (10) days prior to the Annual Meeting, a shareholders
list will be kept at the Company's office and shall be available for inspection
by shareholders during usual business hours. A shareholders list shall also be
present at, and available for inspection during, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement for further
information regarding each proposal to be made.
SHAREHOLDERS UNABLE TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE,
DATE AND SIGN THE ACCOMPANYING PROXY AND MAIL IT IN THE ENCLOSED STAMPED,
SELF-ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU SIGN AND RETURN YOUR
PROXY WITHOUT SPECIFYING YOUR CHOICES IT WILL BE UNDERSTOOD THAT YOU WISH TO
HAVE YOUR SHARES VOTED IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU DESIRE, REVOKE YOUR PROXY AND
VOTE IN PERSON IF YOU WISH.
By Order of the Board of Directors
Robert F. Schaul
Secretary
January 16, 2002
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A POSTAGE PAID,
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO ADDITIONAL POSTAGE
IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
FLEMINGTON PHARMACEUTICAL CORPORATION
31 STATE HIGHWAY 12 WEST
FLEMINGTON, NEW JERSEY 08822
PROXY STATEMENT
2002 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors (the "Board of Directors") of Flemington
Pharmaceutical Corporation (the "Company") of proxies in the accompanying form
to be voted at the 2002 Annual Meeting of Shareholders (the "Annual Meeting") to
be held at 10:00 a.m., Eastern Standard Time, on Friday, February 15, 2002 at
the principal office of the Company at 31 State Highway 12 West, Flemington, New
Jersey 08822 and at any adjournments thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The approximate date on
which this Proxy Statement and the accompanying form of proxy are first being
sent or given to shareholders is January 16, 2002.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended July 31, 2001 and a copy of the Company's Quarterly Report on Form 10-QSB
for the three month period ended October 31, 2001 is enclosed with these
materials, but should not be considered proxy solicitation material.
The Company has fixed the close of business on January 7, 2002 as the
record date (the "Record Date") for determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof. As of
the Record Date, there were 11,724,900 outstanding shares of common stock, $.001
par value per share ("Common Stock"), each share entitled to one vote on each
matter to be voted on at the Annual Meeting. The holders of a majority of
shares entitled to vote and represented in person or by proxy at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. In general, Common Stock represented by a properly signed and returned
proxy card will be counted as Common Stock present and entitled to vote at the
Annual Meeting for purposes of determining a quorum, without regard to whether
the proxy card reflects abstentions (or is left blank) or reflects a "broker
non-vote" on a matter (i.e., a card returned by a broker because voting
instructions have not been received and the broker has no discretionary
authority to vote). Holders of Common Stock are not entitled to cumulative
voting rights.
The election of a nominee for director requires approval of such nominee by
a plurality of the Common Stock present and entitled to vote in person or by
proxy; and the approval of each of the other proposals described in the Proxy
Statement requires the approval of a majority of the Common Stock present and
entitled to vote in person or by proxy on that matter.
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SOLICITATION OF PROXIES
The cost of the proxy solicitations will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise. Arrangements may also be
made with brokerage firms or other custodians, nominees or fiduciaries for the
forwarding of soliciting material to the beneficial owners of Common Stock of
the Company held of record by such persons, and the Company will reimburse such
respective brokers, custodians, nominees and fiduciaries for the reasonable
out-of-pocket expenses incurred by them in connection therewith. The Company
shall not use specially engaged employees or paid solicitors to identify
shareholders or to conduct the solicitation.
THE BOARD OF DIRECTORS
During the fiscal year ended July 31, 2001 ("fiscal 2001"), the Board of
Directors held eleven (11) meetings, three (3) regular meetings and eight (8)
special meetings, attended by all of the Company's Directors. During fiscal
2001, the Board of Directors also acted five (5) times by written consent. The
Company has a compensation committee, and an audit committee, each of which met
once in fiscal 2001. The Company does not have a stock option committee,
shareholder relations committee, or a nominating committee.
Harry A. Dugger, III and John J. Moroney serve on the compensation
committee, which determines the cash (and with respect to the 1997 Plan as
defined hereinafter, the non-cash) compensation amounts to be paid to directors,
officers and employees of the Company. Because the Board of Directors does not
have a standing nominating committee, nominations for election to the Board of
Directors may be made by the Board of Directors or by any shareholder entitled
to vote for the election of directors. Nominations made by shareholders must be
made by written notice received by the Secretary of the Company within ten (10)
days of the date on which notice of a special meeting for the election of
directors is first given to shareholders.
Special meetings are held from time to time to consider matters for
which approval of the Board of Directors is desirable or is required by law.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
As of the Record Date, there were 11,724,900 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting. Each share is entitled
to one vote on each of the matters to be voted on at the Annual Meeting. The
following table sets forth, as of the Record Date, certain information regarding
the ownership of the Common Stock by (i) each person known by the Company to be
the beneficial owner of more than 5% of the Common Stock, (ii) each of the
Company's Directors and Named Executive Officers, as such term is defined under
Item 402(a)(3) of Securities and Exchange Commission ("SEC") Regulation S-K, and
(iii) all of the Company's Executive Officers and Directors as a group.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under Rule
13d-3 certain shares may be deemed to be beneficially owned by more than one
person (such as where persons share voting power or investment power). In
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addition, shares are deemed to be beneficially owned by a person if the person
has the right to acquire the shares (for example, upon the exercise of an
option) within sixty (60) days of the date as of which the information is
provided. In computing the ownership percentage of any person, the amount of
shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights. As
a result, the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person's actual ownership or
voting power at any particular date.
TITLE OF NAME AND ADDRESS OR AMOUNT AND NATURE OF PERCENTAGE OF
CLASS NUMBER IN GROUP(1) BENEFICIAL OWNERSHIP (2) CLASS
------------ ---------------------------------- ------------------------- --------------
Common Stock Harry A. Dugger, III, Ph.D. 1,829,003(3) 14.8%
Common Stock John J. Moroney 1,018,080(4) 8.2%
Common Stock Donald Deitman 0 0%
Common Stock Robert F. Schaul, Esq. 189,286(5) 1.6%
Common Stock Jack J. Kornreich 169,310(5) 1.4%
Common Stock Robert C. Galler 700,000(6) 5.6%
Common Stock Lindsey Rosenwald 8,000,000(7) 50.9%
Common Stock All Executive Officers and Directors 3,955,679 28.0%
as a group (6 persons) (3)(4)(5)(6)
(1) The address of all holders listed herein is c/o Flemington Pharmaceutical
Corporation, 31 State Highway 12 West, Flemington, New Jersey 08822.
(2) Except as otherwise indicated, each named holder has, to the Company's
knowledge, sole voting and investment power with respect to the shares
indicated.
(3) Includes options to purchase 200,000 shares of Common Stock issued under
the 1992 Stock Option Plan; options to purchase 50,000 shares of Common
Stock under the 1997 Stock Option Plan; options to purchase 95,000 shares
of Common Stock under the 1998 Stock Option Plan; options to purchase
300,000 shares of Common Stock issued outside of the Plans; 108,000 shares
owned by his daughter Christina Dugger Sommers; and 108,000 shares owned by
his son Andrew Dugger. Dr. Dugger may be deemed to be a "parent" of the
Company as such term is defined under the Federal securities laws.
(4) Includes options to purchase 200,000 shares of Common Stock issued under
the 1992 Stock Option Plan; options to purchase 50,000 shares of Common
Stock under the 1997 Stock Option Plan; options to purchase 95,000 shares
of Common Stock under the 1998 Stock Option Plan; options to purchase
300,000 shares of Common Stock issued outside of the Plans; 208,080 shares
owned jointly with his wife, and 60,000 shares owned by each of his three
sons, Matthew, Timothy and Sean Moroney.
(5) Includes options to purchase 20,000 shares of Common Stock issued under the
1992 Stock Option Plan; options to purchase 25,000 shares of Common Stock
issued under the 1997 Stock Option Plan; and options to purchase 105,000
shares of Common Stock under the 1998 Stock Option Plan.
(6) Includes options issued outside of the plan to purchase 700,000 shares of
common stock.
(7) Includes warrants to purchase 4,000,000 shares of the Company's common
stock.
-3-
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires officers, directors and persons
who own more than ten (10) percent of a class of equity securities registered
pursuant to Section 12 of the Exchange Act to file reports of ownership and
changes in ownership with both the SEC and the principal exchange upon which
such securities are traded or quoted. Officers, directors and persons holding
greater than ten (10) percent of the outstanding shares of a class of Section
12-registered equity securities ("Reporting Persons") are also required to
furnish copies of any such reports filed pursuant to Section 16(a) of the
Exchange Act with the Company. Based solely on a review of the copies of such
forms furnished to the Company, the Company believes that from August 1, 2000 to
September 30, 2001 all Section 16(a) filing requirements applicable to its
Reporting Persons were complied with.
EXECUTIVE COMPENSATION
The following table sets forth a summary for the fiscal years ended July
31, 2001, 2000 and 1999, respectively, of the cash and non-cash compensation
awarded, paid or accrued by the Company to the Company's Chief Executive Officer
("CEO") and its four most highly compensated officers other than the CEO, who
served in such capacities at the end of fiscal 2001 (collectively, the "Named
Executive Officers"). No other executive officer of the Company earned in
excess of $100,000 in total annual salary and bonus for 2001, 2000 and 1999 in
all capacities in which such person served the Company. There were no
restricted stock awards, long-term incentive plan payouts or other compensation
paid during fiscal 2001, 2000 and 1999 to the Named Executive Officers, except
as set forth below:
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Awards Payouts
Other Securities
Annual Restricted Underlying All
Compen- Stock Options/ LTIP Other
Name and Fiscal Salary Bonus sation Award(s) SAR (1) Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
Harry A. Dugger, III, Ph.D.
President and CEO 2001 232,000(2) 0 0 0 0 0 0
2000 226,000 0 0 0 95,000 0 0
1999 210,000 0 0 0 0 0 0
John J. Moroney
Chairman 2001 57,781 0 0 0 0 0 0
2000 169,000 0 0 0 95,000 0 0
1999 157,500 0 0 0 0 0 0
Donald Deitman
Chief Financial Officer 2001 70,800 0 0 0 0 0 0
2000 68,000 0 0 0 0 0 0
1999 67,500 0 0 0 0 0 0
(1) No Stock Appreciation Rights have been issued.
(2) Includes $49,000 accrued, but unpaid, salary
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OPTION GRANTS IN LAST FISCAL YEAR
(individual grants)
There were no options granted during fiscal 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercises of options during fiscal 2001 and
the number and value of unexercised options held as of the end of fiscal 2001.
Number of
Securities
Underlying Value of
Unexercised Unexercised In-the-
Number of Options at Fiscal Money Options at
Shares Year End; Fiscal Year End ($);
Name of Executive Acquired on Value Realized (Exercisable/ (Exercisable/
Officer Exercise ($) Unexercisable) Unexercisable)
Harry A. Dugger, III, Ph.D. 0 - 645,000 / 0 0 / 0
John J. Moroney 0 - 645,000 / 0 0 / 0
Donald Deitman 0 - - -
COMPENSATION OF DIRECTORS
The Directors of the Company are elected annually and serve until the next
annual meeting of stockholders and until a successor shall have been duly
elected and qualified. Effective January 1999, Directors of the Company, who
are not employees or consultants receive for each meeting attended directors
fees of $500 for their services as members of the Board of Directors. Such
Directors are also reimbursed for expenses incurred in connection with their
attendance at meetings of the Board of Directors. Directors may be removed with
or without cause by a vote of the majority of the stockholders then entitled to
vote. There were no other arrangements pursuant to which any Director was
compensated during fiscal 2001 for any services provided as a Director.
STOCK OPTION PLANS
The Company has three stock option plans, adopted in 1992, 1997 and 1998,
respectively (collectively referred to as the "Plans"). Each Plan provides for
the issuance of options to purchase 500,000 shares of Common Stock, for a total
of 1,500,000 shares. The 1997 Stock Option Plan is administered by Harry A.
Dugger, III, Ph.D. and John J. Moroney, who constitute the Compensation
Committee of the Board of Directors ("Committee"), and the 1992 Stock Option
Plan and 1998 Stock Option Plan are administered by the entire Board of
Directors. For purposes of the following discussion, the term "Committee" will
be used to reference the Committee with respect to the 1997 Stock Option Plan
and the entire Board of Directors with respect to the 1992 Stock Option Plan and
1998 Stock Option Plan, as applicable. The Committee has sole discretion and
authority, consistent with the provisions of the Plans, to select the Eligible
Participants to whom options will be granted under the Plans, the number of
shares which will be covered by each option and the form and terms of the
agreement to be used. All employees and officers of the Company are eligible to
participate in the Plans.
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At September 30, 2001, eleven (11) persons were eligible to receive
Incentive Stock Options ("ISOs") under the 1992, 1997 and 1998 Plans.
See proposal Number 3 - Amendment of the 1998 Stock Plan.
OPTIONS. The Committee is empowered to determine the exercise price of
options granted under the Plans, but the exercise price of ISOs must be equal to
or greater than the fair market value of a share of Common Stock on the date the
option is granted (110% with respect to optionees who own at least 10% of the
outstanding Common Stock). The Committee has the authority to determine the
time or times at which options granted under the Plans become exercisable, but
options expire no later than ten years from the date of grant (five years with
respect to Optionees who own at least 10% of the outstanding Common Stock of the
Company). Options are nontransferable, other than by will and the laws of
descent, and generally may be exercised only by an employee while employed by
the Company or within 90 days after termination of employment (one year from
termination resulting from death or disability).
No ISO may be granted to an employee if, as the result of such grant, the
aggregate fair market value (determined at the time each option was granted) of
the shares with respect to which ISOs are exercisable for the first time by such
Employee during any calendar year (under all such plans of the Company and any
parent and subsidiary) exceeds $100,000. The Plans do not confer upon any
employee any right with respect to the continuation of employment by the
Company, nor do the Plans interfere in any way with the employee's right or the
Company's right to terminate the employee's employment at any time.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Harry A. Dugger, III and John J. Moroney serve as the members of the
Company's Compensation Committee, which reviews and makes recommendations with
respect to compensation of officers, employees and consultants, including the
granting of options under the Company's 1997 Stock Option Plan. The 1992 and
1998 Stock Option Plans are administered by the entire Board.
Mr. Moroney is also a Director and President of Landmark Financial Corp.
("Landmark").
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation of the Company's executives is intended to attract, retain and
award persons who are essential to the enterprise. The fundamental policy of
the Company's executive compensation program is to offer competitive
compensation to executives that appropriately rewards the individual executive's
contribution to corporate performance. The Board of Directors utilizes
subjective criteria for evaluation of individual performance. The Board focuses
on two primary components of the Company's executive compensation program, each
of which is intended to reflect individual and corporate performance: base
salary compensation and long-term incentive compensation. The Company has not
paid cash incentive bonuses during fiscal 2001.
-7-
Except as set forth herein, the Company does not have any annuity,
retirement, pension, deferred or incentive compensation plan or arrangement
under which any executive officer is entitled to benefits, nor does the Company
have any long-term incentive plan pursuant to which performance units or other
forms of compensation are paid. Executive officers who qualify will be
permitted to participate in the Company's 1992, 1997 and 1998 Stock Option Plans
which were adopted in May 1992, February 1997 and June 1998, respectively. In
September 1998 the Board of Directors adopted an investment retirement account
plan in which all employees of the Company are eligible to participate.
Executive officers may participate in group life, health and hospitalization
plans, if and when such plans are available generally to all employees. The
Compensation Committee is satisfied that the compensation and stock option plans
provided to the officers of the Company are structured and operated to create
strong alignment with the long-term best interests of the Company and its
stockholders.
The compensation of the Company's Chief Executive Officer, Dr. Dugger, for
fiscal 2001 consisted of base salary of $ 232,000. Because of an inadequacy of
cash flow during the second and third quarters of fiscal 2001, Dr. Dugger agreed
to accrue all of his salary until the cash flow situation resolved itself. In
May 2001, Dr. Dugger's salary was resumed and one-half of his accrued salary was
paid out. The remaining half ($49,000) continues as an accrual at this time. No
bonuses, stock grants or option grants were awarded to Dr. Dugger during fiscal
2001. The determination by the Compensation Committee of Dr. Dugger's
remuneration is based upon methods consistent with those used for other senior
executives. The committee considers certain quantitative factors, including the
Company's financial, strategic and operating performance for the year. The
qualitative criteria include Dr. Dugger's leadership qualities and management
skills, as exhibited by his innovations, time and effort devoted to the Company,
and other general considerations. The Compensation Committee also takes note of
comparable remuneration of other CEOs at similar companies. Based on the
performance of the Company, the Compensation Committee believes that Mr.
Dugger's compensation was appropriate.
Compensation Committee:
----------------------
Harry A. Dugger, III, Ph.D
John J. Moroney
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
DR. DUGGER AND MR. MORONEY. The Employment Agreements previously in effect
for Dr. Dugger and Mr. Moroney terminated in accordance with their terms in
November, 2000. At that time the Board of Directors decided, with the
concurrence of Dr. Dugger and Mr. Moroney, not to renew their agreements, but
rather to continue their employment, on the same terms and conditions, on a
month-to-month basis. In May 2001, Mr. Moroney resigned as an employee of the
Company (remaining as a Chairman of the Board of Directors), and entered into a
fee-for-service consulting relationship with the Company.
MR. ROBERT C. GALLER. In September 2001, the Company entered into a three
year Employment Agreement with Mr. Galler, who was appointed Vice President -
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Corporate Development and elected to the Board of Directors. The Agreement also
provides for certain non-competition and non-disclosure covenants on the part of
the executive. However, with respect to the non-competition covenants, a court
may determine not to enforce such provisions or only partially enforce such
provisions. Additionally, each of the foregoing agreements provides for certain
Company-paid fringe benefits, such as disability insurance and inclusion in
pension, profit sharing, stock option, savings, hospitalization and other
benefit plans at such times as the Company shall adopt them.
CERTAIN TRANSACTIONS
CONSULTING AGREEMENT
On May 1, 1997, the Company entered into a consulting agreement with Saggi
Capital Corp., a public relations consultant (the "Consultant") pursuant to
which the Consultant received a Nonqualified Stock Option under the 1997 Stock
Option Plan to purchase an aggregate of 200,000 shares of Common Stock. On
March 25, 1998, the Company amended its consulting agreement pursuant to which
the Consultant agreed to expand the scope and duration of the services provided.
As a consequence, the Nonqualified Stock Option was restated and amended and the
Consultant surrendered 200,000 unexercised stock options having an exercise
price of $5.80 per share in exchange for receiving 200,000 stock options having
an exercise price of $1.00 per share plus 120,000 stock options having an
exercise price of $2.00 per share. These options are exercisable for a period
of five (5) years following the date of the grant.
LEGAL FEES
During fiscal 2001 the Company paid Mr. Schaul approximately $85,000 for
legal services rendered to the Company.
STOCKHOLDER LOANS
In fiscal 1998, the Company lent the principal amount of $60,000 to Dr.
Dugger in exchange for a 7% promissory note. The note is due on demand, with
interest due quarterly. Interest approximated $4,200 for fiscal 2001. This note
remains outstanding. In October, 2001, Dr. Dugger indicated that the loan and
all accrued interest would be paid in full by year-end 2001.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from
November 20, 1997 through the fiscal year ended July 31, 2001, with the
cumulative total return on (i) the Total Return Index for the Nasdaq Stock
market (U.S. Companies) (the "Nasdaq Composite Index"), and (ii) the American
Stock Exchange, Inc. ("AMEX") Pharmaceutical Index (assuming the investment of
$100 in the Company's Common Stock, the Nasdaq Composite Index and the AMEX
Pharmaceutical Index on November 20, 1997 and reinvestment of all dividends).
Measurement points are on the first full trading day after the Company's
registration statement was declared effective by the SEC and the last trading
day of the Company's fiscal year ended July 31. The Company cautions that the
stock price performance shown in the graph below should not be considered
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indicative of potential future stock performance. Companies included in the
Nasdaq Composite Index and AMEX Pharmaceutical Index are generally larger and
have greater capitalization than the Company.
[GRAPHICS OMITTED]
11/20/97 7/31/98 7/31/99 7/31/00 7/31/01
AMEX Pharmaceutical Index (DRG) $100.00 $135.00 $136.58 $153.78 $156.82
Flemington Pharmaceutical
Corporation (FLEM) $100.00 $ 24.00 $ 15.57 $ 13.25 $ 5.64
Nasdaq Composite Index $100.00 $118.75 $162.25 $231.59 $124.63
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, five (5) individuals will be elected to serve as
directors until the next annual meeting and until their successors are duly
elected, appointed and qualified. During the fiscal year ended July 31, 2001,
the Company's Board of Directors consisted of four (4) persons. In September,
2001, Mr. Galler was elected to the Board. Unless a shareholder WITHHOLDS
AUTHORITY, a properly signed and dated proxy will be voted "FOR" the election of
the persons named below, unless the proxy contains contrary instructions.
Management has no reason to believe that any of the nominees will not be a
candidate or will be unable to serve as a Director. However, in the event any
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nominee is not a candidate or is unable or unwilling to serve as a Director at
the time of the election, unless the shareholder withholds authority from
voting, the proxies will be voted "FOR" any nominee who shall be designated by
the present Board of Directors to fill such vacancy.
The name and age of each of the five (5) nominees, his position with the
Company, his principal occupation, and the period during which such person has
served as a Director are set out below.
POSITION WITH THE DIRECTOR
NAME OF NOMINEE AGE COMPANY PRINCIPAL OCCUPATION SINCE
Harry A. Dugger, III, Ph.D. 65 President and Chief President and Chief 1982
Executive Officer Executive Officer of the
Company
John John J. Moroney 47 Chairman President, Landmark 1991
Financial Corp.
Robert F. Schaul, Esq. 62 Secretary and Attorney 1991
Director
Jack J. Kornreich 62 Director Retired 1996
Robert C. Galler 41 Director and Vice
President Corporate Financial Advisory 2001
Development Services
HARRY A. DUGGER, III, PH.D., President and Director. Dr. Dugger is a founder of
the Company and has been President and a director of the Company since its
inception in May 1982. Prior to founding the Company, from June 1980 to November
1982, Dr. Dugger was employed as Vice President of Research and Development by
Bauers-Krey Associates, a company engaged in the development of pharmaceutical
products. From 1964 to 1980, Dr. Dugger was Associate Section Head for Research
and Development at Sandoz Pharmaceuticals Corporation. Dr. Dugger received an
MS in Chemistry from the University of Michigan in 1960 and received a Ph.D. in
Chemistry from the University of Michigan in 1962.
JOHN J. MORONEY, Chairman of the Board. Mr. Moroney has been Chairman of the
Company since May 1992. From May 1992 to November 1994, Mr. Moroney was also the
Company's Chief Executive Officer. Mr. Moroney currently is President of
Landmark Financial Corp., Harrington Park, New Jersey, a private financial
consulting company. From 1985 to 1992, Mr. Moroney was a Managing Director of
Corporate Finance for the investment banking firm of Ladenburg, Thalmann & Co.,
Inc., specializing in the pharmaceutical and health care industries. Mr. Moroney
received a BS in 1975 and an MBA in 1977, both from Fordham University.
ROBERT F. SCHAUL, ESQ., Secretary and Director. Mr. Schaul has been a Director
of the Company since November 1991 and was Vice President, Secretary and General
Counsel of the Company from November 1991 to February 1995. He has advised the
Company since its formation. From 1989 to 1991, Mr. Schaul was a partner with
the law firm of Glynn, Byrnes and Schaul, and for twenty years prior thereto was
an attorney and partner with the law firm Kerby, Cooper, English, Schaul &
Garvin, specializing in business law and business related litigation. Mr. Schaul
received a BA from New York University in 1961 and a JD from Harvard University
in 1964.
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JACK J. KORNREICH, Director. Mr. Kornreich has been a director of the Company
since 1996. He presently acts as an independent consultant. From 1989 to 1993,
Mr. Kornreich was Executive Vice President and General Counsel of Circa
Pharmaceuticals Corp. (formerly Bolar Pharmaceuticals, Inc. and now known as
Watson Pharmaceutical Corp.). From 1980 to 1989, Mr. Kornreich practiced law as
a partner in the firm of Baum & Kornreich (from 1980 to 1984 the firm was named
Baum, Skigen & Kornreich). From 1975 to 1980, Mr. Kornreich was in private
practice. Mr. Kornreich received a JD from Brooklyn Law School in 1963 and an
LLM in Corporate Law from New York University in 1975.
ROBERT C. GALLER, Vice President, Corporate Development and Director. Mr. Galler
has been an employee and Director of the Company since September, 2001. From
1992 to the present, Mr. Galler has been the President and Chairman of the Lois
Joy Galler Foundation for Hemolytic Uremic Syndrome, a non-profit charity. From
1999 to 2001, Mr. Galler was Vice President, Corporate Development and Director
of Select Therapeutics, Inc. From 1994 to 1998 Mr. Galler was a Director and
advisor of Synsorb Biotech, Inc. From 1992 to 1994 Mr. Galler was an equity
coordinator at Gallers Financial Group, Inc., and from 1984 to 1992 he was Vice
President of Investments with Gruntal & Co. Mr. Galler attended Hofstra
University, Hempstead, N. Y.
Board members are elected annually by the shareholders and the officers are
appointed annually by the Board of Directors.
VOTE REQUIRED
Provided that a quorum of shareholders is present at the meeting in person,
or is represented by proxy, and is entitled to vote thereon, Directors will be
elected by a plurality of the votes cast at the meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH OF THE ABOVE NOMINEES BE
ELECTED AS A DIRECTOR.
PROPOSAL 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Also submitted for consideration and voting at the Annual Meeting is the
ratification of the appointment by the Company's Board of Directors of Wiss &
Company, LLP ("Wiss") as independent certified public accountants for the
purpose of auditing and reporting upon the financial statements of the Company
for the fiscal year ending July 31, 2002. The Board of Directors of the Company
selected and approved Wiss as independent certified public accountants to audit
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and report upon the Company's financial statements for the last several fiscal
years. Wiss has no direct or indirect financial interest in the Company.
Representatives of Wiss are expected to be present at the Annual Meeting,
and they will be afforded an opportunity to make a statement at the Annual
Meeting if they desire to do so. It is also expected that such representatives
will be available at the Annual Meeting to respond to appropriate questions by
shareholders.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
of the Company present, or represented by proxy, and entitled to vote thereon at
the Annual Meeting, is required for the ratification of the selection of Wiss as
the Company's independent certified public accountants for the fiscal year
ending July 31, 2002.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF WISS & COMPANY, LLP AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JULY 31, 2002.
PROPOSAL 3
AMENDMENT OF THE 1998 STOCK PLAN
At the 1998 Annual Meeting of Shareholders, the Company's stockholders
approved the adoption of the Company's 1998 Stock Plan (the "1998 Plan"). The
1998 Plan authorizes up to 500,000 shares of Company common stock for grants of
non-qualified and incentive stock options. The Board of Directors has amended
the 1998 Plan, subject to stockholder approval, to authorize 575,000 additional
shares for future awards (the "Plan Proposal"). The affirmative vote of the
holders of a majority of the total votes cast on the Plan Proposal is needed to
approve the Plan Proposal.
Because of the limited number of remaining shares that may be granted under
the 1998 Plan, the Board of Directors believes it is appropriate and necessary
at this time to authorize additional shares for future awards. Authorization of
these additional shares will allow grants to employees, consultants and
directors in furtherance of the Company's goal of continuing to achieve
significant gains in stockholder value and operating results.
The Company intends to continue awarding options in order to attract and
retain the services or advice of such directors, employees, officers, agents,
consultants, and independent contractors and to provide additional incentive for
such persons to exert maximum efforts for the success of the Company and its
affiliates. The following is a summary of the principal features of the 1998
Plan. The summary is qualified in its entirety by reference to the complete
text of the 1998 Plan, as proposed to be amended. The proposed amendment to the
1998 Plan is set forth as Annex A to this Proxy Statement.
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DESCRIPTION OF THE 1998 PLAN
The maximum number of shares of Common Stock with respect to which awards
may be presently granted pursuant to the 1998 Plan is 500,000 shares. The Plan
Proposal would authorize the use of up to an additional 575,000 shares of the
Company's common stock for a total of 1,075,000 shares being subject of the 1998
Plan. Shares issuable under the 1998 Plan may be either treasury shares or
authorized but unissued shares. The number of shares available for issuance
will be subject to adjustment to prevent dilution in the event of stock splits,
stock dividends or other changes in the capitalization of the Company.
Subject to compliance with Rule 16b-3 of the Securities Exchange Act of
1934 (the "Exchange Act"), the Plan shall be administered by the Board of
Directors of the Company (the "Board") or, a committee (the "Committee").
Except for the terms and conditions explicitly set forth in the Plan, the
Committee shall have the authority, in its discretion, to determine all matters
relating to the options to be granted under the Plan, including, without
limitation, selection of whether an option will be an incentive stock option or
a nonqualified stock option, selection of the individuals to be granted options,
the number of shares to be subject to each option, the exercise price per share,
the timing of grants and all other terms and conditions of the options.
Options granted under the 1998 Plan may be "incentive stock options"
("Incentive Options") within the meaning of Section 422 of the Internal Revenue
Code (the "Code") or stock options which are not incentive stock options
("Non-Incentive Options" and, collectively with Incentive Options, hereinafter
referred to as "Options"). Each Option may be exercised in whole or in part;
provided, that only whole shares may be issued pursuant to the exercise of any
Option. Subject to any other terms and conditions herein, the Committee may
provide that an Option may not be exercised in whole or in part for a stated
period or periods of time during which such Option is outstanding; provided,
that the Committee may rescind, modify, or waive any such limitation (including
by the acceleration of the vesting schedule upon a change in control of the
Company) at any time and from time to time after the grant date thereof. During
an optionee's lifetime, any incentive stock options granted under the Plan are
personal to such optionee and are exercisable solely by such optionee.
The Committee can determine at the time the Option is granted in the case
of Incentive Options, or at any time before exercise in the case of
Non-Incentive Options, that additional forms of payment will be permitted. To
the extent permitted by the Committee and applicable laws and regulations
(including, without limitation, federal tax and securities laws and regulations
and state corporate law), an Option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an
optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Committee;
(b) delivery of a properly executed notice of exercise, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and any federal, state, or local
withholding tax obligations that may arise in connection with the exercise; or
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(c) delivery of a properly executed notice of exercise, together with
instructions to the Company to withhold from the shares of Common Stock that
would otherwise be issued upon exercise that number of shares of Common Stock
having a fair market value equal to the Option exercise price.
Upon a Change in Control of the Company, any award carrying a right to
exercise that was not previously exercisable shall become fully exercisable, the
restrictions, deferral limitations and forfeiture conditions applicable to any
other award granted shall lapse and any performance conditions imposed with
respect to awards shall be deemed to be fully achieved.
Options granted under the 1998 Plan may not be transferred, pledged,
mortgaged, hypothecated or otherwise encumbered other than by will or under the
laws of descent and distribution, except that the Committee may permit transfers
of awards for estate planning purposes if, and to the extent, such transfers do
not cause a participant who is then subject to Section 16 of the Exchange Act to
lose the benefit of the exemption under Rule 16b-3 for such transactions.
For federal income tax purposes, the grant to an optionee of a
Non-Incentive Option will not constitute a taxable event to the optionee or to
the Company. Upon exercise of a Non-Incentive Option (or, in certain cases, a
later tax recognition date), the optionee will recognize compensation income
taxable as ordinary income, measured by the excess of the fair market value of
the Common Stock purchased on the exercise date (or later tax recognition date)
over the amount paid by the optionee for such Common Stock, and will be subject
to tax withholding. The Company may claim a deduction for the amount of such
compensation. The optionee will have a tax basis in the Common Stock purchased
equal to the amount paid plus the amount of ordinary income recognized upon
exercise of the Non-Incentive Option. Upon the subsequent sale of the Common
Stock received upon exercise of the Non-Incentive Option, an optionee will
recognize capital gain or loss equal to the difference between the amount
realized on such sale and his or her tax basis in the Common Stock, which may be
long-term capital gain or loss if the optionee holds the Common Stock for more
than one year from the exercise date.
For federal income tax purposes, neither the grant nor the exercise of an
Incentive Option will constitute a taxable event to the optionee or to the
Company, assuming the Incentive Option qualifies as an "incentive stock option"
under Code 422. If an optionee does not dispose of the Common Stock acquired
upon exercise of an Incentive Option during the statutory holding period, any
gain or loss upon subsequent sale of the Common Stock will be long-term capital
gain or loss, assuming the shares represent a capital asset in the optionee's
hands. The statutory holding period is the later of two years from the date the
Incentive Option is granted or one year from the date the Common Stock is
transferred to the optionee pursuant to the exercise of the Incentive Option.
If the statutory holding period requirements are satisfied, the Company may not
claim any federal income tax deduction upon either the exercise of the Incentive
Option or the subsequent sale of the Common Stock received upon exercise
thereof. If the statutory holding period requirement is not satisfied, the
optionee will recognize compensa-tion income taxable as ordinary income on the
date the Common Stock is sold (or later tax recognition date) in an amount equal
to the lesser of (i) the fair market value of the Common Stock on that date less
the amount paid by the optionee for such Common Stock, or (ii) the amount
realized on the disposition of the Common Stock less the amount paid by the
optionee for such Common Stock; the Company may then claim a deduction for the
amount of such compensa-tion income.
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The federal income tax consequences summarized hereinabove are based upon
current law and are subject to change.
The Board may amend, alter, suspend, discontinue or terminate the 1998 Plan
at any time, except that any such action shall be subject to stockholder
approval at the annual meeting next following such Board action if such
stockholder approval is required by federal or state law or regulation or the
rules of any exchange or automated quotation system on which the Common Stock
may then be listed or quoted, or if the Board of Directors otherwise determines
to submit such action for stockholder approval. In addition, no amendment,
alteration, suspension, discontinuation or termination to the 1998 Plan may
materially impair the rights of any participant with respect to any Option
granted before amendment without such participant's consent. Unless terminated
earlier by action of the Board of Directors, the 1998 Plan shall continue to
remain effective until such time no further awards may be granted and all awards
under the 1998 are no longer outstanding.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
1998 PLAN PROPOSAL. UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM
STOCKHOLDERS WILL BE VOTED IN FAVOR OF THE PLAN PROPOSAL.
GENERAL
The Management of the Company does not know of any matters, other than
those stated in this Proxy Statement, that are to be presented for action at the
Meeting. If any other matters should properly come before the Meeting, proxies
will be voted on those other matters in accordance with the judgment of the
persons voting the proxies. Discretionary authority to vote on such matters is
conferred by such proxies upon the persons voting them.
The Company will bear the cost of preparing, printing, assembling and
mailing all proxy materials that may be sent to shareholders in connection with
this solicitation. Arrangements will also be made with brokerage houses, other
custodians, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of the Common Stock of the Company held by such persons. The
Company will reimburse such persons for reasonable out-of-pocket expenses
incurred by them. In addition to the solicitation of proxies by use of the
mails, officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone or telegraph. The Company does not expect
to pay any compensation for the solicitation of proxies.
A copy of the Company's Form 10-KSB for the fiscal year ended July 31, 2001
and the Company Quarterly Report on Form 10-QSB for the three month period ended
October 31, 2001 as filed with the Securities and Exchange Commission,
accompanies this Proxy Statement. Upon written request, the Company will
provide each shareholder being solicited by this Proxy Statement with a free
copy of any exhibits and schedules thereto. All such requests should be
directed to Flemington Pharmaceutical Corporation, 31 State Highway 12 West,
Flemington, New Jersey 08822, Attn: Robert F. Schaul, Secretary.
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All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. In voting by proxy in regard to items to be voted upon,
shareholders may (i) vote in favor of, or FOR, the item, (ii) vote AGAINST the
item or, (iii) ABSTAIN from voting on one or more items. Shareholders should
specify their choices on the enclosed proxy. If no specific instructions are
given with respect to the matters to be acted upon, the shares represented by
the proxy will be voted FOR the election of all Directors, and FOR the
ratification the appointment of Wiss & Company, LLP as the Company's independent
certified public accountants for the fiscal year ending July 31, 2002.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 2003
Annual Meeting of Shareholders must be received by the Company at its office in
Flemington, New Jersey on or before June 30, 2002 in order to be considered for
inclusion in the Company's proxy statement and proxy relating to such meeting.
The Company has received no shareholders nominations or proposals for the Annual
Meeting.
VOTING OF PROXIES
Proxies may be revoked by shareholders at any time prior to the voting
thereof by giving notice of revocation in writing to the Secretary of the
Company or by voting in person at the Annual Meeting. If the enclosed proxy is
properly signed, dated and returned, the Common Stock represented thereby will
be voted in accordance with the instructions thereon. If no instructions are
indicated, the Common Stock represented thereby will be voted FOR the election
of Directors and FOR the ratification of the appointment of Wiss & Company, LLP
as the Company's independent certified public accounts for the fiscal year
ending July 31, 2002.
REVOCABILITY OF PROXY
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any person signing and
mailing the enclosed proxy may, nevertheless, revoke the proxy at any time prior
to the actual voting thereof by attending the Annual Meeting and voting in
person, by providing written notice of revocation of the proxy or by submitting
a signed proxy bearing a later date. Any written notice of revocation should be
sent to the attention of the Secretary of the Company at the address above. Any
shareholder of the Company has the unconditional right to revoke his or her
proxy at any time prior to the voting thereof by any action inconsistent with
the proxy, including notifying the Secretary of the Company in writing,
executing a subsequent proxy, or personally appearing at the Annual Meeting and
casting a contrary vote. However, no such revocation will be effective unless
and until such notice of revocation has been received by the Company at or prior
to the Annual Meeting.
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METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the proxy card. A broker
non-vote occurs when a broker holding shares registered in street name is
permitted to vote, in the broker's discretion, on routine matters without
receiving instructions from the client, but is not permitted to vote without
instructions on non-routine matters, and the broker returns a proxy card with no
vote (the "non-vote") on the non-routine matter. Under the rules and
regulations of the primary trading markets applicable to most brokers, both the
election of directors or the ratification of the appointment of accountants are
routine matters on which a broker has the discretion to vote if instructions are
not received from the client in a timely manner. Abstentions will be counted as
present for purposes of determining a quorum but will not be counted for or
against the election of directors or the ratification of independent auditors.
As to Item 1, the Proxy confers authority to vote for all of the five (5)
persons listed as candidates for a position on the Board of Directors even
though the block in Item 1 is not marked unless the names of one or more
candidates are lined out. The Proxy will be voted "For" Item 2 unless "Against"
or "Abstain" is indicated. If any other business is presented at the meeting,
the Proxy shall be voted in accordance with the recommendations of the Board of
Directors.
By order of the Board of Directors
Harry A. Dugger, III
President and Chief Executive Officer
January 16, 2002
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ANNEX A
FLEMINGTON PHARMACEUTICAL CORPORATION
1998 STOCK PLAN
This Flemington Pharmaceutical Corporation 1998 Stock Plan (the "1998
Plan") is hereby amended as follows:
1. Section 3 of the 1998 Plan is amended by deleting the first sentence of
Section 3 in its entirety and replacing the following sentence in lieu thereof:
SECTION 3. STOCK SUBJECT TO THE PLAN. Number of Shares. The total
number of shares of Common Stock reserved and available for distribution under
the Plan shall be 1,075,000 shares.
2. Except as expressly amended hereby, the provisions of the Plan are and
shall remain in full force and effect.
3. This Amendment shall be effective immediately upon approval by
the Company's Board of Directors and stockholders of the Company.
Adopted by the Board of Directors
this 10th day of January, 2002
Approved by the Stockholders
This ___ day of February, 2002
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