ONCOGENE SCIENCE INC, DEFR14A, 1997-02-13

ONCOGENE SCIENCE INC
DEFR14A, 1997-02-13
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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<PAGE> 1

SCHEDULE 14A INFORMATION/A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Amendment No. 1

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

ONCOGENE SCIENCE, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(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: _________________________________________________

<PAGE> 2

ONCOGENE LOGO

February 14, 1997

Dear Stockholders:

It is a pleasure to invite you to the annual meeting of stockholders of
Oncogene Science, Inc., which will be held at the Grace Auditorium of Cold
Spring Harbor Laboratory, at One Bungtown Road, Cold Spring Harbor, New York, on
Wednesday, March 19, 1997, at 10:00 a.m. Eastern Standard Time. Information
about the matters to be voted upon at the meeting is in the attached Notice of
Annual Meeting of Stockholders and Proxy Statement.

In addition to the matters to be voted upon at the meeting there will be a
presentation made on recent developments relating to the Corporation. Specific
directions to Cold Spring Harbor Laboratory may be obtained by calling or
writing to Ms. Kathy Galante, Investor Relations Coordinator, Oncogene Science,
Inc., 106 Charles Lindbergh Boulevard, Uniondale, New York 11553, telephone no.
(516) 222-0023.

In order to assure that a quorum is present at the meeting you are urged to
sign and mail the enclosed proxy card at once, even though you may plan to
attend in person. You may revoke the proxy granted in the proxy card at any time
prior to its being voted by filing with the Secretary of the Corporation either
an instrument of revocation or a duly executed proxy card bearing a later date.
If you attend the meeting, you may elect to revoke the proxy and vote your
shares in person.

The Corporation's Annual Report to Stockholders for the fiscal year ended
September 30, 1996, is being distributed to stockholders with the attached Proxy
Statement.

Sincerely,

/s/ GARY E. FRASHIER
GARY E. FRASHIER
Chief Executive Officer

106 Charles Lindbergh Blvd., Uniondale, New York 11553-3649 (516) 222-0023 -
Fax (516) 222-0114

<PAGE> 3

ONCOGENE SCIENCE, INC.
106 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The annual meeting of stockholders of Oncogene Science, Inc. (the
"Corporation") will be held at the Grace Auditorium of Cold Spring Harbor
Laboratory, located at One Bungtown Road, Cold Spring Harbor, New York, on
Wednesday, March 19, 1997, at 10:00 a.m., for the following purposes:

(1) to elect nine directors;

(2) to consider and act upon a proposal to adopt the Corporation's 1997
Incentive and Non-Qualified Stock Option Plan;

(3) to ratify the appointment of KPMG Peat Marwick LLP as the independent
public accountants to audit the Corporation's accounts for the fiscal
year ending September 30, 1997; and

(4) to transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.

The Board of Directors has fixed the close of business on January 24, 1997,
as the record date for determining stockholders entitled to notice of and to
vote at the meeting. A complete list of stockholders entitled to vote at the
meeting will be open to examination by stockholders for any purpose germane to
the meeting during normal business hours at the Corporation's offices at 106
Charles Lindbergh Boulevard, Uniondale, New York 11553.

By Order of the Board of Directors,

/s/ ROBERT L. VAN NOSTRAND

ROBERT L. VAN NOSTRAND
Secretary

February 14, 1997

IMPORTANT

Whether or not you plan to attend the meeting, please sign and date the
enclosed proxy and return it in the postage-paid envelope enclosed for your
convenience. Returning a proxy will not deprive you of your right to attend the
annual meeting and vote your shares in person.
<PAGE> 4

ONCOGENE SCIENCE, INC.
106 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553

PROXY STATEMENT

This Proxy Statement is furnished to the stockholders of Oncogene Science,
Inc., a Delaware corporation (the "Corporation"), in connection with the
solicitation of proxies by the Board of Directors for use at the annual meeting
of stockholders of the Corporation to be held on March 19, 1997, and any
adjournment or adjournments thereof (the "Meeting"). A copy of the Notice of
Annual Meeting of Stockholders accompanies this Proxy Statement. It is
anticipated that the mailing of this Proxy Statement will commence on or about
February 14, 1997.

Only holders of record of the Corporation's common stock (the "Common
Stock") at the close of business on January 24, 1997, the record date for the
Meeting, will be entitled to notice of and to vote at the Meeting. On the record
date, the Corporation had issued and outstanding 22,188,629 shares of Common
Stock, which are the only securities of the Corporation entitled to vote at the
Meeting. Each share is entitled to one vote.

The presence at the Meeting, in person or by proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
at the Meeting will be necessary to constitute a quorum. If a broker that is a
record holder of Common Stock does not return a signed proxy, the shares of
Common Stock represented by such proxy will not be considered present at the
Meeting and will not be counted toward establishing a quorum. If a broker that
is a record holder of Common Stock does return a signed proxy, but is not
authorized to vote on one or more matters (each such matter, a "broker
non-vote"), the shares of Common Stock represented by such proxy will be
considered present at the Meeting for purposes of determining the presence of a
quorum.

Assuming a quorum is present, (i) directors of the Corporation will be
elected by a plurality of the votes cast by stockholders present, in person or
by proxy, and entitled to vote for the election of directors at the Meeting,
(ii) the affirmative vote of the holders of a majority of the issued and
outstanding Common Stock present, in person or by proxy, and entitled to vote at
the Meeting will be required to approve the adoption of the Corporation's 1997
Incentive and Non-Qualified Stock Option Plan (the "1997 Plan"), and (iii) the
affirmative vote of a majority of the votes cast by stockholders present, in
person or by proxy, and entitled to vote at the Meeting will be required for the
ratification of the appointment of the auditors for the current fiscal year.
Abstentions and broker non-votes will have no effect on the outcome of the
election of directors or the ratification of the appointment of the auditors.
With respect to the adoption of the 1997 Plan, abstentions will have the same
effect as "no" votes, and broker non-votes will have no effect on the outcome of
the vote.

Stockholders who execute proxies may revoke them by giving written notice
to the Secretary of the Corporation at any time before such proxies are voted.
Attendance at the Meeting will not have the effect of revoking a proxy unless
the stockholder attending the Meeting shall, in writing, notify the Secretary of
the Corporation of the revocation of the proxy at any time prior to the voting
of the proxy.

The Board of Directors does not know of any matter other than the election
of directors, the adoption of the 1997 Plan, and the ratification of the
appointment of the auditors for the current fiscal year that is expected to be
presented for consideration at the Meeting. However, if other matters properly
come before the Meeting, the persons named in the accompanying proxy intend to
vote thereon in accordance with their judgment. All proxies received pursuant to
this solicitation will be voted, except as to matters where authority to vote is
specifically withheld, and where a choice is specified as to the proposal, in
accordance with such specification. If no instructions are given, the persons
named in the proxy solicited by the Board of Directors intend to vote (i) FOR
the nominees for election as directors of the Corporation named below under the
caption "Election of Directors," (ii) FOR the adoption of the 1997 Plan, and
(iii) FOR the ratification of the appointment of KPMG Peat Marwick LLP as the
independent public accountants to audit the Corporation's accounts for the
fiscal year ending September 30, 1997.
<PAGE> 5

The Corporation will bear the cost of the Meeting and the cost of
soliciting proxies, including the cost of mailing the proxy materials. In
addition to solicitation by mail, directors, officers and regular employees of
the Corporation (who will not be specifically compensated for such services) may
solicit proxies by telephone. The Corporation may engage Corporate Investor
Communications, Inc. ("CIC") to assist in the solicitation of proxies from
stockholders. In the event the Corporation does engage CIC, the Corporation will
enter into an agreement with CIC pursuant to which the Corporation will pay CIC
a fee of approximately $6,000 plus reimbursement of reasonable out-of-pocket
expenses.

2
<PAGE> 6

VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of December 31, 1996,
regarding the beneficial ownership of Common Stock by (i) all persons known to
the Corporation who own more than 5% of the outstanding shares of Common Stock,
(ii) all corporate stockholders with whom the Corporation has entered into
strategic collaborations, (iii) each director and nominee for director, (iv)
each executive officer, and (v) all officers and directors as a group. Unless
otherwise indicated, the persons named in the table below have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.

<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NO. OF SHARES CLASS(1)
- ---------------------------------------------------------------- ------------- --------------
<S> <C> <C>
Amerindo Investment Advisors Inc................................ 3,461,600 15.60%
388 Market Street
San Francisco, California 94111
Hoechst Marion Roussel, Inc. ................................... 1,590,909(2) 7.01%
10236 Marion Park Drive
Kansas City, Missouri 64114
Becton, Dickinson and Company................................... 1,250,000 5.63%
One Becton Drive
Franklin Lakes, New Jersey 07417
Novartis AG..................................................... 909,091 4.10%
CH-4002 Basel
Switzerland
Pfizer Inc. .................................................... 587,500 2.65%
235 East 42nd Street
New York, New York 10017
BioChem Pharma (International) Inc. ............................ 500,000 2.25%
275 Armand-Frappier Boulevard
Laval, Quebec
Canada H7V 4A7
G. Morgan Browne................................................ 76,940(3) *
Arthur M. Bruskin, Ph.D. ....................................... 22,545(4) *
Gary E. Frashier................................................ 125,790(5) *
John H. French, II.............................................. 55,243(6) *
Edwin A. Gee, Ph.D. ............................................ 79,790(7) *
Colin Goddard, Ph.D. ........................................... 45,796(8) *
Daryl K. Granner, M.D. ......................................... 15,003(9) *
Walter M. Lovenberg, Ph.D. ..................................... 53,000(10) *
Steve M. Peltzman............................................... 136,967(11) *
Ann H. Rose, Ph.D. ............................................. 65,263(12) *
Gary Takata..................................................... 11,924(13) *
Robert L. Van Nostrand.......................................... 31,938(14) *
John P. White................................................... 31,671(15) *
All directors and executive officers as a group
(thirteen persons)............................................ 751,870(16) 3.29%
</TABLE>

- ---------------
* Represents ownership of less than 1% of the outstanding shares of the
Corporation's Common Stock.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to stock options and warrants currently exercisable, or exercisable within
60 days are deemed beneficially owned by the person holding such options
and warrants. The percent of the outstanding shares of the Corporation's
Common Stock for any person or group who as of December 31,

3
<PAGE> 7

1996, beneficially owned any shares pursuant to options which are
exercisable within 60 days of December 31, 1996, is calculated assuming all
such options have been exercised in full and adding the number of shares
subject to such options to the total number of shares issued and
outstanding on December 31, 1996 for each individual.

(2) Includes 500,000 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding warrants.

(3) Includes 400 shares owned by Mr. Browne's wife, as to which Mr. Browne
disclaims beneficial ownership. Also includes 39,790 shares that may be
acquired at or within 60 days of December 31, 1996, pursuant to the
exercise of outstanding options. Also includes 21,750 shares owned by Cold
Spring Harbor Laboratory, of which Mr. Browne is an executive officer. Mr.
Browne disclaims beneficial ownership of the shares owned by Cold Spring
Harbor Laboratory.

(4) Includes 21,932 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(5) Includes 116,774 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(6) Includes 50,743 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(7) Consists entirely of shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(8) Includes 44,918 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of options.

(9) Consists entirely of shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(10) Includes 50,000 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(11) Includes 121,388 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(12) Includes 65,158 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(13) Includes 9,700 shares owned by Mr. Takata's wife, as to which Mr. Takata
disclaims beneficial ownership. Also includes 2,224 shares that may be
acquired at or within 60 days of December 31, 1996, pursuant to the
exercise of outstanding options.

(14) Includes 31,251 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(15) Includes 11,671 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

(16) Includes 650,642 shares that may be acquired at or within 60 days of
December 31, 1996, pursuant to the exercise of outstanding options.

4
<PAGE> 8

ELECTION OF DIRECTORS

At the Meeting, nine directors are to be elected, each to hold office
(subject to the Corporation's Bylaws) until the next annual meeting of
stockholders and until his respective successor has been elected and qualified.
The nominees for election to the Board of Directors are named in the table
below. If any nominee listed in the table below should become unavailable for
any reason, which management does not anticipate, the proxy will be voted for
any substitute nominee selected by management prior to or at the Meeting, or for
a motion to reduce the membership of the Board to the number of nominees
available. Two directors resigned during the fiscal year ended September 30,
1996, and the Board of Directors elected a new director to fill one of the
vacancies created by the resignations. The Board has determined not to fill the
remaining vacancy, and the proxies solicited hereby will not be voted for more
than nine nominees. The information concerning the nominees has been furnished
by them to the Corporation.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE CORPORATION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Edwin A. Gee, Ph.D. ................... 76 Chairman of the Board and Director
Gary E. Frashier....................... 60 Vice Chairman of the Board, Chief
Executive Officer and Director
Steve M. Peltzman...................... 50 President and Director
G. Morgan Browne....................... 61 Director
John H. French, II..................... 65 Director
Daryl K. Granner, M.D. ................ 60 Director
Walter M. Lovenberg, Ph.D. ............ 62 Director
Gary Takata............................ 62 Director
John P. White.......................... 50 Director
</TABLE>

BIOGRAPHICAL INFORMATION

Edwin A. Gee, Ph.D., a director of the Corporation since 1985, served as
President, Chairman of the Board and Chief Executive Officer of International
Paper Company from 1978 until his retirement in April 1985. Prior to 1978, Dr.
Gee was a Senior Vice President, member of the Executive Committee and a
director of E.I. du Pont de Nemours and Company. Dr. Gee serves as a member of
the Board of Directors of Biocryst Pharmaceuticals, Inc. and the Buckhill Falls
Company. Dr. Gee is also Director Emeritus of the Salomon Brothers Fund, Inc.,
the Salomon Brothers Investors Fund, Inc. and the Salomon Brothers Capital Fund,
Inc. Dr. Gee served as an executive officer of the Corporation, holding the
position of Chairman of the Board of the Corporation from April 1987 until March
1990. Since March 1990, Dr. Gee has retained the title of Chairman of the Board,
but no longer serves as an officer of the Corporation.

Gary E. Frashier was appointed Vice Chairman and Chief Executive Officer of
the Corporation in March 1994. Prior to that, he had been President and Chief
Executive Officer of the Corporation from March 1990 to March 1994. From April
1987 to February 1990, he served as President, Chief Executive Officer and a
director of Genex Corporation, a biotechnology company which specializes in
protein engineering. From 1984 to March 1987, he was Chairman, President and
Chief Executive Officer of Continental Water Systems Corporation, a corporation
engaged in the manufacture and marketing of equipment to produce ultrapure
water, which was purchased from Millipore Corporation ("Millipore") in a
management buy-out organized by Mr. Frashier. Mr. Frashier served as an
Executive Vice President of Millipore and President of Waters Associates, Inc.,
Millipore's liquid chromatography subsidiary, from 1980 to 1983. Mr. Frashier
was elected to the Board of Directors of the Corporation in March 1990.

Steve M. Peltzman has been President of the Corporation since March 1994.
From March 1994 to September 1996, Mr. Peltzman was President and Chief
Operating Officer of the Corporation. Prior to that, he had been the
Corporation's Executive Vice President and Chief Operating Officer since October
1991, upon consummation of the acquisition by the Corporation of the cancer
business of Applied bioTechnology, Inc. From June 1984 until October 1991, he
served as President and Chief Executive Officer of Applied bioTechnology, Inc.
From 1986 to 1990, Mr. Peltzman was also President of a partnership between
Applied bioTechnology, Inc. and E.I. du Pont de Nemours and Company, which
focused on the development of

5
<PAGE> 9

products relating to the prevention, diagnosis and treatment of human cancer. He
became a director of the Corporation in March 1992.

G. Morgan Browne has been Administrative Director of Cold Spring Harbor
Laboratory since June 1985. Prior to 1985, Mr. Browne provided management
services to a series of scientifically based companies. He is presently a
director of Harris & Harris Group, Inc. and the New York Biotechnology
Association, as well as Treasurer and a director of the Long Island Research
Institute. Mr. Browne became a director of the Corporation in March 1993.

John H. French, II, has been Vice Chairman of Southern Pacific Petroleum
N.L. (U.S.) for the past six years. Mr. French has been a director of the
Russian American Chamber of Commerce since December 1994, and prior to that time
he was Chairman of this organization from July 1992. He was Chairman of the
Board from January 1990 to February 1992, and President from 1960 to February
1992, of Research and Science Investors, Inc., a New York venture capital
concern. He became a director of the Corporation in July 1988.

Daryl K. Granner, M.D., has been a professor and Chairman of Molecular
Physiology/Biophysics and of Internal Medicine at Vanderbilt University since
July 1984. From 1970 to 1984 he was a faculty member at the University of Iowa,
where he directed the Division of Endocrinology and Diabetes. He directs the
Vanderbilt Diabetes Center, and is an acknowledged authority in the mechanism of
insulin action and the pathophysiology of diabetes mellitus. He has served on
numerous national advisory panels. Dr. Granner has been a director of the
Corporation since September 1996. Prior to that, Dr. Granner was an independent
consultant providing consulting services to the Corporation since 1992.

Walter M. Lovenberg, Ph.D., was an Executive Vice President and member of
the Board of Directors of Marion Merrell Dow Inc. from 1989 through August 1993.
Dr. Lovenberg served as President of the Merrell Dow Research Institute from
1989 to 1993 and Vice President from 1986 through 1989. Dr. Lovenberg has
received the Fulbright-Hayes Senior Scholar Award, the Public Health Service
Superior Service Award and the Third International Award for Research on Adult
Diseases. Dr. Lovenberg currently serves as a member of the Board of Directors
of Xenometrix, Inc., Cytoclonal Pharmaceutics, Inc., BioStart, Inc. and
Inflazyme, Inc. He has served on the Scientific Advisory Board of Amilyn
Pharmaceuticals since 1996. Dr. Lovenberg has served as a consultant to the
Corporation since October 1993. Dr. Lovenberg became a director of the
Corporation in March 1994.

Gary Takata, a founder of the Corporation, is a private investor and
venture capitalist. Since March 1992, he has been President and a director of
Zeron Acquisition II, Inc., and since November 1992, he has been President and a
director of Juno Acquisitions, Inc. Both of these firms are business development
companies. Mr. Takata has been a director of the Corporation since May 1983.

John P. White is a partner in Cooper & Dunham LLP, a New York City law firm
specializing in patent, trademark and related intellectual property matters, and
has been associated with the firm since 1977. Mr. White is a member of numerous
professional organizations, both legal and scientific, and has written and
lectured extensively on the subject of legal protection for biotechnology. Mr.
White has been a director of the Corporation since May 1985.

GENERAL INFORMATION

The Corporation's directors are elected at the annual meeting of
stockholders and hold office (subject to the Bylaws of the Corporation) until
the next succeeding annual meeting of stockholders and until their successors
are elected and qualified. Each of the nominees named above, with the exception
of Dr. Granner, was elected as a director of the Corporation at the annual
meeting of stockholders held on March 25, 1996. Dr. Granner was appointed to the
Board as of September 1996 to fill the vacancy created by the resignation of Mr.
Walter M. Miller.

The Board of Directors held five meetings during the last fiscal year. None
of the directors attended fewer than 75% of the number of meetings of the Board
of Directors or any committee of which he is a member held during the period in
which he was a director or a committee member, as applicable.

6
<PAGE> 10

The Board of Directors has a Nominating Committee, which currently consists
of Dr. Gee and Messrs. Frashier, French and White. The Nominating Committee held
one meeting during the last fiscal year. The principal functions of the
Nominating Committee are to review and select candidates for nomination to the
Board of Directors. In fulfilling this responsibility, the Nominating Committee
considers recommendations received from stockholders and other qualified
sources. Stockholders may submit recommendations with regard to nominees for
election to the Board of Directors by letter addressed to the Secretary of the
Corporation.

The Compensation Committee of the Board of Directors currently consists of
Drs. Gee and Lovenberg and Messrs. French and White. The Compensation Committee
held three meetings during the last fiscal year. The Compensation Committee is
authorized subject to the Certificate of Incorporation and Bylaws of the
Corporation and the Delaware General Corporation Law, to exercise all power and
authority of the Board of Directors with respect to the compensation of
employees of the Corporation. It also addresses a variety of organizational
matters with respect to the Corporation and its employees. The Compensation
Committee also administers the Corporation's stock option plans.

The Audit Committee of the Board of Directors currently consists of Dr. Gee
and Messrs. Browne and Takata. The Audit Committee held one meeting during the
last fiscal year. The Audit Committee is responsible for reviewing the adequacy
of the structure of the Corporation's financial organization and the
implementation of its financial and accounting policies. In addition, the Audit
Committee reviews the results of the audit performed by the Corporation's
outside auditors before the Annual Report to Stockholders is published.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS NAMED ABOVE.

7
<PAGE> 11

EXECUTIVE OFFICERS OF THE CORPORATION

The names and ages of the executive officers of the Corporation as of
December 31, 1996, and their positions with the Corporation are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE CORPORATION
- ----------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Gary E. Frashier................... 60 Vice Chairman and Chief Executive Officer since
March 1994; President and Chief Executive Officer
from March 1990 to March 1994
Steve M. Peltzman.................. 50 President since September 1996; President and Chief
Operating Officer since March 1994; Executive Vice
President and Chief Operating Officer from October
1991 to March 1994
Colin Goddard, Ph.D................ 37 Executive Vice President and Chief Operating Officer
since September 1996; Vice President, Research
Operations since April 1995; Vice President,
Research Operations, Pharmaceutical Division since
December 1993; Director, Pharmaceutical Operations
since February 1993; Director, Drug Discovery since
May 1992; Program Manager, Drug Discovery since
April 1991; Staff scientist since 1989
Robert L. Van Nostrand............. 39 Vice President and Chief Financial Officer since
December 1996; Vice President, Finance and
Administration since May 1990; Treasurer since March
1992; Secretary since March 1995; Controller and
Chief Accounting Officer from September 1986 to May
1990
Arthur M. Bruskin, Ph.D............ 41 Senior Vice President, Drug Discovery since October
1996; Vice President, Drug Discovery since April
1995; Director, Drug Discovery since July 1994;
Director, Cancer Research since April 1992;
Director, Molecular Genetics since October 1991
Ann H. Rose, Ph.D.................. 55 Vice President, TGF-Beta Program and Regulatory
Affairs since April 1994
</TABLE>

Set forth below is a biographical description of each executive officer's
employment prior to employment by the Corporation, based on information supplied
by such executive officers:

Gary E. Frashier. See "Election of Directors."

Steve M. Peltzman. See "Election of Directors."

Colin Goddard, Ph.D., was employed as a research scientist with the
National Cancer Institute in Bethesda, Maryland prior to his employment by the
Corporation.

Robert L. Van Nostrand was employed by the accounting firm of Touche Ross &
Co. prior to his employment by the Corporation. Mr. Van Nostrand is a certified
public accountant.

Arthur M. Bruskin, Ph.D., was employed as Manager of Cancer Research at
Applied bioTechnology, Inc. in Cambridge, Massachusetts prior to his employment
by the Corporation.

Ann H. Rose, Ph.D., was an independent consultant providing clinical and
regulatory development consulting services to companies in the biopharmaceutical
area prior to her employment by the Corporation.

8
<PAGE> 12

EXECUTIVE COMPENSATION

SUMMARY OF COMPENSATION

The following table sets forth a summary of all compensation paid or
accrued by the Corporation for services rendered for the last three completed
fiscal years to its chief executive officer and its six other most highly
compensated executive officers (the "named executive officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ------------
OTHER SECURITIES ALL OTHER
NAME AND FISCAL ANNUAL UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(A) COMPENSATION OPTIONS(#) SATION(B)
------ -------- -------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Frashier........................... 1996 $274,969 $100,000 -- 100,000 $ 4,750
Vice Chairman, Chief 1995 265,884 90,000 -- -- 4,621
Executive Officer and Director 1994 255,369 90,000 -- 100,000 4,620
Steve M. Peltzman.......................... 1996 $203,809 $ 50,000 -- 50,000 $ 4,875
President and 1995 192,289 50,000 -- 112,500 4,987
Director 1994 184,742 50,000 -- 40,000 4,750
Colin Goddard, Ph.D........................ 1996 $129,646 $ 50,000 -- 90,000 $ 3,889
Executive Vice President and 1995 119,914 35,000 -- 35,000 3,598
Chief Operating Officer 1994 111,875 27,000 -- 25,000 11,826(c)
Robert L. Van Nostrand..................... 1996 $116,548 $ 35,000 -- 35,000 $ 3,496
Vice President and Chief 1995 109,750 28,500 -- 15,000 3,571
Financial Officer 1994 107,423 24,500 -- -- 3,223
Arthur M. Bruskin, Ph.D.................... 1996 $115,596 $ 40,000 -- 75,000 $ 3,375
Senior Vice President, 1995 106,423 27,500 -- 25,000 3,193
Drug Discovery 1994 102,192 16,500 -- 15,000 3,066
Ann H. Rose, Ph.D.......................... 1996 $149,015 $ 25,000 $ 20,000(e) 25,000 $ 2,850
Vice President, TGF-Beta 1995 141,346 25,000 20,000(e) 25,000 3,747
Program and Regulatory Affairs 1994 68,019(d) 11,500 94,669(e) 30,000 1,091
J. Gordon Foulkes, Ph.D.(f)................ 1996 $188,617 $ 30,000(g) -- -- $ 4,932
Vice President and 1995 176,250 45,000 -- 37,500 4,707
Chief Scientific Officer and Director 1994 177,800 43,000 -- 20,000 5,001
</TABLE>

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

(a) Bonuses are paid subsequent to the end of the fiscal year.

(b) Represents the Corporation's contributions to the executive officers'
"401(k) Savings Plan."

(d) Dr. Rose became an employee of the Corporation on April 1, 1994.

(e) In 1996 and 1995, other annual compensation consisted of reimbursement for
office expenses. In 1994, other annual compensation included $43,750 in
consulting fees (earned before the commencement of employment with the
Corporation), $33,418 in reimbursement for travel related expenses, and
$17,501 in reimbursement for office expenses.

(f) Dr. Foulkes resigned his positions as officer and director of the
Corporation as of October 1, 1996.

(g) Payable in three annual installments of $10,000 each.

9
<PAGE> 13

STOCK OPTION GRANTS

The following table sets forth grants of stock options made during the
Corporation's fiscal year ended September 30, 1996, to each of the named
executive officers:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------------- STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME GRANTED(A) IN FISCAL YEAR PRICE DATE 5% 10%
---------- --------------- -------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Frashier................... 100,000 12.89% $9.000 June 20, 2006 $730,000 $1,690,000
Steve M. Peltzman.................. 50,000 6.44% 9.000 June 20, 2006 365,000 845,000
Colin Goddard, Ph.D................ 60,000 7.73% 9.000 June 20, 2006 438,000 1,014,000
30,000 3.87% 7.875 Sept. 26, 2006 148,838 375,638
Robert L. Van Nostrand............. 35,000 4.51% 9.000 June 20, 2006 255,500 591,500
Arthur M. Bruskin, Ph.D............ 50,000 6.44% 9.000 June 20, 2006 365,000 845,000
25,000 3.22% 7.875 Sept. 26, 2006 124,031 313,031
Ann H. Rose, Ph.D.................. 25,000 3.22% 9.000 June 20, 2006 182,500 422,500
J. Gordon Foulkes, Ph.D............ -- -- -- -- -- --
</TABLE>

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

(a) All options vest one-third one year from the date of grant and the remainder
pro rata monthly over the ensuing 24 months.

EXERCISE OF OPTIONS

The following table sets forth (i) certain information relating to options
exercised by the named executive officers during the fiscal year ended September
30, 1996, and (ii) the total number of unexercised options at September 30,
1996, and the total value of unexercised in-the-money options at September 30,
1996, for the named executive officers:

AGGREGATED OPTION EXERCISES IN LAST

FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
AGGREGATED
OPTION EXERCISES NUMBER OF SECURITIES
DURING FISCAL 1996 UNDERLYING
---------------------- UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES AT FISCAL YEAR IN-THE-MONEY OPTIONS
ACQUIRED END (#) AT FISCAL YEAR END(A)
ON VALUE ---------------------- -----------------------
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
- ------------------------------------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Frashier..................... 100,000 $862,500 105,497 144,503 $626,798 $216,952
Steve M. Peltzman.................... 30,000 206,250 101,333 131,167 500,329 408,109
Colin Goddard, Ph.D.................. 15,000 90,980 35,223 132,777 163,109 232,016
Robert L. Van Nostrand............... 30,000 207,350 28,021 46,979 135,804 58,546
Arthur M. Bruskin, Ph.D.............. 25,311 157,655 14,377 106,562 68,502 176,654
Ann H. Rose, Ph.D.................... -- -- 42,734 52,266 202,346 130,154
J. Gordon Foulkes, Ph.D.............. 119,078 821,306 8,550 33,872 42,369 167,391
</TABLE>

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

(a) Based on the closing sale price of the Corporation's Common Stock of $8.875
per share, as reported on the Nasdaq National Market on September 30, 1996,
less the exercise price.

10
<PAGE> 14

COMPENSATION OF DIRECTORS

Monetary Compensation

Drs. Gee, Granner and Lovenberg and Messrs. Browne, French, Takata and
White (being the non-employee directors of the Corporation) are the only current
directors compensated for attendance at Board of Directors' meetings. Each
director is paid a $1,500 retainer per month and $1,500 for each meeting of the
Board of Directors he attends. In addition, each of these persons receives $250
for each meeting of a committee of the Board he attends that is held on the same
day as a meeting of the Board of Directors, and $500 for each meeting of a
committee of the Board he attends that is held on a date other than a date upon
which a meeting of the Board of Directors is held.

Formula Option Grants

Pursuant to the Corporation's 1993 Incentive and Non-Qualified Stock Option
Plan, as amended (the "1993 Plan"), any director who is not also an employee of
the Corporation or the designee of a third party who is entitled to
representation on the Board of Directors (a "Non-Employee Director") is entitled
to an automatic, formula based grant of non-qualified stock options ("NSOs"). It
is intended that future formula grants will be provided pursuant to the 1997
Plan, which will be submitted to the Corporation's stockholders for approval at
the Meeting. The provisions of the 1993 Plan regarding such formula grants for
Non-Employee Directors are identical to those contained in the proposed 1997
Plan. On March 26, 1996, each of Drs. Gee and Lovenberg and Messrs. Browne,
French, Takata and White received a formula award of options covering 20,000
shares. See "Adoption of the 1997 Incentive and Non-Qualified Stock Option Plan"
below for a description of the timing and amount of formula awards and the terms
and conditions of such awards.

Stock Purchase Plan

Pursuant to the Corporation's Directors' Stock Purchase Plan (the "DSPP"),
adopted as of March 25, 1996, all Non-Employee Directors may elect to receive up
to 50% of their monthly retainer fees and up to 50% of attendance fees earned
during any month in the form of shares of Common Stock. The Corporation reserved
100,000 shares of Common Stock for issuance under the DSPP.

Non-Employee Directors must file an election with the Corporation at least
six months prior to the month in which the Non-Employee Director intends to
participate in the DSPP. Separate elections (and different percentage amounts)
may be made with respect to retainer fees and attendance fees. Six-months notice
of withdrawal or change in percentage is required and elections, once made, are
irrevocable. Purchases may be made monthly and the number of shares are
determined based upon the fair market value of the Common Stock on the date the
Non-Employee Director earns the fee designated to purchase the shares.

Unless earlier terminated, the DSPP will continue in effect until December
13, 2006, except that if at the end of any month the aggregate funds available
for purchase of Common Stock would purchase a greater number of shares than is
available for purchase, the number of shares that would otherwise be purchased
by each Non-Employee Director at the end of the Purchase Period will be
proportionately reduced in order to eliminate the excess. The DSPP would then
automatically terminate after such month. Upon expiration or termination of the
DSPP, any amount not applied toward the purchase of Common Stock will be
refunded to the Non-Employee Director.

Other Payments

Dr. Gee was paid $50,000 by the Corporation in the last fiscal year for
services rendered as a general business consultant. Dr. Lovenberg was paid
$50,000 by the Corporation in the last fiscal year for services rendered as a
general business consultant. Dr. Granner was paid $14,417 by the Corporation in
the last fiscal year for services rendered as a general business consultant.

11
<PAGE> 15

EMPLOYMENT AGREEMENTS

Gary E. Frashier

In February 1990, the Corporation entered into a three-year employment
agreement with Gary E. Frashier, Vice Chairman and Chief Executive Officer of
the Corporation. The initial term of the agreement expired in February 1993, but
pursuant to its terms, the agreement has been extended automatically on a year-
to-year basis. Under the agreement, Mr. Frashier is entitled to a minimum base
salary plus such other amounts, if any, as the Board may from time to time
determine. In addition, Mr. Frashier is eligible for incentive bonus
compensation in an amount up to 50% of his base salary. The agreement provides
that Mr. Frashier will be entitled to other customary fringe benefits generally
available to executive employees of the Corporation. The agreement prohibits Mr.
Frashier from competing with or becoming engaged in the same business as the
Corporation during the term of employment plus two years thereafter. The
agreement also provides Mr. Frashier with severance benefits in the event the
Corporation terminates his employment, other than for cause or due to Mr.
Frashier's death or disability, or reduces his title, job duties, salary or
benefits following a change in control. Upon termination of the agreement by the
Corporation, the Corporation will be obligated to continue Mr. Frashier's
benefits and salary for the six month period immediately following such
termination, unless such termination is for cause or due to death or disability.
In the event Mr. Frashier terminates his employment due to a change in control
of the Corporation, Mr. Frashier will receive a payment equal to 2.99 times his
base salary, and all options that were previously granted to him shall become
exercisable.

Other Executive Officers

The Corporation has entered into employment agreements with each of Steve
M. Peltzman, Colin Goddard, Ph.D., and Ann H. Rose, Ph.D. (collectively, the
"Officers"). Each agreement has a fixed term of either three or five years, but
provides for automatic extensions for additional one-year terms. The agreements
provide for a minimum base salary, plus such other amounts, if any, as the Board
may from time to time determine. In addition, the Officers are eligible for
incentive bonus compensation and are entitled to receive other customary fringe
benefits generally available to executive employees of the Corporation. The
agreements prohibit the Officers from competing with or becoming engaged in the
same business as the Corporation during the term of employment plus one or two
years thereafter. The agreements also provide the Officers with severance
benefits in the event the Corporation terminates employment other than for cause
or due to the Officers' death or disability. Upon such termination of an
agreement by the Corporation, the Corporation will be obligated to pay the
affected Officer's benefits and salary for the six month period immediately
following such termination.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the Corporation's fiscal year ended September 30, 1996, the
Compensation Committee consisted of Dr. Gee and Messrs. French, Takata, White
and Walter M. Miller from October 1, 1995 to March 25, 1996. Thereafter, the
Compensation Committee consisted of Drs. Gee and Lovenberg and Messrs. French
and White. Dr. Gee served as an executive officer of the Corporation from 1987
through 1990.

12
<PAGE> 16

REPORT OF THE COMPENSATION COMMITTEE

TO: THE BOARD OF DIRECTORS

It is a part of the responsibility of the Corporation's Compensation
Committee (the "Committee") to exercise the power and authority of the Board of
Directors with respect to the compensation of employees and to administer the
Corporation's stock option plans. Consequently it is the Committee's
responsibility to review compensation levels of members of management and to
evaluate the performance of management.

In evaluating the reasonableness of compensation paid to the Corporation's
executive officers, the Committee takes into account how compensation compares
to compensation paid by competing companies as well as the Corporation's
performance. In making this determination, the Committee has relied in part on
independent surveys of compensation of management of companies in the
biotechnology and pharmaceutical areas.

It is the Corporation's policy that the compensation of executive officers
be based, in substantial part, on the Corporation's performance, as well as the
individual contribution of each executive officer. As a result, much of an
executive officer's compensation is "at risk" in the form of bonus and stock
option compensation with target levels established by the Committee for each
position relative to total cash compensation.

The base salary of Gary Frashier, the Corporation's Chief Executive
Officer, for fiscal 1996 was based principally on his rights under an employment
agreement with the Corporation dated February 1990 (the "Employment Agreement").
The Employment Agreement established a minimum base annual salary based on
negotiations between the Board of Directors and Mr. Frashier in connection with
his joining the Corporation in February 1990. This amount has been increased
each year by the Compensation Committee to keep pace with salaries being paid to
other chief executive officers of similar companies and in recognition of the
Corporation's performance. Mr. Frashier's base annual salary generally becomes
effective on April 1st of each year, for the ensuing twelve-month period.

Under the Employment Agreement, Mr. Frashier is eligible for incentive
bonus compensation in an amount up to 50% of his base salary. Because the
Corporation is in the development stage, the use of traditional performance
standards (such as profit levels and return on equity) are not appropriate in
the evaluation of Mr. Frashier's performance. For fiscal year 1996, the
Committee awarded Mr. Frashier a bonus of $100,000 in recognition of achievement
of the following objectives: the progression of clinical trials of TGF-Beta3 for
wound healing and oral mucositis; the completion of several million compound
tests in the Corporation's multiple drug discovery programs; the advancement of
active lead compounds toward clinical development in the Hoechst Marion Roussel,
Inc. ("HMRI") and Wyeth-Ayerst Laboratories collaborations as well as in the
Corporation's proprietary programs; the continued development by Pfizer Inc.
towards the collaborative program's first clinical drug candidate; the renewal
of the Corporation's cancer collaboration with Pfizer Inc. for five years with
approximately $18 million in funding; the renewal of the HMRI collaboration for
five years with approximately $12.5 million in funding; the successful equity
offering completed in March 1996 including 500,000 shares to BioChem Pharma
(International) Inc. raising more than $30 million, net; the establishment of a
co-venture with BioChem Pharma (International) Inc. in anti-virals; the
establishment of Anaderm Research Corp. with Pfizer Inc. in prescription
cosmetics with the Corporation owning a 14% equity stake and royalties; the
acquisitions of MYCOsearch, Inc. and Aston Molecules, Ltd. to enhance the
Corporation's chemistry capabilities; and the negotiation of the agreement with
Bayer AG to collaborate with the Corporation in cancer diagnostics with full
funding of the program.

The Corporation's performance (or that of the appropriate division or unit)
for purposes of compensation decisions is measured under the Corporation's
Annual Business Plan against goals established prior to the start of the fiscal
year by the Committee and is reviewed and approved by the Committee. The
Committee weights individual performance so that in each case the discretionary
annual bonuses fall within a preset range.

During 1996, the Committee also considered the grant of stock options to
each of the Corporation's executive officers. Each of those officers was
considered for stock options based on his or her responsibilities and relative
position in the Corporation and his or her existing stock option position.

Edwin A. Gee, Ph.D., Chairman
John H. French, II
Walter M. Lovenberg, Ph.D.
John P. White

13
<PAGE> 17

STOCK PRICE PERFORMANCE GRAPH

The following graph presents a five-year comparison of cumulative returns
on the Corporation's Common Stock against the Standard & Poor's 500 Stock Index
("Broad Market") and the Dow Jones Industry Group Biotechnology ("Industry
Index"), based on an assumed investment of $100 on October 1, 1991, in each case
assuming reinvestment of all dividends.

<TABLE>
<CAPTION>
Measurement Period Oncogene Science,
(Fiscal Year Covered) Inc. Industry Index Broad Market
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 72.92 88.54 111.06
1993 66.67 86.56 125.51
1994 54.17 89.48 130.15
1995 89.58 127.31 168.86
1996 147.92 158.89 203.20
</TABLE>

14
<PAGE> 18

CERTAIN TRANSACTIONS

Mr. John P. White, a director of the Corporation, is a partner of Cooper &
Dunham LLP, a New York City law firm specializing in patent, trademark and
related intellectual property matters. Cooper & Dunham LLP regularly provides
legal services to the Corporation. Professional fees paid or accrued by the
Corporation to Cooper & Dunham LLP in the fiscal year ended September 30, 1996
did not exceed 5% of such law firm's gross revenues for its last full fiscal
year.

In July 1995, the pharmaceutical operations of Hoechst AG ("Hoechst"),
Hoechst Roussel Pharmaceuticals, Inc. ("HRPI") and Marion Merrell Dow Inc.
("MMDI") combined into one entity, HMRI. Prior to this date the Corporation had
collaborative agreements with all three of these companies (the "Predecessor
Agreements"). HMRI succeeded to the Predecessor Agreements. In the transaction
described above, HMRI acquired 1,090,909 shares and a warrant to purchase an
additional 500,000 shares of the Corporation's Common Stock, which were formerly
held by MMDI. Under the Predecessor Agreements, HMRI has been granted certain
exclusive, worldwide licenses by the Corporation, and has the right to negotiate
with the Corporation within specified parameters to obtain certain other
exclusive, worldwide licenses with respect to products resulting from joint
research programs. In consideration for their licenses, HMRI will pay royalties
to the Corporation on sales of such products. In fiscal year 1996, the
Corporation earned an aggregate of $2,439,558 in research funding under the
Predecessor Agreements. The Corporation and HMRI have agreed in principle to
consolidate the Predecessor Agreements into one collaborative program and are
negotiating a definitive Amended and Restated Collaborative Research and License
Agreement. The Corporation anticipates that the level of annual funding under
the new agreement will be less than the total annual funding under the
Predecessor Agreements.

15
<PAGE> 19

ADOPTION OF THE 1997 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN

Subject to stockholder approval as described in this Proxy Statement, the
Board of Directors has approved a proposal to adopt the 1997 Incentive and
Non-Qualified Stock Option Plan (the "1997 Plan").

DESCRIPTION OF THE 1997 PLAN

The purpose of the 1997 Plan is to promote the interests of the Corporation
by attracting and retaining outstanding individuals as directors, officers and
other key employees and consultants, by encouraging and enabling such persons to
acquire a proprietary and financial interest in the Corporation through the
acquisition and ownership of the Corporation's Common Stock.

Under the 1997 Plan, the Corporation may grant incentive stock options
("ISOs") and stock options that do not qualify as ISOs (non-qualified stock
options or "NSOs"). The Corporation has reserved 2,000,000 shares of its Common
Stock for issuance pursuant to the exercise of options granted under the 1997
Plan. Any shares subject to an option which is canceled or not exercised within
the exercise period may again be subject to an option grant under the 1997 Plan.
As of December 31, 1996, the market value of the securities reserved for
issuance under the 1997 Plan was approximately $12,750,000. No options have been
granted under the 1997 Plan as of the date of this Proxy Statement.

The 1997 Plan will be administered by a committee (the "Committee") as
appointed from time to time by the Board of Directors of the Corporation, which
may be the Compensation Committee of the Board of Directors. The Committee will
have sole authority as to decisions regarding the 1997 Plan, although the
Corporation may engage a third party to administer routine matters. The
Committee will determine to whom (within the class of eligible persons) and when
the options will be granted, the number of shares to be subject to each option
grant, the duration and price of each option, the time during which an option
may be exercised, whether options will be treated as ISOs and, for the most
part, other terms and conditions of the options. The Committee may establish any
rules and regulations it deems necessary to administer the 1997 Plan. All
determinations and actions by the Committee will be final and conclusive for all
purposes.

Participation in the 1997 Plan is limited to directors, officers, key
employees and consultants of the Corporation or a parent or subsidiary of the
Corporation. Directors who are not also officers or key employees may be granted
only NSOs. As of December 31, 1996, approximately 7 directors, 6 officers, 40
employees (based on the category of employees to whom the Committee has granted
options under the Corporation's other stock option plans), who were not also
officers, and 8 consultants were eligible to participate in the 1997 Plan.

The 1997 Plan continues the automatic, formula-based grants of NSOs to
directors who are not employees of the Corporation or the designees of third
parties who are entitled to representation on the Board of Directors
("Non-Employee Directors") established pursuant to the Corporation's 1993
Incentive and Non-Qualified Stock Option Plan (the "1993 Plan"). The following
formula-based grants to Non-Employee Directors will be made only to the extent
they are not otherwise made under the similar provisions of the 1993 Plan. Each
Non-Employee Director receives an NSO to purchase 50,000 shares of Common Stock
(the "Initial Options") upon the Non-Employee Director's initial election to the
Board at a meeting of stockholders. Each Initial Option vests one-half
immediately upon grant, and one-half upon the Non-Employee Director's reelection
to the Board for a second consecutive term.

In addition to the Initial Options, the 1997 Plan provides for the annual
grant of NSOs (the "Annual Options") to Non-Employee Directors at such times and
in such amounts as set forth in the table below, provided that no Annual Options
may be issued following the termination of the 1997 Plan, which is March 18,
2007. Each Annual Option vests one-third upon the first anniversary of its date
of grant (the "Grant Date"), with the remainder vesting ratably on a monthly
basis over the succeeding 24 months:

16
<PAGE> 20

SCHEDULE OF ANNUAL OPTION AWARDS

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
ANNUAL OPTION
AWARDS TIMING OF AWARDS
---------------- ------------------------------------------------------------------------
<C> <S>
20,000 On the date of the Non-Employee Director's reelection to a third
one-year term;
20,000 On the date of the Non-Employee Director's reelection to a fourth
one-year term;
15,000 On the later of the date of the annual meeting of stockholders in 1997
or the date of the Non-Employee Director's reelection to a fifth
one-year term;
15,000 On the later of the date of the annual meeting of stockholders in 1998
or the date of the Non-Employee Director's reelection to a sixth
one-year term;
10,000 On the later of the date of the annual meeting of stockholders in 1999
or the date of the Non-Employee Director's reelection to a seventh
one-year term;
10,000 On the later of the date of the annual meeting of stockholders in 2000
or the date of the Non-Employee Director's reelection to an eighth
one-year term; and
10,000 On the later of the date of the annual meeting of stockholders in 2001
or the date of the Non-Employee Director's reelection to a ninth
one-year term.
</TABLE>

The exercise price of both the Initial Options and Annual Options
(collectively, the "Formula Options") is equal to 100% of the fair market value
of the Common Stock on the Grant Date. The Formula Options expire on the tenth
anniversary of their respective Grant Dates, subject to the sooner expiration
upon the occurrence of certain events set forth in the 1997 Plan which are
generally applicable to all options granted under the 1997 Plan.

Benefits attributable to future grants of Annual Options are not
determinable since such benefits depend, in part, upon the price of the
Corporation's Common Stock on the date of grant.

The exercise price of ISOs granted under the 1997 Plan will not be less
than 100% of the fair market value of the Common Stock on the date of the grant
of such ISOs and not less than the par value of the Common Stock. The aggregate
fair market value of the Common Stock with respect to which ISOs are first
exercisable by a recipient in any calendar year may not exceed $100,000. In the
case of an ISO granted to an employee owning more than 10% of the total combined
voting power of all classes of stock of the Corporation (a "10% Stockholder"),
the exercise price will not be less than 110% of the fair market value of the
Common Stock on the date of the grant of such ISO. With respect to NSOs granted
under the 1997 Plan, the Committee will determine the exercise price at its
discretion but in no case will the exercise price be less than the greater of
50% of the fair market value of the Common Stock on the date of the grant of
such NSOs and the par value of such Common Stock.

At the time of exercise of an option, the recipient must either pay to the
Corporation the full purchase price of the shares in cash or, upon prior
approval and conditions established by the Committee, by delivery to the
Corporation of shares owned by the recipient, the fair market value of which
equals the purchase price of such shares on the date of exercise of the option.
In addition, unless otherwise provided by the Committee an "in the money"
non-qualified stock option may be exercised on a "cashless" basis in exchange
for the issuance to the optionee (or other person entitled to exercise the
option) of the largest whole number of shares having an aggregate value equal to
the value of such option on the date of exercise.

No ISO, and unless otherwise determined by the Committee, no NSO under the
1997 Plan will be transferable otherwise than by will or the laws of descent and
distribution. No stock acquired by a recipient upon exercise of an ISO granted
under the 1997 Plan may be disposed of within two years from the date such ISO
was granted, nor within one year after the transfer of such stock to the
recipient, without the written consent of the Corporation. No stock acquired by
a recipient upon exercise of an NSO granted under the 1997 Plan may be disposed
of by the recipient within six months from the date such NSO was granted unless
otherwise provided by the Committee.

Options granted under the 1997 Plan may not have exercise periods exceeding
ten years from the date of grant. With respect to an ISO granted to a 10%
Stockholder, such an option will be exercisable within five

17
<PAGE> 21

years from the date of grant. Any option granted under the 1997 Plan to a
recipient subject to Section 16 of the Exchange Act may be exercised only after
six months from the date of its grant.

The 1997 Plan will become effective upon stockholder approval and will
terminate on March 19, 2007 or on such earlier date as the Board of Directors of
the Corporation may determine. After termination of the 1997 Plan, no grants may
be effected; however, previously made grants will remain outstanding in
accordance with their terms and conditions and the terms and conditions of the
1997 Plan.

The 1997 Plan may be amended by the Board of Directors of the Corporation
or the Committee without the approval of the stockholders, provided that no
action will be taken without the approval of the stockholders to increase the
aggregate number of shares of Common Stock which may be issued or transferred
under the 1997 Plan, materially increase the benefits accruing to the recipients
under the 1997 Plan or materially modify the requirements as to eligibility for
participation in the 1997 Plan.

FEDERAL INCOME TAX CONSEQUENCES UNDER THE 1997 PLAN

The following is a brief description of the federal income tax consequences
of stock options which may be granted under the 1997 Plan under present tax
laws.

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

A recipient may under certain circumstances be permitted to pay all or a
portion of the option price of an ISO by delivering Common Stock of the
Corporation. If the Common Stock delivered by a recipient as payment of the
option price was acquired through a prior exercise of an ISO or an option
granted under an employee stock purchase plan, and if the holding period
requirement applicable to such Common Stock has not yet been met, the delivery
of such Common Stock to the Corporation could be treated as a taxable sale or
disposition of such stock. In general, where a recipient pays the option price
of an ISO by delivering Common Stock of the Corporation, the recipient will have
a zero tax basis in the shares received that are in excess of the number of
shares of Common Stock delivered in payment of the option price.

For alternative minimum tax purposes, regardless of whether the recipient
satisfies the holding period requirement, the excess of the fair market value of
the shares on the exercise date over the option price will be treated as a
positive adjustment to the recipient's alternative minimum taxable income for
the year the ISO is exercised. If the shares are disposed of in the year the ISO
was exercised, however, the positive adjustment taken into account for
alternative minimum tax purposes will not exceed the gain realized on such sale.
Exercise of an ISO may thus result in liability for alternative minimum tax.

An ISO will generally be treated as an NSO for federal income tax purposes
if it is exercised more than three months after the recipient terminates his or
her employment with the Corporation, provided that this three-month limitation
will not apply if the employment terminates by reason of the recipient's death.
Under the 1997 Plan, an ISO will terminate 90 days after the recipient
terminates employment, except in the case of a termination resulting from death
or retirement. In the case of a recipient who retires, an option will not be

18
<PAGE> 22

treated as an ISO for federal income tax purposes (and will instead be treated
as an NSO) if such option is exercised more than three months after the
termination of employment.

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

If a recipient pays the option price of an NSO by surrendering Common Stock
held by the recipient, then, to the extent the shares received upon exercise of
the option do not exceed the number of shares delivered, the recipient will be
treated as making a tax-free exchange of stock and the new shares received will
have the same tax basis and holding period requirement as the shares given up.
In such case, the recipient will recognize ordinary compensation income in an
amount equal to the fair market value of the shares received in excess of the
shares delivered in payment of the option price. The basis of such additional
shares will equal their fair market value on the date the option was exercised.
If a recipient exercises an NSO on a cashless basis as permitted under the 1997
Plan, the recipient will recognize compensation income equal to the fair market
value of the shares received and the recipient's initial tax basis in such
shares will equal their fair market value.

THE BOARD OF DIRECTORS DEEMS THE ABOVE PROPOSAL TO BE IN THE BEST INTERESTS
OF THE CORPORATION AND RECOMMENDS A VOTE "FOR" ADOPTION OF THE 1997 PLAN.

RATIFICATION OF APPOINTMENT OF AUDITORS

The firm of KPMG Peat Marwick LLP, independent certified public
accountants, has audited the books and records of the Corporation for several
years and the Board of Directors desires to continue the services of this firm
for the current fiscal year. Accordingly, the Board recommends that the
stockholders vote FOR the ratification of the appointment by the Board of
Directors of the firm of KPMG Peat Marwick LLP to audit the books and accounts
of the Corporation for the current fiscal year.

Representatives of KPMG Peat Marwick LLP are expected to be available at
the Meeting to respond to appropriate questions and will be given the
opportunity to make a statement if they desire to do so. If the stockholders do
not ratify the appointment of this firm, the appointment of another firm of
independent certified public accountants will be considered by the Board of
Directors.

THE BOARD OF DIRECTORS DEEMS THE RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE AUDITORS FOR THE CORPORATION TO BE IN THE CORPORATION'S
BEST INTERESTS AND RECOMMENDS A VOTE "FOR" SUCH RATIFICATION.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than ten percent
of a registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.

Based solely on the Corporation's review of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for such persons, the Corporation believes that, during the fiscal year
ended September 30, 1996, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with,
except for the following: (i) certain initial holdings of Dr. Bruskin were
reported late; and (ii) with respect to two transactions by Mr. Takata, two
Forms 4 were filed late.

19
<PAGE> 23

STOCKHOLDER PROPOSALS

Stockholders who intend to present proposals at the Corporation's Annual
Meeting of Stockholders to be held in 1998 must submit their proposals to the
Secretary of the Corporation on or before October 17, 1997. Such proposals must
also meet the other requirements of the rules of the SEC relating to
stockholders' proposals.
By Order of the Board of Directors,

/s/ ROBERT L. VAN NOSTRAND
Robert L. Van Nostrand
Secretary

February 14, 1997

20
<PAGE> 24
ONCOGENE SCIENCE, INC.
PROXY

ANNUAL MEETING OF STOCKHOLDERS, MARCH 19, 1997

THIS PROXY IS SOLICITED ON BEHALF OF THE CORPORATION'S BOARD OF DIRECTORS

The undersigned hereby appoints Gary E. Frashier and Robert L.
Van Nostrand, and each of them jointly and severally, Proxies, with full power
of substitution, to vote, as designated on the reverse side, all shares of
Common Stock of Oncogene Science, Inc. (the "Corporation") held of record by the
undersigned on January 24, 1997, at the annual meeting of stockholders to be
held on March 19, 1997, or any adjournment thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES TO SERVE AS DIRECTORS, "FOR" THE PROPOSAL TO ADOPT THE CORPORATION'S
1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN, AND "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE CORPORATION'S INDEPENDENT
PUBLIC ACCOUNTANTS. The shares represented by this Proxy will be voted as
specified on the reverse side. IF NO DIRECTION IS GIVEN IN THE SPACES PROVIDED
ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED "FOR" ITEMS 1,2 AND 3.

(Continued and to be dated and signed on the reverse side.)

ONCOGENE SCIENCE, INC.
P.O. BOX 11097
NEW YORK, N.Y. 10203-0097
<PAGE> 25

1. Election of Directors (Term to
expire at next Annual Meeting)

FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below [ ] for all nominees listed below [ ] [ ]

Nominees: Edwin A. Gee, Ph.D., Gary E. Frashier, Steve M. Peltzman, G. Morgan
Browne, John H. French, II, Daryl K. Granner, M.D., Walter M.
Lovenberg, Ph.D., Gary Takata, John P. White.

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.) THIS PROXY WILL BE VOTED FOR EACH NOMINEE FOR WHOM AUTHORITY TO VOTE IS
NOT WITHHELD.

*EXCEPTIONS
-------------------------------------------------------------------

2. PROPOSAL TO ADOPT THE CORPORATION'S 1997 INCENTIVE AND NON-QUALIFIED STOCK
OPTION PLAN.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
independent public accountants of the Corporation for the fiscal year ending
September 30, 1997.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof and
matters incident to the conduct of the meeting.

CHANGE OF ADDRESS OR COMMENTS MARK HERE [ ]

PLEASE SIGN EXACTLY AS THE NAME APPEARS HEREON. 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 AND AFFIX
CORPORATE SEAL. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY GENERAL
PARTNER.

DATED: , 1997
-------------------------------------------

(SEAL)
- --------------------------------------------------
Signature
(SEAL)
- --------------------------------------------------
Signature if held jointly

VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. [ ]

(PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE.)
<PAGE> 26

LIST OF APPENDICES

<TABLE>
<CAPTION>
PLAN NAME APPENDIX NO.
- -------------------------------------------------------------------------- ------------
<S> <C>
1997 Incentive and Non-Qualified Stock Option Plan........................ I
</TABLE>
<PAGE> 27

APPENDIX I
ONCOGENE SCIENCE, INC.
1997 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN

1. PURPOSE

The purpose of this 1997 Incentive and Non-Qualified Stock Option Plan (the
"Plan") is to encourage and enable selected management, other key employees,
directors (whether or not employees), and consultants of Oncogene Science, Inc.
(the "Company") or a parent or subsidiary of the Company to acquire a
proprietary interest in the Company through the ownership of common stock, par
value $.01 per share (the "Common Stock"), of the Company. Such ownership will
provide such employees, directors, and consultants with a more direct stake in
the future welfare of the Company, and encourage them to remain with the Company
or a parent or subsidiary of the Company. It is also expected that the Plan will
encourage qualified persons to seek and accept employment with, or become
associated with, the Company or a parent or subsidiary of the Company. Pursuant
to the Plan, the Company may grant (i) "incentive stock options," within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) stock options that do not qualify as incentive stock options
("non-qualified stock options"). No option granted under the Plan shall be
treated as an incentive stock option unless the stock option agreement which
evidences the grant refers to such option as an incentive stock option and such
option satisfies the requirements of Section 422 of the Code.

As used herein, the term "parent" or "subsidiary" shall mean any present or
future corporation which is or would be a "parent corporation" or "subsidiary
corporation" of the Company as the term is defined in Section 424 of the Code
(determined as if the Company were the employer corporation).

2. ADMINISTRATION OF THE PLAN

The Plan shall be administered by a committee (the "Committee") as
appointed from time to time by the Board of Directors of the Company, which may
be the Compensation Committee of the Board of Directors. Except as otherwise
specifically provided herein, no person, other than members of the Committee,
shall have any discretion as to decisions regarding the Plan. The Company may
engage a third party to administer routine matters under the Plan, such as
establishing and maintaining accounts for Plan participants and facilitating
transactions by participants pursuant to the Plan.

In administering the Plan, the Committee may adopt rules and regulations
for carrying out the Plan. The interpretations and decisions made by the
Committee with regard to any question arising under the Plan shall be final and
conclusive on all persons participating or eligible to participate in the Plan.
Subject to the provisions of the Plan, the Committee shall determine the terms
of all options granted pursuant to the Plan, including, but not limited to, the
persons to whom, and the time or times at which, grants shall be made, the
number of shares to be covered by each option, the duration of options, the
exercisability of options, whether options shall be treated as incentive stock
options, and the option price.

3. SHARES OF STOCK SUBJECT TO THE PLAN

Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number of
shares that may be issued or transferred pursuant to the exercise of options
granted under the Plan shall not exceed 2,000,000 shares of Common Stock. Such
shares may be authorized and unissued shares or previously issued shares
acquired or to be acquired by the Company and held in treasury. Any shares
subject to an option which for any reason expires or is terminated unexercised
as to such shares may again be subject to an option right under the Plan. The
aggregate Fair Market Value, as defined in paragraph 6(k) below (determined at
the time the option is granted), of the shares with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year (under the Plan and all plans of the Company and any parent or
subsidiary of the Company) shall not exceed $100,000.

I-1
<PAGE> 28

4. ELIGIBILITY
Incentive stock options may be granted only to management and other key
employees who are employed by the Company or a parent or subsidiary of the
Company. Incentive stock options may be granted to a director of the Company or
a parent or subsidiary of the Company, provided that the director is also an
officer or key employee. Non-qualified stock options may be granted to
directors, officers, employees and consultants of the Company.

5. GRANTING OF OPTIONS
No options pursuant to this Plan may be granted after the close of business
on March 19, 2007. The date of the grant of any option shall be the date on
which the Committee authorizes the grant of such option.

6. OPTIONS
Options shall be evidenced by stock option agreements in such form,
consistent with the Plan, as the Committee shall approve from time to time,
which agreements need not be identical and shall be subject to the following
terms and conditions:

(a) Option Price. The purchase price under each incentive stock
option shall be not less than 100% of the Fair Market Value of the Common
Stock at the time the option is granted and not less than the par value of
the Common Stock. In the case of an incentive stock option granted to an
employee owning, actually or constructively under Section 424(d) of the
Code, more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company (a "10%
Stockholder") the option price shall not be less than 110% of the Fair
Market Value of the Common Stock at the time of the grant. The purchase
price under each non-qualified stock option shall be specified by the
Committee, but shall in no case be less than the greater of 50% of the Fair
Market Value of the Common Stock at the time the option is granted and the
par value of such Common Stock.

(b) Medium and Time of Payment. Stock purchased pursuant to the
exercise of an option shall at the time of purchase be paid for in full in
cash, or, upon conditions established by the Committee, by delivery of
shares of Common Stock owned by the recipient. If payment is made by the
delivery of shares, the value of the shares delivered shall be the Fair
Market Value of such shares on the date of exercise of the option. In
addition, unless otherwise provided by the Committee an "in the money"
non-qualified stock option may be exercised on a "cashless" basis in
exchange for the issuance to the optionee (or other person entitled to
exercise the option) of the largest whole number of shares having an
aggregate value equal to the value of such option on the date of exercise.
For this purpose, the value of the shares delivered by the Company and the
value of the option being exercised shall be determined based on the Fair
Market Value of the Common Stock on the date of exercise of the option.
Upon receipt of payment and such documentation as the Company may deem
necessary to establish compliance with the Securities Act of 1933, as
amended (the "Securities Act"), the Company shall, without stock transfer
tax to the optionee or other person entitled to exercise the option,
deliver to the person exercising the option a certificate or certificates
for such shares. It shall be a condition to the performance of the
Company's obligation to issue or transfer Common Stock upon exercise of an
option or options that the optionee pay, or make provision satisfactory to
the Company for the payment of, any taxes (other than stock transfer taxes)
the Company is obligated to collect with respect to the issue or transfer
of Common Stock upon such exercise, including any federal, state, or local
withholding taxes.

(c) Waiting Period. The waiting period and time for exercising an
option shall be prescribed by the Committee in each particular case;
provided, however, that no option may be exercised after 10 years from the
date it is granted. In the case of an incentive stock option granted to a
10% Stockholder, such option, by its terms, shall be exercisable only
within five years from the date of grant.

(d) Rights as a Stockholder. A recipient of options shall have no
rights as a stockholder with respect to any shares issuable or transferable
upon exercise thereof until the date a stock certificate is issued to him
for such shares. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.

I-2
<PAGE> 29

(e) Non-Assignability of Options. No incentive stock option and,
except as may otherwise be specifically provided by the Committee, no
non-qualified stock options, shall be assignable or transferable by the
recipient except by will or by the laws of descent and distribution. During
the lifetime of a recipient, incentive stock options and, except as may
otherwise be specifically provided by the Committee, non-qualified stock
options, shall be exercisable only by such recipient. If the Committee
approves provisions in any particular case allowing for assignment or
transfer of a non-qualified stock option, then such option will nonetheless
be subject to a six-month holding period commencing on the date of grant
during which period the recipient will not be permitted to assign or
transfer such option, unless the Committee further specifically provides
for the assignability or transferability of such option during this period.
See paragraph 8 hereof for restrictions on sale of shares.

(f) Effect of Termination of Employment. If a recipient's employment
(or service as an officer, director or consultant) shall terminate for any
reason, other than death or Retirement (as defined below), the right of the
recipient to exercise any option otherwise exercisable on the date of such
termination shall expire unless such right is exercised within a period of
90 days after the date of such termination. The term "Retirement" shall
mean the voluntary termination of employment (or service as an officer,
director or consultant) by a recipient who has attained the age of 55 and
who has completed at least five years of service with the Company. If a
recipient's employment (or service as an officer, director or consultant)
shall terminate because of death or Retirement, the right of the recipient
to exercise any option otherwise exercisable on the date of such
termination shall be unaffected by such termination and shall continue
until the normal expiration of such option. Notwithstanding the foregoing,
the tax treatment available pursuant to Section 421 of the Code upon the
exercise of an incentive stock option will not be available in connection
with the exercise of any incentive stock option more than three months
after the date of termination of such option recipient's employment due to
Retirement. Option rights shall not be affected by any change of employment
as long as the recipient continues to be employed by either the Company or
a parent or subsidiary of the Company. In no event, however, shall an
option be exercisable after the expiration of its original term as
determined by the Committee pursuant to subparagraph 6(c) above. The
Committee may, if it determines that to do so would be in the Company's
best interests, provide in a specific case or cases for the exercise of
options which would otherwise terminate upon termination of employment with
the Company for any reason, upon such terms and conditions as the Committee
determines to be appropriate. Nothing in the Plan or in any option
agreement shall confer any right to continue in the employ of the Company
or any parent or subsidiary of the Company or interfere in any way with the
right of the Company or any parent or subsidiary of the Company to
terminate the employment of a recipient at any time.

(g) Leave of Absence. In the case of a recipient on an approved leave
of absence, the Committee may, if it determines that to do so would be in
the best interests of the Company, provide in a specific case for
continuation of options during such leave of absence, such continuation to
be on such terms and conditions as the Committee determines to be
appropriate, except that in no event shall an option be exercisable after
10 years from the date it is granted.

(h) Recapitalization. In the event that dividends payable in Common
Stock during any fiscal year of the Company exceed in the aggregate five
percent of the Common Stock issued and outstanding at the beginning of the
year, or in the event there is during any fiscal year of the Company one or
more splits, subdivisions, or combinations of shares of Common Stock
resulting in an increase or decrease by more than five percent of the
shares outstanding at the beginning of the year, the number of shares
available under the Plan shall be increased or decreased proportionately,
as the case may be, and the number of shares deliverable upon the exercise
thereafter of any options theretofore granted shall be increased or
decreased proportionately, as the case may be, without change in the
aggregate purchase price. Common Stock dividends, splits, subdivisions, or
combinations during any fiscal year that do not exceed in the aggregate
five percent of the Common Stock issued and outstanding at the beginning of
such year shall be ignored for purposes of the Plan. All adjustments shall
be made as of the day such action necessitating such adjustment becomes
effective.

I-3
<PAGE> 30

(i) Sale or Reorganization. In case the Company is merged or
consolidated with another corporation, or in case the property or stock of
the Company is acquired by another corporation, or in case of a separation,
reorganization, or liquidation of the Company, the Board of Directors of
the Company, or the board of directors of any corporation assuming the
obligations of the Company hereunder, shall either (i) make appropriate
provisions for the protection of any outstanding options by the
substitution on an equitable basis of appropriate stock of the Company, or
appropriate stock of the merged, consolidated, or otherwise reorganized
corporation, provided only that such substitution of options shall, with
respect to incentive stock options, comply with the requirements of Section
424(a) of the Code, or (ii) give written notice to optionees that their
options, which will become immediately exercisable notwithstanding any
waiting period otherwise prescribed by the Committee, must be exercised
within 30 days of the date of such notice or they will be terminated.

(j) General Restrictions. Each option granted under the Plan shall be
subject to the requirement that, if at any time the Board of Directors
shall determine, in its discretion, that the listing, registration, or
qualification of the shares issuable or transferable upon exercise thereof
upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the granting of such
option or the issue, transfer, or purchase of shares thereunder, such
option may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected
or obtained free of any conditions not acceptable to the Board of
Directors.

The Company shall not be obligated to sell or issue any shares of
Common Stock in any manner in contravention of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules
and regulations of the Securities and Exchange Commission, any state
securities law, the rules and regulations promulgated thereunder or the
rules and regulations of any securities exchange or over the counter market
on which the Common Stock is listed or in which it is included for
quotation. The Board of Directors may, in connection with the granting of
each option, require the individual to whom the option is to be granted to
enter into an agreement with the Company stating that as a condition
precedent to each exercise of the option, in whole or in part, he shall, if
then required by the Company, represent to the Company in writing that such
exercise is for investment only and not with a view to distribution, and
also setting forth such other terms and conditions as the Committee may
prescribe. Such agreements may also, in the discretion of the Committee,
contain provisions requiring the forfeiture of any options granted and/or
Common Stock held, in the event of the termination of employment or
association, as the case may be, of the optionee with the Company. Upon any
forfeiture of Common Stock pursuant to an agreement authorized by the
preceding sentence, the Company shall pay consideration for such Common
Stock to the optionee, pursuant to any such agreement, without interest
thereon.

(k) "Fair Market Value." Fair Market Value for all purposes under the
Plan shall mean the closing price of shares of Common Stock, as reported in
The Wall Street Journal, in the NASDAQ National Market Issues or similar
successor consolidated transactions reports (or a similar consolidated
transactions report for the exchange on which the shares of Common Stock
are then trading) for the relevant date, or if no sales of shares of Common
Stock were made on such date, the average of the high and low sale prices
of shares as reported in such composite transaction report for the
preceding day on which sales of shares were made. If the shares are not
listed on a national securities exchange or included for quotation in the
NASDAQ National Market System at the time Fair Market Value is to be
determined, then Fair Market Value shall be determined by the Committee in
good faith pursuant to such method as to the Committee deems appropriate
and equitable. Under no circumstances shall the Fair Market Value of a
share of Common Stock be less than its par value.

7. TERMINATION AND AMENDMENT OF THE PLAN

The Board of Directors or the Committee shall have the right to amend,
suspend, or terminate the Plan at any time; provided, however, that no such
action shall affect or in any way impair the rights of a recipient under any
option right theretofore granted under the Plan; and, provided, further, that
unless first duly

I-4
<PAGE> 31

approved by the stockholders of the Company entitled to vote thereon at a
meeting (which may be the annual meeting) duly called and held for such purpose,
except as provided in subparagraphs 6(h) and 6(i), no amendment or change shall
be made in the Plan increasing the total number of shares which may be issued or
transferred under the Plan, materially increasing the benefits to Plan
participants or modifying the requirements as to eligibility for participation
in the Plan.

8. RESTRICTION ON SALE OF SHARES

Without the written consent of the Company, no stock acquired by an
optionee upon exercise of an incentive stock option granted hereunder may be
disposed of by the optionee within two years from the date such incentive stock
option was granted, nor within one year after the transfer of such stock to the
optionee; provided, however, that a transfer to a trustee, receiver, or other
fiduciary in any insolvency proceeding, as described in Section 422(c)(3) of the
Code, shall not be deemed to be such a disposition. The optionee shall make
appropriate arrangements with the Company for any taxes which the Company is
obligated to collect in connection with any such disposition, including any
federal, state, or local withholding taxes.

No stock acquired by an optionee upon exercise of a non-qualified stock
option granted hereunder may be disposed of by the optionee (or other person
eligible to exercise the option) within six months from the date such
non-qualified stock option was granted, unless otherwise provided by the
Committee.

9. EFFECTIVE DATE OF THE PLAN

This Plan shall become effective upon approval by the stockholders of the
Company. The Plan shall terminate on March 19, 2007, or on such earlier date as
the Board of Directors or the Committee may determine. Any option outstanding at
the termination date shall remain outstanding until it has either expired or has
been exercised.

10. COMPLIANCE WITH RULE 16B-3

With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or is successors. To the extent any provision of the
Plan or action by the Committee (or any other person on behalf of the Committee
or the Company) fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

11. AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS

The purpose of this Section 11 is to continue the program of automatic
grants of options to non-employee directors of the Company established pursuant
to Section 11 of the Company's 1993 Incentive and Non-Qualified Stock Option
Plan (the "1993 Plan"). The following options, to the extent not heretofore
granted pursuant to the 1993 Plan, shall be automatically awarded:

(a) Each director, who is not also an employee of the Company or any
of its affiliates, or the designee of any stockholder of the Company
pursuant to a right to designate one or more directors (an "Eligible
Director") shall automatically be awarded a grant of 50,000 non-qualified
stock options upon his or her initial election to the Board of Directors.
Such options shall vest and be exercisable solely in accordance with the
following schedule:

(i) The options may be exercised with respect to a maximum of
one-half of the option shares during the twelve-month period beginning
after the date of grant.

(ii) The options may be exercised with respect to all of the option
shares upon the Eligible Director's reelection to the Board of Directors
for a second consecutive term.

(iii) The options will expire and will no longer be exercisable as
of the tenth anniversary of the date of grant, subject to sooner
expiration upon the occurrence of certain events as provided elsewhere
in this Plan.

I-5
<PAGE> 32

(b) In addition to the grant provided in subsection (a), each Eligible
Director shall automatically be awarded a grant of non-qualified stock
options upon the reelection of such Eligible Director to a third or
subsequent, successive term, in the amount and at the times hereinafter set
forth. Such automatic grants of non-qualified stock options commenced on
June 21, 1995, pursuant to the 1993 Plan, and have occurred and shall
continue to occur annually thereafter on the date of the annual meeting of
stockholders for such year until the termination of the Plan. The number of
options to which each Eligible Director shall be entitled pursuant to this
subsection (b) shall be as follows:

(i) 20,000 on the date of the Eligible Director's reelection to a
third one-year term;

(ii) 20,000 on the date of the Eligible Director's reelection to a
fourth one-year term;

(iii) 15,000 on the later of the date of the annual meeting of
stockholders in 1997, or the date of the Eligible Director's reelection
to a fifth one-year term;

(iv) 15,000 on the later of the date of the annual meeting of
stockholders in 1998, or the date of the Eligible Director's reelection
to a sixth one-year term;

(v) 10,000 on the later of the date of the annual meeting of
stockholders in 1999, or the date of the Eligible Director's reelection
to a seventh one-year term;

(vi) 10,000 on the later of the date of the annual meeting of
stockholders in 2000, or the date of the Eligible Director's reelection
to an eighth one-year term; and

(vii) 10,000 on the later of the date of the annual meeting of
stockholders in 2001, or the date of the Eligible Director's reelection
to a ninth one-year term.

Such options shall vest and be exercisable solely in accordance with
the following schedule:

(i) The options shall not be exercisable during the twelve-month
period beginning after the date of grant.

(ii) The options may be exercised with respect to one-third of the
option shares after the expiration of twelve months from the date of
grant.

(iii) The remaining two-thirds of the options shall vest and become
exercisable ratably on a monthly basis over the two-year period
commencing one year from the date of grant and ending three years from
the date of grant.

(iv) The options will expire and will no longer be exercisable as
of the tenth anniversary of the date of grant, subject to sooner
expiration upon the occurrence of certain events as provided elsewhere
in this Plan.

(c) The option price for all options awarded under this Section 11
shall be equal to 100% of the Fair Market Value on the date of grant.

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