SEC Info - Viropharma Inc - DEF 14A

SEC Info

Home

My Interests

Help

Please Sign In

Viropharma Inc · DEF 14A · For 5/21/98

Filed On 4/15/98 · SEC File 0-21699 · Accession Number 1036050-98-615

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 4/15/98  Viropharma Inc                    DEF 14A     5/21/98    1:34                                     1036050

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Notice & Proxy                                        34    184K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Certain Transactions Compensation Arrangements Security Ownership of Certain Beneficial Owners and Management Warrant Exercises
1	1st Page
4	Security Ownership of Certain Beneficial Owners and Management
8	Compensation Arrangements
11	Certain Transactions
"	Warrant Exercises

DEF 14A 1st Page of 34 TOC Top Previous Next Bottom Just 1st
 Sponsored Ads...







================================================================================

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                                                 

[X]  Definitive Additional Materials                                            

[_]  Soliciting Material Pursuant to Section 14a-11(c) or Section 14a-12        

ViroPharma Incorporated 
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)  

ViroPharma Incorporated 
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)  

Payment of Filing Fee (Check the appropriate box):                              

[X]  No fee required.                                                           

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

(1) Title of each class of securities to which transaction applies:   

   -------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:      

   -------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed  
pursuant to Exchange Act Rule 0-11: *                         

   -------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:                  

   -------------------------------------------------------------------------

(5) Total fee paid:                                                   

   -------------------------------------------------------------------------

*    Set forth the amount on which the filing fee is calculted and state how it 
was determined.                                                       

[_]  Fee paid previously with preliminary materials.                            

[_]  Check box if any part of the fee is offset as provided by Exchange         
  Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.           

(1) Amount Previously Paid:                                           

   -------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:                     

   -------------------------------------------------------------------------

(3) Filing Party:                                                     

   -------------------------------------------------------------------------

(4) Date Filed:                                                       

   -------------------------------------------------------------------------

DEF 14A 2nd Page of 34 TOC 1st Previous Next Bottom Just 2nd

VIROPHARMA INCORPORATED 
405 Eagleview Boulevard 
Exton, PA 19341 

----------------  

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS  
TO BE HELD MAY 21, 1998 

----------------  

To Our Stockholders:                                                            

Notice is hereby given that the Annual Meeting of Stockholders (the "Annual 
Meeting") of ViroPharma Incorporated (the "Company") will be held on May 21,    
1998 at 10:00 a.m., local time, at the Company's headquarters at 405 Eagleview  
Boulevard, Exton, Pennsylvania for the following purposes:                      

(1) To elect a director to Class II of the Board of Directors to serve for  
a three-year term and until the election and qualification of her   
successor;                                                          

(2) To approve the amendment and restatement of the Company's 1995 Stock    
Option Plan; and                                                    

(3) To transact such other business as may properly come before the         
meeting.                                                            

Only stockholders of record at the close of business on April 10, 1998 are  
entitled to notice of the Annual Meeting and to vote at the Annual Meeting and  
any adjournments thereof. A complete list of such stockholders will be          
available at the Company's headquarters, 405 Eagleview Boulevard, Exton,        
Pennsylvania, for ten days before the meeting.                                  

                                       By Order of the Board of Directors,

                   Thomas F. Doyle
                                       Vice President, General Counsel and
             Secretary

April 16, 1998                                                                  

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE     
YOUR REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO COMPLETE,     
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A         
POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE.                      

DEF 14A 3rd Page of 34 TOC 1st Previous Next Bottom Just 3rd

VIROPHARMA INCORPORATED 
405 Eagleview Boulevard 
Exton, PA 19341 

----------------  

PROXY STATEMENT 

ANNUAL MEETING OF STOCKHOLDERS  
TO BE HELD MAY 21, 1998 

----------------  

This Proxy Statement is being furnished to the stockholders of ViroPharma   
Incorporated (the "Company") in connection with the Annual Meeting of           
Stockholders of the Company to be held on May 21, 1998 and any adjournments     
thereof (the "Annual Meeting"). This Proxy Statement and the enclosed Proxy     
Card are being mailed to stockholders on or about April 16, 1998.               

Execution and return of the enclosed Proxy Card are being solicited by and  
on behalf of the Board of Directors of the Company for the purposes set forth   
in the foregoing notice of meeting. The costs incidental to the solicitation    
and obtaining of proxies, including the cost of reimbursing banks and brokers   
for forwarding proxy materials to their principals, will be borne by the        
Company. Proxies may be solicited, without extra compensation, by officers and  
employees of the Company by mail, telephone, facsimile, personal interviews     
and other methods of communication.                                             

The Annual Report to Stockholders for the fiscal year ended December 31,    
1997, including financial statements and other information with respect to the  
Company, is being mailed to stockholders with this Proxy Statement. Such        
Annual Report is not part of this Proxy Statement.                              

VOTING AT THE MEETING 

RECORD DATE; VOTE REQUIRED; PROXIES                                             

Only stockholders of record at the close of business on April 10, 1998 are  
entitled to notice of the Annual Meeting and to vote at the Annual Meeting. As  
of that date, the Company had outstanding 11,480,820 shares of Common Stock,    
par value $.002 per share ("Common Stock"). The holders of a majority of such   
shares, represented in person or by proxy, shall constitute a quorum at the     
Annual Meeting. A quorum is necessary before business may be transacted at the  
Annual Meeting except that, even if a quorum is not present, the stockholders   
present in person or by proxy shall have the power to adjourn the meeting from  
time to time until a quorum is present. Each stockholder entitled to vote       
shall have the right to one vote for each share of Common Stock outstanding in  
such stockholder's name.                                                        

The shares of Common Stock represented by each properly executed Proxy Card 
will be voted at the Annual Meeting in the manner directed therein by the       
stockholder signing such Proxy Card. The Proxy Card provides spaces for a       
stockholder to withhold authority to vote for the nominee for the Board of      
Directors and to vote for or against or abstain from voting with respect to     
the approval of the amendment and restatement of the Company's 1995 Stock       
Option Plan (the "Amended Plan"). The nominee for director is to be elected by  
a plurality of the votes cast at the Annual Meeting. With respect to any other  
matter that may properly be brought before the Annual Meeting, including the    
approval of the Amended Plan, the affirmative vote of a majority of the shares  
represented in person or by proxy at the Annual Meeting and entitled to vote    
is required to take action, unless a greater percentage is required either by   
law or by the Company's Second Amended and Restated Certificate of              
Incorporation or Bylaws.                                                        

With regard to the election of the director, votes may be cast in favor of  
or withheld from the nominee. Votes that are withheld will be excluded          
entirely from the vote and will have no effect, other than for purposes of      
determining the presence of a quorum. Abstentions may be specified on the       
proposal to approve the Amended Plan (but not for the election of the           
director). Abstentions will be considered present and entitled to vote at the   

DEF 14A 4th Page of 34 TOC 1st Previous Next Bottom Just 4th

Annual Meeting, but will not be counted as votes cast in the affirmative.       
Abstentions on the proposal to approve the Amended Plan will have the effect    
of a negative vote because this proposal requires the affirmative vote of a     
majority of the shares present in person or represented by proxy at the Annual  
Meeting and entitled to vote. Brokers who hold shares in street name for        
customers have the authority under the rules of the various stock exchanges to  
vote on certain items when they have not received instructions from beneficial  
owners. The Company believes that brokers that do not receive instructions are  
entitled to vote those shares with respect to the election of the director;     
however, the Company believes that brokers are not entitled to vote such        
shares with respect to the proposal to approve the Amended Plan. A failure by   
brokers to vote those shares will have no effect on the outcome of the          
election of the director, as the director is to be elected by a plurality of    
the votes cast.                                                                 

If a signed Proxy Card is returned and the stockholder has given no         
direction with respect to a voting matter, the shares will be voted with        
respect to that matter by the proxy agents as recommended by the Board of       
Directors. Execution and return of the enclosed Proxy Card will not affect a    
stockholder's right to attend the Annual Meeting and vote in person. Any        
stockholder giving a proxy has the right to revoke it by giving notice of       
revocation to the Secretary of the Company at any time before the proxy is      
voted.                                                                          

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  

The following table sets forth certain information regarding the beneficial 
ownership of the Common Stock as of April 1, 1998, except as otherwise          
indicated in the relevant footnote, by (i) each person or group who is known    
by the Company to own beneficially more than 5% of the Common Stock, (ii) each  
of the Company's directors, (iii) the Company's chief executive officer and     
the four other most highly compensated executive officers of the Company        
(collectively, the "Named Executive Officers") and (iv) all current executive   
officers and directors as a group.                                              

                                                                · Download Table

                                                              PERCENTAGE OF     
                                       NUMBER OF SHARES     OUTSTANDING SHARES  
                                     BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
                                     --------------------- -------------------- 
                                                                                
5% STOCKHOLDERS                                                                 
---------------                                                                 
Oak Investment Partners VI, Limited        1,573,003               13.7         
 Partnership(2)....................                                             
 One Gorham Island                                                              
 Westport, Connecticut 06880                                                    
Sevin Rosen Fund IV L.P.(3)........        1,264,962               11.0         
 550 Lytton Avenue, Suite 200                                                   
 Palo Alto, CA 94301                                                            
FMR Corp.(4).......................           980,500               8.5         
 82 Devonshire Street                                                           
 Boston, Massachusetts 02109                                                    
Technology Leaders II L.P.(5)......          766,700                6.7         
 800 The Safeguard Building                                                     
 435 Devon Park Drive                                                           
 Wayne, Pennsylvania 19087                                                      
UBS Asset Management (New York)               590,000               5.1         
 Inc.(6)...........................                                             
 1345 Avenue of the Americas                                                    
 West 54th & 55th Streets                                                       
 New York, New York 10105                                                       
Frazier Healthcare II L.P.(7)......           574,581               5.0         
 Two Union Square                                                               
 601 Union Street, Suite 2110                                                   
 Seattle, Washington 98101                                                      

-2- 

DEF 14A 5th Page of 34 TOC 1st Previous Next Bottom Just 5th

DIRECTORS AND EXECUTIVE OFFICERS                                                

                                                                · Download Table
                                                                         
Ann H. Lamont(2)....................................... 1,573,003   13.7 
Claude H. Nash(8)......................................    458,134   4.0 
Marc S. Collett(9).....................................    211,022   1.8 
Mark A. McKinlay(10)...................................    141,245   1.2 
Johanna A. Griffin(11).................................    104,858     * 
Frank Baldino, Jr.(12).................................     49,000     * 
Jon M. Rogers(13)......................................     16,537     * 
Robert J. Glaser.......................................      3,400     * 
David J. Williams......................................        --     -- 
All directors and executive officers as a group (13                      
 Persons)(14)..........................................  2,682,300   23.4

--------                                                                        
* Less than one percent.                                                        

(1) Applicable percentage of ownership is based on 11,480,565 shares of       
Common Stock outstanding as of April 1, 1998. In accordance with the  
rules of the Securities and Exchange Commission (the "Commission"),   
 shares underlying options to purchase Common Stock that are exercisable
 as of April 1, 1998 or within 60 days thereafter are deemed outstanding
and to be beneficially owned by the person holding such options for   
purposes of computing such person's percentage ownership, but are not 
treated as outstanding for the purpose of computing the percentage    
ownership of any other person.                                        

(2) Includes 1,537,139 shares of Common Stock owned by Oak Investment         
  Partners VI, Limited Partnership and 35,864 shares of Common Stock owned
  by Oak VI Affiliates Fund, Limited Partnership. Ms. Lamont is a managing
  member of Oak Associates VI, LLC and Oak VI Affiliates, LLC, the general
partners of Oak Investment Partners VI Limited Partnership and Oak VI 
Affiliates Fund, Limited Partnership, respectively. Ms. Lamont shares 
   voting and investment power with respect to the limited partnerships with
the other managing members of Oak Associates VI, LLC and Oak VI       
  Affiliates, LLC, respectively. Ms. Lamont disclaims beneficial ownership
of shares in which she has no pecuniary interest.                     

(3) Includes 1,258,728 shares of Common Stock owned by Sevin Rosen Fund IV    
L.P. and 6,234 shares of Common Stock owned by Sevin Rosen Bayless    
Management Company.                                                   

(4) As reflected in a Schedule 13G dated February 14, 1998. According to such 
Schedule 13G, FMR Corp. is the parent holding company of Fidelity     
  Management & Research Company, a registered investment company under the
Investment Advisors Act of 1940 ("Fidelity") that acts as investment  
   advisor to various other investment companies (the "Funds"), and Fidelity
Management Trust Company, a bank as defined in Section 3(a)(6) of the 
 Securities Exchange Act of 1934 ("FMT Co."). Fidelity is the beneficial
 owner of 901,900 shares of Common Stock. FMR Corp., through its control
   of Fidelity, and the Funds each has the power to dispose of the shares of
Common Stock owned by the Funds. The Funds have the sole power to vote
 such shares. FMT Co. is the beneficial owner of 78,600 shares of Common
Stock as a result of it serving as investment manager of certain      
   institutional accounts (the "Institutional Accounts"). FMR Corp., through
its control of FMT Co., has the sole power to dispose of the shares of
Common Stock beneficially owned by FMT Co., and the sole power to vote
 63,900 shares of such Common Stock. Certain Institutional Accounts have
 the sole power to vote 14,700 shares of Common Stock beneficially owned
by FMT Co.                                                            

(5) As reflected in a Schedule 13G dated February 8, 1998 and in information  
   provided to the Company in connection with the sale by Technology Leaders
 II L.P. ("TL II") of certain restricted securities. According to TL II,
   each of TL II, Technology Leaders II Offshore C.V. and Technology Leaders
 II Management L.P. has the shared voting and dispositive power for such
shares.                                                               

(6) As reflected in a Schedule 13G dated February 13, 1998. According to UBS  
Asset Management (New York) Inc., it has the sole power to dispose or 
direct the disposition of such shares.                                

(7) As reflected in a Schedule 13G dated February 10, 1998 and in information 
   provided to the Company in connection with the sale by Frazier Healthcare
II L.P. ("Frazier") of certain restricted securities. According to    
Frazier, each of Frazier, FMH II, L.L.C., Frazier Management, L.L.C., 
Frazier & Company, Inc. and Alan D. Frazier share the voting and      
dispositive power for such shares.                                    

-3- 

DEF 14A 6th Page of 34 TOC 1st Previous Next Bottom Just 6th

(8) Includes 82,875 issued but unvested shares of Common Stock purchased by   
   Dr. Nash upon the founding of the Company in December 1994 and 400 shares
 Common Stock held by Dr. Nash as custodian for two minor children. Also
includes 15,713 shares of Common Stock issuable upon exercise of      
currently exercisable options.                                        
(9) Includes 25,500 issued but unvested shares of Common Stock purchased by   
Dr. Collett upon the founding of the Company in December 1994. Also   
includes 27,670 shares of Common Stock issuable upon exercise of      
currently exercisable options.                                        
(10) Includes 25,500 issued but unvested shares of Common Stock purchased by    
Dr. McKinlay upon the founding of the Company in December 1994. Also  
includes 34,045 shares of Common Stock issuable upon exercise of      
currently exercisable options.                                        
(11) Includes 15,938 issued but unvested shares of Common Stock purchased by    
Dr. Griffin upon the founding of the Company in December 1994. Also   
   includes 9,941 shares of Common Stock issuable upon exercise of currently
exercisable options.                                                  
(12) Includes 12,750 issued but unvested shares of Common Stock purchased by    
Dr. Baldino in January 1996.                                          
(13) Represents 16,537 shares of Common Stock issuable upon exercise of         
exercisable options.                                                  
(14) Includes 178,501 issued but unvested shares of Common Stock purchased by   
  the founders of the Company. Includes options to purchase 141,409 shares
   of Common Stock, which either are exercisable as of April 1, 1998 or will
be exercisable within 60 days of April 1, 1998.                       

-4- 

DEF 14A 7th Page of 34 TOC 1st Previous Next Bottom Just 7th

PROPOSAL 1  

ELECTION OF DIRECTORS 

The By-laws of the Company permit up to seven persons to serve as members of
the Board of Directors. The Board of Directors currently consists of five       
directors and is classified with respect to terms of office into three          
classes. Only one person has been nominated to serve as a Class II director.    
Mr. Steve Dow was a Class II director and resigned from the Board in March      
1998. Given the proximity of Mr. Dow's resignation to date that this proxy was  
mailed, the Company has not yet found a replacement for Mr. Dow. The Class II   
director elected at the Annual Meeting will serve until the 2001 annual         
meeting of stockholders and until such director's successor has been elected    
and qualified, except in the event of such director's earlier death,            
resignation or removal. The terms of office for the Class I Directors will      
expire at the annual meeting to be held in the year 2000, upon the election     
and qualification of their successors. The terms of office of the Class III     
directors will expire at the annual meeting to be held in 1999, upon the        
election and qualification of their successors.                                 

Dr. Baldino, Ms. Lamont and Claude Nash were elected to the Board of        
Directors pursuant to an Amended and Restated Shareholders' Voting Agreement,   
dated as of May 31, 1996, by and among the Company and certain of its           
stockholders and executive officers. Pursuant to the agreement, Ms. Lamont was  
designated to be a director by Oak Investment Partners VI, Limited              
Partnership, Dr. Baldino was designated to be a director by the holders of all  
outstanding shares of redeemable preferred stock and Common Stock voting as a   
single class, and Claude Nash was designated to be a director by the holders    
of Common Stock.                                                                

The Board of Directors has nominated Ann Lamont for election as a Class II  
director.                                                                       

The persons named as proxy agents in the enclosed Proxy Card intend (unless 
instructed otherwise by a stockholder) to vote for the election of Ann Lamont   
for election as a Class II director. In the event that the nominee should       
become unable to accept nomination or election (a circumstance which the Board  
of Directors does not expect), the proxy agents intend to vote for any          
alternate nominee designated by the Board of Directors or, in the discretion    
of the Board, the position may be left vacant.                                  

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE CLASS II       
NOMINEE.                                                                        

Set forth below is certain information with respect to the nominee for      
director and each other person currently serving as a director of the Company   
whose term of office will continue after the Annual Meeting, including the      
class and term of office of each such person. This information has been         
provided by each director at the request of the Company.                        

CLASS I -- DIRECTORS WITH TERMS CONTINUING UNTIL 2000                           

ROBERT J. GLASER. Mr. Glaser has served as a director of the Company since  
August 1997. Mr. Glaser is currently President of the McKesson Pharmaceutical   
Services division of McKesson Corporation. He was President and COO of Ostex    
International from 1996-1997. Mr. Glaser was Senior Vice President of           
Marketing for Merck U.S. Human Health from 1994-1996, Vice President of         
Marketing from 1993-1994 and Vice President of Merck's Vaccine Division from    
1991-1993. Mr. Glaser is 46 years of age.                                       

DAVID J. WILLIAMS. Mr. Williams has served as a director of the Company     
since November 1997. Mr. Williams has been President and Chief Operating        
Officer of Pasteur Merieux Connaught USA since 1988. Mr. Williams also serves   
on the Board of Directors of Blue Cross of Northeastern Pennsylvania. Mr.       
Williams is 48 years of age.                                                    

CLASS II -- NOMINEE FOR TERM CONTINUING UNTIL 2001                              

ANN H. LAMONT. Ms. Lamont, a co-founder of the Company, has served as a     
director of the Company since June 1995. Since 1986, Ms. Lamont has served as   
general partner and managing member of certain limited partnerships affiliated  
with Oak Investment Partners, a venture capital organization whose affiliates   
are principal stockholders in the Company. Ms. Lamont also serves on the Board  
of Directors of Avecor Cardiovascular, Inc. She is 41 years of age.             

-5- 

DEF 14A 8th Page of 34 TOC 1st Previous Next Bottom Just 8th

CLASS III -- DIRECTORS WITH TERMS CONTINUING UNTIL 1999                         

CLAUDE H. NASH, PH.D. Claude Nash, a co-founder of the Company, has served  
as Chairman of the Board of Directors since February 1997, and as Chief         
Executive Officer, President and director since the Company's commencement of   
operations in December 1994. From 1983 until 1994, Claude Nash served as Vice   
President, Infectious Disease and Tumor Biology at Schering-Plough Research     
Institute. He is 55 years of age.                                               

FRANK BALDINO, JR., PH.D. Dr. Baldino has served as a director of the       
Company since June 1995. Since 1987, he has served as President, CEO and        
director of Cephalon, Inc., an integrated specialty biopharmaceutical company   
that discovers, develops, and markets products to treat neurological            
disorders. Dr. Baldino is also a director of Integrated Systems Consulting      
Group, Inc. and Pharmacopeia, Inc. Dr. Baldino is 44 years of age.              

COMMITTEES AND MEETINGS                                                         

The Board of Directors has a Compensation Committee and an Audit Committee. 
During 1997, the Board of Directors held five meetings, the Compensation        
Committee held one meeting, and the Audit Committee held four meetings. Each    
director attended at least 75% of the aggregate of the meetings of the Board    
of Directors held during 1997 and of the committee or committees on which he    
or she served during the year.                                                  

The Compensation Committee makes recommendations concerning salaries and    
incentive compensation for employees of and consultants to the Company, and     
the Audit Committee reviews the results and scope of the audit and other        
services provided by the Company's independent auditors.                        

The current members of the Compensation Committee are Mr. Glaser and Ms.    
Lamont, and the current members of the Audit Committee are Dr. Baldino and Mr.  
Williams. With respect to the Compensation Committee, Mr. Glaser replaced Mr.   
Steve Dow, who resigned from the Compensation Committee and the Board of        
Directors in March 1998.                                                        

COMPENSATION ARRANGEMENTS                                                       

Non-employee directors not affiliated with investors in the Company receive 
$10,000 per year, plus travel expenses for each meeting of the Board of         
Directors they attend.                                                          

In July 1997 the Company entered into Agreements with each of Dr. Baldino   
and Mr. Glaser, and in November 1997 the Company entered into an Agreement      
with Mr. Williams, in connection with their participation on the Company's      
Board of Directors. Pursuant to such Agreements, Dr. Baldino, Mr. Glaser and    
Mr. Williams were granted options to purchase 13,334, 20,000 and 20,000 shares  
of the Company's Common Stock, respectively, at an exercise price equal to the  
fair market value of the Common Stock on the date of grant, and are each to be  
paid $5,000 per year, payable in equal, quarterly installments and credited     
against the director fees payable to them as described above.                   

Dr. Baldino, Mr. Dow and Ms. Lamont are parties to indemnification          
agreements with the Company. Pursuant to the agreements, the directors are to   
be indemnified against liabilities and expenses incurred in connection with     
their services to the Company to the fullest extent permitted by Delaware law.  
Such indemnification is subject to the director's meeting the applicable        
standard of care and to a determination to indemnify by a majority of           
disinterested directors (as defined in the agreements) or by independent        
counsel (also as defined in the agreements).                                    

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

Mr. Dow and Ms. Lamont are parties to certain transactions with the Company.
See "--Compensation Arrangements" for a description of Mr. Dow's and Ms.        
Lamont's indemnification agreements with the Company; and "Certain              
Transactions- Warrant Exercises" for a description of cashless exercises of     
warrants by Oak Investment Partners VI Limited Partnership and Oak VI           
Affiliates Fund, Limited Partnership (collectively, "Oak"), Sevin Rosen Fund    
IV, LP, of which Mr. Dow is a partner ("Sevin Rosen") and Claude Nash.          

-6- 

DEF 14A 9th Page of 34 TOC 1st Previous Next Bottom Just 9th

EXECUTIVE COMPENSATION  

The following table sets forth certain information with respect to              
compensation paid or earned during the fiscal                                   
years ended December 31, 1995, December 31, 1996 and December 31, 1997 to the   
Company's chief executive officer and the Named Executive Officers.             

SUMMARY COMPENSATION TABLE  
Annual Compensation 

                                                        · Enlarge/Download Table

                                                                         LONG-TERM               
                                                                        COMPENSATION             
                                                                        ------------             
                                                                           AWARDS                
                                                                        ------------             
                                                                         SECURITIES              
                                                      OTHER ANNUAL       UNDERLYING   ALL OTHER  
   NAME AND POSITION      YEAR SALARY($) BONUS($) COMPENSATION($)(1)(2)   OPTIONS    COMPENSATION
   -----------------      ---- --------- -------- --------------------- ------------ ------------
                                                                                                 
Claude H. Nash..........  1997 $220,000  $55,000           --              45,000      $20,000(3)
Chief Executive Officer   1996  180,000   18,000           --              17,850       20,000   
 and President            1995  180,000      --            --                 --                 

Jon M. Rogers(4)........  1997  189,000   45,250           --              30,000          --    
Vice President, Clinical  1996  104,218   10,500           --              36,147          --    
Research                  1995      --       --                               --                 

Mark McKinlay...........  1997  181,500   46,375           --              25,000                
Vice President, Research  1996  165,000   16,500           --              60,180          --    
 & Development            1995  165,000                                       --                 

Marc S. Collett.........  1997  159,500   39,875           --              25,000          --    
Vice President, Discov-   1996  145,000   14,500           --              47,430          --    
 ery Research             1995  145,000      --                               --                 

Johanna A. Griffin......  1997  139,750   34,938           --              20,000          --    
Vice President, Business  1996  125,000   12,500           --              19,763          --    
Development               1995  125,000      --                               --                 

--------                                                                        
(1) In 1995, certain of the Named Executive Officers also received cash         
payments for deferred compensation for services performed in December   
1994. Drs. Nash, McKinlay, Collett and Griffin received payments of     
$6,923, $6,346, $5,576 and $4,807, respectively.                        
(2) Excludes perquisites and other personal benefits, securities or property    
 which are, in the aggregate, less than 10% of the total annual salary and
bonus.                                                                  
(3) Represents premiums paid by the Company for life insurance of which the     
 Company is not the beneficiary. The Company currently intends to continue
  paying these premiums in future years and does not expect such premiums to
exceed $20,000 per year.                                                
(4) Dr. Rogers joined the Company in June 1996.                                 

-7- 

DEF 14A 10th Page of 34 TOC 1st Previous Next Bottom Just 10th

The following table summarizes stock options granted during fiscal 1997 to  
the Named Executive Officers.                                                   

OPTION GRANTS IN LAST FISCAL YEAR 

                                                        · Enlarge/Download Table

                                          INDIVIDUAL GRANTS                                                
                         ----------------------------------------------------                              
                                                                               POTENTIAL REALIZABLE VALUE  
                                                                               AT ASSUMED ANNUAL RATES OF  
                             NUMBER OF                                        STOCK PRICE APPRECIATION FOR 
                            SECURITIES      PERCENTAGE OF                             OPTION TERM(3)       
                             UNDERLYING     TOTAL OPTIONS EXERCISE EXPIRATION -----------------------------
          NAME           OPTIONS GRANTED(1)   GRANTED(2)   PRICE      DATE          5%             10%     
          ----           -----------------  ------------- -------- ---------- -------------- --------------
                                                                                                           
Claude H. Nash..........      45,000            13.5%      $8.75     1/1/07   $      247,628 $      627,536
Jon M. Rogers...........      30,000             9.0        8.75     1/1/07          165,085        418,357
Mark McKinlay...........      25,000             7.5        8.75     1/1/07          137,571        348,631
Marc S. Collett.........      25,000             7.5        8.75     1/1/07          137,571        348,631
Johanna A. Griffin......      20,000             6.0        8.75     1/1/07          110,057        278,905

--------                                                                        
(1) These options are exercisable in four annual installments commencing on     
the first anniversary of the date of grant.                             
(2) Based on an aggregate of 332,434 options granted to employees in 1997,      
including options granted to the Named Executive Officers.              
(3) Represents the hypothetical gains or "option spreads" that would exist for  
the options at the end of their ten year term. These gains are based on 
assumed rates of annual compound stock price appreciation of 5% and 10% 
 from the date the option was granted to the end of the option term (which
calculated assumed prices are less than the closing price on the Nasdaq 
National Market on April 1, 1998; see also "Fiscal Year-End Options     
  Values" below) and are calculated based on the exercise price per share on
 the date of grant. Such 5% and 10% assumed annual compound rates of stock
 price appreciation are mandated by the rules of the Commission and do not
 represent the Company's estimate or projection of the future Common Stock
price.                                                                  

The following table sets forth certain information concerning the number and
value of unexercised options held by each of the Named Executive Officers on    
December 31, 1997.                                                              

FISCAL YEAR-END OPTION VALUES 

                                                                · Download Table

                        NUMBER OF SECURITIES         VALUE OF UNEXERCISED      
                       UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS      
                             OPTIONS(#)                       ($)              
                      ------------------------- -------------------------------
NAME                  EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE(1)
----                  ----------- ------------- -------------- ----------------
                                                                               
Claude H. Nash.......    4,462       58,388        $ 69,005        $606,420    
Jon M. Rogers........    9,037       57,110         154,467         729,651    
Mark McKinlay........   15,045       70,135         257,661         994,858    
Marc S. Collett......   11,858       60,572         202,119         828,223    
Johanna A. Griffin...    4,940       34,823          76,397         406,738    

--------                                                                        
(1) Based on the difference between $17.625, which was the closing price per    
share on December 31, 1997, and the exercise price of the option.       

CONFIDENTIALITY AND INVENTIONS AGREEMENTS                                       

The Company has entered into confidentiality and inventions agreements with 
each of its employees. The agreements provide that, among other things, all     
inventions, discoveries and ideas made or conceived by an employee during       
employment which are useful to the Company or related to the business of the    
Company or which were made or conceived with the use of the Company's time,     
material, facilities or trade secret information, belong exclusively to the     
Company, without additional compensation to the employee. The agreements also   
have confidentiality provisions in favor of the Company and a noncompetition    
provision in favor of the Company during employment.                            

-8- 

DEF 14A 11th Page of 34 TOC 1st Previous Next Bottom Just 11th


CERTAIN TRANSACTIONS  

See "Matters Concerning Directors-Compensation Arrangements" for a          
description of the Company's indemnification and other agreements with certain  
directors and "Executive Compensation-Confidentiality and Inventions            
Agreements" for a description of the Company's confidentiality and inventions   
agreements with all employees.                                                  

PROMISSORY NOTE                                                                 

On June 12, 1997, the Company loaned $104,107 to Jon M. Rogers, M.D., Vice  
President-Clinical Research of the Company, in connection with the relocation   
of his residence required by his employment with the Company. The loan is       
evidenced by a promissory note (the "Rogers Note"), which bears interest at an  
annual rate of 6.8% and comes due in full on the date of Dr. Rogers'            
resignation from the Company or in monthly installments beginning on the date   
of termination of Dr. Rogers' employment with the Company (other than by        
resignation), and extending over a period of between 48 months and 192 months   
thereafter, depending upon when the termination of employment occurs. The       
Rogers Note provides that on each of the first four anniversaries of the date   
of the Rogers Note, 25% of the original principal amount of the loan will be    
forgiven by the Company so long as Dr. Rogers is then in the Company's employ.  

FINANCINGS                                                                      

For information regarding beneficial ownership of the Company's securities  
by officers, directors and greater than 5% stockholders of the Company, see     
"Security Ownership of Certain Beneficial Owners and Management."               

WARRANT EXERCISES                                                               

In June 1997, Oak (of which Ms. Lamont is a principal) exercised warrants to
purchase 22,435 shares of Common Stock; Sevin Rosen exercised warrants to       
purchase 22,437 shares of Common Stock; Technology Leaders II L.P. and          
Technology Leaders II Offshore C.V. collectively exercised warrants to          
purchase 22,436 shares of Common Stock; and Claude Nash exercised warrants to   
purchase 4,487 shares of Common Stock. The foregoing warrants were exercised    
on a cashless basis and were otherwise exercisable on a cash basis for 81,597   
shares of Common Stock in the aggregate.                                        

-9- 

DEF 14A 12th Page of 34 TOC 1st Previous Next Bottom Just 12th

NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORT OF THE       
COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH ON PAGE 16 SHALL NOT       
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT                
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER       
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES             
EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY     
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT      
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.                                  

REPORT OF THE COMPENSATION COMMITTEE  

The Compensation Committee of the Board of Directors (the "Committee") is   
composed of two non-employee directors. The Committee is responsible for        
setting and administering the policies which govern annual executive salaries,  
bonuses (if any) and stock ownership programs. The Committee annually           
evaluates the performance, and determines or recommends to the full board, the  
compensation of the Chief Executive Officer ("CEO") and the other executive     
officers of the Company based upon a mix of the achievement of corporate        
goals, individual performance and comparisons with other bio-pharmaceutical     
companies.                                                                      

The policies of the Committee with respect to executive officers, including 
the CEO, are to provide compensation designed to attract, motivate and retain   
executives of outstanding ability and potential and to align the interests of   
executive officers with the interest of the Company's stockholders. The         
Company seeks to provide incentives for superior individual performance by      
paying competitive compensation, and to base a significant portion of           
compensation upon the Company's performance. To meet these goals, the           
Committee has adopted a mix among the compensation elements of salary, bonus    
and stock options. In 1998, the Stockholder Value Reward program discussed      
below will emphasize the link between executive incentives and the creation of  
stockholder value as measured by the equity markets. In general, the salaries   
and stock option awards of executive officers, including the CEO, are not       
determined by the Company's achievement of specific corporate performance       
criteria. Instead, the Committee determines the salaries for executive          
officers based upon an evaluation of compensation data from an analysis of      
certain comparable companies, and from a relevant industry survey(s), for       
similar executive positions. In awarding stock options, the Committee           
considers individual performance, overall contribution to the Company, officer  
retention, the number of unvested stock options and the total number of stock   
options to be awarded. In addition, the Committee generally does not award      
stock options to executive officers more frequently than once every year.       

The Committee met in December 1997 and January 1998 to review and approve   
base salary increases and option grants for executive officers, including the   
CEO, for 1998. The Committee considered the results of the Company's Phase II   
clinical trial for viral meningitis and the Company's successful completion of  
a follow-on public offering in July 1997, together with the other factors       
described above. Consistent with the policies described in this report, the     
Committee increased 1998 base salaries for all executive officers other than    
the CEO by an average of 8.6% over 1997 salaries. In determining the CEO's      
salary, the Committee considered the CEO's performance in 1997, the Company's   
performance in 1997, and the fact that the CEO was below the average salaries   
for his position when compared to the salary data and industry surveys          
described above. The Committee recommended to the Board, and the full Board     
approved, an increase to the CEO's base salary of 10%. In addition, after       
considering the criteria relating to awarding stock options and consistent      
with the Company's general policies, the Committee granted options to those     
employees recommended by management, and to all executive officers, including   
the CEO.                                                                        

During 1997, the Committee also approved bonuses to all employees and       
executive officers. The bonus, equal to 10% of each person's base salary, was   
approved in August 1997 for the completion of the Company's Phase II clinical   
trials in viral meningitis and the Company's follow-on public offering          
described above. In January 1998, the Committee also approved an additional     
bonus for each executive officer, including the CEO, equal to an average of     
15% of each executive's 1997 annual salary.                                     

-10-  

DEF 14A 13th Page of 34 TOC 1st Previous Next Bottom Just 13th

In December 1997 and January 1998, the Committee also reviewed and approved 
the Executive Compensation Guidelines (the "Guidelines"). The Guidelines will   
be effective in 1998. In addition to the compensation objectives and            
strategies discussed above, the Guidelines call for a significant portion of    
executive officers' cash compensation to be linked directly to the performance  
of the Company stock, thus establishing a direct correlation between increases  
in stockholder value and executive compensation. Under the Guidelines, and      
until such time following the Company's launch of its first commercial product  
that an alternative measurement of financial performance is adopted by the      
Committee (for example, earnings per share), increases in stockholder value     
will be measured with reference to the amount by which the Company's adjusted   
market capitalization for the applicable year (the "Evaluation Period")         
exceeds the Company's adjusted market capitalization for the year immediately   
preceding the Evaluation Period. For the purpose of the foregoing evaluation,   
the Company's adjusted market capitalization will be determined by computing    
the Company's average market capitalization during the last five business days  
in June and December of each year.                                              

If the Company's adjusted market capitalization for an Evaluation Period    
increases over its adjusted market capitalization for the immediately           
preceding year, then each executive may be eligible (at the discretion of the   
Committee after considering the Company's then-current cash position, among     
other factors) to participate in the Company's "Stockholder Value Reward"       
program. The Stockholder Value Reward component of each executive's             
compensation is determined by multiplying a percentage figure to be determined  
each year by the Committee times the product of the executive's annual base     
salary in the Evaluation Period multiplied by the Company's percentage          
increase in adjusted market capitalization for the Evaluation Period.           

To assist the Company in meeting its goals of executive retention and long- 
term increases in stockholder value, the Stockholder Value Reward for any       
Evaluation Period is to be paid in three equal, annual increments, and is       
subject to reevaluation. The first one-third of an executive's Stockholder      
Value Reward is payable immediately after the end of the Evaluation Period.     
Thereafter, the full amount of the remaining portions of the Stockholder Value  
Reward for the Evaluation Period may be paid only if the Company's adjusted     
market capitalization increases from year to year over the next two years. If   
the Company's adjusted market capitalization decreases in the year following    
the Evaluation Period ("Performance Year 1"), or decreases in the year          
following Performance Year 1 ("Performance Year 2") when compared to the        
Company's adjusted market capitalization for Performance Year 1, the portions   
of the Stockholder Value Reward deferred to Performance Year 1 or Performance   
Year 2 (as the case may be) will be proportionately decreased. Except in        
certain limited circumstances, if an Executive leaves the Company, he or she    
will forfeit any then-unpaid Stockholder Value Reward.                          

DEDUCTIBILITY OF CERTAIN COMPENSATION                                           

Section 162(m) of the Internal Revenue Code generally denies a federal      
income tax deduction for certain compensation exceeding $1,000,000 paid to the  
CEO or any of the four other highest paid executive officers, excluding (among  
other things) certain performance-based compensation. Through December 31,      
1997, this provision has not affected the Company's tax deductions, but the     
Committee will continue to monitor the potential impact of Section 162(m) on    
the Company's ability to deduct executive compensation.                         

                          COMPENSATION COMMITTEE

                 Ann H. Lamont
              Steve Dow*

February 27, 1998                                                               

* Mr. Dow resigned from the Compensation Committee and the Board of Directors   
in March 1998.                                                                

-11-  

DEF 14A 14th Page of 34 TOC 1st Previous Next Bottom Just 14th

PROPOSAL 2  

APPROVAL OF STOCK OPTION PLAN 

In March 1998, the Company's Board of Directors approved and adopted the    
Amended Plan, subject to stockholder approval. The Amended Plan is an           
amendment and restatement of the Company's 1995 Stock Option Plan (the "Prior   
Plan"). The purpose of the Amended Plan is to (i) further the growth and        
success of the Company by enabling selected employees, directors, consultants   
and advisors of the Company and any subsidiaries, including non-employee        
directors, to acquire shares of common stock of the Company, thereby            
increasing their personal interest in such growth and success, and (ii)         
provide a means of rewarding outstanding performance of such persons to the     
Company and any subsidiaries.                                                   

The Prior Plan provided for the grant of options to acquire a maximum of    
1,200,000 shares of Common Stock. As of April 1, 1998, 198,419 shares remained  
available for grant under the Prior Plan and will remain available for grant    
under the Amended Plan. Because the Amended Plan is an amendment and            
restatement of the Prior Plan, options awarded under the Prior Plan will be     
governed by the Amended Plan, except to the extent that certain provisions of   
the Amended Plan may constitute a modification of outstanding option            
agreements that may not be implemented without the optionee's consent.          

A copy of the Amended Plan is included herein as Annex A, and the following 
description of the principal features of the Amended Plan is qualified in its   
entirety by reference thereto.                                                  

The Amended Plan provides for the grant of options to acquire a maximum of  
2,000,000 shares of Common Stock, which includes 1,200,000 shares of Common     
Stock authorized for award under the Prior Plan as well as an additional        
800,000 shares of Common Stock (the "Additional Shares"). As of April, 1 1998,  
1,001,581 shares were subject to outstanding options, and 998,419 shares,       
including all of the Additional Shares, remained available for grant. As of     
April 1, 1998, option grants have been made under the Amended Plan (including   
grants under the Prior Plan) to the following persons and groups (with          
underlying share amounts to each person or group): Dr. McKinlay (100,180); Dr.  
Nash (89,850); Dr. Collett (87,430); Dr. Rogers (78,147); Dr. Griffin           
(51,763); all current executive officers as a group (581,366); all current      
directors who are not executive officers as a group (53,334); and all other     
employees as a group (289,184). All such options were granted at exercise       
prices equal to the fair market value of the Company's Common Stock on the      
date of grant. As of April 1, 1998, the market value of a share of Common       
Stock was $21.625.                                                              

The Amended Plan permits the granting of qualified incentive stock options  
("ISOs") or nonqualified stock options ("NSOs") (collectively, "Options"), at   
the discretion of the Board of Directors of the Company (the "Board") or the    
Compensation Committee of the Board (the "Committee"). Options granted under    
the Amended Plan are evidenced by written agreements which contain such terms,  
conditions, limitations and restrictions as the Committee deems advisable and   
which are not inconsistent with the Amended Plan. Under the Amended Plan, ISOs  
may be granted to individuals who, at the time of grant, are employees of the   
Company or its affiliates, and NSOs may be granted to directors, employees,     
consultants or advisors of the Company or its affiliates. The Amended Plan      
confirms that non-employee directors are eligible to receive option grants.     

The Amended Plan may be administered by the Board or the Committee.         
Currently, the Committee administers the Amended Plan. Subject to the           
provisions of the Amended Plan, the Committee has the authority (i) to          
determine the persons to whom Options will be granted, the number of shares to  
be covered by each Option, and the exercise price per share; (ii) to            
prescribe, amend and rescind rules and regulations relating to the Amended      
Plan; (iii) to determine the conditions which must be satisfied in order for    
an Option to vest and become exercisable; (iv) to accelerate the vesting or     
exercise date of any Option; and (v) to interpret the Amended Plan or any       
agreement entered into with respect to an Option.                               

The Amended Plan provides that the Committee must establish an exercise     
price for ISOs that is not less than the fair market value per share of the     
Common Stock at the date of grant and an exercise price for NSOs of             

-12-  

DEF 14A 15th Page of 34 TOC 1st Previous Next Bottom Just 15th

not less than par value per share. Each Option expires within 10 years of the   
date of grant. However, if ISOs are granted to persons owning more than 10% of  
the voting stock of the Company, the exercise price may not be less than 110%   
of the fair market value per share at the date of grant and the term of such    
ISOs may not exceed five years. The aggregate number of options which may be    
granted under the Amended Plan to any individual participant is limited to      
500,000 shares (subject to proportionate adjustment for changes in              
capitalization). The Prior Plan did not contain this limitation. Options vest   
upon satisfaction of vesting conditions, which may include attainment of        
performance goals, completion of specified periods of service, or other         
conditions specified by the Committee.                                          

Unless provided otherwise in the terms of an option agreement, if an        
optionee is an employee or director and the optionee's relationship with the    
Company or any related corporation ceases for any reason (other than            
termination for cause, death or disability, as such terms are defined in the    
Amended Plan), the optionee may exercise options that are then vested within    
the three-month period following such cessation (unless such options terminate  
or expire sooner by their terms). If the optionee commences competitive         
employment or service within the three-month period, all unexercised options    
will terminate immediately. Unless provided otherwise in the terms of an        
option agreement, if an optionee is an advisor or consultant, termination of    
the relationship with the Company or any related corporation does not cause     
acceleration of the expiration of the option; however, if the optionee          
violates the terms of a non-competition covenant in an agreement that he or     
she may have with the Company, all unexercised options will terminate           
immediately. In the event an optionee's relationship with the Company or any    
related corporation ceases due to disability or death, the option may be        
exercised by the optionee or executor, as appropriate, for a period following   
12 months from the date of termination; provided, however, that in the event    
of termination due to disability, unexercised options will terminate if an      
optionee who is an employee or director commences competitive employment or     
service (or, in the case of a consultant or advisor, violates the terms of his  
or her non-competition covenant) in the 12-month period following termination.  
If an optionee is terminated for cause, all unexercised options are forfeited,  
including options that have been exercised but for which no share certificates  
have been issued (provided, in such instance, that the exercise price paid by   
the optionee shall be refunded). The Prior Plan did not include option          
forfeiture provisions upon a termination for cause or in connection with a      
breach of any post-employment noncompetition agreements.                        

In the event of a Change of Control (as defined in the Amended Plan) in     
which the Amended Plan is not continued by a successor corporation, or in       
which equivalent, substituted options for common stock in a successor           
corporation are not provided to optionees, the Amended Plan shall be            
terminated and, with respect to optionees who are employees or members of the   
Board, all unvested Options shall vest as follows: (i) all unvested Options     
held by employees and Board members who have been employed by the Company or    
who have served on the Board for at least two years as of the Change of         
Control shall be fully vested; and (ii) fifty percent (50%) of all Options      
held by all other employees and Board members which are not vested as of the    
date of the Change of Control shall be fully vested, and the remaining portion  
of such Options shall lapse and be forfeited.                                   

In the event of a Change of Control in which the Amended Plan is continued  
by a successor corporation or in which equivalent substituted options for       
common stock in a successor corporation are provided to optionees, Options      
previously granted to employees and Board members shall vest as follows: (i)    
if an optionee who is employed by the Company at the Executive Director level   
or above (each, an "Executive Officer") or is a member of the Board at the      
time of the Change of Control is not offered substantially equivalent           
employment with the successor corporation or a related employer (both in terms  
of duties and compensation), then any unvested Options as of the date of the    
Change of Control held by such Executive Officer or member of the Board shall   
be fully and immediately vested and exercisable in the manner described in the  
immediately preceding paragraph, taking into account all service performed      
with the Company without regard to such optionee's title for purposes of        
vesting; and (ii) if any optionee (without regard to such optionee's title) is  
offered substantially equivalent employment with the successor corporation or   
a related employer (both in terms of duties and compensation), then Options     
shall not be subject to accelerated vesting; provided however, that if the      
optionee's employment with the successor corporation or related employer is     
terminated by the successor corporation or                                      

-13-  

DEF 14A 16th Page of 34 TOC 1st Previous Next Bottom Just 16th

related employer during the six month period following such Change of Control,  
then any unvested Options or substituted options shall be fully and             
immediately vested and exercisable at the date of the optionee's termination    
of employment in the manner described in the immediately preceding paragraph.   

In addition, in the event of a Change of Control that is a merger,          
consolidation or tax free reorganization or sale of substantially all of the    
assets of the Company, the Board has the authority to distribute to each        
optionee cash and/or other property in an amount equal to and in the same form  
as the optionee would have received from the successor corporation if the       
optionee had owned the shares subject to the option rather than the option at   
the time of the Change of Control, provided that any such amount paid to an     
optionee shall reflect the deduction of the exercise price the optionee would   
have paid to purchase such shares. The Prior Plan included as an event          
constituting a "Change of Control" any transaction resulting in any person or   
entity acquiring eighty percent or more of the Company's voting stock, while    
the Amended Plan sets this threshold at fifty percent. The Prior Plan did not   
contain the provisions in the Amended Plan which condition accelerated vesting  
upon a Change of Control on length or service and the availability of           
substantially equivalent employment by a successor corporation.                 

The Option exercise price must be paid in full at the time the notice of    
exercise of the Option is delivered to the Company and must be tendered in      
cash, or by personal or certified check. In the discretion of the Committee,    
Options may also be exercised by delivering a combination of shares and cash.   
Unless otherwise provided by the Committee, Options are nontransferable. The    
Board may suspend, amend or terminate the Amended Plan. Stockholder approval    
must be obtained for amendments which would (i) increase the number of shares   
which are to be reserved for the issuance of Options under the Amended Plan or  
(ii) permit the granting of options to a class of employees other than those    
presently permitted to receive Options under the Amended Plan.                  

The following is a brief description of the federal income tax consequences 
of stock options which may be granted under the Amended Plan under present tax  
laws. The following description does not purport to address all of the tax      
consequences that may be applicable to any particular optionee or the Company.  
In addition, such discussion does not address foreign, state or local taxes,    
nor does it address federal taxes other than federal income tax. The            
discussion is based upon applicable statutes, regulations, case law, and        
administrative interpretations in effect as of the date of this Proxy           
Statement.                                                                      

Incentive Stock Options. There are no federal income tax consequences to    
either the optionee or the Company upon the grant of an ISO. Except as          
described below, the optionee will not recognize any income upon the exercise   
of an ISO, and the Company will not be allowed any deduction, as long as the    
optionee does not dispose of the shares within two years from the date the ISO  
was granted or within one year from the date the shares were issued to the      
optionee (the "holding period requirement"). Upon a sale of the shares after    
the holding period requirement is satisfied, the optionee will recognize a      
long-term capital gain (or loss) measured by the excess (or deficit) of the     
amount realized from such sale over the option price of such shares, but no     
deduction will be allowed to the Company. If an optionee disposes of shares     
before the holding period requirement is satisfied, the optionee will           
recognize ordinary income in the year of disposition, and the Company will be   
entitled to a corresponding deduction, in an amount equal to the lesser of (a)  
the excess of the fair market value of the shares on the date of exercise over  
the option price of the shares or (b) the excess of the amount realized from    
such disposition over the option price of the shares. Where shares are sold     
before the holding period requirement is satisfied, the optionee will also      
recognize a capital gain to the extent that the amount realized from the        
disposition of the shares exceeds the fair market value of the shares on the    
date of exercise. Upon exercise of an ISO, the excess, if any, of the fair      
market value over the exercise price will be an item of tax preference for      
purposes of the optionee's alternative minimum tax.                             

Non-Qualified Stock Options. There are no federal income tax consequences to
either the optionee or the Company upon the grant of an NSO. Upon the exercise  
of an NSO, the optionee will recognize ordinary compensation income in an       
amount equal to the excess of the fair market value of each share on the date   
of exercise over the option price, and the Company generally will be entitled   
to a federal income tax deduction of the same amount.                           

-14-  

DEF 14A 17th Page of 34 TOC 1st Previous Next Bottom Just 17th

In general, if previously owned shares are used to pay the exercise price of
options, the optionee's tax basis and holding period of such previously owned   
shares will be carried over to the equal number of shares received on           
exercise. The fair market value of any additional shares received upon the      
exercise of an option will be recognized by the optionee as ordinary income.    
The tax basis of the additional shares will be equal, in the aggregate, to the  
ordinary income recognized by the optionee. The holding period will begin on    
the day after the tax basis of the shares is determined. However, if the        
previously owned shares had been acquired on the exercise of an ISO and the     
holding period requirement for those shares was not satisfied at the time they  
were used to exercise an option, such use would constitute a disposition of     
such previously owned shares resulting in the recognition of ordinary income    
as described above.                                                             

The persons named as proxy agents in the enclosed Proxy Card intend (unless 
instructed otherwise by a stockholder) to vote in favor of the adoption of the  
Amended Plan.                                                                   

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDED    
PLAN AS DESCRIBED ABOVE. A MAJORITY OF THE VOTES CAST IN PERSON OR BY PROXY AT  
THE MEETING IS REQUIRED FOR SUCH APPROVAL.                                      

-15-  

DEF 14A 18th Page of 34 TOC 1st Previous Next Bottom Just 18th

PERFORMANCE GRAPH 

The following line graph compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total stockholder return of the  
Nasdaq National Market--US and the Nasdaq Pharmaceutical Index. Dividends       
reinvestment has been assumed. The graph commences as of November 19, 1996,     
the date the Company's Common Stock first started trading on the Nasdaq         
National Market.                                                                

[PERFORMANCE CHART APPEARS HERE]  

          11/19/96 11/29/96 12/31/96  1/31/97  2/28/97  3/31/97  4/30/97
ViroPharma     $100.00  $103.57  $125.00  $180.36  $187.50  $185.71  $148.21    
Nasdaq US      $100.00  $102.58  $102.49  $109.76  $103.77  $ 96.85  $ 99.88    
Nasdaq Pharm   $100.00  $102.66  $105.61  $114.69  $115.48  $100.47  $ 94.52    

           5/30/97  6/30/97  7/31/97  8/29/97  9/30/97 10/31/97 11/28/97
ViroPharma     $155.36  $255.36  $214.29  $228.57  $314.29  $314.29  $258.93    
Nasdaq US      $111.20  $114.61  $126.71  $126.51  $134.00  $127.06  $127.70    
Nasdaq Pharm   $108.76  $108.46  $111.55  $110.23  $121.67  $115.47  $111.85    

12/31/97  1/30/98  2/27/98                          
ViroPharma     $251.79  $267.85  $282.14                                        
Nasdaq US      $125.69  $129.72  $141.91                                        
Nasdaq Pharm   $109.24  $108.18  $111.74                                        

-16-  

DEF 14A 19th Page of 34 TOC 1st Previous Next Bottom Just 19th

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS  

KPMG Peat Marwick LLP has served as the Company's independent certified     
public accountants since 1995. KPMG Peat Marwick LLP has been selected to       
continue in such capacity for the current year. A representative of that firm   
is expected to be present at the Annual Meeting with the opportunity to make a  
statement if he or she desires to do so and to be available to respond to       
appropriate questions.                                                          

STOCKHOLDER PROPOSALS -- 1999 ANNUAL MEETING  

Stockholders may submit proposals on matters appropriate for stockholder    
action at annual meetings in accordance with regulations adopted by the         
Commission. Any proposal which an eligible stockholder desires to have          
presented at the 1999 annual meeting of stockholders concerning a proper        
subject for inclusion in the proxy statement and for consideration at the       
annual meeting, will be included in the Company's proxy statement and related   
proxy card if it is received by the Company no later than December 17, 1998.    

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires  
that directors and certain officers of the Company, and persons who own more    
than ten percent of the Company's Common Stock, file with the Commission        
initial reports of ownership and reports of changes in ownership of such        
Common Stock. Such directors, officers and more than ten percent stockholders   
are required by regulation to furnish the Company with copies of all Section    
16(a) forms which they file.                                                    

To the Company's knowledge, based solely on a review of the copies of such  
reports furnished to the Company and written representations that no other      
reports were required, all fiscal year 1997 Section 16(a) filing requirements   
applicable to its directors, officers and more than ten percent stockholders    
were complied with.                                                             

OTHER MATTERS 

The Board of Directors of the Company does not intend to bring any other    
matters before the Annual Meeting and has no reason to believe any other        
matters will be presented. If, however, other matters properly do come before   
the meeting, it is the intention of the persons named as proxy agents in the    
enclosed Proxy Card to vote upon such matters in accordance with their          
judgment.                                                                       

                                       By Order of the Board of Directors,

                   Thomas F. Doyle
                                   Vice President, General Counsel
                 and Secretary
April 16, 1998                                                                  

-17-  

DEF 14A 20th Page of 34 TOC 1st Previous Next Bottom Just 20th

ANNEX A TO PROXY STATEMENT  

VIROPHARMA INCORPORATED 
STOCK OPTION PLAN 

SECTION 1. PURPOSES.                                                            

The ViroPharma Incorporated 1995 Stock Option Plan was originally effective 
September 20, 1995. The ViroPharma Incorporated Stock Option Plan (the "Plan")  
is an amendment and restatement of this prior plan and is effective March 3,    
1998. The purposes of the Plan are to: (a) further the growth and success of    
ViroPharma Incorporated (the "Company") and its Subsidiaries by enabling        
selected employees, directors, consultants and advisors of the Company and any  
Subsidiaries to acquire shares of common stock of the Company, thereby          
increasing their personal interest in such growth and success and (b) to        
provide a means of rewarding outstanding performance of such persons to the     
Company and/or its Subsidiaries. The Options granted pursuant to the Plan are   
intended to constitute either Incentive Stock Options within the meaning of     
Section 422 of the Code, or non-qualified stock options, as determined by the   
Board or the Committee at the time of award. The type of Options awarded will   
be specified in the Option Agreement between the Company and the Optionee. The  
terms of the Plan shall be incorporated in the Option Agreement to be executed  
by the Optionee.                                                                

SECTION 2. DEFINITIONS                                                          

(a) "Affiliate" shall mean, with respect to a Person, a Person that directly
or indirectly controls, or is controlled by, or is under common control with    
such Person.                                                                    

(b) "Award" shall mean a grant of an Option or Options to an Eligible Person
pursuant to the provisions of this Plan. Each separate grant of an Option or    
Options to an Eligible Person and each group of Options which vests on a        
separate date, is treated as a separate Award.                                  

(c) "Board" shall mean the Board of Directors of the Company, as constituted
from time to time.                                                              

(d) "Change of Control" shall mean the happening of an event, which shall be
deemed to have occurred upon the earliest to occur of the following events:     

(i)   the date the stockholders of the Company (or the Board, if            
stockholder action is not required) approve a plan or other     
arrangement pursuant to which the Company will be dissolved or  
liquidated, or                                                  

(ii)  the date the stockholders of the Company (or the Board, if            
     stockholder action is not required) approve a definitive agreement to
   sell or otherwise dispose of all or substantially all of the assets
of the Company, or                                              

(iii) the date the stockholders of the Company (or the Board, if            
     stockholder action is not required) and the stockholders of the other
     constituent corporations (or their respective boards of directors, if
and to the extent that stockholder action is not required) have 
   approved a definitive agreement to merge or consolidate the Company
with or into another corporation, other than, in either case, a 
    merger or consolidation of the Company in which holders of shares of
     the Company's voting capital stock immediately prior to the merger or
consolidation will have at least 50% of the ownership of voting 
capital stock of the surviving corporation immediately after the
merger or consolidation (on a fully diluted basis), which voting
capital stock is to be held in the same proportion (on a fully  
    diluted basis) as such holders' ownership of voting capital stock of
the Company immediately before the merger or consolidation, or  

(iv)  the date any entity, Person or group (within the meaning of Section   
     13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (A) the
    Company, or (B) any of its Subsidiaries, or (C) any employee benefit
     plan (or related trust) sponsored or maintained by the Company or any
    of its Subsidiaries or (D) any Affiliate (as such term is defined in
Rule 405 promulgated under the Securities Act) of any of the    

1 

DEF 14A 21st Page of 34 TOC 1st Previous Next Bottom Just 21st

   foregoing, shall have acquired beneficial ownership of, or shall have
  acquired voting control over more than 50% of the outstanding shares
of the Company's voting capital stock (on a fully diluted basis), 
   unless the transaction pursuant to which such Person, entity or group
acquired such beneficial ownership or control resulted from the   
    original issuance by the Company of shares of its voting capital stock
 and was approved by at least a majority of Directors who shall have
    been either members of the Board on the date that this Plan is adopted
  by the Board or members of the Board for at least twelve (12) months
prior to the date of such approval, or                            

(v)  the first day after the date of this Plan when Directors are elected   
such that there shall have been a change in the composition of the
    Board such that a majority of the Board shall have been members of the
Board for less than twelve (12) months, unless the nomination for 
   election of each new Director who was not a Director at the beginning
 of such twelve (12) month period was approved by a vote of at least
sixty percent (60%) of the Directors then still in office who were
Directors at the beginning of such period, or                     

(vi) the date upon which the Board determines (in its sole discretion) that 
  based on then current available information, the events described in
clause (iv) are reasonably likely to occur.                       

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.        

(f) "Committee" shall mean a committee appointed by the Board in accordance 
with Section 4(a) of the Plan, and if one is appointed, then such committee     
shall possess all of the power and authority of, and shall be authorized to     
take any and all actions required to be taken hereunder by, and make any and    
all determinations required taken hereunder by, the Board.                      

(g) "Common Stock" shall mean common stock of the Company, $.002 par value  
per Share.                                                                      

(h) "Company" shall mean ViroPharma Incorporated.                           

(i) "Company Plan" means any restricted stock, stock bonus, stock option or 
other compensation plan, program or arrangement established or maintained by    
the Company or an Affiliate.                                                    

(j) "Director" shall mean an individual who is a member of the Board of     
Directors of the Company.                                                       

(k) "Disability" shall mean a mental or physical disability of an Eligible  
Person which renders such Eligible Person unable to perform the full extent of  
his duties and responsibilities by reason of his illness or incapacity for a    
period of 90 consecutive days or longer, or for 90 days during any six-month    
period.                                                                         

(l) "Eligible Person" shall mean any person employed by the Company or any  
of its Subsidiaries. Additionally, the term "Eligible Person" shall include     
advisors and consultants to the Company or any Subsidiary, as well as           
Directors and members of the board of directors of a Subsidiary; provided that  
Options to Eligible Persons who are not employees of the Company or any of its  
Subsidiaries shall be limited to non-qualified stock options.                   

(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as       
amended.                                                                        

(n) "Fair Market Value Per Share" shall mean the fair market value of a     
share of Common Stock, as determined pursuant to Section 8 hereof.              

(o) "Incentive Stock Option" shall mean an Option which is an incentive     
stock option as described in Section 422 of the Code.                           

(p) "Non-Employee Director" shall have the meaning set forth in Rule 16b-   
3(b)(3)(i) promulgated by the Securities and Exchange Commission under the      
Exchange Act, or any successor definition adopted by the Securities and         
Exchange Commission; provided, however, that the Board or the Committee may,    
to the extent it                                                                

2 

DEF 14A 22nd Page of 34 TOC 1st Previous Next Bottom Just 22nd

deems it necessary or desirable to comply with Section 162(m) of the Code and   
applicable regulations thereunder, ensure that each Non-Employee Director also  
qualifies as an "outside director" as that term is defined in the regulations   
under Section 162(m) of the Code.                                               

(q) "Option(s)" shall mean an Incentive Stock Option or a non-qualified     
stock option to purchase Shares that is awarded pursuant to the Plan.           

(r) "Option Agreement" shall mean a written agreement substantially in the  
form of Exhibit A-1 or A-2, or such other form or forms as the Board or the     
Committee (subject to the terms and conditions of this Plan) may from time to   
time approve evidencing and reflecting the terms of an Option.                  

(s) "Optionee" shall mean an Eligible Person to whom an Option is awarded.  

(t) "Other Available Shares" means, as of any date, the excess, if any of:  

(i) the total number of Shares owned by an Optionee; over                   

(ii) the sum of:                                                            

(A) the number of Shares owned by such Optionee for less than six       
months; plus                                                    

(B) the number of Shares owned by such Optionee that has, within the    
preceding six months, been surrendered as payment in full or in 
part, of the exercise price for an option to purchase any       
 securities of the Company or an Affiliate under any Company Plan.

(u) "Participant" shall mean each Eligible Person of the Company or a       
Subsidiary to whom an Award is granted pursuant to the Plan.                    

(v) "Person" shall mean an individual, partnership, corporation, limited    
liability company, trust, joint venture, unincorporated association, or other   
entity or association.                                                          

(w) "Plan" shall mean the ViroPharma Incorporated Stock Option Plan, as     
amended from time to time.                                                      

(x) "Pool" shall mean the pool of Shares subject to the Plan, as described  
in Section 6, and as adjusted in accordance with Section 9 of the Plan.         

(y) "Securities Act" shall mean the Securities Act of 1933, as amended.     

(z) "Shares" shall mean shares of Common Stock.                             

(aa) "Subsidiary" shall mean a subsidiary corporation, whether now or       
hereafter existing, as defined in Sections 424(f) and (g) of the Code.          

SECTION 3. PARTICIPATION.                                                       

Participants in the Plan shall be selected by the Board or the Committee    
from the Eligible Persons. The Board or the Committee may make Awards at any    
time and from time to time to Eligible Persons. Any Award may include or        
exclude any Eligible Person, as the Board or the Committee shall determine in   
its sole discretion.                                                            

SECTION 4. ADMINISTRATION.                                                      

(a) Procedure. The Plan shall be administered by the Board. The Board may at
any time appoint a Committee consisting of not less than two persons to         
administer the Plan on behalf of the Board, each of whom is a Non-Employee      
Director, subject to such terms and conditions as the Board may prescribe.      
Members of the Committee shall serve for such period of time as the Board may   
determine. Members of the Board or the Committee who are eligible for Options   
or have been awarded Options may vote on any matters affecting the              
administration of the Plan or the award of any Options pursuant to the Plan,    
except that no such member shall                                                

3 

DEF 14A 23rd Page of 34 TOC 1st Previous Next Bottom Just 23rd

act upon the award of an Option to himself or herself, but any such member may  
be counted in determining the existence of a quorum at any meeting of the       
Board or the Committee during which action is taken with respect to the award   
of Options to himself or herself.                                               

From time to time the Board may increase the size of the Committee and      
appoint additional members thereto, remove members (with or without cause) and  
appoint new members in substitution therefor, fill vacancies however caused,    
or remove all members of the Committee and thereafter directly administer the   
Plan.                                                                           

(b) Powers of the Board and the Committee. Subject to the provisions of the 
Plan, the Board or the Committee shall have the authority, in its discretion:   

(i)    to make Awards;                                                      

(ii)   to determine the Fair Market Value Per Share;                        

(iii)  to determine the exercise price of the Options to be awarded in      
accordance with Sections 7 and 8 of the Plan;                 

(iv)   to determine the Eligible Persons to whom, and the time or times at  
        which, Awards shall be made, and the number of Shares to be subject to
each Award;                                                   

(v)    to prescribe, amend and rescind rules and regulations relating to the
Plan;                                                         

 (vi)   to determine the terms and provisions of each Award under the Plan and
      each Option Agreement (which need not be identical with the terms of
  other Awards and Option Agreements) and, with the consent of the
        Optionee, to modify or amend an outstanding Award or Option Agreement;

(vii)  to determine the conditions which must be satisfied in order for an  
    Award to vest and become exercisable, which conditions may include
 satisfaction of performance goals, vesting over time, and other
criteria as determined by the Board or the Committee;         

(viii) to accelerate the vesting or exercise date of any Award;             

 (ix)   to interpret the Plan or any agreement entered into with respect to an
Award or exercise of Options;                                 

(x)    to authorize any person to execute on behalf of the Company any      
  instrument required to effectuate an Award or to take such other
actions as may be necessary or appropriate with respect to the
         Company's rights pursuant to Awards or agreements relating to the Award
or exercise thereof; and                                      

(xi)   to make such other determinations and establish such other procedures
        as it deems necessary or advisable for the administration of the Plan.

(c) Effect of Decisions. All decisions, determinations and interpretations  
of the Board or the Committee shall be final and binding with respect to all    
Awards under the Plan.                                                          

(d) Limitation of Liability. Notwithstanding anything herein to the         
contrary, no member of the Board or the Committee shall be liable for any good  
faith determination, act or failure to act in connection with the Plan or any   
Award hereunder                                                                 

SECTION 5. ELIGIBILITY. Awards may be made only to Eligible Persons. An     
Eligible Person who has received an Award, if he or she is otherwise eligible,  
may receive additional Awards.                                                  

SECTION 6. STOCK SUBJECT TO THE PLAN. Subject to the provisions of this     
Section 6 and the provisions of Section 9 of the Plan, the maximum aggregate    
number of Shares which may be awarded and sold under the Plan is 2,000,000      
Shares of Common Stock (collectively, the "Pool"). The maximum aggregate        
number of Shares which may be awarded and sold under the Plan to any            
individual Optionee is 500,000 Shares of Common Stock. Options awarded from     
the Pool may be either Incentive Stock Options or non-qualified stock options,  
as determined by the Board or the Committee. If an Option should expire or      
become unexercisable for any reason                                             

4 

DEF 14A 24th Page of 34 TOC 1st Previous Next Bottom Just 24th

without having been exercised in full, the Shares which were subject thereto    
shall, unless the Plan shall have been terminated, be returned to the Pool and  
become available for future award under the Plan.                               

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.                                     

Each Option awarded pursuant to the Plan shall be authorized by the Board or
the Committee and shall be evidenced by an Option Agreement in such form as     
the Board or the Committee may from time to time determine. Each Option         
Agreement shall incorporate by reference all other terms and conditions of the  
Plan, including the following terms and conditions:                             

(a) Number of Shares. The number of Shares subject to the Option, which     
shall not include fractional Shares.                                            

(b) Option Price. The price per Share payable on the exercise of any Option 
which is an Incentive Stock Option shall be stated in the Option Agreement and  
shall be no less than the Fair Market Value Per Share of the Common Stock on    
the date such Option is awarded, without regard to any restriction other than   
a restriction which will never lapse. Notwithstanding the foregoing, if an      
Option which is an Incentive Stock Option shall be awarded under this Plan to   
any person who, at the time of the award of such Option, owns stock possessing  
more than 10% of the total combined voting power of all classes of the          
Company's stock, the price per Share payable upon exercise of such Incentive    
Stock Option shall be no less than 110 percent (110%) of the Fair Market Value  
Per Share of the Common Stock on the date such Option is awarded. The price     
per Share payable on the exercise of an Option which is a non-qualified stock   
option shall be at least the par value per Share and shall be stated in the     
Option Agreement.                                                               

(c) Consideration. The consideration to be paid for the Shares to be issued 
upon the exercise of an Option, including the method of payment, shall be       
determined by the Board or the Committee and may consist entirely of cash,      
personal or certified check, or, at the election of the Optionee and as the     
Board or the Committee may, in its sole discretion, approve, by surrendering    
Shares with an aggregate Fair Market Value per Share equal to the aggregate     
Option price, or by delivering such combination of Shares and cash as the       
Board or the Committee may, in its sole discretion, approve; provided,          
however, that Shares may be surrendered in satisfaction of the Option price     
only if the Optionee certifies in writing to the Company that the Optionee      
owns a number of Other Available Shares as of the date the Option is exercised  
that is at least equal to the number of Shares to be surrendered in             
satisfaction of the Option price; provided further, that the Option price may   
not be paid in Shares if the Board or the Committee determines that such        
method of payment would result in liability under Section 16(b) of the          
Exchange Act to an Optionee.                                                    

Except as otherwise provided by the Board or the Committee, if payment is   
made in whole or in part in Shares, the Optionee shall deliver to the Company   
certificates registered in the name of such Optionee representing Shares        
legally and beneficially owned by such Optionee, free of all liens, claims and  
encumbrances of every kind and having an aggregate Fair Market Value on the     
date of delivery that is not greater than the aggregate Option price            
accompanied by stock powers duly endorsed in blank by the record holder of the  
Shares represented by such certificates. If the Board or the Committee, in its  
sole discretion, should refuse to accept Shares in payment of the Option        
price, any certificates representing Shares which were delivered to the         
Company shall be returned to the Optionee with notice of the refusal of the     
Board or the Committee to accept such Shares in payment of the option price.    
The Board or the Committee may impose such limitations and prohibitions on the  
use of Shares to exercise an Option as it deems appropriate.                    

(d) Form of Option. The Option Agreement will state whether the Option      
awarded is an Incentive Stock Option or a non-qualified stock option, and will  
constitute a binding determination as to the form of Option awarded.            

(e) Exercise of Options. Any Option awarded hereunder shall be exercisable  
at such times and under such conditions as shall be set forth in the Option     
Agreement (as may be determined by the Board or the Committee                   

5 

DEF 14A 25th Page of 34 TOC 1st Previous Next Bottom Just 25th

and as shall be permissible under the terms of the Plan), which may include     
performance criteria with respect to the Company and/or the Optionee, and as    
shall be permissible under the terms of the Plan.                               

An Option may be exercised in accordance with the provisions of this Plan as
to all or any portion of the Shares then exercisable under an Option from time  
to time during the term of the Option. If an Option is exercised for a          
fraction of a Share, the Fair Market Value of such fractional Share, as of the  
date of exercise, will be paid in cash.                                         

An Option shall be deemed to be exercised when written notice of such       
exercise has been given to the Company at its principal executive office in     
accordance with the terms of the Option Agreement by the person entitled to     
exercise the Option and full payment for the Shares with respect to which the   
Option is exercised has been received by the Company, accompanied by any        
agreements required by the terms of the Plan and/or Option Agreement. Full      
payment may consist of such consideration and method of payment allowable       
under this Section 7 of the Plan. No adjustment shall be made for a dividend    
or other right for which the record date is prior to the date the Option is     
exercised, except as provided in Section 9 of the Plan.                         

As soon as practicable after any proper exercise of an Option in accordance 
with the provisions of the Plan, the Company shall, without transfer or issue   
tax to the Optionee, deliver to the Optionee at the principal executive office  
of the Company or such other place as shall be mutually agreed upon between     
the Company and the Optionee, a certificate or certificates representing the    
Shares for which the Option shall have been exercised.                          

Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available for sale under the Option by the    
number of Shares as to which the Option is exercised.                           

(f)   Term and Vesting of Options.                                          

 (i)   Except as provided in Section 7(g)(iv), Options awarded hereunder shall
        vest and become exercisable in whole or in part, in accordance with such
       vesting conditions as the Board or the Committee shall determine, which
  conditions shall be stated in the Option Agreement. Options may be
 exercised in any order elected by the Optionee whether or not the
        Optionee holds any unexercised Options under this Plan or any other plan
of the Company.                                                 

  (ii)  Notwithstanding any other provision of this Plan, no Option shall be (A)
        awarded under this Plan after ten (10) years from the date on which this
   Plan is adopted by the Board, or (B) exercisable more than ten (10)
       years from the date of award; provided, however, that if an Option that
       is intended to be an Incentive Stock Option shall be awarded under this
     Plan to any person who, at the time of the award of such Option, owns
     stock possessing more than 10% of the total combined voting power for
     all classes of the Company's stock, the foregoing clause (B) shall be
       deemed modified by substituting "five (5) years" for the term "ten (10)
years" that appears therein.                                    

(iii) No Option awarded to any Optionee shall be treated as an Incentive    
 Stock Option, to the extent such Option would cause the aggregate
  Fair Market Value Per Share (determined as of the date of award of
     each such Option) of the Shares with respect to which Incentive Stock
  Options are exercisable by such Optionee for the first time during
 any calendar year to exceed $100,000. For purposes of determining
 whether an Incentive Stock Option would cause such aggregate Fair
Market Value Per Share to exceed the $100,000 limitation, such  
Incentive Stock Options shall be taken into account in the order
 awarded. For purposes of this subsection, Incentive Stock Options
  include all Incentive Stock Options under all plans of the Company
   that are Incentive Stock Option plans within the meaning of Section
422 of the Code.                                                

(g)   Termination of Options.                                               

 (i)   Unless sooner terminated as provided in this Plan, each Option shall be
       exercisable for such period of time as shall be determined by the Board
    or the Committee and set forth in the Option Agreement, and shall be
void and unexercisable thereafter.                              

6 

DEF 14A 26th Page of 34 TOC 1st Previous Next Bottom Just 26th

(ii)  Except as otherwise provided herein or by the terms of any Award, with
respect to an Optionee who is an employee or Director, upon the 
        termination of such Optionee's employment or other relationship with the
Company for any reason, Options exercisable on the date of such 
       termination shall be exercisable by the Optionee (or in the case of the
      Optionee's death subsequent to termination of employment or such other
      relationship, by the Optionee's executor(s) or administrator(s)) for a
       period of three (3) months from the date of the Optionee's termination.

      Except as otherwise provided herein or by the terms of any Award, with
       respect to an Optionee who is an advisor or consultant, the termination
     of such Optionee's relationship with the Company for any reason shall
        not accelerate the expiration date of Options exercisable on the date of
        termination; provided however, that if such Optionee dies following such
        termination, the Option shall be exercisable for a period of twelve (12)
        months commencing on the date of the Optionee's death by such Optionee's
executor(s) or administrator(s).                                

(iii) Except as otherwise provided herein or by the terms of any Award,     
   upon the Disability or death of an Optionee while in the service of
   the Company, Options held by such Optionee which are exercisable on
    the date of Disability or death shall be exercisable for a period of
twelve (12) months commencing on the date of the Optionee's     
Disability or death, by the Optionee or his legal guardian or   
representative or, in the case of death, by his executor(s) or  
administrator(s).                                               

(iv)  Options may be terminated at any time by agreement between the Company
and the Optionee.                                               

(h)   Forfeiture.                                                           

  (i)   Termination for Cause. Notwithstanding any other provision of this Plan,
if the Optionee's employment or engagement is terminated by the Company, and    
the Board or the Committee makes a determination that the Optionee:             

(A) has engaged in any type of disloyalty to the Company, including     
without limitation, fraud, embezzlement, theft, or dishonesty in
the course of his employment or engagement, or has otherwise    
breached any fiduciary duty owed to the Company;                

(B) has been convicted of a felony;                                     

(C) has disclosed trade secrets or confidential information of the      
Company; or                                                     

(D) has breached any agreement with or duty to the Company in respect   
 of confidentiality, non-disclosure, non-competition or otherwise,

then all unexercised Options shall terminate upon the date of such a finding,   
or, if earlier, the date of termination of employment or engagement for such a  
finding, and the Optionee shall forfeit all Shares for which the Company has    
not yet delivered share certificates to the Optionee and the Company shall      
refund to the Optionee the Option purchase price paid to it, if any, in the     
same form as it was paid (or in cash at the Company's discretion).              
Notwithstanding anything herein to the contrary, the Company may withhold       
delivery of share certificates pending the resolution of any inquiry that       
could lead to a finding resulting in forfeiture.                                

(ii) Non-Competition. Notwithstanding any other provision of this Plan, if, 
during the 3-month period following a termination of service, which period      
shall be extended to 12 months in the event of a termination due to             
Disability, an Optionee who is not a consultant or advisor commences any        
employment or engagement with or by a competitor of the Company (including,     
but not limited to, full or part-time employment or independent consulting      
work), as determined in the sole discretion of the Board or the Committee, all  
unexercised Options shall terminate immediately upon the commencement thereof.  
In the event an Optionee who is a consultant or advisor has entered into an     
agreement with the Company which contains non-competition covenants and such    
consultant or advisor violates the terms of his or her non-competition          
covenant, all unexercised Options shall terminate immediately upon the date of  
such violation.                                                                 

7 

DEF 14A 27th Page of 34 TOC 1st Previous Next Bottom Just 27th

SECTION 8. DETERMINATION OF FAIR MARKET VALUE PER SHARE OF COMMON STOCK.        

(a) Except to the extent otherwise provided in this Section 8, the Fair     
Market Value Per Share of Common Stock shall be determined by the Board or the  
Committee in its sole discretion.                                               

(b) Notwithstanding the provisions of Section 8(a), in the event that shares
of Common Stock are traded in the over-the-counter market, the Fair Market      
Value Per Share of Common Stock shall be the mean of the bid and asked prices   
for a share of Common Stock on the relevant valuation date as reported in The   
Wall Street Journal (or, if not so reported, as otherwise reported by the       
National Association of Securities Dealers Automated Quotations ("NASDAQ")      
System), as applicable or, if there is no trading on such date, on the next     
preceding date on which there were reported share prices. In the event shares   
of Common Stock are listed on a national or regional securities exchange or     
traded through the NASDAQ National Market, the Fair Market Value of a share of  
Common Stock shall be the closing price for a share of Common Stock on the      
exchange or on the NASDAQ National Market, as reported in The Wall Street       
Journal on the relevant valuation date, or if there is no trading on that       
date, on the next preceding date on which there were reported share prices.     

SECTION 9. ADJUSTMENTS.                                                         

(a) Subject to required action by the stockholders, if any, the number of   
Shares as to which Awards may be made under this Plan and the number of Shares  
subject to outstanding Options and the Option prices thereof shall be adjusted  
proportionately for any increase or decrease in the number of outstanding       
Shares of Common Stock of the Company resulting from stock splits, reverse      
stock splits, stock dividends, reclassifications and recapitalizations,         
merger, consolidation, exchange of shares, or any similar change affecting      
Common Stock.                                                                   

(b) No fractional Shares shall be issuable on account of any action         
mentioned in Section 9(a), and the aggregate number of Shares into which        
Shares then covered by the Award, when changed as the result of such action,    
shall be increased to the next highest whole number of Shares resulting from    
such action, provided that no such increase shall be made if such increase      
would cause an Incentive Stock Option to lose its status as such without the    
consent of the Optionee.                                                        

SECTION 10. RIGHTS AS A STOCKHOLDER.                                            

A recipient of an Award shall have no rights as a stockholder of the Company
and shall neither have the right to vote nor receive dividends with respect to  
any Shares subject to an Option until such Option has been exercised and a      
certificate with respect to the Shares purchased upon such exercise has been    
issued to him.                                                                  

SECTION 11. TIME OF AWARDING OPTIONS.                                           

The date of an Award shall, for all purposes, be the date which the Board or
the Committee specifies when the Board or the Committee makes its               
determination that an Award is made, or if none is specified, then the date of  
such determination. Notice of the determination shall be given to each          
Eligible Person to whom an Award is made within a reasonable time after the     
date of such Award.                                                             

SECTION 12. MODIFICATION, EXTENSION AND RENEWAL OF OPTION.                      

Subject to the terms and conditions of the Plan, the Board or the Committee 
may modify, extend or renew an Award, or accept the surrender of an Award (to   
the extent not theretofore exercised). Notwithstanding the foregoing, (a) no    
modification of an Award which adversely affects the Optionee shall be made     
without the consent of the Optionee, and (b) no Incentive Stock Option may be   
modified, extended or renewed if such action would cause it to cease to be an   
"Incentive Stock Option" within the meaning of Section 422 of the Code, unless  
the Optionee specifically acknowledges and consents to the tax consequences of  
such action.                                                                    

8 

DEF 14A 28th Page of 34 TOC 1st Previous Next Bottom Just 28th

SECTION 13. PURCHASE FOR INVESTMENT AND OTHER RESTRICTIONS.                     

(a) The obligation of the Company to issue Shares to an Optionee upon the   
exercise of an Option granted under the Plan is conditioned upon such issuance  
complying with all relevant provisions of applicable law, including, without    
limitation, the Securities Act, the Exchange Act, the rules and regulations     
promulgated thereunder and any applicable foreign laws.                         

(b) At the option of the Board or the Committee, the obligation of the      
Company to issue Shares to an Optionee upon the exercise of an Option granted   
under the Plan may be conditioned upon obtaining appropriate representations,   
warranties, restrictions and agreements of the Optionee. Among other            
representations, warranties, restrictions and agreements, the Optionee may be   
required to represent and agree that the purchase of Shares shall be for        
investment, and not with a view to the public resale or distribution thereof,   
unless the Shares are registered under the Securities Act and the issuance and  
sale of the Shares complies with all other laws, rules and regulations          
applicable thereto. Unless the issuance of such Shares is registered under the  
Securities Act (and any similar law of a foreign jurisdiction applicable to     
the Optionee), the Optionee shall acknowledge that the Shares purchased are     
not registered under the Securities Act (or any such other law) and may not be  
sold or otherwise transferred unless the Shares have been registered under the  
Securities Act (or any such other law) in connection with the sale or other     
transfer thereof, or that counsel satisfactory to the Company has issued an     
opinion satisfactory to the Company that the sale or other transfer of such     
Shares is exempt from registration under the Securities Act (or any such other  
law), and unless said sale or transfer is in compliance with all other          
applicable laws, rules and regulations, including all applicable federal,       
state and foreign securities laws, rules and regulations. Unless the Shares     
subject to an Award are registered under the Securities Act, the certificates   
representing such Shares issued shall contain the following legend in           
substantially the following form:                                               

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED         
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE        
SECURITIES LAWS. THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO         
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED,           
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED       
OF, BY GIFT OR OTHERWISE, OR IN ANY WAY ENCUMBERED WITHOUT AN EFFECTIVE     
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF          
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR A            
SATISFACTORY OPINION OF COUNSEL SATISFACTORY TO VIROPHARMA INCORPORATED     
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND UNDER APPLICABLE       
STATE SECURITIES LAWS.                                                      

If required under the laws of any jurisdiction in which the Optionee        
resides, the certificate or certificates may bear any such legend.              

SECTION 14. TRANSFERABILITY.                                                    

No Option shall be assignable or transferable otherwise than by will or by  
the laws of descent and distribution. During the lifetime of the Optionee, his  
Options shall be exercisable only by such Optionee, or, in the event of his or  
her legal incapacity or Disability, then by the Optionee's legal guardian or    
representative.                                                                 

SECTION 15. OTHER PROVISIONS.                                                   

The Option Agreement may contain such other provisions as the Board or the  
Committee in its discretion deems advisable and which are not inconsistent      
with the provisions of this Plan, including, without limitation, restrictions   
upon or conditions precedent to the exercise of the Option.                     

9 

DEF 14A 29th Page of 34 TOC 1st Previous Next Bottom Just 29th

SECTION 16. CHANGE OF CONTROL.                                                  

(a) Notwithstanding anything to the contrary set forth in this Plan, in the 
event of a Change of Control in which the Plan is not continued by a successor  
corporation, or in which equivalent, substituted options for common stock in a  
successor corporation are not provided to Optionees, the Plan shall be          
terminated and, with respect to Optionees who are employees of the Company or   
any of its Subsidiaries or who are members of the Board, all unvested Options   
shall vest as follows: (i) with respect to such Optionees who have been         
employed by the Company or a Subsidiary or who have served on the Board for at  
least two years as of the Change of Control, Options shall be fully and         
immediately vested and exercisable; and (ii) with respect to all other such     
Optionees, fifty percent (50%) of that portion of the Options which are not     
vested as of the date of the Change of Control shall be immediately vested and  
exercisable and the remaining portion of the Options which are not vested       
shall lapse and be forfeited.                                                   

(b) In the event of a Change of Control in which the Plan is continued by a 
successor corporation or in which equivalent substituted options for common     
stock in a successor corporation are provided to Optionees, with respect to     
Optionees who are employees of the Company or any of its Subsidiaries or who    
are members of the Board, Options shall vest as follows: (i) if an Optionee     
who is employed by the Company at the Executive Director level or above (each,  
an "Executive Officer") or is a member of the Board at the time of the Change   
of Control is not offered substantially equivalent employment with the          
successor corporation or a related employer (both in terms of duties and        
compensation), then any unvested Options as of the date of the Change of        
Control held by such Executive Officer or member of the Board shall be fully    
and immediately vested and exercisable in accordance with Section 16(a)(i) or   
16(a)(ii), as applicable, taking into account all service performed with the    
Company without regard to such Optionee's title for purposes of vesting; and    
(ii) if any Optionee (without regard to such Optionee's title) is offered       
substantially equivalent employment with the successor corporation or a         
related employer (both in terms of duties and compensation), then Options       
shall not be subject to accelerated vesting; provided however, that if the      
Optionee's employment with the successor corporation or related employer is     
terminated by the successor corporation or related employer during the six      
month period following such Change of Control, then any unvested Options or     
substituted options shall be fully and immediately vested and exercisable at    
the date of the Optionee's termination of employment in accordance with         
Section 16(a)(i) or 16(a)(ii), as applicable.                                   

(c) Notwithstanding Sections 16(a) and (b) hereof, any Optionee who is a    
"disqualified individual," as that term is defined in Section 280G(c) of the    
Code, shall be notified by the Committee of any event which may constitute a    
Change of Control in advance of the effective date of such Change of Control.   
Notice shall be provided, in the sole discretion of the Committee, as soon as   
reasonably practicable prior to the Change of Control. The disqualified         
individual may refuse to accept accelerated vesting of his or her Options       
after consideration of the tax consequences to such disqualified individual     
resulting from the Change of Control, provided that any such refusal shall be   
communicated to the Committee in writing prior to the Change of Control. If it  
is not practicable to provide advance notice of such Change of Control, the     
disqualified individual will be deemed to have elected to refuse such           
acceleration, but only to the extent that it is determined, as soon as          
practicable after the Change of Control, that accelerated vesting will result   
in negative tax consequences under Section 280G of the Code.                    

(d) In addition to arranging for the exchange of Options for options to     
purchase common stock in a successor corporation, in the event of a Change of   
Control of the Company by reason of a merger, consolidation or tax free         
reorganization or sale of all or substantially all of the assets of the         
Company, the Board shall have the authority, in its discretion, to terminate    
this Plan and to distribute to each Optionee cash and/or other property in an   
amount equal to and in the same form as the Optionee would have received from   
the successor corporation if the Optionee had owned the Shares subject to the   
Option rather than the Option at the time of the Change of Control, provided    
that any such amount paid to an Optionee shall reflect the deduction of the     
exercise price the Optionee would have paid to purchase such Shares. The form   
of payment or distribution to the Optionee pursuant to this Section shall be    
determined by the Committee.                                                    

10  

DEF 14A 30th Page of 34 TOC 1st Previous Next Bottom Just 30th

SECTION 17. AMENDMENT OF THE PLAN.                                              

Insofar as permitted by law and the Plan, and subject to Section 20(c), the 
Board or the Committee may from time to time suspend, terminate or discontinue  
the Plan or revise or amend it in any respect whatsoever with respect to any    
Shares at the time not subject to an Option, including amendments necessary or  
advisable to assure that the Incentive Stock Options or the non-qualified       
stock options available under the Plan continue to be treated as such,          
respectively, under all applicable laws.                                        

SECTION 18. APPLICATION OF FUNDS.                                               

The proceeds received by the Company from the sale of Shares pursuant to the
exercise of Options shall be used for general corporate purposes or such other  
purpose as may be determined by the Board.                                      

SECTION 19. NO OBLIGATION TO EXERCISE OPTION.                                   

The awarding of an Option shall impose no obligation upon the Optionee to   
exercise such Option.                                                           

SECTION 20. APPROVAL OF STOCKHOLDERS.                                           

(a) Effective Date of Plan. This amendment and restatement of the Plan shall
become effective on the date that it is adopted by the Board; provided,         
however, that this amendment and restatement shall be rescinded, and all        
actions taken pursuant to the Plan, as amended and restated (except the         
granting of Options with respect to Shares initially authorized for award       
under the Plan prior this amendment and restatement), shall be null and void    
as of the first anniversary of the date of adoption by the Board unless,        
before such first anniversary, the Plan, as amended and restated, is approved   
by a majority of the votes cast at a duly held stockholder meeting at which a   
quorum representing a majority of the Company's outstanding voting shares is    
present, either in person or by proxy.                                          

(b) Awards Prior to Stockholder Approval. The Board or the Committee may    
make Awards hereunder before the stockholder meeting at which the Plan, as      
amended and restated, will be presented to the Company's stockholders for       
approval; provided, however, that any and all Options awarded for Shares in     
excess of 1,200,000 Shares, the number of Shares initially authorized for       
award under the Plan prior to this amendment and restatement, shall lapse       
automatically on the first anniversary of the date of adoption by the Board if  
the Plan is not approved by such stockholders on or before such date. With      
respect to Options awarded before the earlier of the date the Plan is approved  
by the Company's stockholders or the first anniversary of the date the Plan is  
adopted by the Board, the Board or the Committee shall designate whether the    
Option is for Shares previously authorized for award under the Plan, or is for  
Shares as to which stockholder approval is pending.                             

(c) Stockholder Approval of Certain Amendments.                             

(i) If the Board or the Committee amends the Plan to increase the aggregate 
number of Shares for which Options may be awarded hereunder, and    
  approval of the stockholders by a majority of the votes cast at a duly
 held stockholder meeting at which a quorum representing a majority of
   the Company's outstanding voting shares is present (either in person or
   by proxy), is not obtained within twelve (12) months of the adoption of
such amendment, all Options awarded with respect to such increased  
  number of shares shall lapse automatically on the first anniversary of
the date of the adoption of such amendment.                         

(ii) If the Board or the Committee amends the Plan to change the            
    designation of the class of employees eligible to receive Options, and
    approval of the stockholders by a majority of the votes cast at a duly
   held stockholder meeting at which a quorum representing a majority of
  the Company's outstanding voting shares is present (either in person
or by proxy), is not obtained within twelve (12) months of the    
   adoption of such amendment, all Incentive Stock Options awarded after
the date of such adoption                                         

11  

DEF 14A 31st Page of 34 TOC 1st Previous Next Bottom Just 31st

  automatically shall be converted into non-qualified stock options on the
first anniversary of the date of the adoption of such amendment.      

SECTION 21. CONDITIONS UPON ISSUANCE OF SHARES.                                 

Shares shall not be issued pursuant to the exercise of an Option unless the 
exercise of such Option and the issuance and delivery of such Shares pursuant   
thereto shall comply with all relevant provisions of law, including, without    
limitation, the Securities Act, the Exchange Act, the rules and regulations     
promulgated thereunder, and the requirements of any stock exchange upon which   
the Shares may then be listed, and shall be further subject to the approval of  
counsel for the Company with respect to such compliance.                        

SECTION 22. RESERVATION OF SHARES.                                              

The Company, during the term of this Plan, shall at all times reserve and   
keep available such number of Shares as shall be sufficient to satisfy the      
requirements of the Plan.                                                       

The Company, during the term of this Plan, shall use its best efforts to    
seek to obtain from appropriate regulatory agencies any requisite               
authorization in order to issue and sell such number of Shares as shall be      
sufficient to satisfy the requirements of the Plan. The inability of the        
Company to obtain from any such regulatory agency having jurisdiction the       
requisite authorization(s) deemed by the Company's counsel to be necessary for  
the lawful issuance and sale of any Shares hereunder, or the inability of the   
Company to confirm to its satisfaction that any issuance and sale of any        
Shares hereunder will meet applicable legal requirements, shall relieve the     
Company of any liability in respect to the failure to issue or sell such        
Shares as to which such requisite authority shall not have been obtained.       

SECTION 23. STOCK OPTION AGREEMENTS.                                            

Options shall be evidenced by an Option Agreement in such form or forms as  
the Board or the Committee shall approve from time to time.                     

SECTION 24. TAXES, FEES, EXPENSES AND WITHHOLDING OF TAXES.                     

(a) The Company shall pay all original issue and transfer taxes (but not    
income taxes, if any) with respect to the award of Options and/or the issue     
and transfer of Shares pursuant to the exercise thereof, and all other fees     
and expenses necessarily incurred by the Company in connection therewith, and   
will use its best efforts to comply with all laws and regulations which, in     
the opinion of counsel for the Company, shall be applicable thereto.            

(b) The award of Options hereunder and the issuance of Shares pursuant to   
the exercise of Options is conditioned upon the Company's reservation of the    
right to withhold in accordance with any applicable law, from any compensation  
or other amounts payable to the Optionee, any taxes required to be withheld     
under federal, state or local law as a result of the award or exercise of such  
Option or the sale of the Shares issued upon exercise thereof. To the extent    
that compensation or other amounts, if any, payable to the Optionee is          
insufficient to pay any taxes required to be so withheld, the Company may, in   
its sole discretion, require the Optionee (or such other person entitled        
herein to exercise the Option), as a condition of the exercise of an Option,    
to pay in cash to the Company an amount sufficient to cover such tax liability  
or otherwise to make adequate provision for the Company's satisfaction of its   
withholding obligations under federal, state and local law, provided that such  
satisfaction of tax liability is made within 60 days of the date on which       
written notice of exercise has been given to the Company.                       

SECTION 25. NOTICES.                                                            

Any notice to be given to the Company pursuant to the provisions of this    
Plan shall be addressed to the Company in care of its Secretary (or such other  
person as the Company may designate from time to time) at its                   

12  

DEF 14A 32nd Page of 34 TOC 1st Previous Next Bottom Just 32nd

principal executive office, and any notice to be given to an Optionee shall be  
delivered personally or addressed to him or her at the address given beneath    
his or her signature on his or her Option Agreement, or at such other address   
as such Optionee or his or her permitted transferee (upon the transfer of the   
Shares) may hereafter designate in writing to the Company. Any such notice      
shall be deemed duly given on the date and at the time delivered via hand       
delivery, courier or recognized overnight delivery service or, if sent via      
telecopier, on the date and at the time telecopied with confirmation of         
delivery or, if mailed, on the date five (5) days after the date of the         
mailing (which shall be by regular, registered or certified mail). Delivery of  
a notice by telecopy (with confirmation) shall be permitted and shall be        
considered delivery of a notice notwithstanding that it is not an original      
that is received. It shall be the obligation of each Optionee and each          
permitted transferee holding Shares purchased upon exercise of an Option to     
provide the Secretary of the Company, by letter mailed as provided herein,      
with written notice of his or her direct mailing address.                       

SECTION 26. NO ENLARGEMENT OF OPTIONEE RIGHTS.                                  

This Plan is purely voluntary on the part of the Company, and the           
continuance of the Plan shall not be deemed to constitute a contract between    
the Company and any Optionee, or to be consideration for or a condition of the  
employment or service of any Optionee. Nothing contained in this Plan shall be  
deemed to give any Optionee the right to be retained in the employ or service   
of the Company or any Subsidiary, or to interfere with the right of the         
Company or any such corporation to discharge or retire any Optionee thereof at  
any time subject to applicable law. No Optionee shall have any right to or      
interest in Awards authorized hereunder prior to the award thereof to such      
Optionee, and upon such Award he shall have only such rights and interests as   
are expressly provided herein, subject, however, to all applicable provisions   
of the Company's Certificate of Incorporation, as the same may be amended from  
time to time.                                                                   

SECTION 27. INFORMATION TO OPTIONEES.                                           

The Company, upon request, shall provide without charge to each Optionee    
copies of such annual and periodic reports as are provided by the Company to    
its stockholders generally.                                                     

SECTION 28. AVAILABILITY OF PLAN.                                               

A copy of this Plan shall be delivered to the Secretary of the Company and  
shall be shown by him to any eligible person making reasonable inquiry          
concerning it.                                                                  

SECTION 29. INVALID PROVISIONS.                                                 

In the event that any provision of this Plan is found to be invalid or      
otherwise unenforceable under any applicable law, such invalidity or            
unenforceability shall not be construed as rendering any other provisions       
contained herein as invalid or unenforceable, and all such other provisions     
shall be given full force and effect to the same extent as though the invalid   
or unenforceable provision was not contained herein.                            

SECTION 30. APPLICABLE LAW.                                                     

This Plan shall be governed by and construed in accordance with the laws of 
the Commonwealth of Pennsylvania.                                               

Executed this 3rd day of March, 1998.                                       

[CORPORATE SEAL]                          VIROPHARMA INCORPORATED               

/s/ Thomas F. Doyle                     /s/ Claude H. Nash    
Attest: _____________________________     By: _________________________________ 

13  

DEF 14A 33rd Page of 34 TOC 1st Previous Next Bottom Just 33rd

--------------------------------------------------------------------------------

VIROPHARMA INCORPORATED 
1998 Annual Meeting of Stockholders--May 21, 1998 
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED BY THE BOARD OF DIRECTORS 

The undersigned hereby constitutes and appoints Claude H. Nash and Thomas F.
Doyle, and each of them, as attorneys and proxies of the undersigned, with full 
power of substitution, for and in the name of the undersigned, to appear at the 
Annual Meeting of Stockholders of ViroPharma Incorporated to be held on the     
21st day of May, 1998 and at any postponement or adjournment thereof, and to    
vote all of the shares of ViroPharma Incorporated that the undersigned is       
entitled to vote, with all powers and authority the undersigned would possess   
if personally present. The undersigned hereby directs that this proxy be voted  
as follows:                                                                     
ELECTION OF CLASS II DIRECTOR FOR A TERM OF THREE YEARS:  
     Ann Lamont   FOR [_] WITHHOLD AUTHORITY [_]

APPROVE AMENDMENT AND RESTATEMENT OF 1995 STOCK OPTION PLAN:
FOR [_]  AGAINST [_]  ABSTAIN [_] 

This proxy, when properly executed, will be voted as directed. If no        
directions to the contrary are indicated, the proxy agents intend to vote FOR   
the election of the aforementioned nominee as a director, and FOR the approval  
of the amendment and restatement of the Company's 1995 Stock Option Plan.       
Abstentions on the proposal to approve the amendment and restatement of the     
Company's 1995 Option Plan will have the effect of a negative vote.             

--------------------------------------------------------------------------------
(Please date and sign on reverse side)

--------------------------------------------------------------------------------

DEF 14A Last Page of 34 TOC 1st Previous Next Bottom Just 34th

--------------------------------------------------------------------------------

A majority of the proxy agents present and acting in person, or by their    
substitutes (or if only one is present and acting, then that one) may exercise  
all the powers conferred hereby. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS 
TO ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.                  

 Receipt of the Company's 1997 Annual Report to Stockholders and the Notice of
the 1998 Annual Meeting and Proxy Statement relating thereto is hereby          
acknowledged.                                                                   

                                          Date: ________________________, 1998
                                          (Please date this Proxy)

                                          ------------------------------------

                                          ------------------------------------
                                          (Signature (s)

                                         Please sign your name exactly as it
                                    appears hereon, indicating any
                                         official position or representative
                                        capacity. If shares are registered
                                       in more than one name, all owners
                must sign.

PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE  
PAID ENVELOPE.                                                                  

--------------------------------------------------------------------------------

DEF 14A	1st Page of 34	TOC	Top	Previous	Next	Bottom	Just 1st

DEF 14A	2nd Page of 34	TOC	1st	Previous	Next	Bottom	Just 2nd

DEF 14A	3rd Page of 34	TOC	1st	Previous	Next	Bottom	Just 3rd

DEF 14A	4th Page of 34	TOC	1st	Previous	Next	Bottom	Just 4th

DEF 14A	5th Page of 34	TOC	1st	Previous	Next	Bottom	Just 5th

DEF 14A	6th Page of 34	TOC	1st	Previous	Next	Bottom	Just 6th

DEF 14A	7th Page of 34	TOC	1st	Previous	Next	Bottom	Just 7th

DEF 14A	8th Page of 34	TOC	1st	Previous	Next	Bottom	Just 8th

DEF 14A	9th Page of 34	TOC	1st	Previous	Next	Bottom	Just 9th

DEF 14A	10th Page of 34	TOC	1st	Previous	Next	Bottom	Just 10th

DEF 14A	11th Page of 34	TOC	1st	Previous	Next	Bottom	Just 11th

DEF 14A	12th Page of 34	TOC	1st	Previous	Next	Bottom	Just 12th

DEF 14A	13th Page of 34	TOC	1st	Previous	Next	Bottom	Just 13th

DEF 14A	14th Page of 34	TOC	1st	Previous	Next	Bottom	Just 14th

DEF 14A	15th Page of 34	TOC	1st	Previous	Next	Bottom	Just 15th

DEF 14A	16th Page of 34	TOC	1st	Previous	Next	Bottom	Just 16th

DEF 14A	17th Page of 34	TOC	1st	Previous	Next	Bottom	Just 17th

DEF 14A	18th Page of 34	TOC	1st	Previous	Next	Bottom	Just 18th

DEF 14A	19th Page of 34	TOC	1st	Previous	Next	Bottom	Just 19th

DEF 14A	20th Page of 34	TOC	1st	Previous	Next	Bottom	Just 20th

DEF 14A	21st Page of 34	TOC	1st	Previous	Next	Bottom	Just 21st

DEF 14A	22nd Page of 34	TOC	1st	Previous	Next	Bottom	Just 22nd

DEF 14A	23rd Page of 34	TOC	1st	Previous	Next	Bottom	Just 23rd

DEF 14A	24th Page of 34	TOC	1st	Previous	Next	Bottom	Just 24th

DEF 14A	25th Page of 34	TOC	1st	Previous	Next	Bottom	Just 25th

DEF 14A	26th Page of 34	TOC	1st	Previous	Next	Bottom	Just 26th

DEF 14A	27th Page of 34	TOC	1st	Previous	Next	Bottom	Just 27th

DEF 14A	28th Page of 34	TOC	1st	Previous	Next	Bottom	Just 28th

DEF 14A	29th Page of 34	TOC	1st	Previous	Next	Bottom	Just 29th

DEF 14A	30th Page of 34	TOC	1st	Previous	Next	Bottom	Just 30th

DEF 14A	31st Page of 34	TOC	1st	Previous	Next	Bottom	Just 31st

DEF 14A	32nd Page of 34	TOC	1st	Previous	Next	Bottom	Just 32nd

DEF 14A	33rd Page of 34	TOC	1st	Previous	Next	Bottom	Just 33rd

DEF 14A	Last Page of 34	TOC	1st	Previous	Next	Bottom	Just 34th

Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This DEF 14A Filing	Date	First	Last	Other Filings

	9/20/95	20
	12/31/95	9
	5/31/96	7
	11/19/96	18		S-1/A
	12/31/96	9		10-K
	6/12/97	11
	12/31/97	3	13	10-K405
	2/8/98	5
	2/10/98	5		SC 13G, SC 13G/A
	2/13/98	5		SC 13G, SC 13G/A
	2/14/98	5
	2/27/98	13
	3/3/98	20
	4/1/98	4	14
	4/10/98	2	3
Filed On / Filed As Of	4/15/98
	4/16/98	2	19
For The Period Ended	5/21/98	2	33
	12/17/98	19

Top				List All Filings

Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

Viropharma Inc · DEF 14A · For 5/21/98

Filed On 4/15/98 · SEC File 0-21699 · Accession Number 1036050-98-615

Definitive Proxy Solicitation Material · Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents