SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
/x/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BIO-TECHNOLOGY GENERAL CORP.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BIO-TECHNOLOGY GENERAL CORP.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
70 Wood Avenue South
Iselin, New Jersey 08830
(908) 632-8800
May 5, 1995
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 10:00 a.m., on Wednesday, June 14, 1995, at The
University Club, 1 West 54th Street, New York, New York.
This year, you are being asked only to elect ten directors to the Company's
Board of Directors. In addition, I will be pleased to report on the affairs of
the Company and a discussion period will be provided for questions and comments
of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
SIM FASS
President and
Chief Executive Officer
<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------------------
New York, New York
May 5, 1995
Notice is hereby given that the Annual Meeting of Stockholders of
Bio-Technology General Corp. will be held on Wednesday, June 14, 1995, at 10:00
a.m., at The University Club, 1 West 54th Street, New York, New York for the
following purposes:
(1) To elect ten directors to serve for the ensuing year; and
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record at the close of business on April 17, 1995 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
ROY L. GOLDMAN
Secretary
<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
70 Wood Avenue South
Iselin, New Jersey 08830
------------------------------------
PROXY STATEMENT
------------------------------------
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of Bio-Technology General Corp. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Wednesday, June 14, 1995, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about May
5, 1995 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the
<PAGE>
Company's Common Stock represented by executed and unrevoked proxies will be
voted in accordance with the choice or instructions specified thereon. If no
specifications are given, the proxies intend to vote the shares represented
thereby for all listed nominees for director and in accordance with their best
judgment on any other matters which may properly come before the meeting.
Record Date and Voting Rights
Only stockholders of record at the close of business on April 17, 1995 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On April 17, 1995 there were 43,194,325 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker nonvotes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. With respect to the proposal to elect directors,
abstentions, broker non-votes and instructions on the accompanying proxy card to
withhold authority to vote for one or more nominees will result in the
respective nominees receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such action.
-2-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of February 1, 1995 (except
as otherwise noted in the footnotes) regarding the beneficial ownership (as
defined by the Securities and Exchange Commission (the "SEC")) of the Company's
Common Stock of: (i) each person known by the Company to own beneficially more
than five percent of the Company's outstanding Common Stock; (ii) each director
and nominee for election as a director of the Company; (iii) each executive
officer named in the Summary Compensation Table (see "Executive Compensation");
and (iv) all directors and executive officers of the Company as a group. Except
as otherwise specified, the named beneficial owner has the sole voting and
investment power over the shares listed.
Amount and Nature of
Beneficial Ownership of Percentage of
Name of Beneficial Owner Common Stock Common Stock
- ------------------------ ----------------------- -------------
Elliott Associates, L.P. ........... 4,450,764(1) 10.38%
712 Fifth Avenue, 36th Floor
New York, New York 10019
Momar Corporation .................. 2,650,390(2) 6.18%
160 Broadway
New York, New York 10038
Grace Holdings, L.P. ............... 3,853,300(3) 8.99%
1000 W. Diversey
Suite 233
Chicago, Illinois 60614
Herbert J. Conrad .................. 13,707(4)(5) *
Sim Fass ........................... 645,000(6) 1.48%
Marian Gorecki ..................... 307,500(7) *
Fred Holubow ....................... 126,434(4)(8) *
David Haselkorn .................... 327,500(9) *
Hoffer Kaback ...................... 11,744(4) *
Nadim Kassem ....................... 56,250(10) *
Charles MacDonald .................. 0(4)(11) *
Moses Marx ......................... 2,650,390(2)(4)(12) 6.18%
Matthew Pazaryna ................... 25,000(13) *
Stephen Simes ...................... 367,287(4)(14) *
David Tendler ...................... 7,184(4)(15) *
Virgil Thompson .................... 5,000(15) *
Dan Tolkowsky ...................... 753,595(4)(16) 1.76%
Bradford T. Whitmore ............... 3,853,300(4)(17) 8.99%
-3-
<PAGE>
All directors, nominees and
executive officers
as a group (16) persons).......... 9,144,891(12)(16) 20.62%
(17)(18)
- -------------
* Represents less than one percent of the Company's Common Stock.
(1) Information included herein concerning the shares of Common Stock owned
beneficially by Elliott Associates, L.P. was taken from an amended Schedule
13D that was filed with the Securities and Exchange Commission by Elliott
Associates, L.P. on October 26, 1994.
(2) Includes 1,000,000 shares of Common Stock owned by Momar Corp., a Maryland
corporation of which Mr. Marx, a director of the Company, is the President
and sole director and 1,650,390 shares of Common Stock owned by United
Equities (Commodities) Company, a partnership of which Mr. Marx owns a
majority interest. Mr. Moses Marx, United Equities (Commodities) Company
and Momar Corp. filed a joint Schedule 13D because they may be deemed to
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange
Act of 1934, as amended. See note 12.
(3) Includes 1,530,614 shares of Common Stock held of record by Grace Brothers,
Ltd. and 408,686 shares of Common Stock held of record by Grace Brothers
International, Ltd. Both Grace Holdings, L.P. and Grace Brothers
International, Ltd. are substantially wholly owned affiliates of Grace
Brothers, Ltd. See note 16.
(4) Does not include 1,111 shares which were issued pursuant to the Company's
Stock Compensation Plan for Outside Directors on March 31, 1995. See
"Executive Compensation--Compensation of Directors."
(5) Includes 10,000 shares which may be acquired through the exercise of stock
options. Does not include 10,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of February 1,
1995.
(6) Consists of shares which may be acquired through exercise of stock options.
Does not include 322,500 shares of Common Stock issuable upon the exercise
of options which are not exercisable within 60 days of February 1, 1995.
(7) Such information is as of March 7, 1995 and includes 249,500 shares which
may be acquired through the exercise of stock options. Does not include
157,500 shares of Common Stock issuable upon the exercise of options which
are not exercisable within 60 days of February 1, 1995.
(8) Includes 1,500 shares of Common Stock owned by a trust as to which Mr.
Holubow is a trustee, which shares Mr. Holubow is deemed to beneficially
own. Includes 5,000 shares which may be acquired through exercise of stock
options. Does not include 15,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of February 1,
1995.
(9) Consists of 327,500 shares which may be acquired through the exercise of
stock options. Does not include 192,500 shares of Common Stock issuable
upon the exercise of options which are not exercisable within 60 days of
February 1, 1995. Dr. Haselkorn is not standing for reelection as a
director.
-4-
<PAGE>
(10) Includes 53,250 shares which may be acquired through the exercise of stock
options. Does not include 128,750 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of February 1,
1995.
(11) Does not include 20,000 shares of Common Stock issuable upon the exercise
of options which are not exercisable within 60 days of February 1, 1995.
(12) Does not include 20,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of February 1,
1995.
(13) Consists of shares which may be acquired through the exercise of stock
options. Does not include 105,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of
February 1, 1995.
(14) Such information is as of February 23, 1995 and includes 116,500 shares
which may be acquired through the exercise of stock options. Does not
include 135,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days of February 1, 1995. Mr.
Simes is not standing for reelection as a director.
(15) Includes 5,000 shares which may be acquired through the exercise of stock
options. Does not include 15,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of February 1,
1995.
(16) Includes 712,714 shares of Common Stock beneficially owned by Athena
Venture Partners L.P. ("Athena"). Mr. Tolkowsky may be deemed the
beneficial owner of such 712,714 shares by virtue of his being a general
partner of the general partner of Athena. Mr. Tolkowsky disclaims
beneficial ownership of all such shares except to the extent of his general
partner interest in Athena. The shares of Common Stock earned by Mr.
Tolkowsky under the Stock Compensation Plan for Outside Directors were
either issued directly or transferred to Athena in accordance with Athena's
partnership agreement.
(17) Includes 1,914,000 shares of Common Stock held of record by Grace Holdings,
L.P., 1,530,614 shares of Common Stock held of record by Grace Brothers,
Ltd. and 408,686 shares of Common Stock held of record by Grace Brothers
International, Ltd. Both Grace Holdings, L.P. and Grace Brothers
International, Ltd. are substantially wholly owned affiliates of Grace
Brothers, Ltd. Mr. Bradford T. Whitmore may be deemed the beneficial owner
of the 3,853,000 shares owned by such entities due to the fact that he is a
general partner of Grace Brothers, Ltd. and the sole shareholder of a
general partner of Grace Holdings, L.P. Does not include 20,000 shares of
Common Stock issuable upon the exercise of options which are not
exercisable within 60 days of February 1, 1995.
(18) Includes 1,464,750 shares which may be acquired through exercise of stock
options. Does not include 1,276,250 shares of Common Stock issuable upon
the exercise of options which are not exercisable within 60 days of
February 1, 1995 and an aggregate of 9,999 shares issued on March 31, 1995
pursuant to the Company's Stock Compensation Plan for Outside Directors.
PROPOSAL -- ELECTION OF DIRECTORS
Ten directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor
-5-
<PAGE>
of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- ---------------------------
<S> <C> <C> <C>
Herbert J. Conrad ............ 62 1993 Retired; President of Roche
Pharmaceuticals Division, Hoffmann-La
Roche from December 1981 until
September 1993. (1)
Sim Fass ..................... 53 1983 President/CEO of the Company and
President of Bio-Technology General
(Israel) Ltd., the Company's wholly-owned
subsidiary ("BTG Israel"), since May 1984;
Treasurer of the Company since August
1983; Chief Operating Officer of BTG
Israel between August 1983 and May
1987. (1)(3)
Fred Holubow ................. 56 1994 Vice President of Pegasus Associates, Inc.
since June 1982. (4)(5)
Hoffer Kaback ................ 45 1989 President of Gloucester Capital
Corporation since 1980; General Partner
of Bosworth Partners, an investment
partnership, since 1986. (4)(6)
Charles MacDonald ............ 37 1994 Portfolio Manager at Elliott Associates,
L.P. since November 1987. (1)
Moses Marx ................... 59 1994 Partner of United Equities Company since
June 1954 and partner of United Equities
(Commodities) Company since January
1972. (1)(2)
David Tendler ................ 56 1994 Chairman of Tendler Beretz Associates
Ltd. since January 1985; Co-Chairman
and Chief Executive Officer of Phibro-
Salomon, Inc. (now Salomon, Inc.) from
May 1982 until October 1984. (1)(2)(4)
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Virgil Thompson .............. 55 1994 President and Chief Executive Officer of
CIBUS Pharmaceutical, Inc. since July
1994. President from August 1991 to
August 1993 and Executive Vice President
from March 1986 to August 1991 of
Syntex Laboratories, Inc.(2)(4)
Dan Tolkowsky ................ 74 1985 Partner at Adler & Tolkowsky
Management Associates, the general
partner of Athena Venture Partners L.P.,
a venture capital partnership, since May
1985; prior thereto, Vice Chairman and
Managing Director of Discount Investment
Corporation (Tel-Aviv); Chairman of the
Executive Committee of BTG Israel from
1983 through October 1989. (2)
Bradford T. Whitmore ......... 37 1994 General Partner of Grace Brothers, Ltd.
since January 1986. (1)
- ----------------------
<FN>
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Compensation and Stock Option Committee of the Board of
Directors.
(3) Pursuant to Dr. Fass' employment agreement with the Company, the Company
has agreed to nominate Dr. Fass for election as a director during all
periods when Dr. Fass serves as President and Chief Executive Officer of
the Company. See "Executive Compensation--Employment Contracts."
(4) Member of the Audit Committee of the Board of Directors.
(5) Pursuant to that certain Agreement and Plan of Merger, dated as of March 9,
1993, by and among the Company, BTG Acquisition Subsidiary, Inc. and Gynex
Pharmaceuticals, Inc. (the "Merger Agreement"), the Company agreed that for
the longer of (i) the 1994 and 1995 Annual Meeting of Stockholders of the
Company and (ii) a group consisting of William Harris Investors, Inc.,
Irving B. Harris, the William B. Harris Revocable Trust, Marc A. Neuerman
and Jerome Kahn, together with persons and entities associated with them,
beneficially own at least five percent of the outstanding Common Stock, the
Company would nominate as a nominee for director and solicit proxies for
election as a director a person designated by Irving B. Harris and
reasonably acceptable to the Company. Fred Holubow is Mr. Harris' designee.
(6) In connection with the Company's offer to exchange (a) $250 principal
amount of the Company's Series A 7 1/2% Senior Secured Convertible Notes
due January 15, 1995 and 200 shares of the Company's Common Stock for each
$1,000 principal amount of its 7 1/2% Convertible Senior Subordinated Notes
due April 15, 1997 and (b) $250 principal amount of the Company's Series B
11% Senior Secured Convertible Notes due October 15, 1998 and 200 shares of
Common Stock for each $1,000 principal amount of its 11% Convertible Senior
Subordinated Debentures due 2006, the Company reached an agreement with
Elliott Associates, L.P., Grace Brothers, Ltd. and Wechsler & Krumholz,
Inc. (the "Group") to appoint as a director a person designated by the
Group and to nominate as a director and solicit proxies for the Group's
nominee. The Company and the Group have terminated this agreement. Mr.
Kaback was the representative designated by the Group to serve as a
director of the Company.
</FN>
</TABLE>
-7-
<PAGE>
Mr. Conrad is a director of Bradley Pharmaceuticals, Inc., Gensia, Inc. and
Dura Pharmaceuticals, Inc. Mr. Holubow is a director of Jefferson State Bank,
Thermo Remediation Inc. and Unimed Pharmaceuticals, Inc. Mr. Kaback is a
director of Lewis Galoob Toys, Inc. and Sunshine Mining and Refining Co. Mr.
Simes, who is not standing for reelection as a director of the Company at the
Annual Meeting of Stockholders, is a director of Unimed Pharmaceuticals, Inc.
Mr. Tendler is a director of Ryan, Beck & Co. Mr. Tolkowsky is a director of
Israel Discount Bank Ltd., IRT Corp. and several private companies. Mr. Whitmore
is a director of Patten Corp.
On December 6, 1994 the Board reestablished the Executive Committee to
exercise, to the extent authorized by law, all of the powers and authority of
the Board in the management of the business and affairs of the Company. Messrs.
Herbert Conrad, Sim Fass, Charles MacDonald, Moses Marx, David Tendler and
Bradford Whitmore are the current members of the Executive Committee. During
1994 the Executive Committee did not hold any meetings.
In November 1989, the Board formed an Audit Committee which was established
to review the internal accounting procedures of the Company and to consult with
and review the Company's independent auditors and the services provided by such
auditors. Messrs. Fred Holubow, Hoffer Kaback, David Tendler and Virgil Thompson
are the current members of the Audit Committee. During the fiscal year ended
December 31, 1994, the Audit Committee consisted of Messrs. Fred Holubow,
Christopher Illick (until his resignation as a director in December, 1994),
Hoffer Kaback, David Tendler (commencing on June 2, 1994) and Virgil Thompson
(commencing on June 2, 1994). During 1994 the Audit Committee held one meeting.
In January 1990, the Board formed a Compensation Committee. In May 1990,
the Board combined the Compensation Committee and the Stock Option Plan
Committee to form the Compensation and Stock Option Committee which was
established to review compensation practices, to recommend compensation for
executives and key employees, and to administer the Company's stock option
plans. Messrs. Moses Marx, David Tendler, Virgil Thompson and Dan Tolkowsky are
the current members of the Compensation and Stock Option Committee. During the
fiscal year ended December 31, 1994, the Compensation and Stock Option Committee
consisted of Messrs. David Blech (until he ceased to serve as a director on June
2, 1994), Herbert Conrad (until April 4, 1994), Christopher Illick (until his
resignation as a director in December 1994), Moses Marx (commencing on April 4,
1994), David Tendler (commencing on June 2, 1994), Virgil Thompson (commencing
on June 2, 1994) and Dan Tolkowsky. During the past year, this Committee acted
by unanimous written consent in lieu of a meeting one time and held one meeting.
During the fiscal year ended December 31, 1994, each person who was a
director, officer or beneficial owner of more than 10 percent of the Company's
equity securities filed on a timely basis all Forms 3 and 4 pursuant to Rule
16a-3(e) and any
-8-
<PAGE>
required Form 5 for the fiscal year ended December 31, 1994, except for Herbert
Conrad, Marian Gorecki, Christopher Illick and Jane Pfeiffer (a director of the
Company until her resignation in November 1994), each of whom filed one such
form in an untimely manner, and Dan Tolkowsky, who filed two such forms in an
untimely manner.
During the fiscal year ended December 31, 1994, the Board of Directors held
ten meetings and acted once by unanimous written consent in lieu of a meeting.
Each director attended at least 75% of the meetings of the Board of Directors
held when he was a Director and of all committees of the Board of Directors on
which he served, with the exception of Herbert Conrad who attended seven of the
ten meetings of the Board of Directors held during the fiscal year ended
December 31, 1994.
Vote Required
The ten nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for all nominees in
the absence of instruction to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will result in the respective nominees receiving fewer
votes. However, the number of votes otherwise received by the nominee will not
be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL -- ELECTION OF DIRECTORS" TO BE IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
-9-
<PAGE>
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to
be paid by the Company or its subsidiaries, as well as certain other
compensation paid or accrued, during the fiscal years indicated, to the
President and Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company for such period in all capacities
in which they served, as well as one executive officer who was one of the four
other most highly compensated executive officers but was not an executive
officer at the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term All Other
Annual Compensation Compensation Compensation(1)
---------------------------- ------------ ---------------
Name and Fiscal
Principal Position Year Salary ($) Bonus($)(2) Options(#)
- ------------------ ------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Sim Fass (3) ................. 1994 $264,583 $115,000 120,000 $4,620(4)
President and Chief 1993 $243,039 $105,000 157,500
Executive Officer 1992 $214,583 $95,000 125,000
David Haselkorn (3) .......... 1994 $163,750 $60,000 80,000
Senior Vice President and 1993 $149,267 $50,000 100,000
Chief Operating Officer; 1992 $134,292 $40,000 50,000
General Manager of
BTG-Israel
Marian Gorecki (3) ........... 1994 $148,750 $40,000 70,000
Senior Vice President- 1993 $134,267 $40,000 82,500
Chief Technical Officer 1992 $117,209 $35,000(7) 30,000
Nadim Kassem (3)(8) .......... 1994 $178,750 $30,000 60,000 $4,620(4)
Senior Vice President- 1993 $173,696 $15,000 25,000 $40,000(9)
Chief Medical Officer 1992 $93,333 100,000
Stephen Simes (5) ............ 1994 $156,250 $35,000 60,000 $4,620(4)
Formerly Senior Vice 1993 $172,420 $30,000 100,000
President 1992 $138,301 $10,000 91,500(6)
Matthew Pazaryna (10) ........ 1994 $155,833 $10,000 30,000 $4,620(4)
Formerly Senior Vice 1993 $42,614 100,000
President-Finance
- --------------
<FN>
(1) Pursuant to the SEC's rules on executive compensation disclosure, "All
Other Compensation" does not include perquisites because the aggregate
amount of such compensation for each of the persons listed did not exceed
the lesser of (i) $50,000 or (ii) 10 percent of the combined salary and
bonus for such person in each such year.
(2) Bonuses paid during a fiscal year are for the prior fiscal year.
(3) Each of Drs. Fass, Haselkorn, Kassem and Gorecki is party to an employment
agreement with the Company. See "-- Employment Contracts."
(4) Represents the Company's matching contribution pursuant to its 401(k)
defined contribution plan.
</FN>
</TABLE>
-10-
<PAGE>
(5) Mr. Simes' salary and bonus for the fiscal years ended December 31, 1992
and 1993 include amounts paid to him by Gynex Pharmaceuticals, Inc., which
was merged with and into a wholly-owned subsidiary of the Company in August
1993. The Merger Agreement provides that for the shorter of (i) the 1994
and 1995 Annual Meeting of Stockholders of the Company and (ii) Mr. Simes
ceasing for any reason to be an employee of the Company, the Company will
nominate Mr. Simes for election as a director. Mr. Simes ceased to be
employed by the Company during October 1994.
(6) Represents options to purchase Company Common Stock resulting from the
conversion of options to purchase common stock of Gynex Pharmaceuticals,
Inc. into options to purchase the Company's Common Stock resulting from the
merger of Gynex Pharmaceuticals, Inc. with and into a wholly owned
subsidiary of the Company on August 6, 1993.
(7) Dr. Gorecki elected to defer the payment of this bonus until January 1993.
(8) Dr. Kassem joined the Company in June 1992.
(9) Pursuant to his employment agreement, the Company loaned Dr. Kassem $40,000
which was forgiven in full on June 1, 1993. See "--Employment Contracts."
(10) Mr. Pazaryna joined the Company in September 1993 and resigned from his
position with the Company effective April 10, 1995.
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<PAGE>
The following table sets forth information with respect to option grants in
1994 to the persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realized Value at
Assumed Annual
Number of % of Total Rates of Stock
Securities Options Exercise Market Price Appreciation
underlying Granted to or Price on for Option Term(3)
Options Employees in Base Price Date of Expiration ------------------------
Name Granted (#)(1) Fiscal Year(2) ($/sh) Grant Date 5% ($) 10% ($)
- ---- ------------- -------------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Sim Fass ............. 120,000 26.67% $3.00 $3.00 6/2/04 $226,402 $573,747
David Haselkorn ...... 80,000 17.78% $3.00 $3.00 6/2/04 $150,935 $382,498
Marian Gorecki ....... 70,000 15.56% $3.00 $3.00 6/2/04 $132,068 $334,686
Nadim Kassem ......... 60,000 13.33% $3.00 $3.00 6/2/04 $113,201 $286,874
Stephen Simes ........ 60,000 13.33% $3.00 $3.00 6/2/04 $113,201 $286,874
Matthew Pazaryna ..... 30,000 6.67% $3.00 $3.00 6/2/04 $56,600 $143,436
- ---------------------
<FN>
(1) Options vest ratably over four years on the anniversary date of the grant
unless otherwise indicated; however, options granted under the Company's
1992 Stock Option Plan and certain other options become immediately
exercisable upon a change in control of the Company. See " -- Employment
Agreements."
(2) Based upon options to purchase 450,000 shares granted to all employees in
1994.
(3) These amounts represent assumed rates of appreciation in the price of the
Company's Common Stock during the terms of the options in accordance with
rates specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. The 5% rate of
appreciation over the 10 year option term of the $3.00 stock price on the
date of grant would result in a stock price of $4.89. The 10% rate of
appreciation over the 10 year option term of the $3.00 stock price on the
date of grant would result in a stock price of $7.78. There is no
representation that the rates of appreciation reflected in this table will
be achieved.
</FN>
</TABLE>
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<PAGE>
The following table sets forth information with respect to (i) stock
options exercised in 1994 by the persons named in the Summary Compensation Table
and (ii) unexercised stock options held by such individuals at December 31,
1994.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised,
Options Held at In-the-Money Options at
Shares Fiscal Year End (#) Fiscal Year End ($)(1)
Acquired on Value ---------------------------- ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sim Fass -- -- 645,000 322,500 306,950.00 0.00
David Haselkorn -- -- 327,500 192,500 98,662.50 0.00
Nadim Kassem -- -- 56,250 128,750 0.00 0.00
Marian Gorecki(2) -- -- 254,500 157,500 26,858.12 0.00
Stephen Simes(3) -- -- 313,508 135,000 387,366.98 0.00
Matthew Pazaryna -- -- 25,000 105,000 0.00 0.00
- ---------------
<FN>
(1) Based on a closing stock price of the Company's Common Stock on December
30, 1994 of $2.15625.
(2) On March 7, 1995 Marian Gorecki exercised options to acquire 5,000 shares
of the Company's Common Stock at a price of $1.06 per share. The closing
price of the Company's Common Stock on the date of exercise was $2.375.
(3) On February 23, 1995 Stephen Simes exercised options to acquire 197,008
shares of the Company's Common Stock at a price of $0.19 per share. The
closing price of the Company's Common Stock on the date of exercise was
$2.375.
</FN>
</TABLE>
Employment Contracts
The Company and Sim Fass entered into an employment agreement dated as of
January 1, 1990 (the "Fass Agreement") pursuant to which Dr. Fass has served as
President and Chief Executive Officer of the Company. At January 1, 1994, the
Fass Agreement was automatically renewed for another two year period, and will
automatically be renewed for successive two year periods thereafter unless
either party gives the other notice of non-renewal. The Fass Agreement also
provides that the Company will nominate Dr. Fass for election as a director
during all periods when he serves as President and Chief Executive Officer of
the Company. For his services, Dr. Fass is currently entitled to an annual
salary of $275,000, subject to adjustment at each Annual Meeting of the
Company's Board (which adjustment shall be a minimum of a six percent annual
increase) and to bonuses to be determined at the discretion of the Company's
Board. In the event Dr. Fass' employment is terminated by the Company at any
time for any reason other than justifiable cause, disability or death, or the
Company shall fail to renew the Fass Agreement at any time within two years
following a "Change of Control of the Company," the Company shall pay Dr. Fass,
for a period equal to the longer of (1) the remaining term of the Fass Agreement
or (2) one year (such period being hereinafter referred to as the "Fass
Severance Period") a monthly payment equal to $20,000, which amount shall be in
lieu of any and all other payments due and owing to Dr. Fass under the terms of
the Fass Agreement. During the Fass
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<PAGE>
Severance Period, the Company shall continue to provide Dr. Fass with health,
life and disability insurance. In the event the Company elects not to renew the
Fass Agreement other than within two years following a "Change in Control of the
Company," the Company is obligated to pay Dr. Fass a severance payment equal to
the sum of one month's salary plus 1/12 of his most recently declared bonus for
each year Dr. Fass has been employed by the Company.
Pursuant to the Fass Agreement, all options granted or to be granted to Dr.
Fass under any Company stock option plan shall become immediately exercisable
and all restrictions against disposition, if any, which have not otherwise
lapsed shall immediately lapse if (i) Dr. Fass' employment with the Company is
terminated upon a determination by the Company's Board that the performance of
his duties has not been fully satisfactory for any reason that would not
constitute "justifiable cause" (as defined in the Fass Agreement), (ii) Dr. Fass
dies or is disabled (as defined in the Fass Agreement) while employed by the
Company, (iii) Dr. Fass is not nominated by the Company for re-election to the
Company's Board, other than for justifiable cause, (iv) there shall occur a
material reduction in Dr. Fass' duties, other than for justifiable cause, or (v)
any event constituting a Change in Control of the Company shall occur while Dr.
Fass is employed by the Company.
For purposes of the Fass Agreement, the Haselkorn Agreement (as described
below) and the Gorecki Agreement (as described below), a "Change in Control of
the Company" shall be deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the
Company's outstanding Common Stock other than pursuant to a plan or arrangement
entered into by such person and the Company, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
The Company and David Haselkorn entered into an employment agreement dated
as of September 5, 1990 (the "Haselkorn Agreement") pursuant to which Dr.
Haselkorn has served as Senior Vice President and Chief Operating Officer of the
Company and
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<PAGE>
General Manager of BTG-Israel. At September 5, 1994, the Haselkorn
Agreement was automatically renewed for an additional two year period, and will
automatically be renewed for successive two year periods unless either party
gives the other notice of nonrenewal. For his services, Dr. Haselkorn is
currently entitled to an annual salary of $170,000, subject to adjustment at
each Annual Meeting of the Company's Board (which adjustment shall be a minimum
of a six percent annual increase) and to bonuses to be determined at the
discretion of the Company's Board. In the event that Dr. Haselkorn's employment
is terminated by the Company at any time for any reason other than justifiable
cause, disability or death, or the Company shall fail to renew the Haselkorn
Agreement at any time within two years following a "Change in Control of the
Company," the Company is obligated to pay Dr. Haselkorn an amount equal to the
greater of (i) one year's salary plus Dr. Haselkorn's most recent bonus, if any,
or (ii) the product of one month's salary plus 1/12 of Dr. Haselkorn's most
recently declared bonus multiplied by the number of years Dr. Haselkorn has been
employed by the Company.
BTG-Israel and Marian Gorecki entered into an employment agreement dated as
of September 5, 1990 (the "Gorecki Agreement") pursuant to which Dr. Gorecki has
served as Vice President and Chief Technical Officer of BTG-Israel. At September
5, 1994, the Gorecki Agreement was automatically renewed for an additional two
year period, and the Gorecki Agreement provides that it automatically will be
renewed for successive two year periods unless either party gives the other
notice of nonrenewal. For his services, Dr. Gorecki is currently entitled to an
annual salary of $155,000, subject to adjustment at each Annual Meeting of the
Company's Board (which adjustment shall be a minimum of a six percent annual
increase) and to bonuses to be determined at the discretion of the Company's
Board. In the event that Dr. Gorecki's employment is terminated by BTG-Israel at
any time for any reason other than justifiable cause, disability or death, or
BTG-Israel shall fail to renew the Gorecki Agreement at any time within two
years following a "Change in Control of the Company," BTG-Israel is obligated to
pay Dr. Gorecki an amount equal to the greater of (i) one year's salary plus Dr.
Gorecki's most recent bonus, if any, or (ii) the product of one month's salary
plus 1/12 of Dr. Gorecki's most recently declared bonus multiplied by the number
of years Dr. Gorecki has been employed by BTG-Israel.
The Company and Nadim Y. Kassem, M.D. entered into an employment agreement
dated as of June 1, 1992 (the "Kassem Agreement") pursuant to which Dr. Kassem
has served as Senior Vice President--Chief Medical Officer of the Company. At
June 1, 1994, the Kassem Agreement was automatically renewed for an additional
two year period, and will be automatically renewed for successive two year
periods unless either party gives the other notice of nonrenewal. For his
services, Dr. Kassem is currently entitled to an annual salary of $185,000,
subject to adjustment at each Annual Meeting of the Company's Board (which
adjustment shall be a minimum of a six percent annual increase) and to bonuses
to be determined at the discretion of the Company's Board. In the event Dr.
Kassem's employment is terminated by the Company at any time for any reason
other than justifiable cause, disability or death, or the Company shall fail to
renew the Kassem Agreement, the Company is obligated to pay Dr. Kassem, for a
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<PAGE>
period equal to the longer of (1) the remaining term of the Kassem Agreement or
(2) one year (such period being hereinafter referred to as the "Kassem Severance
Period") a bi-monthly payment equal to 1/24th of his annual salary, which amount
shall be in lieu of any and all other payments due and owing to Dr. Kassem under
the terms of the Kassem Agreement. During the Kassem Severance Period, the
Company shall continue to provide Dr. Kassem with health, life and disability
insurance until the earlier of (1) one year or (2) such time as Dr. Kassem
becomes eligible to participate in another employer's health and disability
insurance plan.
In connection with the commencement of his employment with the Company, Dr.
Kassem was granted options to purchase 100,000 shares of the Company's Common
Stock at an exercise price of $6.50 per share. On the date of grant of the
option, the fair market value of the Company's Common Stock was $7.50. If (i)
Dr. Kassem's employment with the Company is terminated upon a determination by
the Company's Board that the performance of his duties has not been fully
satisfactory for any reason that would not constitute "justifiable cause" (as
defined in the Kassem Agreement) or (ii) Dr. Kassem dies or is disabled (as
defined in the Kassem Agreement) while employed by the Company, these options
shall become immediately exercisable.
Pursuant to the Kassem Agreement, the Company loaned to Dr. Kassem $40,000.
The Company agreed to forgive repayment of the loan (i) on June 1, 1993 if Dr.
Kassem is then still an employee of the Company, (ii) if Dr. Kassem dies or is
disabled (as defined in the Kassem Agreement) while employed by the Company or
(iii) if Dr. Kassem's employment with the Company is terminated for any reason
that would not constitute "justifiable cause" (as defined in the Kassem
Agreement). This loan was forgiven on June 1, 1993.
Indebtedness of Management
Stephen M. Simes, a former Senior Vice President of the Company and a
current director of the Company who is not standing for reelection at the Annual
Meeting of Stockholders, borrowed an aggregate of $47,500 and $27,408 during
1986 and 1992, respectively, from Gynex to purchase shares of Gynex common stock
(collectively the "Gynex Loan"). The 1986 loan bore interest at the rate of
6.74% per annum, and the 1992 loan bore interest at the rate of 4.64% per annum.
Mr. Simes had agreed to repay the Gynex Loan, plus all accrued interest thereon,
on the earliest to occur of (i) his sale of the shares of the Company's Common
Stock received in the merger of Gynex with and into a wholly-owned subsidiary of
the Company in respect of his Gynex common stock; (ii) his ceasing for any
reason to be an employee of the Company; and (iii) August 9, 1995. In addition,
in connection with the commencement of his employment with the Company, the
Company loaned Mr. Simes $50,000 (the "Company Loan"). The Company Loan bore
interest at the rate of 7% per annum and was due August 9, 1994. As of December
31, 1994, Mr. Simes was indebted to the Company in the principal amount of
$144,752. During October 1994, Mr. Simes ceased his employment with the Company.
Mr. Simes repaid all amounts owed to the Company under the Gynex Loan and the
Company Loan in full on February 1, 1995 pursuant to an agreement with the
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<PAGE>
Company which forgave the payment of an aggregate of $14,210 of interest on the
Company Loan and the Gynex Loan.
Compensation of Directors
Directors of the Company do not receive any cash compensation for their
services as directors, except that beginning January 1, 1995 non-employee
members of the Executive Committee receive $1,000 per Executive Committee
meeting attended. Upon becoming a director of the Company, non-employee
directors receive a one time only grant of options to purchase 20,000 shares of
the Company's Common Stock pursuant to the Company's Stock Option Plan for
Outside Directors. In addition, non-employee directors receive quarterly grants
of shares of Common Stock pursuant to the Company's Stock Compensation Plan for
Outside Directors. All directors are reimbursed for their expenses in connection
with attending meetings of the Company's Board.
Stock Option Plan For Outside Directors. Pursuant to the Company's Stock
Option Plan for Outside Directors (the "Option Plan"), each person who is
neither an officer nor employee of the Company or its subsidiaries and who is
elected or appointed a director of the Company (the "New Director")
automatically receives on the date of his initial election or appointment to the
Company's Board (the "Grant Date") an option to purchase 20,000 shares of the
Company's Common Stock (the "Option") at a per share exercise price equal to the
Fair Market Value (as defined in the Option Plan) of the Company's Common Stock
on the Grant Date.
Options may be exercised as to 5,000 shares on the date which is six months
and one day after the Grant Date and an additional 5,000 shares on each of the
three successive anniversaries of the Grant Date. In the event that a New
Director ceases to be a director of the Company, such person may exercise any
portion of the Option that is exercisable by him at the time he ceases to be a
director of the Company, but only to the extent such Option is exercisable as of
such date, within six months after the date he ceases to be a director of the
Company. However, in the event a "Change of Control of the Corporation" (as
defined in the Option Plan) shall occur, all options granted under the Option
Plan which are outstanding at the time a Change of Control of the Corporation
occurs shall immediately become exercisable. Options granted under the Option
Plan have a term of ten years from the Grant Date and are not "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
Mr. Hoffer Kaback, who was elected a director of the Company on November 1,
1989, was granted an Option at a per share exercise price of $1.09, the Fair
Market Value of the Company's Common Stock on January 29, 1990, the date of the
adoption of the Option Plan by the Company's Board. Mr. Herbert J. Conrad, who
was elected a director of the Company on October 14, 1993, was automatically
granted an Option at a per share price of $5.8125. Mr. Fred Holubow, who was
elected a director of the Company on April 6, 1994, was automatically granted on
such date an Option at a per
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<PAGE>
share exercise price of $4.1875. Mr. David Tendler and Mr. Virgil Thompson, who
were elected as directors of the Company on June 2, 1994 were each automatically
granted an Option at a per share exercise price of $2.9375. Mr. Charles
MacDonald, who was elected as a director of the Company on October 24, 1994, was
automatically granted an Option at a per share exercise price of $2.15625. Mr.
Moses Marx and Mr. Bradford Whitmore, who were elected as directors of the
Company on December 6, 1994, were each automatically granted an Option at a per
share exercise price of $2.375.
Stock Compensation Plan for Outside Directors. Pursuant to the Company's
Compensation Plan for Outside Directors (the "Compensation Plan"), each director
of the Company who is neither an officer nor employee of the Company or its
subsidiaries (an "Outside Director") is awarded automatically, in lieu of cash
compensation for services as a director, on the last business day of each full
fiscal quarter subsequent to his election or appointment as an Outside Director,
such number of shares of the Company's Common Stock as has an aggregate Fair
Market Value (as defined in the Compensation Plan) equal to $2,500, based on the
price of the Company's Common Stock on the date of issue (the "Shares"). The
Compensation Plan provides that each Outside Director will be awarded Shares
until such time as he is no longer an Outside Director. If an Outside Director
ceases to be an Outside Director for any reason, the number of Shares which he
will be awarded on the last business day of the Company's next fiscal quarter
will be equal to one-third of the number of Shares which he would have been
awarded on such date for each complete month that he was an Outside Director in
the fiscal quarter in which he ceased to be an Outside Director.
The Compensation Plan allows any Outside Director to defer the issuance and
delivery of the Company's Common Stock awarded under the Compensation Plan until
the termination of his services on the Company's Board or such other time as the
Company's Board may determine. Virgil Thompson and the Company entered into a
deferral agreement in June 1994 (the "Deferral Agreement") pursuant to which the
issuance and delivery of the Company's Common Stock to be awarded to Mr.
Thompson under the Compensation Plan has been deferred until after the date Mr.
Thompson ceases to be a member of the Company's Board; provided, however, that
any shares of the Company's Common Stock, the issuance of which was deferred,
will be issued to Mr. Thompson at the time of a change in ownership or effective
control of the Company or a change in ownership of a substantial portion of the
Company's assets, as defined in the Code, except that in determining whether
there is a change in effective control by reason of a stock acquisition, there
must be an acquisition of stock possessing at least 40% (as opposed to the 20%
requirement set forth in the Code), of the total voting power of the Company's
Common Stock.
During the 1994 fiscal year, each Outside Director eligible to receive
shares under the Compensation Plan received 571 shares of the Company's Common
Stock on March 31, 1994, 952 shares of the Company's Common Stock on June 30,
1994, 1,025 shares of the Company's Common Stock on September 30, 1994 and 1,159
shares of the Company's Common Stock on December 31, 1994. On March 31, 1994,
June 30, 1994, September 30, 1994 and December 31, 1994, the Fair Market Value
of the Company's
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<PAGE>
Common Stock was $4.375, $2.625, $2.4375 and $2.15625, respectively. Each of
Herbert Conrad, Hoffer Kaback and Dan Tolkowsky received an aggregate of 3,707
shares of the Company's Common Stock each under the Compensation Plan for their
services as director during the 1994 fiscal year. Fred Holubow and David
Tendler, who joined the Board on April 6, 1994 and June 2, 1994, respectively,
received an aggregate of 2,184 shares each of the Company's Common Stock under
the Compensation Plan for their services as a director during the 1994 fiscal
year.
Compensation and Stock Option Committee Report to Stockholders
The report of the Compensation and Stock Option Committee (the
"Compensation Committee") shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act") or
under the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Compensation Committee is currently comprised of four directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties entail
reviewing the Company's compensation practices, recommending compensation for
executives and key employees and administering the Company's stock option plans.
Compensation Philosophy
The Company has been engaged in the research, development, manufacture and
marketing of genetically engineered and other products for human health care
since its inception in 1980. One of the Company's strengths contributing to its
success is the strong management team -- many of whom have been with the Company
for a significant period of time. The central goal of the Compensation Committee
is to ensure that the Company's remuneration policy is such that the Company is
able to attract, retain and reward capable employees who can contribute -- both
short- and longer-term -- to the continued success of the Company. Equity
participation and a strong alignment to stockholders' interests are key elements
of the Company's compensation philosophy. The Company's executive compensation
program consists of three parts: base salary, annual bonus and stock options. In
awarding salary increases and bonuses, the Compensation Committee did not relate
the various elements of corporate performance to each element of executive
compensation. Rather, the Compensation Committee considered whether the
compensation package as a whole adequately compensated each executive for the
Company's performance during 1994 and executive's contribution to such
performance.
Under the Omnibus Budget Reconciliation Act ("OBRA") which was enacted in
1993, publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total remuneration in excess of $1 million paid to
certain executive
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<PAGE>
officers in a single year. However, OBRA provides an exception for "performance
based" remuneration, including stock options. The Company expects to keep
"non-performance based" remuneration within the $1 million limit in order that
all executive compensation will be fully deductible. Nevertheless, although the
Committee considers the net cost to the Company in making all compensation
decisions (including, for this purpose, the potential limitation on
deductibility of executive compensation), there is no assurance that
compensation realized with respect to any particular award will qualify as
"performance based" remuneration.
Base Salary
Base salary represents the fixed component of the executive compensation
program. The Company's philosophy regarding base salaries is conservative,
maintaining salaries at approximately competitive industry average.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness with similar biotechnology companies, and on
internal relationships. Periodic increases in base salary relate to individual
contributions to the Company's overall performance, relative marketplace
competitiveness levels, length of service and the industry's annual competitive
pay practice movement. No specific performance targets were established for
fiscal year 1993, which was the base year for determining the salary increases
awarded in June 1994. In determining appropriate levels of base salary, the
Compensation Committee relied in part on several biotechnology industry
compensation surveys. Each of the Company's executive officers have employment
contracts which require a specified minimum salary increase.
Bonus
Bonuses represent the variable component of the executive compensation
program that is tied to the Company's performance and individual achievement.
The Company's policy is to base a significant portion of its senior executives'
cash compensation on bonus. In determining bonuses, the Compensation Committee
considers factors such as relative performance of the Company during the year
and the individual's contribution to the Company's performance.
Stock Options
The Compensation Committee, which administers the Company's stock option
plans, believes that one important goal of the executive compensation program
should be to provide executives, key employees and consultants -- who have
significant responsibility for the management, growth and future success of the
Company -- with an opportunity to increase their ownership and potentially gain
financially from the Company's stock price increases. This approach ensures that
the best interests of the stockholders, executives and employees will be closely
aligned. Therefore, executive officers and other key employees of the Company
are granted stock options from time to time, giving them a right to purchase
shares of the Company's Common Stock at a specified price in the future. The
grant of options is based primarily on an employee's
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<PAGE>
potential contribution to the Company's growth and financial results. In
determining the size of option grants, the Compensation Committee considers the
number of options owned by such officer, the number of options previously
granted and currently outstanding, and the aggregate size of the current option
grants. Options generally are granted at the prevailing market value of the
Company's Common Stock and will only have value if the Company's stock price
increases. Generally, grants of options vest in equal amounts over four years
and the individual must be employed by the Company for such options to vest.
1994 Compensation to Chief Executive Officer
In reviewing and recommending Dr. Fass' salary and bonus and in awarding
him stock options for fiscal year 1994 and for his future services, the
Compensation Committee followed its compensation philosophy. The Compensation
Committee noted that Dr. Fass is a party to an employment agreement with the
Company which provides for minimum annual salary increases of 6%. Dr. Fass'
annual salary was increased to $275,000 in June 1994, a 10% increase over the
prior year, compared to an 11% increase in salary in August 1993 over the prior
year. The Compensation Committee recommended this increase in salary over the
prior year in recognition of Dr. Fass' achievements in establishing new
commercial relationships and advancing the commercialization of many of the
Company's products as well as integrating Gynex and its products into the
Company. For the 1993 fiscal year, Dr. Fass received approximately 30% of his
cash compensation in bonus, which bonus was paid in 1994. The Committee
recommended the particular dollar amount of Dr. Fass' bonus in recognition of
Dr. Fass' efforts in establishing new commercial relationships and advancing the
commercialization of many of the Company's products as well as integrating Gynex
and its products into the Company. In 1994, Dr. Fass was granted options to
purchase 120,000 shares of the Company's Common Stock at an exercise price of
$3.00, the fair market value on the date of grant, under the terms of the 1992
Stock Option Plan. The options become exercisable in equal installments over
four years on the anniversary date of the date of grant. The Compensation
Committee believes a grant of a stock option to purchase 120,000 shares of the
Company's Common Stock is reasonable, based on marketplace competitiveness, to
secure the long-term services of the Company's chief executive officer and to
further align the chief executive officer's compensation with stockholder
interests.
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COMPENSATION AND STOCK OPTION COMMITTEE
Moses Marx*
David Tendler*
Virgil Thompson*
Dan Tolkowsky
*Appointed subsequent to the determination of 1994 compensation. Each of Herbert
Conrad and Christopher Illick were members of the Compensation and Stock Option
Committee at the time the 1994 Compensation was established and are not
presently members of such committee.
Compensation Committee Interlocks and
Insider Participation in Compensation Decisions
Messrs. David Blech (until he ceased to serve as a director of the Company
on June 2, 1994), Herbert Conrad, Christopher Illick (until his resignation on
December 6, 1994), David Tendler (since June 2, 1994), Virgil Thompson (since
June 2, 1994) and Dan Tolkowsky were the members of the Compensation and Stock
Option Committee during 1994. The Company paid D. Blech & Company, Incorporated
("DBC") $100,000 on April 22, 1994 to retain DBC as a non-exclusive financial
advisor for a one year term beginning August 1, 1994 and ending July 31, 1995.
David Blech, formerly a director of the Company, is the sole stockholder of DBC.
The Company believes the terms of this arrangement with DBC were no less
favorable than could have been obtained from a non-affiliated third party.
The Company's Performance
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return of the Company's Common
Stock with the cumulative total return of (i) the S&P 500 Index, (ii) an
industry peer group index (the "1995 Peer Index") and (iii) the industry peer
group index utilized in 1994 (the "1994 Peer Index"). The graph assumes (a) $100
was invested on December 29, 1989 in each of the Company's Common Stock, the
stocks comprising the S&P 500 Index, the stocks comprising the 1995 Peer Index
and the stocks comprising the 1994 Peer Index, and (b) the reinvestment of
dividends. The 1995 Peer Index consists of Agouron Pharmaceuticals, Inc.;
Alpha-Beta Technology, Inc.; Alteon Inc.; Amylin Pharmaceuticals, Inc.; Applied
Immune Sciences, Inc.; Arris Pharmaceutical Corp.; Athena Neurosciences, Inc.;
AutoImmune, Inc.; Cell Genesys, Inc.; CellPro, Inc.; Cytel Corp.; Cytogen Corp.;
Genetic Therapy, Inc.; Gensia, Inc.; Genta Incorporated; ICOS Corp.; ImmuLogic
Pharmaceutical Corp.; Immune Response, Inc.; Immunomedics, Inc.; Incyte
Pharmaceuticals, Inc.; Interneuron Pharmaceuticals, Inc.; Isis Pharmaceuticals,
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<PAGE>
Inc.; Liposome Technology, Inc.; Matrix Pharmaceutical, Inc.; NeoRx Corp.;
Neurogen Corp.; Regeneron Pharmaceuticals, Inc.; RIBI Immunochem Research, Inc.;
Seragen, Inc.; Shaman Pharmaceuticals, Inc.; Somatogen, Inc.; U.S. Bioscience,
Inc.; Univax Biologics, Inc.; Vical, Inc.; and Xoma Corporation. The 1994 Peer
Index consists of Advanced Tissue Sciences, Inc.; Affymax N.V.; Amylin
Pharmaceuticals, Inc.; Cell Genesys, Inc.; Cephalon, Inc.; COR Therapeutics,
Inc.; Cortech, Inc.; Creative BioMolecules, Inc.; CytRx Corporation; Genetic
Therapy, Inc.; Gilead Sciences, Inc.; ImmuLogic Pharmaceuticals Corp.;
Immunomedics, Inc.; Ligand Pharmaceuticals, Inc. (Class A); Liposome Company,
Inc.; Liposome Technology, Inc.; Magainin Pharmaceuticals Inc.; MedImmune, Inc.;
MGI PHARMA, Inc.; SyStemix, Inc.; Vertex Pharmaceuticals Incorporated; and
Vical, Inc. The 1995 Peer Index consists of those companies listed as Tier 2
companies by BioVenture Stock Report (January/ February 1995) which had a market
capitalization at December 31, 1994 of between $50 million and $150 million; at
that date, the Company had a market capitalization of $92.5 million according to
the BioVenture Stock Report. The 1994 Peer Index consists of those companies
listed as Tier 2 companies by BioVenture Stock Report (January/ February 1994)
which had a market capitalization at December 31, 1993 of between $150 million
and $250 million; at that date, the Company had a market capitalization of
$194.3 million according to the BioVenture Stock Report. The Company changed the
companies in the peer group index because of the change in the Company's market
capitalization between December 31, 1993 and December 31, 1994.
STOCK PERFORMANCE GRAPH
BTG S&P 500 1994 Peer Group 1995 Peer Group
--- ------- --------------- ---------------
12/29/89 ...... 100 100 100 100
12/31/90 ...... 173 94 104 95
12/31/91 ...... 803 118 427 278
12/31/92 ...... 548 124 306 177
12/31/93 ...... 488 132 300 159
12/30/94 ...... 200 130 181 79
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RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP have been the independent auditors for the Company
since December 1990 and will serve in that capacity for the 1995 fiscal year. A
representative of Arthur Andersen LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if he desires to do so, and will
respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1996
Annual Meeting of Stockholders of the Company must be received by the Company no
later than January 6, 1996 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Roy L. Goldman
Secretary
Dated: May 5, 1995
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: BIO-TECHNOLOGY GENERAL
CORP., ATTENTION: SIM FASS, PRESIDENT, 70 WOOD AVENUE SOUTH, ISELIN, NEW
JERSEY 08830
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1995
Herbert Conrad, Sim Fass, and Dan Tolkowsky, and each of them, as the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Bio-Technology General Corp. held of record by the undersigned
on April 17, 1995, at the Annual Meeting of Stockholders to be held at 10:00
A.M. on Wednesday, June 14, 1995, at The University Club, 1 West 54th Street,
New York, New York, and at any adjournment thereof. Any and all proxies
heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL --
ELECTION OF DIRECTORS
Proposal - Election of Directors - Nominees are:
Herbert Conrad, Sim Fass, Fred Holubow, Hoffer Kaback, Charles MacDonald,
Moses Marx, David Tendler, Virgil Thompson, Dan Tolkowsky and Bradford
Whitmore.
[ ] FOR all listed nominees (except do not vote for the nominee(s)
whose name(s) appears(s) below):
---------------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for the listed nominees.
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the meeting.
<PAGE>
IMPORTANT: Please sign exactly as name appears below. Each joint owner shall
sign. Executors, administrators, trustees, etc. should give full title as such.
If signor is a corporation, please give full corporate name by duly authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated ____________________, 1995
--------------------------------
Signature
--------------------------------
Signature if held jointly
The above-signed acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement furnished
therewith.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
