<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIOMATRIX, 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
BIOMATRIX, INC.
65 RAILROAD AVENUE
RIDGEFIELD, N.J. 07657
(201) 945-9550
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1998
Notice is hereby given that the Annual Meeting of Shareholders of
Biomatrix, Inc. will be held at the Corporate Headquarters of the Company, 65
Railroad Avenue, Ridgefield, N.J. 07657, on Friday, May 29, 1998 at 10:00 A.M.,
local time, for the following purposes:
(1) To elect two (2) directors, each to hold three-year terms.
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Wednesday, April
1, 1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY,
AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION
OF YOUR SHARES AT THE MEETING. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
/s/ ENDRE A. BALAZS
Endre A. Balazs, M.D.
Chief Executive Officer and
Chief Scientific Officer
Ridgefield, New Jersey
April 20, 1998
The Company's 1997 Annual Report and Annual Report on Form 10-K
accompany the Proxy Statement.
<PAGE> 3
BIOMATRIX, INC.
65 RAILROAD AVENUE
RIDGEFIELD, N.J. 07657
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Biomatrix, Inc. (the
"Company") for use at the Annual Meeting of the Shareholders of the Company (the
"Meeting") to be held at the Corporate Headquarters of the Company, 65 Railroad
Avenue, Ridgefield, N.J. 07657, at 10:00 A.M., local time, on Friday, May 29,
1998 and at any adjournment thereof, for the purposes set forth in the foregoing
notice (the "Notice").
The close of business on Wednesday, April 1, 1998 has been established as
the record date for determining the shareholders entitled to the Notice of and
to vote at the Meeting and at any adjournment thereof. As of the record date,
there were issued and outstanding and entitled to vote 11,037,338 shares of
common stock of the Company, par value $.0001 per share (the "Common Stock").
Holders of shares of the Common Stock are entitled to one vote for each share
owned at the record date on all matters to come before the Meeting and any
adjournment thereof. The presence in person or by proxy of holders of a majority
of the shares of the Common Stock entitled to vote at the Meeting constitutes a
quorum for the transaction of business. The mailing of this Proxy Statement to
the shareholders of the Company was commenced on or about April 20, 1998.
Proxies in the form enclosed are solicited by the Board of the Company.
All proxies will be voted in accordance with the instructions contained therein.
If no choice is specified, the proxies will be voted in favor of such proposals
and at the discretion of the named proxies with respect to any other proposals
which may properly come before the Meeting. Any proxy may be revoked at any time
before it is voted by written notice, mailed or delivered to the Secretary of
the Company, or by revocation of a written proxy by request in person at the
Meeting; if not so revoked, the shares represented by such proxy will be voted.
If, in a proxy submitted on behalf of a Shareholder by a person acting
solely in a representative capacity, the proxy is marked clearly to indicate
that the shares represented thereby are not being voted with respect to one or
more proposals, then such proxies will be counted as present for establishing a
quorum at the meeting but such "non-votes" will have no effect on the voting
with respect to such proposal
The Board does not know of any matters which will be brought before the
Meeting other than those matters specifically set forth in the Notice. However,
if any other matter properly comes before the Meeting, it is intended that the
persons named in the enclosed form of proxy, or their substitutes acting
thereunder, will vote on such matter in accordance with their best judgment.
<PAGE> 4
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of April 1, 1998, the ownership of the
Company's Common Stock held by: (i) each person known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock; (ii)
each director, each nominee for election as a director and each named executive
officer of the Company; and (iii) all of the Company's executive officers and
directors as a group. As of such date, the Company had 11,037,338 shares of
Common Stock outstanding. The number of shares and the percentage beneficially
owned by the persons named in the table and by all executive officers and
directors as a group is presented in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934 and includes, in addition to shares issued and
outstanding, unissued shares which are subject to issuance upon exercise of
options within 60 days of April 1, 1998.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------
NUMBER OF
SHARES(1) PERCENT
--------- -------
<S> <C> <C>
Endre A. Balazs, M.D............................................. 2,196,519 (2) 19.9
Janet L. Denlinger, Ph.D......................................... 1,157,835 (3) 10.5
H. Stuart Campbell............................................... 67,914 (4) *
Rory B. Riggs.................................................... 661,000 (5) 6.0
Kurt Mark........................................................ 12,000 (6) *
Justin P. Morreale............................................... 36,000 (7) *
Julius A. Vida, Ph.D............................................. 8,000 (8) *
Donald Woodhouse................................................. 24,750 (9) *
Wesley Domareki.................................................. 5,500 (10) *
All executive officers and directors as a group (12 persons)..... 4,236,018 (11) 38.4
</TABLE>
- --------------
* Less than 1%
(1) Unless otherwise indicated in these footnotes, each Shareholder has sole
voting and investment power with respect to the shares beneficially owned.
(2) Excludes 1,150,835 shares of Common Stock and 7,000 shares of Common Stock
subject to exercisable options held by Dr. Denlinger, as to which shares
Dr. Balazs disclaims beneficial ownership. The address of such person is
65 Railroad Avenue, Ridgefield, N.J. 07657.
(3) Excludes 2,196,519 shares held by Dr. Balazs, as to which shares Dr.
Denlinger disclaims beneficial ownership. Includes 7,000 shares of Common
Stock subject to issuance upon exercise of options within 60 days of April
1, 1998. The address of such person is 65 Railroad Avenue, Ridgefield,
N.J. 07657.
(4) Includes 23,000 shares of Common Stock subject to issuance upon exercise
of options within 60 days of April 1, 1998. Excludes 7,336 shares of
Common Stock owned by Mr. Campbell's wife, as to which shares Mr. Campbell
disclaims beneficial ownership.
(5) The address of such person is 65 Railroad Avenue, Ridgefield, NJ 07657.
(6) Includes 8,000 shares of Common Stock subject to issuance upon exercise of
options within 60 days of April 1, 1998.
(7) Excludes 1,000 shares of Common Stock owned by Mr. Morreale's wife, as to
which shares Mr. Morreale disclaims beneficial ownership.
(8) Represents shares of Common Stock subject to issuance upon exercise of
options within 60 days of April 1, 1998. Excludes 891 shares of Common
Stock owned by Dr. Vida's wife and children as to which shares Dr. Vida
disclaims beneficial ownership.
(9) Includes 5,750 shares of Common Stock subject to issuance upon exercise of
options within 60 days of April 1, 1998. Excludes 300 shares of Common
Stock owned by Mr. Woodhouse's daughter as to which shares Mr. Woodhouse
disclaims beneficial ownership.
(10) Represents shares of Common Stock subject to issuance upon exercise of
options within 60 days of April 1, 1998.
(11) Includes 93,750 shares of Common Stock subject to issuance upon exercise
of options within 60 days of April 1, 1998.
2
<PAGE> 5
ELECTION OF DIRECTORS
Two directors will be elected to a three-year term at the Meeting.
Pursuant to the Company's Charter, the Board is divided into three classes of
directors, as nearly equal in number as possible, with each director serving a
three-year term. Each year only one class of directors is elected by the
Shareholders. The members of Class 1 are Endre A. Balazs, M.D. and Kurt Mark; of
Class 2 are Janet L. Denlinger, Ph.D. and Julius A. Vida, Ph.D.; and of Class 3
are H. Stuart Campbell, Rory B. Riggs and Justin P. Morreale, Esq., who will
serve until the annual Shareholders' meetings of the Company to be held in 1998,
1999 and 2000, respectively.
Endre A. Balazs, M.D. and Kurt Mark are the nominees for election to the
Board at the Meeting. Dr. Balazs and Mr. Mark, if elected, will hold office
until the annual meeting in 2001 and until their successors are duly elected and
qualified. The affirmative vote of a plurality of the shares of the Common Stock
present or represented at the Meeting and entitled to vote is required for the
election of the Class 1 Directors. Unless otherwise instructed, the persons
named in the accompanying proxy will vote "FOR" the election of Endre A. Balazs,
M.D. and Kurt Mark as Class 1 Directors.
The following table sets forth the name of each director and nominee for
director and the positions and offices held by them, their age and the year in
which they became a director of the Company.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------- --- --------------
<S> <C> <C>
Endre A. Balazs, M.D. (1).................................................... 78 1981
Chief Executive Officer and Chief Scientific Officer of the Company
H. Stuart Campbell........................................................... 68 1983
Vice President of Highland Packaging Labs, Inc.
Janet L. Denlinger, Ph.D. ................................................... 52 1981
Executive Vice President of the Company
Kurt Mark (1)................................................................ 68 1987
Partner of Law Firm Vinge
Justin P. Morreale, Esq. .................................................... 56 1997
Partner, Bingham Dana LLP
Rory B. Riggs................................................................ 44 1990
President of the Company
Julius A. Vida, Ph.D. ....................................................... 68 1993
President of Vida International Pharmaceutical Consultants
</TABLE>
----------------
(1) A nominee for election to the Board of Directors.
BACKGROUND OF DIRECTORS AND NOMINEES FOR DIRECTOR
Endre A. Balazs, M.D., a co-founder of Biomatrix, Inc., became Chief
Executive Officer and Chief Scientific Officer of the Company in February 1987,
having served as President from inception of the Company until that time. He
also served as a Director of the Company since its inception. He is the Malcolm
P. Aldrich Research Professor Emeritus at the College of Physicians and
Surgeons, Columbia University. Prior to joining Columbia in 1975, he taught at
Harvard Medical School for 25 years, during which time he was also co-founder,
research director and President of the Retina Foundation and the Boston
Biomedical Research Institute. From 1968 to 1978, Dr. Balazs was President and
owner of Biotrics, Inc., which developed and manufactured the first hyaluronan
therapeutic products used in medicine. He is the author of more than 300
scientific articles and patents. Dr. Balazs received an M.D. from the University
of Budapest, Hungary. He is married to Dr. Denlinger.
H. Stuart Campbell has been Chairman of the Board of the Company since
1983. For 22 years prior to his association with the Company he held various
marketing and executive positions at Johnson & Johnson, having retired in 1982
as Company Group Chairman of the Ethicon business of that corporation.
Currently, Mr. Campbell is the owner of Highland Packaging Labs, Inc. and also a
director of Atrix Laboratories, Inc. and Mesa
3
<PAGE> 6
Laboratories, Inc. He is a graduate of Cornell University and the Advanced
Management Program of the Harvard University Graduate School of Business
Administration.
Janet L. Denlinger, Ph.D., a co-founder of the Company, has been an
Executive Vice President of the Company since 1989 and a Vice President and
Director of the Company since its inception. She was a research associate of Dr.
Balazs for 20 years at the Boston Biomedical Research Institute and then at the
Department of Ophthalmology, College of Physicians and Surgeons, Columbia
University. She is the author of numerous publications in physiology,
biochemistry, biological activity and metabolism of hyaluronan. Dr. Denlinger
received a Ph.D. in biochemistry from the University of Lille, France. She is
married to Dr. Balazs.
Kurt Mark has been a Director of the Company since June 1987 and has
served as an advisor to the Company since 1985. He served on the Board of
Directors of Pharmacia AB from 1974 to 1984, and was Chairman from 1978 to 1984.
Mr. Mark is a senior partner of the law firm Vinge, with principal offices in
Goteborg, Sweden and Paris, France. Mr. Mark is Chairman of the Boards of Elof
Hansson AB and Elof Hansson, Inc. (New York), the Lundberg Research Foundation
and the Elof Hansson Foundation. He received a law degree from the University of
Uppsala, Sweden.
Justin P. Morreale, Esq., has been a Director of the Company since May
1997. Mr. Morreale has been a partner of Bingham, Dana LLP, a law firm based in
Boston, Massachusetts, since 1975. Mr. Morreale has acted as counsel to the
Company since its formation and has served as Secretary of the Company since
that time. Mr. Morreale is a graduate of Syracuse University and Harvard Law
School.
Rory B. Riggs was elected President of the Company on April 1, 1996 and
served as the acting Chief Financial Officer from September 1996 to January
1998. He has been a Director of the Company since October 1990. From 1991 to
1997, he was affiliated with ITIM Corp., formerly an investment advisory and
venture capital firm specializing in pharmaceutical and biotechnology
investments. From 1991 to 1994, he was acting President and Chief Executive
Officer of RF&P Corporation, a company wholly owned by the Virginia Retirement
System. Until 1990, Mr. Riggs was a Managing Director in the Mergers and
Acquisitions Department at PaineWebber Incorporated, where he was employed for
more than nine years. He is a graduate of Middlebury College and Columbia
University's Graduate School of Business. Mr. Riggs is a member of the Board of
Directors of Spartan, Inc. and FibroGen, Inc..
Julius A. Vida, Ph.D., has been a Director since April 1993. He is
President of Vida International Pharmaceutical Consultants and is a consultant
to several pharmaceutical and biotechnology companies. He was formerly the Vice
President, Business Development, Licensing and Planning for Bristol-Myers Squibb
Co. His background includes establishment of international businesses in new
pharmaceutical therapeutic areas, modernizing portfolios by in-licensing
innovative new products and developing contacts with the private sector as well
as academia and international government agencies. Dr. Vida received his Ph.D.
from Carnegie Mellon University, his M.B.A. from Columbia University in New York
and was a post-doctoral research fellow at Harvard University. He has held R & D
positions at Merck and Kendall/Colgate Company, and is the holder of over 30
U.S. patents, author of 35 scientific publications and 20 books or chapters. Dr.
Vida is a member of the Board of Directors of Medarex, Inc., Codon, Inc., DIAD,
Inc., FibroGen, Inc. and SuperGen, Inc.
COMPENSATION OF DIRECTORS
Each Director who is not an employee of the Company is entitled to receive
a Director's fee of $300 per meeting. All Directors are reimbursed for expenses
incurred in attending meetings of the Board.
In accordance with the Company's Non-Employee Director Stock Option Plan
(the "Director Plan"), non-employee directors are entitled to receive stock
options to purchase 6,000 shares of Common Stock, at fair market value, upon
election or re-election to the Board. Non-employee directors are able to forgo
such option grants in favor of purchasing an equal number of shares of
restricted stock under the Company's Restricted Stock Plan, at a price equal to
the fair market value.
4
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1997, the Board held four
meetings. Each Director attended at least 75% of the aggregate of the total
number of such meetings of the Board and the total number of meetings held by
all committees on which the individual Director served while a member of the
Board.
During 1997, the members of the Audit Committee were Messrs. Campbell and
Morreale and Dr. Vida. Responsibilities of this committee include engagement of
independent auditors, review of audit fees, supervision of matters relating to
audit functions, review and setting of internal policies and procedures
regarding audits, accounting and other financial controls, and reviewing related
party transactions. During 1997, the Audit Committee met one time.
During 1997, the members of the Compensation Committee were Messrs.
Campbell, Mark and Morreale and Dr. Vida. Responsibilities of this committee
include approval of remuneration arrangements for the officers of the Company,
review and approval of compensation plans and other benefits relating to the
officers and Directors, and general review of the Company's employee
compensation policies. During 1997, the Compensation Committee met one time.
The Board does not have a standing nominating committee.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
compensation information for each of the Company's last three fiscal years with
respect to (i) the Company's Chief Executive Officer and (ii) each of the
Company's four other most highly compensated executive officers based on salary
and bonus earned during fiscal 1997. The Company maintains a 401(k) retirement
savings plan for all of its employees, including its executive officers.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus ($) (1) Options (#) Compensation ($)(2)
- --------------------------- ---- --------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Endre A. Balazs, M.D., 1997 194,775 - - 250
CEO and CSO 1996 183,750 - - 250
1995 175,000 - - 250
Rory B. Riggs, 1997 148,400 29,680 10,000 (4) -
President 1996 100,692 (3) 14,000 - -
Janet L. Denlinger, Ph.D., 1997 156,170 31,234 10,000 (4) 250
Executive Vice President 1996 147,330 14,733 5,000 250
1995 140,315 14,032 - 250
Donald Woodhouse, 1997 140,418 14,042 15,000 250
Vice President, Manufacturing 1996 132,470 13,247 5,000 250
1995 126,162 12,616 - 250
Wesley Domareki, 1997 137,813 13,781 4,000 250
President - ORLO Division 1996 131,250 10,500 5,000 250
1995 125,000 12,500 - 250
</TABLE>
- -----------------
(1) Represents bonus earned during the fiscal year. In some instances all or a
portion of the bonus was paid during the next fiscal year.
(2) Amounts presented represent the Company's matching contributions under the
Company's 401(k) Plan.
(3) Mr. Riggs became President of the Company on April 2, 1996.
(4) Such option grants were cancelled on March 31, 1998.
5
<PAGE> 8
Option Grants and Exercises in Fiscal Year 1997. The following tables
summarize option grants and exercises during fiscal 1997 to or by the executive
officers named in the Summary Compensation Table. In accordance with Securities
and Exchange Commission rules, also shown are the hypothetical gains or "option
spreads", on a pre-tax basis, that would exist for the respective options. These
gains are based on assumed rates of annual compound stock appreciation of 5% and
10% from the date the options were granted over the full option term.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------------- ANNUAL RATES OF
SECURITIES PERCENT OF STOCK PRICE
UNDERLYING TOTAL OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES PRICE EXPIRATION --------------------------
NAME (#) (1) IN FISCAL YEAR (%) ($/SH) DATE 5% ($) 10% ($)
---- --------------- ---------------------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Endre A. Balazs - - - - - -
Rory B. Riggs 10,000 (2) 2.4 22.00 8/08/07 138,357 350,623
Janet L. Denlinger 10,000 (2) 2.4 24.20 8/08/07 116,357 328,623
Donald Woodhouse 5,000 (2) 1.3 11.25 4/10/07 35,375 89,648
10,000 (2) 2.4 22.00 8/08/07 138,357 350,623
Wesley Domareki 4,000 (2) 1.0 22.00 8/08/07 55,343 140,249
</TABLE>
(1) All grants are under the Company's 1994 Stock Option Plan, as amended.
Such Options are not transferable, other than by will or by the laws of
descent and distribution.
(2) Options will become exercisable at a rate of 20% per year for the first
three years and 40% in the fourth year.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END(#) FISCAL YEAR-END ($)(2)
NAME EXERCISE (#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Endre A. Balazs - - - / - - / -
Rory B. Riggs - - - / 10,000 - / 80,000
Janet L. Denlinger - - 5,750 / 19,250 127,406 / 238,219
Donald Woodhouse 9,000 305,460 13,500 / 21,500 325,250 / 291,000
Wesley Domareki - - 4,250 / 13,250 91,688 / 218,688
</TABLE>
- -------------
(1) Value is calculated based on the difference between the option price and
the market price of the Common Stock on the date of exercise multiplied by
the number of shares to which the exercise relates.
(2) Value is calculated based on the difference between the option exercise
price and the market price of the Common Stock on December 31, 1997
($30.00) multiplied by the number of shares to which the option relates.
6
<PAGE> 9
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement, as of December 30,
1988, with Dr. Balazs which, as amended, provides for compensation at an annual
rate to be determined by the Compensation Committee. The Compensation Committee
set Dr. Balazs' salary for 1997 at $194,775. Dr. Balazs declined salary
increases in 1994 and 1995 and accepted 5% and 6% salary increases in 1996 and
1997, respectively. The agreement includes a covenant not to compete with the
Company during his employment and for a period up to eighteen months thereafter.
This agreement is terminable at any time by either party.
The Company entered into an employment agreement with Mr. Riggs as of
April 2, 1996, pursuant to which Mr. Riggs is to serve as President of the
Company. This agreement is terminable by either party upon thirty days notice.
Under the employment agreement, Mr. Riggs is to receive an annual base salary of
at least $140,000 and is eligible to receive an annual performance bonus and
salary increase upon the recommendation of the Company's Chief Executive Officer
and at the discretion of the Compensation Committee. Additionally, in connection
with Mr. Riggs' becoming President of the Company, Mr. Riggs purchased 200,000
shares of the Company's Common Stock on April 2, 1996. See "Certain
Transactions."
CERTAIN TRANSACTIONS
In connection with Mr. Riggs becoming President of the Company, he
acquired 200,000 shares of the Company's Common Stock on April 2, 1996 at a
price of $12.25 per share, such price representing the fair market value. Mr.
Riggs paid for such shares by issuing the Company a four year promissory note in
the amount of $2,450,000 which is payable over a four year period with an annual
interest rate of 6%. At December 31, 1997 Mr. Riggs' indebtedness under the note
was $2,707,250. The Company has an option to repurchase these shares at the
original purchase price, in decreasing amounts (on a monthly basis). At the
first, second and third anniversary, the total shares subject to repurchase are
80%, 60% and 40% of the total. Additionally, in 1996 the Company accelerated the
vesting of 23,333 shares of non-qualified stock options previously granted to
Mr. Riggs.
On May 29, 1997, pursuant to the Company's Restricted Stock Purchase
Plan, the Company sold 6,000 shares of the Company's Common Stock to each of Dr.
Janet L. Denlinger, Mr. Rory B. Riggs and Justin P. Morreale, Esq. at a purchase
price of $15.875 per share, such price representing the fair market value. Dr.
Denlinger, Mr. Riggs and Mr. Morreale each purchased the shares described above
with a full recourse, ten-year, secured promissory note which incurs simple
interest at an annual rate of 7.18%. Such shares are pledged as collateral for
the notes. The shares sold to Dr. Denlinger and Mr. Riggs are subject to
repurchase by the Company according to agreements between the Company and each
of Dr. Denlinger and Mr. Riggs, as applicable.
Also on May 29, 1997, the Board of Directors approved Dr. Denlinger and
Mr. Riggs each foregoing a previous option grant of 5,000 shares at a price of
$11.25 per share in exchange for the purchase of 5,000 shares under the
Company's Restricted Stock Purchase Plan. Dr. Denlinger and Mr. Riggs each
purchased the shares with an interesting bearing, full recourse, ten-year,
secured promissory note equal to the underlying option price per share. Both
officers recognized a gain on this transaction based on the fair market value of
$15.875 per share as of May 28, 1997. The Company recognized compensation
expense of $46,250 in its consolidated financial statements. Such shares are
pledged as collateral for the notes which bear simple interest at an annual rate
of 7.18%. Such shares are subject to repurchase by the Company according to
agreements between the Company and each of Dr. Denlinger and Mr. Riggs, as
applicable.
On June 30, 1997, the Board of Directors approved the sale of 35,000
shares of the Company's Common Stock under the Company's Restricted Stock
Purchase Plan to each of Drs. Balazs and Denlinger and Mr. Riggs. Such shares
were sold at a purchase price of $18.00 per share, such price representing the
fair value. Drs. Balazs and Denlinger and Mr. Riggs purchased the shares with
cash.
On January 5, 1998 pursuant to the Company's Restricted Stock Purchase
Plan, the Company sold 30,000 shares of Company's Common Stock to Maxine
Seifert, Vice President, Finance and Chief Financial Officer, at a purchase
price of $29.625 per share, such price representing the fair market value. Ms.
Seifert purchased the shares described above with a full recourse, ten-year,
secured promissory note which incurs simple interest at an annual
7
<PAGE> 10
rate of 6.13%. Such shares are pledged as collateral for the note. The shares
sold to Ms. Seifert are subject to repurchase by the Company according to an
agreement between the Company and Ms. Seifert.
On March 31, 1998, pursuant to the Company's Restricted Stock Purchase
Plan, the Company sold 10,000 shares of the Company's Common Stock to each of
Dr. Janet L. Denlinger and Mr. Rory B. Riggs at a purchase price of $28.00 per
share, such price representing the fair market value. Dr. Denlinger and Mr.
Riggs each purchased the shares described above with a full recourse, ten-year,
secured promissory note which incurs simple interest at an annual rate of 5.91%.
Such shares are pledged as collateral for the notes. The shares sold to Dr.
Denlinger and Mr. Riggs are subject to repurchase by the Company according to
agreements between the Company and each of Dr. Denlinger and Mr. Riggs, as
applicable.
Also on March 31, 1998, the Company cancelled option grants previously
issued to Dr. Janet L. Denlinger and Mr. Rory B. Riggs. The option grants were
originally issued on August 8, 1997 and allowed Dr. Denlinger and Mr. Riggs the
right to purchase 10,000 shares of the Company's Common Stock each at $24.20 and
$22.00, respectively.
Mr. Morreale is a partner of the law firm Bingham Dana LLP, which is
general counsel to the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board (the "Committee") is pleased to
present its report on 1997 executive compensation. This Committee report
documents the components of the Company's executive officer compensation
programs administered by the Committee and describes the basis on which
compensation determinations were made by the Committee with respect to the
officers of the Company. The Committee is responsible for the determination of
base salary and bonuses for the officers of the Company, including the Chief
Executive Officer.
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Company to ensure that executive
compensation be directly linked to continuous improvements in corporate
performance. The following objectives have been adopted by the Committee as
guidelines for compensation decisions:
- Provide a competitive total compensation package that enables
the Company to attract and retain key executives.
- Provide variable compensation opportunities that are linked
with executive officer performance toward objectives of the
Company and that align executive officer remuneration with the
interests of shareholders.
Compensation Program Components
The Committee has reviewed the Company's compensation program to ensure
that pay levels and incentive opportunities are competitive and reflect the
performance of the officer and the Company. The particular elements of the
compensation program are further explained below. The Committee does not believe
that the Company's most direct competitors for executive talent include all of
the companies which comprise the peer group in the shareholder return graph.
Therefore, the peer group used for compensation comparisons by the Committee
consists of a smaller group of companies in the biomedical field in which the
Company competes.
Base Salary. Base salary levels for the officers are largely determined
through comparisons with biomedical companies of similar size and complexity to
the Company. Actual salaries are based on individual performance contributions
within a salary range for each position that is established through job
evaluation and market comparison. The Committee believes that overall base
salary levels for the officers are competitive with biomedical companies of
similar size and complexity to the Company. An average increase in base salary
of 5.0% to 6.0% was granted by the Committee for salaries in fiscal 1997 for the
officers based upon comparisons of annual salary adjustments with other
biomedical companies.
8
<PAGE> 11
Bonuses. The Company's officers are eligible to receive bonuses at the
discretion of the Committee based primarily on the attainment of certain
enumerated goals and objectives and the officers' contributions to the Company.
The objective of this plan is to deliver competitive levels of compensation for
the attainment of strategic objectives that the Committee believes will be
primary determinants of share price over time. The Committee believes that
bonuses for the officers for 1997 were consistent with those of biomedical
companies of similar size and complexity to the Company.
Stock Option Program. The Committee believes that stock options have
been and remain an excellent vehicle for the Company to compensate its
employees. Because the option exercise price for the employee is generally the
fair market value of the stock on the date of grant, employees recognize a gain
only if the value of the Company's stock increases. Thus, employees with stock
options are rewarded for their efforts to improve long-term stock market
performance of the Company when that improved performance results in improved
stock prices. In this way, the financial interests of management are directly
aligned with those of the Company's shareholders. Also, share ownership gives
employees a greater personal stake in the Company. In 1997, stock options were
granted to the officers of the Company except for the Chief Executive Officer.
Discussion of 1997 Compensation for the Chief Executive Officer. In
considering the compensation for the Chief Executive Officer for fiscal year
1997, the Committee reviewed Dr. Balazs' existing compensation arrangements and
both Company and individual performance. The employment agreement between the
Company and Dr. Balazs was structured to provide him with a competitive base
salary. The Committee determined that Dr. Balazs' base salary should be set at
the desired competitive level relative to base salaries of other chief
executives in the biomedical industry. Dr. Balazs' salary for 1997 was $194,775.
Dr. Balazs declined salary increases in 1994 and 1995 and cash bonuses for the
past seven years. As indicated in the discussion above, the Company's executive
officer compensation programs are based on individual and corporate performance.
Summary. After its review of all existing programs, the Committee
continues to believe that the total compensation program for officers of the
Company is competitive with the compensation programs provided by other
corporations with which the Company competes for executive talent. The Committee
believes that any bonuses paid will be appropriately related to corporate and
individual performance, yielding awards that are directly linked to the
attainment of objectives of the officers and of the Company.
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1 million for compensation paid to certain executives of public companies. The
Committee has considered these new requirements and believes that the Company's
1994 Stock Option Plan meets the requirement that it be "performance based" and,
therefore, exempt from the limitations on deductibility. Historically, the
combined salaries and bonuses of the Company's officers have been well under the
$1 million limit. The Committee's present intention is to comply with Section
162(m) unless the Committee feels that required changes would not be in the best
interest of the Company or its shareholders.
Compensation Committee of the Board of Directors
H. Stuart Campbell
Julius A. Vida, Ph.D.
Kurt Mark
Justin P. Morreale, Esq.
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<PAGE> 12
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the Nasdaq Stock Market Index (US Companies) and to the Index of Nasdaq
Pharmaceutical Stocks since December 31, 1992. The graph assumes that the value
of the investment in the Company's Common Stock and each index was $100 at
December 31, 1992 and that all dividends were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
Biomatrix, Inc. Nasdaq Nasdaq Pharmaceutical
<S> <C> <C> <C>
1992 100.0 100.0 100.0
1993 84.6 114.8 89.2
1994 35.9 112.2 67.1
1995 171.8 158.7 122.7
1996 164.1 195.2 123.1
1997 307.7 239.5 127.2
</TABLE>
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities to file reports
of ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the Company. Based on the Company's review of copies of such forms, the
following persons made late filings with respect to transactions during the year
ended December 31, 1997. Mr. Riggs filed two late reports reporting one
transaction on each form, Mr. Woodhouse filed one late report reporting one
transaction, Mr. Domareki filed one late report reporting one transaction, Ms.
Beatrice Morales, an officer of the Company, filed one late report reporting one
transaction, Mr. Richard Romasz, an officer of the Company, filed one late
report reporting one transaction and Dr. Janet L. Denlinger filed one late
report reporting one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers and Lybrand L.L.P., independent certified public accountants, have
been auditors of the Company since 1986 and have been selected as the Company's
auditors for 1998.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Meeting, will be afforded an opportunity to make a statement, if such
representative desires to do so, and will be available to answer any appropriate
questions.
10
<PAGE> 13
SHAREHOLDER PROPOSALS
The Board will make provision for presentation of proposals by
shareholders at the 1999 annual meeting of shareholders (or special meeting in
lieu thereof) provided such proposals are submitted by eligible shareholders who
have complied with the relevant regulations of the Securities and Exchange
Commission. Such proposals must be received by the Company no later than January
29, 1999 to be considered for inclusion in the Company's proxy materials
relating to that meeting.
OTHER MATTERS
The Board of the Company knows of no matter other than the foregoing to be
brought before the meeting. However, the enclosed proxy gives discretionary
authority in the event any additional matters should be properly presented.
The accompanying proxy is solicited by and on behalf of the Board of the
Company, whose notice of meeting is attached to this Proxy Statement. The entire
cost of such solicitation will be borne by the Company.
The Company has provided to all Shareholders from whom a proxy is
solicited pursuant to this Proxy Statement, a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997. Additional
requests for such report should be directed to Biomatrix, Inc., 65 Railroad
Avenue, Ridgefield, New Jersey 07657, Attention: Anne Marie Fields, Director,
Investor Relations.
In addition to the use of the mails, proxies may be solicited by regular
employees of the Company in person, by telephone, by courier or via facsimile.
Additionally, the Company will request that brokers, nominees, custodians and
other fiduciaries forward soliciting materials to the beneficial owners of
shares held of record by such brokers, nominees, custodians and other
fiduciaries. The Company will reimburse such persons for their reasonable
expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupation and security holdings of the Directors and officers of the Company is
based upon information received from the individual Directors and officers.
GENERAL
THE ANNUAL REPORT AND ANNUAL REPORT ON FORM 10-K OF THE COMPANY FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997 ARE ENCLOSED HEREWITH. PLEASE DATE, SIGN AND
RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE ENCLOSED RETURN
ENVELOPE.
By Order of the Board of Directors,
/s/ ENDRE A. BALAZS
Endre A. Balazs, M.D.
Chief Executive Officer and
Chief Scientific Officer
Ridgefield, New Jersey
April 20, 1998
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<PAGE> 14
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------
BIOMATRIX, INC.
- --------------------------------
RECORD DATE SHARES:
---------------------
Please be sure to sign and date this proxy. Date
- ------------------------------------------------------------------------
- ----Shareholder sign here----------------------Co-owner sign here-------
DETACH CARD DETACH CARD
1. Election of Directors.
For All With- For All
Endre A. Balazs M.D. Nominees hold Except
Kurt Mark
[ ] [ ] [ ]
NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
the name of the nominee. Your shares will be voted for the remaining
nominee.
2. At their discretion, the proxies are authorized to vote upon
any other business that may properly come before the meeting or
at any adjournment(s) thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card [ ]
Mark box at right if you will attend the meeting. [ ]
BIOMATRIX, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
The proxy materials discuss issues related to the management and operation of
your Company that require your immediate attention and approval.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted, then sign the card, detach it and return it in the enclosed postage paid
envelope.
Your vote must be received prior to the Annual Meeting of Shareholders on
May 29, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Biomatrix, Inc.
<PAGE> 15
BIOMATRIX, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 29, 1998
The undersigned hereby appoints Endre A. Balazs, M.D. and Rory B. Riggs, and
each of them, as proxies, with full power of substitution, to vote all the
shares of common stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of Biomatrix, Inc. to
be held on May 29, 1998 at 10:00 a.m., local time, at the Corporate
Headquarters of the Company, 65 Railroad Avenue, Ridgefield, New Jersey 07657,
or any adjournments thereof, upon any and all matters which may properly be
brought before the meeting or adjournments thereof, hereby revoking all former
proxies.
The shares represented by this proxy will be voted on Proposals 1 and 2 in
accordance with the specifications made and FOR such proposals if there is no
specification.
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PLEASE VOTE, DATE, AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
- -------------------------------------------------------------------------------
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Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owner should each sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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