<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GelTex Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
GelTex Pharmaceuticals, Inc.
(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 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
[GELTEX LOGO]
153 SECOND AVENUE
WALTHAM, MASSACHUSETTS 02451
(781) 290-5888
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000
Notice is hereby given that the 2000 Annual Meeting of Stockholders (the
"Meeting") of GelTex Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), will be held on Wednesday, May 24, 2000, at 9:30 a.m. at the
executive offices of the Company located at 153 Second Avenue, Waltham,
Massachusetts, to consider and act upon the following matters:
1. To elect two (2) members of the Board of Directors;
2. To approve an amendment to the Company's 1992 Equity Incentive Plan to
increase the aggregate number of shares of the Company's common stock as
to which awards may be granted by 700,000 shares;
3. To approve an amendment to the Company's 1995 Employee Stock Purchase
Plan to increase the aggregate number of shares of the Company's common
stock available for purchase thereunder by 50,000 shares; and
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
Only stockholders of record at the close of business on April 14, 2000
will be entitled to vote at the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY
WILL NOT BE USED.
By Order of the Board of Directors,
Elizabeth A. Grammer
Secretary
Waltham, Massachusetts
April 24, 2000
<PAGE> 3
GELTEX PHARMACEUTICALS, INC.
153 SECOND AVENUE
WALTHAM, MASSACHUSETTS 02451
(781) 290-5888
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
The enclosed proxy card is solicited on behalf of the Board of Directors of
GelTex Pharmaceuticals, Inc. (the "Company") for use at the Company's 2000
Annual Meeting of Stockholders to be held on Wednesday, May 24, 2000, at 9:30
a.m. at the executive offices of the Company located at 153 Second Avenue,
Waltham, Massachusetts, and at any adjournments thereof (the "Meeting").
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no voting instructions
are given on a signed proxy card with respect to one or more proposals, the
shares represented by that proxy card will be voted, with respect to the
election of directors, for the nominees named herein, and with respect to other
proposals, in accordance with the recommendations of the Board. Stockholders may
revoke their proxies at any time prior to any vote at the Meeting by written
notice of revocation to the Secretary of the Company at or before the Meeting,
by submission of a duly executed proxy card bearing a later date or by voting in
person by ballot at the Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed or
otherwise furnished to all stockholders of the Company entitled to notice of and
to vote at the Meeting on or about April 24, 2000. The Annual Report to
Stockholders for the fiscal year ended December 31, 1999 is being mailed to the
stockholders with this Proxy Statement, but does not constitute a part hereof.
VOTING SECURITIES AND VOTES REQUIRED
Holders of the Company's common stock, $0.01 par value per share ("Common
Stock"), of record on the books of the Company at the close of business on April
14, 2000 (the "Record Date") are entitled to notice of and to vote at the
Meeting. On the Record Date, there were 20,066,060 shares of Common Stock issued
and outstanding, each of which entitles the holder to one vote on each matter
submitted to a vote at the Meeting.
The presence, in person or by proxy, of the holders of a majority of the
Company's outstanding Common Stock is necessary to constitute a quorum at the
Meeting. Pursuant to Delaware General Corporation Law and the Company's Restated
Certificate of Incorporation and Amended and Restated By-laws (the "By-laws"),
the directors are elected by a plurality of the votes properly cast at the
Meeting. Abstentions, votes withheld and broker non-votes will not be treated as
votes cast for this purpose and will not affect the outcome of the election. A
"broker non-vote" occurs when a registered broker holding a customer's shares in
the name of the broker has not received voting instructions on a matter from the
customer, and is barred by applicable rules from exercising discretionary
authority to vote on the matter and so indicates on the proxy.
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote is required to approve the
proposed amendments to the 1992 Equity Incentive Plan (the "Equity Plan") and
the 1995 Employee Stock Purchase Plan (the "Purchase Plan"). Broker non-votes
will not be counted as present, or represented, and entitled to vote for these
purposes and, therefore, will not affect the outcome of the voting on these
proposals. Abstentions will be counted as present, or represented, and entitled
to vote and, accordingly, will have the effect of negative votes.
<PAGE> 4
SHARE OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of April 14, 2000 by (i) each
person known by the Company to own beneficially 5% or more of the Common Stock,
(ii) each Named Executive Officer (as defined in "Executive Compensation"
below), (iii) each director or nominee for director of the Company, and (iv) all
directors, nominees for director and current executive officers of the Company
as a group:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
BENEFICIAL OWNER SHARES PERCENT
- ---------------- ---------- --------
<S> <C> <C>
Amerindo Investment Advisors Inc.(2)........................ 1,295,100 6.5%
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
Wellington Management Company, LLP(3)....................... 1,326,200 6.6%
75 State Street
Boston, MA 02109
Wellington Trust Company, NA(4)............................. 1,008,400 5.0%
75 State Street
Boston, MA 02109
OrbiMed Advisors Inc.(5).................................... 979,000 4.9%
c/o OrbiMed Advisors LLC
767 Third Avenue, 6th Floor
New York, NY 10010
Mark Skaletsky(6)........................................... 318,393 1.6%
Steven K. Burke, M.D.(7).................................... 73,672 *
Edmund J. Sybertz, Ph.D.(8)................................. 72,913 *
Paul J. Mellett, Jr.(9)..................................... 55,831 *
Douglas Reed, M.D.(10)...................................... 22,984 *
Robert J. Carpenter(11)..................................... 203,917 1.0%
Henri A. Termeer(12)........................................ 118,505 *
Jesse Treu, Ph.D.(13)....................................... 22,750 *
J. Richard Crout(14)........................................ 28,300 *
All directors and current executive officers as a group (9
persons)(15).............................................. 917,265 4.5%
</TABLE>
- ---------------
* Indicates less than 1%.
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to the shares listed in the table.
Share ownership information includes shares of Common Stock issuable
pursuant to outstanding options that may be exercised within the 60-day
period following April 14, 2000.
(2) Includes shares beneficially owned by Amerindo Investment Advisors Inc., a
California corporation ("Amerindo"), and Amerindo Investment Advisors,
Inc., a Panama corporation ("Amerindo Panama"), in their capacity as
investment advisers for securities owned of record by clients of Amerindo
and Amerindo Panama, and by Alberto W. Vilar and Gary A. Tanaka, the sole
directors and shareholders of Amerindo and Amerindo Panama. This
information is based on a Schedule 13G/A filed with the Securities and
Exchange Commission on February 14, 2000.
(3) Includes shares beneficially owned by Wellington Management Company, LLP
("WMC") in its capacity as investment adviser for securities owned of
record by clients of WMC. This information is based on a Schedule 13G filed
with the Securities and Exchange Commission on February 11, 2000.
(4) Includes shares beneficially owned by Wellington Trust Company, NA ("WTC")
in its capacity as investment adviser for securities owned of record by
clients of WTC. This information is based on a Schedule 13G filed with the
Securities and Exchange Commission on February 11, 2000.
2
<PAGE> 5
(5) Includes shares held by OrbiMed Advisors Inc., OrbiMed Advisors LLC,
Caduceus Capital Trust, Caduceus Capital II, L.P., Finsbury Worldwide
Pharmaceutical Trust, and Worldwide Health Sciences Portfolio. This
information is based on a Schedule 13G filed with the Securities and
Exchange Commission for the aforementioned entities on January 12, 2000.
(6) Includes 241,893 shares issuable on exercise of options exercisable within
the 60-day period following April 14, 2000. Of such shares issuable upon
exercise of options, 3,000 are unvested and would be subject to repurchase
by the Company if such shares are exercised before they have vested. Also
includes 10,000 shares held by Mr. Skaletsky's wife and 3,000 shares held
by Mr. Skaletsky's daughter. Mr. Skaletsky disclaims beneficial ownership
of the shares held by his wife and children.
(7) Includes 28,079 shares issuable on exercise of options exercisable by Dr.
Burke within the 60-day period following April 14, 2000. Of such shares
issuable upon exercise of options, 200 are unvested and would be subject to
repurchase by the Company if such shares are exercised before they have
vested. Also includes 1,860 shares held in two trusts for the benefit of
his children and 400 shares owned by his mother. Dr. Burke disclaims
beneficial ownership of the shares held in trust for his children.
(8) Consists of shares subject to options exercisable by Dr. Sybertz within the
60-day period following April 14, 2000.
(9) Consists of shares subject to options exercisable by Mr. Mellett within the
60-day period following April 14, 2000.
(10) Includes 20,833 shares subject to options exercisable by Dr. Reed within
the 60-day period following April 14, 2000. Dr. Reed resigned from his
position as a Vice President of the Company in January 2000, although his
employment will continue until July 4, 2000. His options will continue to
vest through July 4, 2000. Any unexercised, vested options held by Dr. Reed
on October 3, 2000 will terminate.
(11) Includes 24,500 shares subject to options exercisable by Mr. Carpenter
within the 60-day period following April 14, 2000.
(12) Includes 12,000 shares subject to options exercisable by Mr. Termeer within
the 60-day period following April 14, 2000.
(13) Includes 16,000 shares subject to options exercisable by Dr. Treu within
the 60-day period following April 14, 2000.
(14) Includes 6,500 shares held in trust for the benefit of Dr. Crout's son, 700
shares held in an IRA account for the benefit of his son, and 3,100 shares
owned by his wife. Dr. Crout disclaims beneficial ownership of all such
shares. Also includes 12,000 shares subject to options exercisable by Dr.
Crout within the 60-day period following April 14, 2000.
(15) See footnotes 6-14 above.
PROPOSAL 1:
ELECTION OF DIRECTORS
In accordance with Section 2 of Article II of the By-laws, the Board has
fixed the number of directors to constitute the full Board at five for the
coming year. Article SIXTH of the Company's Restated Certificate of
Incorporation provides that the directors are to be divided into three classes,
which are to be as nearly equal in number as the then total number of directors
constituting the entire Board permits. At the Meeting, two Class III directors
will be elected, each to hold office for three years, and until his successor is
duly elected and qualified. The Board has nominated each of J. Richard Crout and
Mark Skaletsky for election for a term of office expiring in 2003. The nominees
are currently directors of the Company, and have consented to be nominated and
to serve if elected. If a nominee is unable to serve as a director, the shares
represented by the proxy will be voted for the person, or persons, if any, who
is designated by the Board to replace such nominee. In the event that a vacancy
occurs during the year, such vacancy may be filled by the Board for the
remainder of the full term remaining to be served by the director creating such
vacancy.
3
<PAGE> 6
The following table contains certain information about the nominees for
election to the Board for directors and the continuing directors.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- ------------ ------------------------------------------- -------- -------
<S> <C> <C> <C>
NOMINEES FOR CLASS III DIRECTOR:
J. Richard Crout, M.D.#... Dr. Crout has served as President of Crout 1997 2000
(age 70) Consulting, a firm providing consulting services
to the pharmaceutical and biotechnology
industries, since 1994. From 1984 to 1994, Dr.
Crout served as Vice President, Medical and
Scientific Affairs of Boehringer Mannheim
Pharmaceuticals Corporation, a pharmaceutical
company. Prior to that, Dr. Crout served as
Associate Director for Medical Applications of
Research at the National Institutes of Health
from 1982 to 1984 and as Director, Bureau of
Drugs, U.S. Food and Drug Administration from
1973 to 1982. Dr. Crout is a director of
Trimeris, Inc. and Genelabs Technologies, Inc.
Mark Skaletsky+........... Mr. Skaletsky joined the Company in May 1993 as 1993 2000
(age 51) President, Chief Executive Officer and a
Director of the Company. He served as Treasurer
of the Company from August 1993 until May 1997.
Mr. Skaletsky previously served from 1988 to
1993 as Chairman and Chief Executive Officer of
Enzytech, Inc., a biotechnology company, and
from 1983 to 1988, as President and Chief
Operating Officer of Biogen, Inc, a
biotechnology company. He is a director of Isis
Pharmaceuticals, Inc. and Microcide
Pharmaceuticals, Inc.
CONTINUING DIRECTORS:
CLASS I DIRECTOR
Robert J. Carpenter*+..... Mr. Carpenter, a co-founder of the Company, has 1991 2002
(age 55) served as Chairman of the Board of the Company
since 1991. He is President of Boston Medical
Investors, Inc., an investment firm. Mr.
Carpenter served as President and Chief
Executive Officer of the Company from 1991 to
1993. He served as an Executive Vice President
of Genzyme Corporation, a human health care
company, from 1989 to 1991, and was Chief
Executive Officer and Chairman of the Board of
IG Laboratories, Inc., a genetic testing service
company, from 1989 to 1991. Prior to that, he
was Chairman, President and Chief Executive
Officer of Integrated Genetics, Inc., a
biotechnology company, which he joined as
President in 1981. He is a director of Genzyme
Corporation and Aquila Biopharmaceuticals, Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- ------------ ------------------------------------------- -------- -------
<S> <C> <C> <C>
CLASS II DIRECTORS
Henri A. Termeer#......... Mr. Termeer has served as president of Genzyme 1992 2001
(age 54) Corporation, a human health care company, since
October 1983, Chief Executive Officer since
December 1985, and Chairman of the Board since
May 1988. For ten years prior to joining
Genzyme, Mr. Termeer held various management
positions at Baxter Travenol Laboratories, Inc.,
a manufacturer of human health care products.
Mr. Termeer is also a director of Genzyme
Transgenics Corporation, Abiomed, Inc.,
AutoImmune, Inc., and Diacrin, Inc. and a
trustee of Hambrecht & Quist Healthcare
Investors and Hambrecht & Quist Life Sciences
Investors.
Jesse Treu, Ph.D.*........ Dr. Treu has been a Managing Member of the 1993 2001
(age 53) venture capital management firm, Domain
Associates, L.L.C. since 1986. Dr. Treu is a
director of Trimeris, Inc., Focal, Inc., Simione
Central Holdings, Inc. and OraPharma, Inc.
</TABLE>
- ---------------
* Member of the Compensation Committee.
+ Member of the Nominating Committee.
# Member of the Audit Committee.
During the year ended December 31, 1999, the Board held seven meetings.
Each of the directors attended at least 75% of the Board meetings and meetings
of committees of the Board of which he was a member, except for Mr. Termeer who
attended three of seven meetings of the Board and all three meetings of the
Audit Committee.
The Audit Committee, which currently consists of J. Richard Crout and Henri
Termeer, reviews with the Company's independent accountants the scope of the
annual audit, discusses the adequacy of internal accounting controls and
procedures, and performs general oversight with respect to the accounting
principles applied in the financial reporting of the Company. The Board of
Directors expects to adopt a written charter for the Audit Committee in May
2000. The Audit Committee held three meetings in 1999.
The Compensation Committee currently consists of Robert Carpenter and Jesse
Treu. The Compensation Committee's functions are to recommend to the full Board
the amount, character and method of payment of compensation for all executive
officers and certain other key employees and consultants of the Company and to
administer the Company's equity incentive, stock option and stock purchase
plans. The Compensation Committee held one meeting in 1999.
The Nominating Committee currently consists of Robert Carpenter and Mark
Skaletsky. The function of the Nominating Committee is to recommend to the full
Board individuals to serve on the Company's Board of Directors. The Nominating
Committee will consider persons nominated by stockholders in accordance with the
procedures set forth in the Company's By-laws. See "Advance Notice Provisions
for Stockholder Proposals and Nominations." The Nominating Committee did not
meet in 1999.
DIRECTOR COMPENSATION
All directors who are not employees of the Company, except Robert
Carpenter, receive $1,000 for each meeting of the Board of Directors in which
they participate. Mr. Carpenter receives $50,000 per year for his services as
Chairman of the Board.
All directors who are not employees of the Company (the "Eligible
Directors") are currently eligible to participate in the 1995 Director Stock
Option Plan (the "Plan"). The Director Plan provides for the automatic grant of
options to purchase shares of Common Stock at an exercise price equal to the
fair market
5
<PAGE> 8
value of the Company's Common Stock on the date of grant upon election and
re-election as a director of the Company. Upon election or re-election at the
Company's annual meeting of stockholders, each Eligible Director is granted
options to purchase 4,000 shares of Common Stock for each year of the term of
office to which the director is elected (normally 12,000 shares for election to
a three year term of office). In addition, upon the election of an Eligible
Director other than at an annual meeting of stockholders, such director will
automatically be granted an option to purchase 4,000 shares of Common Stock for
each year or portion thereof for the term of office to which he or she is
elected. The options have a term of ten years and become exercisable with
respect to 4,000 shares on the date of each of the three annual meetings of
stockholders of the Company following the date of grant, so long as the optionee
is then a director of the Company.
EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes the
compensation policies applicable to executive officers of the Company. The
following graph shows the cumulative stockholder return of the Company's Common
Stock from December 31, 1995 through December 31, 1999 as compared with that of
the Nasdaq (U.S. Companies) Index and the Nasdaq pharmaceutical stocks. The
graph assumes that the value of the investment in the Company's Common Stock and
each of the comparison groups was $100 on December 31, 1995 and assumes the
reinvestment of dividends. The Company has never declared a dividend on the
Common Stock of the Company. The stock price performance depicted in the graph
below is not necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG GELTEX PHARMACEUTICALS, INC.,
NASDAQ (U.S. COMPANIES) INDEX AND NASDAQ PHARMACEUTICALS INDEX(1)
<TABLE>
<CAPTION>
GELTEX PHARMACEUTICALS, NASDAQ STOCK MARKET
INC. (U.S.) NASDAQ PHARM. STOCKS
----------------------- ------------------- --------------------
<S> <C> <C> <C>
31-Dec-95 100.00 100.00 100.00
31-Dec-96 198.00 123.00 100.00
31-Dec-97 216.00 151.00 104.00
31-Dec-98 185.00 212.00 132.00
31-Dec-99 104.00 386.00 246.00
</TABLE>
- ---------------
(1) The fiscal year of the Company ends December 31.
6
<PAGE> 9
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") evaluates the performance of
management and determines compensation policies and levels. The Committee's
members are independent, non-employee directors. The full Board of Directors
reviews the Committee's recommendations regarding compensation of executive
officers. The Committee is also responsible for setting and administering the
Company's policies governing employee compensation and administering the
Company's Equity Plan and the Purchase Plan. The Committee met once in 1999.
Compensation Philosophy. The Company's executive compensation programs are
designed to attract and retain executives capable of leading the Company to meet
its business objectives and to motivate them to enhance long-term stockholder
value. Because the company operates in a highly competitive business
environment, the Company has designed its compensation program intending to
attract and retain individuals with a high caliber of talent. The Committee
provides the Company's executives with incentives, in the form of compensation,
to focus attention on achieving short-term business objectives while working
towards long-term Company goals in an effort to maximize business opportunities
for the Company and to enhance stockholder value. Annual compensation for the
Company's executive officers consists of three elements: a base salary, a cash
incentive bonus and stock option grants.
Base Salaries. Base salaries for executives are determined by reference to
individual experience, contribution and value. In addition, the Committee
reviews a variety of industry surveys which provide information about salary,
bonus and stock awards. The performance of the companies surveyed is not
considered by the Committee. Based in part on this information, the Committee
generally considers changes to existing base salaries, including that of the
Chief Executive Officer, at levels comparable to competitive companies in
similar industries. Annual salary adjustments are made, based upon a
recommendation by the Company's Chief Executive Officer, to maintain salaries at
competitive levels, taking into account each officer's years of experience and
individual performance, and to maintain an equitable relationship between
executive officer salaries and overall salaries for the Company's other
employees. Base salaries for new executive officers are determined with
reference to such industry surveys and by evaluating the responsibilities of the
position held and the experience of the individual.
The determination of Mr. Skaletsky's base salary for 1999 was set by the
Compensation Committee in December 1998, and was based on the factors discussed
above and on the overall successful development of the Company during 1998. In
determining Mr. Skaletsky's base salary for 1999, the Compensation Committee
considered the achievement of certain goals during 1998, including: receipt of
approval from the Food and Drug Administration for Renagel(R) Capsules, the
successful completion of a public offering of the Company's Common Stock which
generated over $81 million, the issuance of five patents, and the hiring of
three executive officers.
Bonus Compensation. The Company's executive officers are eligible to
receive an annual cash bonus, the amount of which is based on corporate and
individual performance. In determining the level of cash bonuses to grant to the
executive officers, including Mr. Skaletsky, the Compensation Committee
considered certain significant accomplishments during 1999, including: filing a
new drug application for Cholestagel(R) (now known as Welchol(TM)); entering
into a collaboration agreement with Sankyo Pharma Inc. relating to the
development and commercialization of Welchol(TM); filing a new drug application
for Renagel(R) tablets; the progress of the Company's anti-obesity and
infectious diseases programs; the acquisition of SunPharm Corporation and the
resulting increase in the Company's research programs; the positive opinion for
marketing authorization under exceptional circumstances for Renagel(R) by the
Committee for Proprietary Medicinal Products (CPMP), a scientific body comprised
of representatives from the 15 member states of the European Union that provides
advice to the European Commission for the approval of medicinal products; and
the issuance of 20 U.S. and foreign patents.
Stock Options. Stock options are granted to the Company's executive
officers under the Equity Plan to provide long-term incentives to employees. The
Company uses its stock option program to further align the interests of
stockholders and management by creating a mutual and substantial economic
interest in the long-
7
<PAGE> 10
term appreciation of the Company's Common Stock. New options are granted to
existing members of management on an annual basis to provide continuing
financial incentive based upon the level of responsibility of each individual
member of management and his or her individual performance for the year. Options
are granted with an exercise price equal to the fair market value of the Common
Stock on the date of grant. Options generally vest and become exercisable
monthly over a four year period commencing with the first month following the
date of grant of the option. Certain options granted under the Equity Plan,
including some of the options granted to the Chief Executive Officer and the
four most highly compensated executive officers at the end of 1998, are subject
to different vesting schedules that are based on the achievement of certain
milestone events. In determining the size of option grants, the Committee
evaluates the job level of the executive, responsibilities to be assumed in the
upcoming year, and responsibilities and performance in prior years, and also
takes into account the size of awards granted to the officer in the past. These
awards provide value to the executive officer only when and to the extent that
the fair market value of the Company's Common Stock appreciates over the fair
market value on the date the option was granted.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits a publicly held company's tax deduction for compensation paid to
the Chief Executive Officer and the other four most highly paid officers.
Generally, amounts paid in excess of $1,000,000 to a covered executive in any
year cannot be deducted by the Company. Certain performance based compensation
that has been approved by stockholders is not subject to the limit. In order to
maximize the deductibility of compensation arising from certain awards under the
Equity Plan, the Company has limited the number of shares of Common Stock
subject to options that may be granted to any individual in any fiscal year
under the Equity Plan to 250,000 shares. The Committee will continue to assess
the impact of Section 162(m) on its compensation practices and determine what
further action, if any, is appropriate.
By the GelTex Pharmaceuticals, Inc. Compensation
Committee,
Robert Carpenter
Jesse Treu
8
<PAGE> 11
The following tables set forth certain compensation information for the
Chief Executive Officer of the Company and the four most highly compensated
individuals who were serving as executive officers of the Company at the end of
1999 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION ALL OTHER
COMPENSATION AWARDS COMPENSATION
------------ ------------ ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTION (#) ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mark Skaletsky 1999 $300,096 $ 84,000 45,000 $2,200(1)
President and Chief 1998 $286,993 $100,000 50,000 $2,200(1)
Executive Officer 1997 $255,981 $ 80,000 50,000 $2,200(1)
Edmund J. Sybertz 1999 $211,415 $ 57,800 40,000 --
Sr. Vice President, Research 1998 $163,846 $ 27,000 110,000 --
and Development(2)
Paul J. Mellett, Jr. 1999 $194,285 $ 38,800 15,000 --
Vice President, Finance 1998 $189,192 $ 37,000 30,000 --
and Administration; Chief 1997 $139,904 $ 27,000 50,000 --
Financial Officer and
Treasurer(3)
Douglas Reed 1999 $192,500 $ 31,200 0 --
Vice President, Business 1998 $ 49,606 $ 10,000 50,000 --
Development(4)
Steven K. Burke 1999 $190,058 $ 42,700 20,000 --
Vice President, 1998 $176,741 $ 50,000 15,000 --
Clinical Development 1997 $151,850 $ 45,000 17,000 --
</TABLE>
- ---------------
(1) Consists of life insurance premiums paid by the Company.
(2) Dr. Sybertz joined the Company in March 1998.
(3) Mr. Mellett joined the Company in April 1997.
(4) Dr. Reed joined the Company in October 1998, and resigned from his position
as a Vice President of the Company in January 2000, although his employment
will continue through July 4, 2000. He received a $10,000 bonus upon
acceptance of employment with the Company in 1998.
9
<PAGE> 12
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1999 by the Company to the
Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO OR BASE FOR OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark Skaletsky 45,000 6.34% $12.5625 11/01/09 $355,522 $900,963
Edmund J. Sybertz 20,000 2.82% $16.3750 3/19/09 $205,963 $521,951
20,000 2.82% $12.5625 11/01/09 $158,010 $400,428
Paul J. Mellett, Jr. 15,000 2.11% $12.5625 11/01/09 $118,507 $300,321
Douglas Reed 0
Steven K. Burke 20,000 2.82% $12.5625 11/01/09 $158,010 $400,428
</TABLE>
- ---------------
(1) Represents options granted under the Equity Plan. Shares subject to the
option become exercisable monthly over a four year period commencing one
month from the date of grant.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, in the price of the underlying Common Stock. No gain to the optionees
is possible without an increase in price of the underlying Common Stock,
which will benefit all stockholders proportionately.
The following table sets forth certain information concerning option
exercises during 1999 and exercisable and unexercisable options held by the
Named Executive Officers as of December 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)(1)
SHARES ------------------ --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE(2) UNEXERCISABLE(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark Skaletsky 37,500 $855,781 232,103/109,897 $1,845,890/$33,047
Steven K. Burke 0 -- 22,415/37,585 $22,770/$15,730
Paul J. Mellett, Jr. 0 -- 44,269/50,731 $234/$11,016
Douglas Reed 0 -- 14,583/35,417 $0/$0
Edmund J. Sybertz 0 -- 57,916/92,084 $312/$14,688
</TABLE>
- ---------------
(1) Based on the difference between closing price of the underlying shares of
Common Stock on December 31, 1999 as reported by The Nasdaq Stock Market(R)
($13.3125) and the option exercise price.
(2) Certain shares subject to exercisable options, if exercised, would be
subject to the Company's right to repurchase such shares at cost. The
repurchase right lapses as the shares vest. See footnotes (6) and (7) to the
table under the heading "Share Ownership."
10
<PAGE> 13
EMPLOYMENT AGREEMENTS AND INDEBTEDNESS OF MANAGEMENT
In March 1997, the Company entered into an at-will employment agreement
with Paul J. Mellett, the Company's Vice President, Finance and Administration,
Chief Financial Officer and Treasurer. Pursuant to this agreement, Mr. Mellett
was eligible to receive his base salary for six months upon termination without
cause of his employment.
In January 1998, the Company entered into an at-will employment agreement
with Edmund J. Sybertz, Ph.D., the Company's Senior Vice President, Research and
Development. Pursuant to this agreement, Dr. Sybertz is eligible to receive his
base salary for six months upon the termination without cause of his employment.
In addition, the Company made a loan to Dr. Sybertz in June 1998 in the
principal amount of $600,000 in order to assist Dr. Sybertz in relocating to the
Boston area. During 1999 and as of April 3, 2000, the principal amount
outstanding on the loan was $245,000. The loan is secured by a mortgage on Dr.
Sybertz's principal residence. For so long as Dr. Sybertz remains an employee of
the Company, interest does not accrue on the unpaid principal balance. Should
Dr. Sybertz's employment with the Company terminate, interest will accrue on the
unpaid principal balance at the rate equal to the lowest applicable federal rate
of interest as set forth in the Internal Revenue Code of 1986, as amended (the
"Code"). The outstanding principal and accrued interest, if any, is due and
payable on or before September 1, 2002. However, should Dr. Sybertz remain
employed by the Company on such date, all outstanding principal will be
forgiven. In addition, the outstanding principal will be forgiven if Dr.
Sybertz's employment is terminated as a result of a change of control of the
Company.
In September 1998, the Company entered into an at-will employment agreement
with Douglas Reed, M.D., whereby Dr. Reed became the Company's Vice President,
Business Development. In January 2000, Dr. Reed stepped down from his
responsibilities with respect to managing and directing the business activities
of the Company, and agreed to remain employed by the Company for a transitional
period that will end on July 4, 2000. When Dr. Reed joined the Company in 1998,
the Company made several loans to Dr. Reed with an aggregate principal of
$350,000 in order to assist Dr. Reed in relocating to the Boston area. The terms
of these loans were amended in connection with Dr. Reed's resignation from his
position as Vice President, Business Development. Pursuant to the amended terms,
Dr. Reed is obligated to repay $250,000 to the Company at the earlier of (i) 15
days following the sale of Dr. Reed's prior home and (ii) September 30, 2000.
While this amount is outstanding and Dr. Reed remains an employee of the
Company, interest does not accrue on the principal. Beginning on July 5, 2000,
interest will accrue at the prime rate as announced by Fleet National Bank.
With respect to the remaining $100,000 in principal outstanding, this
amount is secured by a mortgage on Dr. Reed's principal residence. Pursuant to
the amended terms of this note, $50,000 of the outstanding principal will be
forgiven effective July 4, 2000, $12,500, plus any accrued interest (at a rate
equal to the lowest applicable federal rate of interest set forth in the Code)
shall become due and payable to the Company on each of July 4, 2000 and July 4,
2001, and, if all amounts outstanding under the $250,000 obligation discussed
above are repaid in a timely fashion, the Company will forgive the remaining
$25,000 and any accrued interest on such amount which remains outstanding under
this $100,000 note.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert Carpenter and Jesse Treu served as members of the Company's
Compensation Committee throughout the fiscal year ended December 31, 1999. Mr.
Carpenter, a co-founder of the Company, served as President and Chief Executive
Officer of the Company from 1991 to 1993.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1997, the Company entered into a joint venture with Genzyme
Corporation for the final development and commercialization of the Company's
Renagel(R) product (the "Joint Venture"). Under the agreement, Genzyme paid the
Company a $15 million non-refundable payment upon receipt of marketing approval
from the FDA, and made an additional $10 million non-refundable payment in
October 1999. The
11
<PAGE> 14
terms of the Joint Venture require the Company and Genzyme to each make capital
contributions to the Joint Venture in an amount equal to 50% of all costs and
expenses associated with the development and commercialization of Renagel(R),
including costs and expenses incurred by either party in performing under the
agreement, and the Company and Genzyme will share equally in the profits
generated from sales of the product. In fiscal year 1999, the Company earned
$5.8 million in revenue as reimbursement from the Joint Venture, 50% of which
was funded by Genzyme Corporation. Henri Termeer is a director of the Company
and is the President, Chief Executive Officer and Chairman of Genzyme
Corporation. Robert Carpenter is also a director of Genzyme Corporation.
PROPOSAL 2:
AMENDMENT OF 1992 EQUITY INCENTIVE PLAN
GENERAL
In June 1992, the Board of Directors adopted the Equity Plan, which was
approved by the Company's stockholders in May 1993. The aggregate number of
shares of Common Stock reserved for issuance under the Equity Plan is currently
3,350,000 shares (including shares subject to options already granted). The
Equity Plan is designed to provide the Company flexibility in awarding equity
incentives by providing for multiple types of incentives that may be awarded.
The purpose of the Equity Plan is to attract and retain key employees and
directors of and consultants to the Company and to enable them to participate in
the long-term growth of the Company.
AMENDMENT
In March 2000, the Board of Directors voted, subject to stockholder
approval, to amend the Equity Plan to increase the aggregate number of shares of
Common Stock available thereunder by an additional 700,000 shares to an
aggregate of 4,050,000 shares, subject to adjustment for stock-splits and
similar capital changes. The Company believes that this increase is necessary
and appropriate to enable the Company to attract and retain the quality of
employees, directors, and consultants whose services are considered essential to
the Company's future progress, to encourage such employees', directors', and
consultants' ownership in the Company and to provide them with an incentive to
remain with the Company.
ADMINISTRATION AND ELIGIBILITY
The Equity Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock,
stock units and other stock-based awards. Awards under the Equity Plan can be
granted to officers, directors, employees, and other individuals. The Equity
Plan is generally administered by the Compensation Committee which selects the
participants and establishes the terms and conditions of each option or other
equity right granted under the Equity Plan, including the exercise price, the
number of shares subject to options or other equity rights, and the time at
which such options become exercisable. The Compensation Committee has adopted
guidelines for the number of options awarded to each new employee of the
Company, other than executive officers. The guidelines may be changed by the
Compensation Committee at any time. Subject to certain limitations, the
Compensation Committee may delegate to one or more executive officers of the
Company the power to make awards to participants who are not executive officers.
The Compensation Committee has authorized Mr. Skaletsky to grant options to
purchase up to 10,000 shares of Common Stock each to such participants. The full
Board of Directors has also retained the right to make awards under the Equity
Plan. The exercise price of all "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Code granted under the Equity Plan must be at
least equal to the fair market value of the option shares on the date of grant.
The term of any ISO granted under the Equity Plan may not exceed ten years.
As of April 1, 2000, approximately 112 employees were eligible to
participate in the Equity Plan. The closing price of the Company's Common Stock
as reported on The Nasdaq Stock Market(R) on April 1, 2000
12
<PAGE> 15
was $16.75, the market value of the proposed 700,000 share increase was
$11,725,000, and the aggregate market value of the 3,350,000 shares currently
subject to the Equity Plan was $56,112,500.
EQUITY PLAN ACTIVITY
As of April 1, 2000, options to purchase an aggregate of 2,197,284 shares
of Common Stock under the Equity Plan were outstanding, and options to purchase
835,020 shares had been exercised as of such date. As of such date, 349,030
shares remained available for the granting of awards under the Equity Plan, not
including the 700,000 shares added by the amendment for which stockholder
approval is being requested. No stock appreciation rights have been granted
under the Equity Plan to date.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO STOCK OPTIONS
Incentive Stock Options. An optionee does not realize taxable income upon
the grant or exercise of an ISO under the Equity Plan. If no disposition of
shares issued to an optionee pursuant to the exercise of an ISO is made by the
optionee within two years from the date of grant or within one year from the
date of exercise, then (a) upon sale of such shares, any amount realized in
excess of the option price (the amount paid for the shares) is taxed to the
optionee as mid-term or long-term capital gain and any loss sustained will be a
mid-term or long-term capital loss and (b) no deduction is allowed to the
Company for Federal income tax purposes. The exercise of ISOs gives rise to an
adjustment in computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are disposed
of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) the
Company is entitled to deduct such amount. Any further gain realized is taxed as
a short-term, mid-term or long-term capital gain and does not result in any
deduction to the Company. A disqualifying disposition in the year of exercise
will generally avoid the alternative minimum tax consequences of the exercise of
an ISO.
Nonstatutory Stock Options. No income is realized by the optionee at the
time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
the Company receives a tax deduction for the same amount. Upon disposition of
the shares, appreciation or depreciation after the date of exercise is treated
as a short-term, mid-term or long-term capital gain or loss and will not result
in any deduction by the Company.
BOARD RECOMMENDATION
The Board of Directors of the Company believes that the amendment to the
Equity Plan is in the best interest of the Company and its stockholders and
recommends a vote FOR the proposal to approve the amendment to the Equity Plan.
PROPOSAL 3:
AMENDMENT OF 1995 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
In December 1995, the Board of Directors of the Company adopted the
Purchase Plan, which was approved by the Company's stockholders in May 1996.
Under the Purchase Plan, employees of the Company who are deemed to be full-time
employees (as defined in the Purchase Plan) may purchase shares of Common Stock
at a discount from fair market value. The purpose of the Purchase Plan is to
provide employees of the Company who wish to become stockholders of the Company
an opportunity to purchase
13
<PAGE> 16
shares of Common Stock of the Company. The Plan is intended to qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code of 1986, as amended.
AMENDMENT
In March 2000, the Board of Directors voted, subject to stockholder
approval, to amend the Purchase Plan to increase the aggregate number of shares
of Common Stock available thereunder by an additional 50,000 shares to an
aggregate of 100,000 shares, subject to adjustment for stock-splits and similar
capital changes.
ADMINISTRATION AND ELIGIBILITY
Rights to purchase Common Stock under the Purchase Plan are granted at the
discretion of the Compensation Committee, which determines the frequency and
duration of individual offerings under the Purchase Plan, and the dates when
stock may be purchased. Eligible employees participate voluntarily and may
withdraw from any offering at any time before stock is purchased. Currently, a
new 6-month offering commences every six months on each of January 1 and July 1,
and purchase right exercises occur on the last day of each offering period, or
June 30 and December 31, respectively. The Purchase Plan terminates on December
7, 2005.
As of April 1, 2000, approximately 112 employees were eligible to
participate in the Purchase Plan. The closing price of the Company's Common
Stock as reported on The Nasdaq Stock Market(R) on April 1, 2000 was $16.75, the
market value of the proposed 50,000 share increase was $837,500, and the
aggregate market value of the 100,000 shares currently subject to the Purchase
Plan was $1,675,000.
PURCHASE TERMS AND PRICE
The purchase price per share of Common Stock in an offering is 85% of the
fair market value of the Common Stock at the beginning of the offering period or
on the date the purchase right is exercised, whichever is lower. The purchase
price may be paid through payroll deductions, lump sum payments or a combination
of both. Participation terminates automatically upon termination of employment.
In accordance with Section 423 of the Code, no employee may subscribe for
shares under the Purchase Plan if, immediately after having subscribed, the
employee would own 5% or more of the voting stock of the Company (including
stock that may be purchased through subscriptions under the Purchase Plan or any
other options), nor may an employee buy more than $25,000 worth of stock
(determined by the fair market value of the Common Stock at the time the
offering begins) through the Purchase Plan in any calendar year. The Purchase
Plan provides that no employee may allocate more than 15%, or such lesser
percentage as the Board of Directors may fix, of the employee's annual rate of
compensation to the purchase of stock through the Purchase Plan.
1995 EMPLOYEE STOCK PURCHASE PLAN ACTIVITY
As of April 1, 2000, an aggregate of 49,979 shares of Common Stock had been
purchased under the Purchase Plan. As a result, 21 shares remain available for
purchase under the Purchase Plan prior to the proposed amendment.
FEDERAL INCOME TAX CONSEQUENCES
Employees electing to participate in an offering under the Purchase Plan do
not realize taxable income at the commencement of an offering or at the time
shares are purchased under the Purchase Plan.
If no disposition of shares purchased under the Purchase Plan is made by
the participant within two years from the offering commencement date or within
one year from the purchase date, then (a) upon sale of such shares, 15% of the
fair market value of the stock at the commencement of the offering period (or,
if less, the amount realized on sale of such shares in excess of the purchase
price) is taxed to the participant as ordinary
14
<PAGE> 17
income with any additional gain taxed as a long-term capital gain and any loss
sustained is treated as a long-term capital loss and (b) no deduction is allowed
to the Company for Federal income tax purposes.
If the participant dies at any time while owning shares purchased under the
Purchase Plan, then (a) 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the fair market value of such
shares on the date of death in excess of the purchase price) is taxed to the
participant as ordinary income in the year of death and (b) no deduction is
allowed to the Company for Federal income tax purposes.
If shares of Common Stock purchased under the Purchase Plan are disposed of
prior to the expiration of the two-year and one-year holding periods described
above, then (a) the participant realizes ordinary income in the year of
disposition in an amount equal to the excess of the fair market value of the
shares on the date of purchase over the purchase price thereof, and (b) the
Company is entitled to deduct such amount. Any further gain or loss is treated
as a short-term or long-term capital gain or loss and will not result in any
deduction to the Company.
VOTES REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote at the Meeting is required
for the approval of the amendment to the Purchase Plan.
BOARD RECOMMENDATION
The Board of Directors of the Company believes that the amendment to the
Purchase Plan is in the best interest of the Company and its stockholders and
recommends a vote FOR the proposal to approve the amendment to the Purchase
Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each of the Company's executive officers and directors is required under
Section 16(a) of the Securities Exchange Act of 1934, as amended, to file
reports of ownership of the Company's securities and changes in ownership with
the Securities and Exchange Commission. Copies of those reports must also be
furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company
and written representations that no other reports were required, the Company
believes that during 1999 the executive officers and all directors of the
Company other than Dr. Crout complied with all applicable Section 16(a) filing
requirements. Dr. Crout filed a Form 5 on February 10, 2000 to report certain
transactions from December 1999, including: his purchase of 3,000 shares in two
separate transactions; his wife's purchase of 2,200 shares in three separate
transactions; and the purchase by a trust for the benefit of his son who resides
with him of 3,500 shares in two separate transactions. These transactions should
have been reported by Dr. Crout on Form 4 in January 2000. Dr. Crout is not the
trustee of such trust and disclaims beneficial ownership of these 3,500 shares.
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young LLP, independent auditors, examined the Company's
financial statements for the fiscal year ended December 31, 1999. The Board of
Directors has appointed Ernst & Young LLP as the Company's independent
accountants for the fiscal year ending December 31, 2000. Ernst & Young LLP has
served as the Company's independent accountants since its inception in 1991.
Representatives of Ernst & Young LLP are expected to be present at the Meeting
to respond to appropriate questions and will be given the opportunity to make a
statement should they desire to do so.
15
<PAGE> 18
STOCKHOLDER PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT
FOR THE 2001 ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in the
Company's proxy materials for the 2001 Annual Meeting of Stockholders, it must
be received by the Company no later than December 23, 2000. Proposals should be
sent to the attention of the Secretary at the Company's offices at 153 Second
Avenue, Waltham, Massachusetts 02451.
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The By-laws of the Company provide that in order for a stockholder to bring
business before or propose director nominations at an annual meeting, the
stockholder must give written notice to the Company not less than 50 days nor
more than 75 days prior to the meeting. The notice must contain specified
information about the proposed business or each nominee and the stockholder
making the proposal or nomination. If less than 65 days notice or prior public
disclosure of the date of the annual meeting is given or made to stockholders,
the notice given by the stockholder must be received not later than the 15th day
following the day on which the notice of such annual meeting date was mailed or
public disclosure made, whichever first occurs.
EXPENSES OF SOLICITATION
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company.
Proxies may be solicited by directors, officers or regular employees of the
Company by mail, by telephone, in person or otherwise. No such person will
receive additional compensation for such solicitation. In addition, the Company
will request banks, brokers and other custodians, nominees and fiduciaries to
forward proxy material to the beneficial owners of Common Stock and to obtain
voting instructions from such beneficial owners. The Company will reimburse such
firms for their reasonable expenses in forwarding proxy materials and obtaining
voting instructions.
OTHER MATTERS
The 2000 Annual Meeting of Stockholders is called for the purposes set
forth in the notice. The Board of Directors does not know of any matter for
action by the stockholders at the Meeting other than the matters described in
the notice. However, the enclosed proxy confers discretionary authority on the
persons named therein with respect to matters which are not known to the
directors at the date of printing hereof and which may properly come before the
Meeting. It is the intention of the persons named in the proxy to vote in
accordance with their best judgment on any such matter.
Whether or not you intend to be present at the Meeting, you are urged to
fill out, sign, date and return the enclosed proxy at your earliest convenience.
16
<PAGE> 19
Appendix A
GELTEX PHARMACEUTICALS, INC.
AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
Section 1. PURPOSE
The purpose of the GelTex Pharmaceuticals, Inc. 1992 Equity Incentive
Plan (the "Plan") is to attract and retain key employees and consultants, to
provide an incentive for them to achieve long-range performance goals, and to
enable them to participate in the long-term growth of the Company.
Section 2. DEFINITIONS
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance
Share, Restricted Stock, Stock Unit or Other Stock-Based Award awarded under the
Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor to such Code.
"Committee" means a committee of not less than two members of the
Board appointed by the Board to administer the Plan; provided, however, that
until such committee is appointed, "Committee" means the Board.
"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of
the Company.
"Company" means GelTex Pharmaceuticals, Inc.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" shall mean the Participant's estate.
"Effective Date" means June 1, 1992.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a
<PAGE> 20
Participant under Section 6 that is intended to meet the requirements of Section
422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of
Common Stock awarded to a Participant under Section 6 that is not intended to be
an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock
Option.
"Other Stock-Based Award" means an Award, other than an Option, Stock
Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a
Common Stock element and awarded to a Participant under Section 11.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by
the Committee during which performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock, which may be earned
by the achievement of performance goals, awarded to a Participant under Section
8.
"Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time during which an Award
may be forfeited to the Company pursuant to the terms and conditions of such
Award.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any
excess in value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
"Stock Unit" means an award of Common Stock or units that are valued
in whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
Section 3. ADMINISTRATION
The Plan shall be administered by the Committee; provided, however,
that any duties described herein as duties of the Committee may at all times be
conducted by the Board of Directors as a whole, in its discretion. The Committee
shall have authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, and to interpret the provisions of the Plan.
The Committee's decisions shall be final and binding. To the extent permitted by
applicable law, the Committee may delegate to one or more executive officers of
the Company the power to make Awards to Participants who are not Reporting
A-2
<PAGE> 21
Persons and all determinations under the Plan with respect thereto, provided
that the Committee shall fix the maximum amount of such Awards for the group and
a maximum for any one Participant.
Section 4. ELIGIBILITY
All employees and, in the case of Awards other than Incentive Stock
Options, consultants and members of the Board of Directors of the Company or any
Affiliate capable of contributing significantly to the successful performance of
the Company, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan. Incentive Stock Options may be
awarded only to persons eligible to receive such Options under the Code.
Section 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (c), Awards may be made
under the Plan for up to 4,050,000 shares of Common Stock If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited without the Participant having had the benefits of ownership (other
than voting rights), the shares subject to such Award, to the extent of such
expiration, termination or forfeiture, shall again be available for award under
the Plan. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) Subject to adjustment under subsection (c), no Participant may
receive an Award which would result in such Participant having received, during
the fiscal year of the Company in which the Award is made, Awards for more than
an aggregate of 250,000 shares of Common Stock.
(c) In the event that the Committee in its discretion determines that
any stock dividend, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value, or other
similar transaction affects the Common Stock such that an adjustment is required
in order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee (subject, in the case of Incentive
Stock Options, to any limitation required under the Code) shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Committee
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
Section 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder, and no Incentive
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<PAGE> 22
Stock Option may be granted hereunder more than ten years after the Effective
Date.
(b) The Committee shall establish the option price at the time each
Option is awarded, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of award with respect to Incentive Stock
Options. Nonstatutory Stock Options may be granted at such prices as the
Committee may determine.
(c) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may specify in the applicable Award
or thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the award of the Option, by delivery of a
note or shares of Common Stock owned by the optionee, including Restricted
Stock, valued at their Fair Market Value on the date of delivery, or such other
lawful consideration as the Committee may determine.
(e) The Committee may provide that, subject to such conditions as it
considers appropriate, upon the delivery of shares to the Company in payment of
an Option, the Participant shall automatically be awarded an Option for up to
the number of shares so delivered.
Section 7. STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award
SARs in tandem with an Option (at or after the award of the Option), or alone
and unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs granted in
tandem with Options shall have an exercise price not less than the exercise
price of the related Option. SARs granted alone and unrelated to an Option may
be granted at such exercise prices as the Committee may determine.
(b) An SAR related to an Option that can only be exercised during
limited periods following a change in control of the Company may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the change in control or paid
during the thirty-day period immediately preceding the occurrence of the change
in control in any transaction reported in the stock market in which the Common
Stock is normally traded.
Section 8. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance
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<PAGE> 23
Shares are earned or, in the discretion of the Committee, on the date the
Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle,
for the purpose of determining the extent to which Performance Shares awarded
for such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares that have been earned
on the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
Section 9. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award
shares of Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the
Committee, during the Restricted Period. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may determine. Any certificates issued
in respect of shares of Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Committee, deposited by the
Participant, together with a stock power endorsed in blank, with the Company. At
the expiration of the Restricted Period, the Company shall deliver such
certificates to the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.
Section 10. STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee may award
Stock Units subject to such terms, restrictions, conditions, performance
criteria, vesting requirements and payment rules as the Committee shall
determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit
Award shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
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<PAGE> 24
Section 11. OTHER STOCK-BASED AWARDS
(a) Subject to the provisions of the Plan, the Committee may make
other awards of Common Stock and other awards that are valued in whole or in
part by reference to, or are otherwise based on, Common Stock, including
without limitation convertible preferred stock, convertible debentures,
exchangeable securities and Common Stock awards or options. Other Stock-Based
Awards may be granted either alone or in tandem with other Awards granted under
the Plan and/or cash awards made outside of the Plan.
(b) The Committee may establish performance goals, which may be based
on performance goals related to book value, subsidiary performance or such other
criteria as the Committee may determine, Restricted Periods, Performance Cycles,
conversion prices, maturities and security, if any, for any Other Stock-Based
Award. Other Stock-Based Awards may be sold to Participants at the face value
thereof or any discount therefrom or awarded for no consideration or such
minimum consideration as may be required by applicable law.
Section 12. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Reporting Person Limitations. Notwithstanding any other provision
of the Plan, to the extent required to qualify for the exemption provided by
Rule 16b-3 under the Securities Exchange Act of 1934 and any successor
provision, Awards made to a Reporting Person shall not be transferable by such
person other than by will or the laws of descent and distribution or pursuant to
a qualified domestic relations order, as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder.
(b) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(c) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(d) Settlement. The Committee shall determine whether Awards are
settled in whole or in part in cash, Common Stock, other securities of the
Company, Awards or other property. The Committee may permit a Participant to
defer all or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents on
amounts denominated in Common Stock.
(e) Dividends and Cash Awards. In the discretion of the Committee,
any Award under the Plan may provide the Participant with (i) dividends or
dividend equivalents payable currently or deferred with or without interest, and
(ii) cash payments in lieu of or in addition to an Award.
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<PAGE> 25
(f) Termination of Employment. The Committee shall determine the
effect on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.
(g) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company, the Committee
in its discretion may, at the time an Award is made or at any time thereafter,
take one or more of the following actions: (i) provide for the acceleration of
any time period relating to the exercise or realization of the Award, (ii)
provide for the purchase of the Award upon the Participant's request for an
amount of cash or other property that could have been received upon the exercise
or realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.
(h) Loans. The Committee may authorize the making of loans or cash
payments to Participants in connection with any Award under the Plan, which
loans may be secured by any security, including Common Stock, underlying or
related to such Award (provided that such Loan shall not exceed the Fair Market
Value of the security subject to such Award), and which may be forgiven upon
such terms and conditions as the Committee may establish at the time of such
loan or at any time thereafter.
(i) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
(j) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
(k) Amendment of Award. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
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<PAGE> 26
Section 13. MISCELLANEOUS
(a) No Right To Employment. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company expressly
reserves the right at any time to dismiss a Participant free from any liability
or claim under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the shareholders of
the Company, the Plan shall be effective on the Effective Date. Prior to such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any shareholder approval
that the Board determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by
and interpreted in accordance with the laws of Delaware.
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<PAGE> 27
Appendix B
GELTEX PHARMACEUTICALS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of this 1995 Employee Stock Purchase Plan (the "Plan") is
to provide employees of GelTex Pharmaceuticals, Inc. (the "Company"), and
its subsidiaries, who wish to become shareholders of the Company an
opportunity to purchase Common Stock of the Company (the "Shares"). The
Plan is intended to qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code").
2. ELIGIBLE EMPLOYEES.
Subject to the provisions of Sections 7, 8 and 9 below, any individual
who is a full-time employee (as defined below) of the Company, or any of
its subsidiaries (as defined in Section 424(f) of the Code) the employees
of which are designated by the Board of Directors as eligible to
participate in the Plan, is eligible to participate in any Offering of
Shares (as defined in Section 3 below) made by the Company hereunder.
Full-time employees shall include all employees whose customary employment
is:
(a) 20 hours or more per week and
(b) more than five months
in the calendar year during which said Offering Date occurs or in the
calendar year immediately preceding such year.
3. OFFERING DATES.
From time to time, the Company, by action of the Board of Directors,
will grant rights to purchase Shares to employees eligible to participate
in the Plan pursuant to one or more offerings (each of which is an
"Offering") on a date or series of dates (each of which is an "Offering
Date") designated for this purpose by the Board of Directors.
4. PRICES.
The price per share for each grant of rights hereunder shall be the
lesser of:
(a) eighty-five percent (85%) of the fair market value of a Share on
the Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a Share on
the date such right is exercised.
At its discretion, the Board of Directors may determine a higher price
for a grant of rights under the Plan.
5. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
(a) Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Board of Directors.
<PAGE> 28
(b) The method of payment for Shares purchased upon exercise of
rights granted hereunder shall be through regular payroll
deductions or by lump sum cash payment or both, as determined by
the Board of Directors. No interest shall be paid upon payroll
deductions unless specifically provided for by the Board of
Directors.
(c) Any payments received by the Company from a participating
employee and not utilized for the purchase of Shares upon
exercise of a right granted hereunder shall be promptly returned
to such employee by the Company after termination of the right to
which the payment relates.
6. TERM OF RIGHTS.
The total period from an Offering Date to the last date on which
rights granted on that Offering Date are exercisable (the "Offering
Period") shall in no event be longer than twenty-seven (27) months. The
Board of Directors when it authorizes an Offering may designate one or more
exercise periods during the Offering Period. Rights granted on an Offering
Date shall be exercisable in full on the Offering Date or in such
proportion on the last day of each exercise period as the Board of
Directors determines.
7. SHARES SUBJECT TO THE PLAN.
No more than One Hundred Thousand (100,000) Shares may be sold
pursuant to rights granted under the Plan. Appropriate adjustments in the
above figure, in the number of Shares covered by outstanding rights granted
hereunder, in the exercise price of the rights and in the maximum number of
Shares which an employee may purchase (pursuant to Section 9 below) shall
be made to give effect to any mergers, consolidations, reorganizations,
recapitalizations, stock splits, stock dividends or other relevant changes
in the capitalization of the Company occurring after the effective date of
the Plan, provided that no fractional Shares shall be subject to a right
and each right shall be adjusted downward to the nearest full Share. Any
agreement of merger or consolidation will include provisions for protection
of the then existing rights of participating employees under the Plan.
Either authorized and unissued Shares or issued Shares heretofore or
hereafter reacquired by the Company may be made subject to rights under the
Plan. If for any reason any right under the Plan terminates in whole or in
part, Shares subject to such terminated right may again be subjected to a
right under the Plan.
8. LIMITATIONS ON GRANTS.
(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or rights
to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of
the Company, or of any subsidiary, computed in accordance with
Section 423(b)(3) of the Code.
(b) No employee shall be granted a right which permits his right to
purchase shares under all employee stock purchase plans of the
Company and its subsidiaries to accrue at a rate which exceeds
twenty-five thousand dollars ($25,000) (or such other maximum as
may be prescribed from time to time by the Code) of the fair
market value of such Shares (determined at the time such right is
granted) for each calendar year in which such right is
outstanding at any time in accordance with the provisions of
Section 423(b)(8) of the Code.
(c) No right granted to any participating employee under an Offering,
when aggregated with rights granted under any other Offering
still exercisable by the participating employee, shall cover more
Shares than may be purchased at an exercise price equal to
fifteen percent (15%) of the employee's annual rate of
compensation on the date the employee elects to participate in
the Offering or such lesser percentage as the Board of Directors
may determine.
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<PAGE> 29
9. LIMIT ON PARTICIPATION.
Participation in an Offering shall be limited to eligible employees
who elect to participate in such Offering in the manner, and within the
time limitations, established by the Board of Directors when it authorizes
the Offering.
10. CANCELLATION OF ELECTION TO PARTICIPATE.
An employee who has elected to participate in an Offering may cancel
such election as to all (but not part) of the unexercised rights granted
under such Offering by giving written notice of such cancellation to the
Company before the expiration of any exercise period. Any amounts paid by
the employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the
employee, without interest, unless otherwise determined by the Board of
Directors, upon such cancellation.
11. TERMINATION OF EMPLOYMENT.
Upon the termination of employment for any reason, including the death
of the employee, before the date on which any rights granted under the Plan
are exercisable, all such rights shall immediately terminate and amounts
paid by the employee for the Shares or withheld for the purchase of Shares
from the employee's compensation through payroll deductions shall be paid
to the employee or to the employee's estate, without interest, unless
otherwise determined by the Board of Directors.
12. EMPLOYEES' RIGHTS AS SHAREHOLDERS.
No participating employee shall have any rights as a shareholder in
the Shares covered by a right granted hereunder until such right has been
exercised, full payment has been made for the corresponding Shares and the
Share certificate is actually issued.
13. RIGHTS NOT TRANSFERABLE.
Rights under the Plan are not assignable or transferable by a
participating employee and are exercisable only by the employee.
14. AMENDMENTS TO OR DISCONTINUATION OF THE PLAN.
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however,
that the then existing rights of all participating employees shall not be
adversely affected thereby, and provided further that, subject to
provisions of Section 7 above, no such amendment to the Plan shall, without
the approval of the shareholders of the Company, increase the total number
of Shares which may be offered under the Plan.
15. EFFECTIVE DATE AND APPROVALS.
This Plan became effective on December 7, 1995, the date it was
adopted by the Board of Directors, provided that it is approved by the
shareholders of the Company within twelve (12) months before or after the
date of adoption.
The Company's obligation to offer, sell and deliver its Shares under
the Plan is subject to (i) the approval of any governmental authority
required in connection with the authorized issuance or sale of such Shares,
(ii) satisfaction of the listing requirements of any national securities
exchange on which the shares are then listed and (iii) compliance, in the
opinion of the Company's counsel, with all applicable federal and state
securities and other laws.
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<PAGE> 30
16. TERMS OF PLAN.
No rights shall be granted under the Plan after December 7, 2005.
17. ADMINISTRATION OF THE PLAN.
The Board of Directors or any committee or person(s) to whom it
delegates its authority (the "Administrator") shall administer, interpret
and apply all provisions of the Plan as it deems necessary to meet special
circumstances not anticipated or covered expressly by the Plan. Nothing
contained in this Section shall be deemed to authorize the Administrator to
alter or administer the provisions of the Plan in a manner inconsistent
with the provisions of Section 423 of the Code.
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<PAGE> 31
GELTEX PHARMACEUTICALS, INC.
153 SECOND AVENUE, WALTHAM, MASSACHUSETTS 02451
PROXY FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint Mark Skaletsky and Paul J. Mellett,
Jr., and each of them acting singly, the attorneys and proxies of the
undersigned, with full power of substitution, with all the powers which the
undersigned would possess if personally present, to vote all of the shares of
capital stock of GelTex Pharmaceuticals, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the executive offices of the Company located at 153
Second Avenue, Waltham, Massachusetts, on Wednesday, May 24, 2000 at 9:30 a.m.,
and at any and all adjournments thereof, hereby acknowledging receipt of the
Proxy Statement for such meeting and revoking any proxy heretofore given with
respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED TO ELECT THE NOMINEES SET FORTH IN PROPOSAL 1, AND FOR PROPOSALS 2 AND 3.
IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
-------------
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
-------------
<PAGE> 32
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
GELTEX PHARMACEUTICALS, INC.
MAY 24, 2000
Please Detach and Mail in the Envelope Provided
<TABLE>
<S> <C>
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE USING
DARK INK ONLY.
FOR WITHHELD
nominees from nominees
FOR AGAINST ABSTAIN
1. Proposal to [ ] [ ] NOMINEES: J. Richard Crout 2. Proposal to amend the Company's 1992
elect directors. Mark Skaletsky Equity Incentive Plan to increase the [ ] [ ] [ ]
aggregate number of shares of the
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING Company's common stock as to which
NOMINEE(S): awards may be granted under such plan
by 700,000 shares.
- -------------------------------------------- 3. Proposal to amend the Company's 1995
Employee Stock Purchase Plan to [ ] [ ] [ ]
increase the aggregate number of
shares of the Company's common stock
available for purchase under such plan
by 50,000 shares.
PLEASE SIGN, DATE AND MAIL THIS PROXY TODAY
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Signature _________________________ Date __________, 2000 Signature (if held jointly) ______________________ Date: ________, 2000
NOTE: Please sign exactly as name appears on stock certificate. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign
in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
</TABLE>
