GENELABS TECHNOLOGIES INC /CA, DEF 14A, 1999-04-29

GENELABS TECHNOLOGIES INC /CA
DEF 14A, 1999-04-29
PHARMACEUTICAL PREPARATIONS

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SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

<TABLE>
<S> <C>
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

GENELABS TECHNOLOGIES, 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):

<TABLE>
<S> <C>
[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:
-------------------------------------------------------
</TABLE>
<PAGE> 2

April 29, 1999

To Our Shareholders:

You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Genelabs Technologies, Inc. The meeting will be held at the Company's offices
at 505 Penobscot Drive, Redwood City, California, on Wednesday, June 16, 1999,
at 10:00 a.m. local time.

At the meeting, you will be asked to elect members to the Board of
Directors and approve amendments to the Stock Option Plan and the Employee Stock
Purchase Plan. These matters are described in detail in the following Notice of
Annual Meeting of Shareholders and Proxy Statement.

I would like to thank you for your support as a Genelabs Technologies, Inc.
shareholder and urge you to please complete, date, sign and return the enclosed
proxy as soon as possible. We look forward to seeing you at the meeting.

Sincerely,
LOGO
Irene A. Chow, Ph.D.
Chairman of the Board

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GENELABS TECHNOLOGIES, INC.
505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

<TABLE>
<C> <S>
DATE: WEDNESDAY, JUNE 16, 1999
TIME: 10:00 A.M.
PLACE: 505 PENOBSCOT DRIVE, REDWOOD CITY, CALIFORNIA
</TABLE>

MATTERS TO BE VOTED UPON:

1. To elect the following nine directors of the Company, each to serve
until the next Annual Meeting of Shareholders and until his or her
successor has been elected and qualified or until his or her earlier
resignation or removal:

<TABLE>
<S> <C> <C>
Irene A. Chow Frank L. Douglas Alan Y. Kwan
J. Richard Crout Arthur Gray, Jr. James A.D. Smith
Thomas E. Dewey, Jr. H.H. Haight Nina K. Wang
</TABLE>

2. To approve (i) an amendment to the 1995 Stock Option Plan to increase
the number of shares reserved for issuance thereunder by 2,000,000
shares and (ii) an amendment to change the number of shares each
optionee may be granted under the 1995 Stock Option Plan, for purposes
of Section 162(m) of the Internal Revenue Code.

3. To approve an amendment to the Employee Stock Purchase Plan to increase
the number of shares reserved for issuance thereunder by 500,000 shares.

4. To transact other business that may properly come before the Annual
Meeting.

Shareholders who are holders of record of the Common Stock and of the
Preferred Stock at the close of business on April 19, 1999 will be entitled to
vote at this Annual Meeting.

By Order of the Board of Directors
LOGO
James A.D. Smith
President

Redwood City, California
April 29, 1999

ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.

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GENELABS TECHNOLOGIES, INC.
505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94603
------------------------

1999 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
------------------------

DATE, TIME AND PLACE OF MEETING

The Board of Directors (the "Board") of Genelabs Technologies, Inc. (the
"Company" or "Genelabs") is soliciting your proxy for use at the Annual Meeting
of Shareholders of the Company to be held at Genelabs' principal office located
at 505 Penobscot Drive, Redwood City, California 94063, on June 16, 1999 at
10:00 a.m. local time (the "Meeting"). This Proxy Statement and the accompanying
proxy card were first mailed to shareholders on or about April 29, 1999.

RECORD DATE, OUTSTANDING SHARES AND QUORUM

Only holders of record of the Company's Common Stock and Series A
Convertible Preferred Stock ("Preferred Stock") at the close of business on
April 19, 1999 (the "Record Date") will be entitled to vote at the Meeting. At
the close of business on March 31, 1999, the Company had 39,785,042 shares of
Common Stock outstanding and 44,785,042 shares of Common Stock and Preferred
Stock on an as-converted basis entitled to vote. A majority of the shares
entitled to vote on the Record Date will constitute a quorum for the transaction
of business.

VOTING RIGHTS AND SOLICITATION OF PROXIES

Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above Record Date, except that in the election of directors
each shareholder has cumulative voting rights and is entitled to a number of
votes equal to the number of shares held by such shareholder multiplied by the
number of directors to be elected. The shareholder may cast these votes all for
a single candidate or distribute the votes among any or all of the candidates.
No shareholder will be entitled to cumulate votes for a candidate, however,
unless that candidate's name has been placed in nomination prior to the voting
and the shareholder, or any other shareholder, has given notice at the Meeting
prior to the voting of an intention to cumulate votes. In such an event, the
proxy holder may allocate among the Board of Directors' nominees the votes
represented by proxies in the proxy holder's sole discretion.

Holders of the Company's Preferred Stock are entitled to one vote for each
share of Common Stock into which such Preferred Stock could be converted, in
accordance with a pre-determined formula. Under this formula, the holders of the
Preferred Stock are entitled to vote an aggregate of 5,000,000 shares at the
Meeting.

In the election of directors, the nominees receiving the highest number of
affirmative votes will be elected as directors. All votes will be tabulated by
the Inspector of Elections appointed for the Meeting who will separately
tabulate affirmative and negative votes, abstentions and broker non-votes for
each proposal. Abstentions will be counted towards a quorum. Broker non-votes
will be counted towards a quorum but are not counted for any purpose in
determining whether a matter has been approved.

The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, or in person. Following the original mailing of the proxies and
other soliciting materials, the Company will request that brokers, custodians,
nominees and other record holders of the Company's Common Stock and Preferred
Stock forward copies of the proxy and other soliciting materials to persons for
whom they hold shares of Common Stock and Preferred Stock and request authority
for the exercise of proxies. In such cases, the Company, upon the request of the
record holders, will reimburse such holders for their reasonable expenses.

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REVOCABILITY OF PROXIES

Any person signing a proxy card accompanying this Proxy Statement has the
power to revoke it prior to the Meeting or at the Meeting prior to the vote
pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is signed
by the person who signed the earlier proxy and is presented at the Meeting or by
attendance at the Meeting and voting in person.

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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS

At the Meeting, shareholders will elect the Company's Board of Directors
(the "Board") to hold office until the next Annual Meeting of Shareholders and
until his or her successor has been elected and qualified or until his or her
earlier resignation or removal. Nine persons have been nominated for election at
the Meeting to the nine positions approved by the Board pursuant to the
Company's By-laws. Shares represented by the accompanying proxy will be voted
for the election of the nine nominees unless the proxy is marked in such a
manner as to withhold authority so to vote. If any nominee for any reason is
unable to serve or for good cause will not serve, the proxies may be voted for
such substitute nominee as the Board may determine. The Company is not aware of
any nominee who will be unable to, or for good cause will not, serve as a
director.

DIRECTORS/NOMINEES

The names of the nominees and certain information about them are set forth
below:

<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
Irene A. Chow, Ph.D.................. 60 Chairman of the Board, Genelabs 1993
Technologies, Inc.
J. Richard Crout, M.D.(1)............ 69 President, Crout Consulting 1999
Thomas E. Dewey, Jr.(2).............. 66 Partner, McFarland Dewey & Co., LLC 1999
Frank L. Douglas, M.D., Ph.D.(1)..... 55 Executive Vice President, Drug 1997
Innovation and Approval, Hoechst
Marion Roussel AG
Arthur Gray, Jr.(2).................. 76 Managing Director, Cowen Investment 1991
Counselors
H.H. Haight(2)....................... 65 President and CEO, Argo Global 1989
Capital, Inc.
Alan Y. Kwan(1)...................... 53 Attorney, Private Practice 1999
James A.D. Smith..................... 40 President, Genelabs Technologies, --
Inc.
Nina K. Wang(2)...................... 61 Chairlady, Chinachem Group 1997
</TABLE>

- ---------------
(1) Member of the Human Resources Committee.

(2) Member of the Finance and Audit Committee.

Each of the directors listed above, with the exception of Dr. Crout, Mr.
Dewey, Mr. Kwan and Mr. Smith was elected to be a director at the Company's
Annual Meeting of Shareholders held on May 21, 1998. Dr. Crout, Mr. Dewey, Jr.
and Mr. Kwan were appointed to the Board on January 25, 1999 and Mr. Smith was
nominated for election at the Meeting on April 27, 1999.

Irene A. Chow has been Chairman of the Board of Directors of Genelabs since
April 1, 1999. From July 1995 through March 1999, Dr. Chow was President and
Chief Executive Officer of Genelabs. Dr. Chow joined Genelabs in 1993 as
President of the Biopharmaceutical Division, when she also became a director. In
addition to her duties at the Company, Dr. Chow also chairs the Board of
Directors of the Company's Taiwan-based affiliate, Genelabs Biotechnology Co.
Ltd. From 1975 to 1993, Dr. Chow held several positions at Ciba-Geigy
Corporation, USA, a pharmaceutical company, most recently as Senior Vice
President of Drug Development for the pharmaceuticals division. She holds a B.A.
degree in Literature from National Taiwan University, and both an M.A. and a
Ph.D. in Biostatistics from the University of California, Berkeley.

J. Richard Crout has been a director of Genelabs since January 1999. Dr.
Crout is a pharmaceutical industry consultant, providing regulatory and drug
development advice to pharmaceutical and biotechnology companies. Prior to
forming Crout Consulting in 1994, Dr. Crout served as Vice President, Medical
and Scientific Affairs of Boehringer Mannheim Pharmaceuticals Corporation. Dr.
Crout has also headed the Office of Medical Applications of Research at the
National Institutes of Health and served as Director of the

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Bureau of Drugs (now the Center for Drug Evaluation and Research) at the Food
and Drug Administration. Dr. Crout is currently a member of the Board of
Directors of GelTex Pharmaceuticals, Inc. and Trimeris, Inc.

Thomas E. Dewey, Jr. has been a director of Genelabs since January 1999. He
is a senior investment banker and financial adviser with McFarland Dewey & Co.,
LLC, an investment banking firm in New York City concentrating in health care.
Prior to founding his first firm in 1976, Mr. Dewey was General Partner of the
international investment banking firm Kuhn, Loeb & Co. Mr. Dewey is currently a
senior trustee of Lenox Hill Hospital, where he was Chairman for a 10-year term,
and a director of Northwest Natural Gas Company.

Frank L. Douglas has been a director of Genelabs since 1997. He is
Executive Vice President, Drug Innovation and Approval of Hoechst Marion Roussel
AG and a member of its Board of Directors. Dr. Douglas was Executive Vice
President, Research and Development, at Marion Merrell Dow, Inc., prior to its
merger with Hoescht Roussel in 1995. Previously, he spent seven years at
Ciba-Geigy Pharmaceutical Corp., most recently as Senior Vice President and
Director of Research, and Vice President and Partner of the Biocine Company, a
joint venture between Ciba-Geigy and Chiron Corporation. Dr. Douglas has held
professorial appointments at the University of Chicago, Robert Wood Johnson
Medical School and University of Kansas. Dr. Douglas received his Ph.D. in
Physical Chemistry from Cornell University, Ithaca, and his M.D. from Cornell
University Medical College, New York City.

Arthur Gray, Jr. has been a director of Genelabs since March 1991. He has
been a Managing Director of Cowen Investment Counselors, a division of Cowen &
Co., since July 1993. Prior to joining Cowen, he was President and Chief
Executive Officer of Dreyfus Personal Management, Inc., a subsidiary of the
Dreyfus Corporation, from January 1984 to June 1993. He is also a director of
Seventh Generation, an environmental product catalog company.

H.H. Haight has been a director of Genelabs since May 1989. Mr. Haight is
President and CEO of Argo Global Capital, Inc., where he specializes in
high-technology industries. Prior to joining Argo in 1998, Mr. Haight was a
Managing Director of Advent International Corporation, an advisor and manager of
international venture capital funds, where he was closely involved in Advent's
Far East activities and responsible for Advent's Far East Group from 1985
through 1998. Mr. Haight holds a B.S. in Forestry from the University of
California, Berkeley and an M.B.A. from Harvard University.

Alan Y. Kwan has been a director of Genelabs since January 1999. Mr. Kwan
is an attorney based in Houston, Texas, maintaining a general legal practice
with an emphasis in business transactions and asset management. Previously, for
more than 20 years Mr. Kwan was active in real estate development and general
management for several Hong Kong-based international companies including the
Chinachem Group, Swire Properties, Ltd. and Tai Cheung Properties, Ltd. Mr. Kwan
was also a director of the Hong Kong operation of China International Trust &
Investment Corp.

James A. D. Smith has been President of Genelabs Technologies, Inc. since
April 1, 1999. Previously he was Genelabs' Chief Operating Officer beginning in
October 1996. From June 1995 through September 1996 he was Vice President,
Marketing and Business Development, and from January 1994 through June 1995 he
was Director of Marketing. Prior to joining Genelabs in early 1994, Mr. Smith
served for more than ten years in various marketing and business development
positions with ICN Pharmaceuticals, most recently as Director of Worldwide
Business Development. Mr. Smith has a B.S. in Molecular and Cellular Biology
from the University of California, San Diego.

Nina K. Wang has been a director of Genelabs since February 1997. Mrs. Wang
is the Chairlady of the Chinachem Group, one of Hong Kong's largest private real
estate developers. She is currently a Director of FPB Bank Holding Company
Limited in Hong Kong; Yangming Marine Transport Corporation in Taiwan;
Chelsfield PLC in the United Kingdom, and the University of International
Business and Economics and the Foreign Affairs College in China. Mrs. Wang
created the Ruxin Agricultural Award to recognize technological advancements and
achievements in agriculture in China; is the Honorary President of the Chinese
Red Cross Foundation; and is Special Advisor to the World Federation of United
Nations Associations. Mrs. Wang

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is a John Harvard Fellow of Harvard University and is a Professor at both Peking
University and The Foreign Affairs College.

THE BOARD RECOMMENDS A VOTE FOR
THE ELECTION OF ALL DIRECTORS NOMINATED.

BOARD OF DIRECTORS' MEETINGS AND COMMITTEES

The Board met 3 times during 1998. All directors attended at least 75% of
the meetings of the Board and of the committees on which they served, except for
Dr. Douglas, who attended less than 75% of the meetings.

The standing committees of the Board are the Finance and Audit Committee
and the Human Resources Committee. The Board does not have a nominating
committee or a committee performing similar functions.

In 1998, Mr. Gray, Mr. Haight and Mrs. Wang were the members of the Finance
and Audit Committee which met 3 times during 1998. Beginning with the April 27,
1999 Board meeting, Mr. Dewey also began serving on the Finance and Audit
Committee. The Finance and Audit Committee reviews the Company's accounting
practices, internal control systems, cash investment policy and Securities and
Exchange Commission ("SEC") filings, and meets with the Company's outside
auditors concerning the scope and terms of their engagement and the results of
their audits. In addition, the Finance and Audit Committee is responsible for
reviewing significant finance transactions.

In 1998, Dr. Douglas and Dr. Engleman were the members of the Company's
Human Resources Committee which met 3 times during 1998. Beginning with the
April 27, 1999 Board meeting, Dr. Crout and Mr. Kwan also began serving on the
Human Resources Committee. The Human Resources Committee is primarily
responsible for reviewing compensation paid to officers of the Company and for
administering the Company's stock option and employee benefit plans.

COMPENSATION OF DIRECTORS

Each director of the Company who is neither an employee nor consultant is
eligible to receive $1,000 per Board meeting attended. In addition, directors
are reimbursed for actual business expenses incurred in attending each Board
meeting. Each non-employee director, upon his or her first election to the
Board, is granted an option to purchase 20,000 shares of the Company's common
stock at an exercise price equal to the fair market value of the common stock on
the date of grant. At the Company's Annual Meeting of Shareholders following the
second anniversary of his or her election to the Board, and at each subsequent
Annual Meeting of Shareholders, each non-employee director is granted an
additional option to purchase 10,000 shares. Directors who are also employees of
the Company are granted options under the 1995 Stock Option Plan in accordance
with Genelabs' general compensation policy.

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PROPOSAL NO. 2 -- APPROVAL OF AMENDMENTS TO THE STOCK OPTION PLAN

The Company's 1995 Stock Option Plan (the "Stock Option Plan") was adopted
by the Board in April 1995 and approved by the Company's shareholders in May
1995, replacing a previous stock option plan that expired. Genelabs offers this
stock option plan to provide equity incentives for employees, officers,
directors, and, in some cases, independent contractors of the Company. To date,
shareholders have approved a total of 6,000,000 shares for issuance under the
two stock option plans, the status of which is as follows:

<TABLE>
<S> <C>
Stock options currently outstanding....................... 3,524,390
Stock options exercised................................... 2,308,927
Stock options available for grant......................... 166,683
---------
Total options approved.......................... 6,000,000
=========
</TABLE>

The stock options approved consist of 4,912,889 shares under the Stock
Option Plan and 1,087,111 shares under the stock option plan that expired in
1995.

In January 1999, the Board adopted an amendment to the Stock Option Plan to
increase the number of shares reserved for issuance thereunder by an additional
2,000,000 shares to a total of 6,912,889 shares. The Board believes that the
grant of equity based awards, such as stock options, is a highly effective way
to align the interests of management and employees with those of Genelabs'
shareholders and provides a cost-effective means of recognizing employee
contributions to the success of the Company. The Board believes that increasing
the number of shares of common stock available for this purpose will be
important to the future success of the Company by allowing it to remain
competitive in attracting and retaining highly qualified personnel. In addition,
although the purpose of the plan is to attract and retain highly qualified and
motivated personnel, the Company has also received $4.3 million from exercises
of stock options under this plan and its predecessor plan. The options granted
and available for grant are commonly called a Company's "overhang," and for
Genelabs this represents 9.3% of the currently outstanding shares, which
Genelabs believes is much lower than other companies in its biotechnology peer
group. As of March 31, 1999, 166,683 shares of Common Stock remained available
for future grants under the Stock Option Plan and there were options to purchase
a total of 3,524,390 shares of Common Stock outstanding under the Company's
stock option plans.

At the Annual Meeting, the shareholders are being requested to approve:

(i) the increase in number of shares reserved for issuance under the Stock
Option Plan by 2,000,000 shares

(ii) the amendment to change the number of maximum shares each optionee may
be granted under the Stock Option Plan from 800,000 during the term of
the Stock Option Plan to 500,000 shares during any single calendar
year.

Below is a summary of the principal provisions of the Stock Option Plan,
assuming approval of the above amendment.

Shares Subject to the Stock Option Plan. The stock reserved for issuance
under the Stock Option Plan represents shares of the Company's authorized but
unissued Common Stock. The aggregate number of shares that may be issued under
the Stock Option Plan may not exceed 6,912,889. If any portion of an outstanding
option under the Stock Option Plan expires or is terminated, the unexercised
shares of common stock attributable to that option are available for future
option grant under the Stock Option Plan.

Eligibility. Options may be granted to employees, officers, directors,
independent contractors, consultants and advisors of the Company or any parent,
subsidiary or affiliate of the Company (as such terms are defined in the Stock
Option Plan) as the Human Resources Committee may determine (including directors
who are also employees or consultants). The annual maximum number of shares that
can be granted to a single participant under the Stock Option Plan is 500,000
shares.

Administration. The Stock Option Plan is administered by the Human
Resources Committee appointed by the Board (the "Committee"), currently
consisting of J. Richard Crout, Frank L. Douglas and Alan Y. Kwan. The
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interpretation by the Committee of any provision of the Stock Option Plan or of
any option granted under it is final and binding on all the participants.

Terms of Options. Subject to the terms of the Stock Option Plan, the
Committee determines the number of shares for which each option will be granted,
the exercise price of the option (but not less than fair market value), the
periods during which the option may be exercised and other terms and conditions.
Each option is evidenced by an option grant in a form as approved by the
Committee and is subject to the following conditions:

NUMBER OF SHARES: Each option states the number of shares to which it
pertains.

OPTION PRICE: The option exercise price generally may not be less than 100%
of the fair market value of the Company's common stock. The exercise price of
any incentive stock option ("ISO") granted to a holder of greater than 10% of
the total combined voting shares of the Company may not be less than 110% of the
fair market value of the shares of Common Stock on the date of the grant.

FORM OF PAYMENT: The option exercise price is typically payable in cash or
by check. In addition, the option exercise price may also be payable in shares
of fully paid Genelabs common stock that have been owned for more than six
months, by promissory note, by waiver of compensation due, through a "same day
sale," a "margin commitment" or by any combination of the foregoing that the
Committee may authorize.

TERM OF OPTIONS AND VESTING: Under the Stock Option Plan, options are
permitted to be exercisable for up to ten years, except that an ISO granted to a
10% shareholder can only be exercisable for five years. To date, options granted
under the Stock Option Plan generally become 25% vested on the first anniversary
of the grant, with 1/48 of each grant vesting each subsequent month for the next
three years.

LIMITATIONS ON ISOS: An individual will not be eligible to receive an ISO
unless such individual is an employee of the Company or of a parent or
subsidiary of the Company.

TERMINATION OF EMPLOYMENT: If an option holder ceases to be employed by the
Company, the option holder typically has three months (or twelve months in the
case of the employee's death or disability) to exercise any options exercisable
on the date his or her employment ends.

MERGERS, CONSOLIDATIONS AND RECAPITALIZATIONS: The number of shares subject
to any option will be adjusted in the event of a stock dividend, stock split,
reverse stock split or similar change relating to the Company's Common Stock. In
the event of a dissolution or certain types of acquisitions of the Company, if
the options are not assumed or substituted by a successor corporation, they will
accelerate and become exercisable in full prior to their termination.

DIRECTOR STOCK OPTIONS: For non-employee directors, the Stock Option Plan
provides for the automatic grant of a nonqualified stock option ("NSO") to
purchase 20,000 shares of the Company's common stock upon the non-employee
director's first election to the Board. At Genelabs' Annual Meeting following
the second anniversary of each non-employee director's election to the Board,
and at each subsequent Annual Meeting, the non-employee directors are each
granted an additional option to purchase 10,000 shares. The options granted to
non-employee directors are granted at fair market value and vest in two equal
annual installments. The term of options granted to non-employee directors prior
to February 1999 was five years, in February 1999 the Board amended the Stock
Option Plan to extend the term to ten years.

Amendment of the Stock Option Plan. The Board, to the extent permitted by
law, and with respect to any shares at the time not subject to options, may
suspend or discontinue the Stock Option Plan or revise or amend the Stock Option
Plan in any respect whatsoever; provided that the Board may not, without the
approval of the shareholders, amend the Stock Option Plan in a manner that
requires shareholder approval pursuant to the Internal Revenue Code or the
regulations thereunder or, if applicable, pursuant to Rule 16b-3 promulgated
under the Exchange Act.

Term of the Stock Option Plan. Options may be granted pursuant to the Stock
Option Plan from time to time until April 14, 2005, which is ten years after the
date the Stock Option Plan was originally adopted by the Board.

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Federal Income Tax Information -- Incentive Stock Options. An option holder
does not recognize income upon the grant of an ISO and generally incurs no tax
on its exercise, unless the option holder is subject to the alternative minimum
tax. If the option holder retains the stock acquired upon exercise of an ISO for
more than one year after the date the option was exercised and for more than two
years after the date the option was granted, the option holder generally will
realize long-term capital gain or loss upon disposition of the shares. This gain
or loss will be equal to the difference between the amount realized upon such
disposition and the amount paid for the shares. If the option holder disposes of
the shares prior to the above described term, then gain realized upon such
disposition will generally be treated as ordinary income.

Federal Income Tax Information -- Nonqualified Stock Options. An option
holder does not recognize any taxable income at the time an NSO is granted.
However, upon exercise of an NSO, the option holder must include as taxable
income the difference between the fair market value of the shares on the date of
exercise and the amount paid for that stock. The included amount must be treated
as ordinary income and may be subject to income tax withholding by the Company.
Upon subsequent sale of the shares by the option holder, any later appreciation
or depreciation in the value of the shares will be treated as capital gain or
loss.

Tax Treatment of the Company. The Company is entitled to a deduction upon
the exercise of an NSO by a domestic option holder equivalent to ordinary income
recognized by the option holder. The Company is entitled to a deduction in
connection with the disposition of ISO shares only to the extent that the option
holder recognizes ordinary income on a disqualifying disposition of the ISO
Shares.

It is not possible at this time to determine the future options that will
be granted under the Stock Option Plan if it is approved by the shareholders.
Genelabs has not granted any options under the Stock Option Plan that are
contingent upon approval of this amendment.

The Stock Option Plan is being submitted for shareholder approval pursuant
to the requirements of Sections 422 and 162(m) of the Internal Revenue Code.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENTS TO THE STOCK OPTION PLAN.

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PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT
TO THE EMPLOYEE STOCK PURCHASE PLAN

The Company's Employee Stock Purchase Plan (the "Stock Purchase Plan") was
originally adopted by the Board and approved by shareholders in April 1991.
Genelabs offers this Stock Purchase Plan to provide eligible employees an
opportunity to acquire an ownership interest in Genelabs through payroll
deductions. The Stock Purchase Plan is intended to operate in compliance with
Section 423 of the Internal Revenue Code.

The Board of Directors amended the Stock Purchase Plan in February 1999 to
increase the number of shares of the Company's common stock reserved for
issuance under the Plan by an additional 500,000 shares, subject to shareholder
approval at the Meeting. The Board believes it is in the best interests of the
Company to continue a program of stock ownership for Genelabs' employees. The
Board also believes that the Stock Purchase Plan provides a meaningful
opportunity for employees to purchase substantial ownership interests in
Genelabs and encourages alignment of the employees' interests with those of
other shareholders. In addition, although the purpose of the plan is to provide
employees with the opportunity to acquire ownership interests in Genelabs, the
Company has received over $1.7 million from the purchase of stock under this
plan. Shareholders have approved the issuance of 1,000,000 shares of common
stock under the Stock Purchase Plan; 662,055 shares have been issued and 337,945
shares currently remain available for future issuance under this plan. Based on
the Stock Purchase Plan purchases in 1998, the Board estimates that the current
shares remaining available for issuance under the Stock Purchase Plan will last
for approximately another two years. However, the Board approved an additional
500,000 shares for issuance under this plan in order to avoid non-cash
accounting charges that may result if number of shares remaining available for
issuance drops below two year's projected purchases.

Following is a summary of the principal provisions of the Plan, assuming
approval of the above amendment.

Eligibility. Employees who are employed on the fifteenth day of the month
before the beginning of an Offering Period and are customarily employed at least
20 hours per week and five months in a calendar year are eligible to participate
in the Plan. However, no employee can participate in the Stock Purchase Plan if
they own or have rights to own 5% or more of the total combined voting power or
value of Genelabs' stock. All of the Company's approximately 91 employees are
currently eligible to participate in the Stock Purchase Plan.

Offering Periods. The offering periods of the Plan (the "Offering Periods")
are up to 24 months long and consist of up to four six-month purchase periods
(individually, a "Purchase Period") during which payroll deductions of the
participants are accumulated. Offering Periods begin on January 2 and July 2 of
each year and end on July 1 and January 1 of each year. The first business day
of each Offering Period is referred to as the "Offering Date" and the last
business day of each Offering Period is referred to as the "Purchase Date." If
the stock price on the Purchase Date is lower than the price on the current
Offering Date(s), the current Offering Periods terminate and a new Offering
Period begins on the next scheduled Offering Date. The Board can change the
duration of Offering Periods or Purchase Periods if the change is announced at
least 15 days prior to the beginning of the affected Offering or Purchase
Period.

Administration. The Plan is administered by the Human Resources Committee,
and this committee handles all questions of interpretation or application of the
Plan.

Payroll Deductions. The purchase price of the shares is accumulated by
regular payroll deductions made during the Purchase Periods. Deductions from
participant's payroll checks are made in one percent increments from two percent
to ten percent of gross compensation, up to a maximum of $25,000 per year.
Participants can lower but not raise the rate of payroll deductions during each
Purchase Period, but can increase or decrease the payroll deductions for
subsequent Purchase Periods. If the Company's stock price has dropped more than
50% from the Offering Date to the Purchase Date, purchases for that period are
limited to twice the number of shares the Participant could have purchased based
on the Offering Date price.

Purchase of Stock. The purchase price for each Offering Period is 85% of
the lesser of the fair market value on the Offering Date or the Purchase Date.
The Stock Purchase Plan defines the term "fair market value" as the closing
price from the previous day's trading as reported on The NASDAQ National Market.
11
<PAGE> 13

The number of whole shares that a participant will be able to purchase in any
Purchase Period is the total amount of payroll deductions divided by the
purchase price per share.

Withdrawal. Participants can withdraw from Purchase Periods any time prior
to 15 days before the end of the Purchase Period. Accumulated payroll deductions
will be returned without interest, and the Participant's interest in the Stock
Purchase Plan terminates. Termination of a participant's employment immediately
terminates participation in the Stock Purchase Plan, and payroll deductions
credited to the participant's account are returned without interest.

Term of the Plan. Shares of Common Stock may be sold under the Stock
Purchase Plan until the earlier of termination by the Board, issuance of all of
the shares reserved for issuance under the Stock Purchase Plan, or until April
24, 2001, which is ten years after the date the Stock Purchase Plan was adopted
by the Board.

Federal Income Tax Information -- Tax Treatment of the
Participant. Participating employees do not recognize income for federal income
tax purposes either upon enrollment in the Plan or upon the purchase of shares.
All tax consequences are deferred until a participating employee sells the
shares, disposes of the shares by gift, or dies.

If a participant holds the purchased shares for more than one year after
the Purchase Date and for more than two years from the beginning of the Offering
Period, the participant realizes ordinary income on a sale (or a disposition by
way of gift or upon death) at either the discount at the beginning of the
Offering Period or the actual gain, whichever is lower. Any additional gain upon
the sale of shares is treated as long-term capital gain.

If the shares are sold or otherwise disposed of within either the one-year
or the two-year holding periods described above (called a "disqualifying
disposition"), the participant realizes ordinary income at the time of the
disqualifying disposition in the amount the fair market value of the shares at
the date of purchase was greater than the purchase price. This amount is taxed
as ordinary income in the year of the disqualifying disposition, even if no gain
is realized on the sale or if a gratuitous transfer is made. The difference, if
any, between the proceeds of sale and the fair market value of the shares at the
date of purchase is a capital gain or loss.

Tax Treatment of the Company. The Company receives tax deductions upon the
disposition of shares acquired under the Plan only to the extent that the
participant recognizes ordinary income on a disqualifying disposition of the
shares.

It is not possible at this time to determine the future options that will
be granted under the Stock Purchase Plan. Genelabs has not granted any options
under the Stock Purchase Plan that are contingent upon approval of this
amendment.

The Stock Purchase Plan is being submitted for shareholder approval
pursuant to Section 423 of the Internal Revenue Code.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE AMENDMENT TO THE STOCK PURCHASE PLAN.

12
<PAGE> 14

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of March 31, 1999,
with respect to the beneficial ownership of each class of the Company's voting
securities held by (i) each shareholder known by the Company to be the
beneficial owner of more than 5% of either class of the Company's voting
securities, (ii) each director and nominee, (iii) each executive officer named
in the Summary Compensation Table and (iv) all directors and executive officers
as a group.

AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED(1)

<TABLE>
<CAPTION>
TOTAL
NUMBER OF SHARES PERCENT OF
TITLE OF SHARES RIGHT TO BENEFICIALLY OUTSTANDING
CLASS(2) NAME OWNED ACQUIRE(3) OWNED SHARES
- -------- ---- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Common Veron International Limited(4)...... 5,391,633 -- 5,391,633 13.6%
Common SMALLCAP World Fund, Inc.(5)........ 2,085,000 -- 2,085,000 5.2%
Common Edgar G. Engleman(6)................ 765,401 67,916 833,317 2.1%
Common Irene A. Chow....................... 23,602 566,436 590,038 1.5%
Common Cynthia A. Edwards.................. 22,960 158,969 181,929 *
Common James A.D. Smith.................... 14,148 113,272 127,420 *
Common Arthur Gray, Jr. ................... 50,000 35,000 85,000 *
Common H. H. Haight........................ 20,162 35,000 55,162 *
Common Debra C. Bannister.................. 11,269 37,670 48,939 *
Common Marc J. Gurwith..................... 9,605 27,500 37,105 *
Common Nina K. Wang........................ -- 20,000 20,000 *
Common Frank L. Douglas.................... -- 10,000 10,000 *
Common Alan Y. Kwan........................ 4,500 -- 4,500 *
Common J. Richard Crout.................... -- -- -- *
Common Thomas E. Dewey, Jr. ............... -- -- -- *
Common All directors and executive officers
as a group (17 persons)(7).......... 967,794 1,158,919 2,126,713 5.2%
Preferred... Chiron Corporation(8)............... 5,000 -- 5,000 50.0%
Preferred... Johnson & Johnson Development
Corp.(9)............................ 5,000 -- 5,000 50.0%
</TABLE>

- ---------------
* Represents beneficial ownership of less than 1%

(1) This table is based on information supplied by executive officers, directors
and principal shareholders and Schedules 13D and 13G, if any, filed with the
SEC. Unless otherwise indicated in the footnotes to this table and subject
to community property laws where applicable, each of the shareholders named
in this table has sole voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based on
39,785,042 shares of Common Stock and 10,000 shares of Preferred Stock
outstanding on March 31, 1999, adjusted as required by rules promulgated by
the SEC.

(2) The Company has two classes of voting securities, Common Stock and Series A
Convertible Preferred Stock. The two holders of the Company's Series A
Convertible Preferred Stock are entitled to one vote for each share of
Common Stock into which their Convertible Preferred Stock could be
converted, in accordance with a pre-determined formula. Under this formula,
each holder is entitled to vote 2,500,000 shares at this year's Annual
Meeting.

(3) Represents shares that can be acquired through stock option exercises
through May 30, 1999.

(4) The address of Veron International Limited ("Veron") is Top Floor Chinachem
Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon, Hong Kong. Veron is
an investment holding company whose principal shareholder is Mrs. Nina K.
Wang, a director of the Company.

13
<PAGE> 15

(5) The address of SMALLCAP World Fund, Inc. is 333 South Hope Street, 52nd
Floor, Los Angeles, California 90071.

(6) Dr. Engleman is a current director who is not standing for reelection to the
Board. Shares owned represent 715,485 shares held of record by the Engleman
Family Trust, 49,916 shares held of record by Dr. Engleman's minor child.

(7) Includes holdings of the above listed officers and directors and four other
executive officers of the Company. This amount does not include shares held
by Veron International, Ltd., an investment holding company whose principal
shareholder is Mrs. Nina K. Wang, a director of the Company.

(8) The address of Chiron Corporation is 4560 Horton Street, Emeryville,
California 94608-2916.

(9) The address of Johnson & Johnson Development Corporation is One Johnson &
Johnson Plaza, New Brunswick, New Jersey 08933-7002.

EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------
- -----------------------------------------------------------------------------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING
NAME AND PRINCIPAL COMPENSATION STOCK OPTIONS
POSITION YEAR SALARY($) BONUS($) ($)(1) ($) (#)
------------------ ---- --------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Irene A. Chow............. 1998 293,583(2) 97,055 110,479 -- 40,000
President and Chief 1997 276,500(2) 92,435 79,667 -- 100,000
Executive Officer 1996 259,167(2) 114,000 41,666 -- 60,000
James A.D. Smith.......... 1998 195,833 45,100 35,191 -- 12,000
Chief Operating 1997 184,250 39,775 21,934 -- 22,600
Officer 1996 141,000 41,800 8,000 -- 79,000
Marc J. Gurwith........... 1998 187,750 35,720 21,836(3) -- 4,000
Vice President, 1997 69,375 15,108 -- -- 60,000
Drug Development and
Chief Medical Officer
Cynthia A. Edwards........ 1998 173,083 30,960 28,541 -- 32,000
Chief Scientific 1997 158,933 31,360 18,087 -- 36,400
Officer 1996 145,767 28,262 8,666 44,062(4) 81,000
Debra C. Bannister........ 1998 139,250 26,040 14,296 -- 10,000
Vice President, Corp. 1997 130,583 24,366 6,174 -- 18,600
Communications and 1996 82,626 18,522 -- -- 38,000
Investor Relations
</TABLE>

- ---------------
(1) Unless otherwise noted, amounts in this column represent amounts vested in
the long-term portion of the Company's Annual and Long-term Incentive Based
Compensation Program.

(2) Excludes $89,842, $87,933 and $73,333 in 1998, 1997 and 1996, respectively,
paid on behalf of Genelabs' Taiwan-based affiliate, Genelabs Biotechnology
Co., Ltd. ("GBL"), for Dr. Chow's services as GBL's Chairman of the Board.

(3) Represents $5,036 vesting in the Annual and Long-term Incentive Based
Compensation Program, forgiveness of $14,400 in principal of a loan made to
Dr. Gurwith, and forgiveness of $2,400 in interest on the loan.

(4) Represents a grant of 5,000 shares of common stock to Dr. Edwards in 1996,
which vested in 1996 and had a fair market value at December 31, 1998 of
$13,125.

14
<PAGE> 16

The following table sets forth information regarding individual grants of
stock options pursuant to the Company's 1995 Stock Option Plan during 1998 to
each of the Officers named in the Summary Compensation Table.

INDIVIDUAL GRANTS IN 1998

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(1) IN 1998 ($/SHARE) DATE ($)(2)
---- ------------- ------------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Irene A. Chow.................. 40,000 6.4 3.4688 02/05/2008 81,860
James A.D. Smith............... 12,000 1.9 3.4688 02/05/2008 24,558
Marc J. Gurwith................ 4,000 0.6 3.4688 02/05/2008 8,165
Cynthia A. Edwards............. 12,000 1.9 3.4688 02/05/2008 24,558
20,000 3.2 2.0469 10/02/2008 23,869
Debra C. Bannister............. 10,000 1.6 3.4688 02/05/2008 20,465
</TABLE>

- ---------------
(1) Stock options are awarded with an exercise price equal to the fair market
value of the Company's Common Stock on the date of award. Stock options
generally become exercisable with respect to 25% of the number of underlying
shares on the first anniversary of the date of grant with pro-rata monthly
vesting thereafter for the remaining three years, so long as employment with
the Company continues. All of the options granted have a 10-year term.

(2) The estimated "grant date present value" of options granted in 1998 is based
on a Black-Scholes option pricing model, a model that reflects certain
assumptions regarding variable factors such as interest rates and stock
price volatility. Stock options have value only as a result of appreciation
in the price of the Company's Common Stock. If, at the time of exercise, the
price of the Company's Common Stock is the same as or lower than the option
exercise price, there will be no gain to the optionee. Because changes in
the subjective input assumptions can materially affect the fair value
estimate, it is the Company's belief that this model does not necessarily
provide a reliable single measure of the fair value of the options granted.
For the purposes of establishing the "grant date present value" shown in the
table, the model assumed a dividend yield of zero, risk-free interest rate
of 5.0%, volatility factor of the expected market price of the Company's
Common Stock of .80, and an expected life of the options of one year
subsequent to vesting.

During 1998 there were no stock option exercises by any of the Officers
listed in the Summary Compensation Table. The following table sets forth certain
information concerning the number and value of unexercised options held by each
of these Officers at December 31, 1998.

DECEMBER 31, 1998 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END(#) OPTIONS AT YEAR-END($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Irene A. Chow.............................. 532,479 136,426 61,389 4,567
James A.D. Smith........................... 99,586 63,014 23,155 -
Marc J. Gurwith............................ 20,000 44,000 - -
Cynthia A. Edwards......................... 140,720 91,280 13,805 11,630
Debra C. Bannister......................... 28,650 37,950 - -
</TABLE>

- ---------------
(1) These values are based on the positive spread between the respective
exercise price of outstanding stock options and the fair market value of the
Company's Common Stock at December 31, 1998 ($2.6250). These amounts may not
represent amounts actually realized by the named Officers.

15
<PAGE> 17

The following pages contain a report issued by the Human Resources
Committee relating to executive compensation for 1998 and a chart titled
"Company Stock Price Performance." Shareholders should be aware that under SEC
rules, the Human Resources Committee report and the stock price performance
chart are not considered filed with the SEC under the Securities Act of 1933 or
the Securities Exchange Act of 1934 unless these sections are specifically
referenced.

REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION

Decisions regarding executive compensation and stock option grants to
executives are made by the Human Resources Committee of the Board of Directors
(the "Committee") subject to the review and, in certain cases, approval by the
Board. The Committee is currently composed of two non-employee directors.
Although Dr. Chow attended the meetings of the Committee during 1998, she did
not vote on any matters that relate to compensation and was excused from
meetings when matters concerning her compensation were discussed.

COMPENSATION POLICY

The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. The primary
goal of the Company's compensation policy is to align compensation with the
Company's business objectives and performance. The Committee's primary aim is to
attract, reward, and retain executive officers and other employees who
contribute to the long-term success of the Company. The Committee typically
reviews base salary levels and target bonuses for the Chief Executive Officer
("CEO"), President and other executive officers of the Company and key employees
at or about the beginning of each year. The Committee has adopted a total
compensation package comprised of base salary, bonus, long-term incentive
awards, stock options and stock grant awards.

SALARY AND VARIABLE COMPENSATION

The base salaries, incentive compensation and stock option grants of the
executive officers are determined by the Committee in part by reviewing the
Radford Survey and other published surveys for similar positions in the
biopharmaceutical industry. These surveys are nationally known for their
databases of high technology and biopharmaceutical companies compensation
practices. The Radford Survey itself includes over 1,500 high technology
companies and 335 biopharmaceutical companies. In addition, custom survey data
is also reviewed on a case by case, position by position basis. The compensation
of the Company's executive officers is evaluated against comparable positions
and competitive market compensation levels to determine base salary, target
bonuses and target total cash compensation. The Committee attempts to target
total cash compensation at competitive rates and percentiles of the survey
companies. Practices of such companies with respect to stock option grants are
also reviewed and compared.

In addition to their base salaries, the Company's executive officers,
including the CEO, are each eligible to receive an annual cash bonus under the
Incentive Bonus Program ("IBC Program"). The Committee's philosophy in
compensating executive officers, including the CEO, is to relate compensation
principally to corporate and executive performance. Thus, a portion of the cash
compensation paid to the Company's executive officers, including the CEO, is in
the form of discretionary bonus payments that are paid on an annual basis. Under
the IBC Program, cash bonuses are awarded only if an executive officer achieved
predetermined individual performance objectives and the Company met certain
corporate objectives that were approved by the Committee. Bonus payments are
expressly linked to the attainment of goals established for each executive
officer, as well as overall corporate goals, and are limited by the target bonus
amount established for each executive officer which is a percentage of the
officer's base salary.

In the biopharmaceutical industry, traditional measures of corporate
performance, such as earnings per share or return on equity, may not readily
apply in evaluating the performance of executives. Because the Company has been
engaged primarily in research and development activities, the Company's
objectives are based on other financial and strategic measures, such as the
progress of the Company's research and development programs, the establishment
of cooperative development and marketing relationships with
16
<PAGE> 18

corporate partners, the recruitment of management personnel, and the securing of
capital resources sufficient to enable the Company to further research and
product development plans. General corporate goals for 1998 included a year-end
cash balance target, timely enrollment of a specified number of patients in our
second Phase III trial of GL701 for lupus, the hiring of qualified scientists
for key research positions, screening of several chemistry libraries for
DNA-binding properties and renewing existing collaborations for principal
research programs.

Under the IBC Program, for certain executive management positions there is
a long-term compensation element which is in addition to the annual bonus
described above. If a person in this category should be eligible for and receive
an annual bonus, the amount of the bonus will also be awarded in the long-term
portion of the Incentive Program. This long-term element is designed to defer
payments to the executive over a three-year period, vesting one third each year.
In doing so, the goal of the plan is to encourage the executive to remain with
the Company on a long-term basis by committing the payment of additional
compensation if employment continues throughout the vesting period.

LONG-TERM EQUITY INCENTIVES

The Company's equity incentive plans include the 1995 Stock Option Plan,
Restricted Stock Plan and Employee Stock Purchase Plan.

Long-term equity incentives for executive officers are provided through the
granting of stock options under the Stock Option Plan. The exercise price of
options granted under the Stock Option Plan is equal to the fair market value of
the Company's Common Stock on the date of award. These options have value only
if the price of the Company's stock increases above the fair market value on the
award date and the executive remains an employee for the period required for the
shares to vest. These options generally become exercisable with respect to 25%
of the number of underlying shares on the first anniversary of the date of grant
with pro-rata monthly vesting thereafter for the remaining three years.

Stock options typically have been granted to executive officers and other
employees when they first join the Company, in connection with a significant
change in responsibilities and, occasionally, to achieve parity within a peer
group. The Committee may, however, grant additional stock options to executives
for other reasons. Generally, the number of shares subject to each stock option
granted may also be based on anticipated future contribution and ability to
impact corporate and/or business unit results, past individual or corporate
performance or consistency within the executive's peer group. In making its
decisions, the Committee considers these factors, as well as the number of
options held by such executive officers as of the date of grant that remained
unvested. In the discretion of the Committee, executive officers may also be
granted stock options under the Stock Option Plan to provide greater incentives
to continue their employment with the Company and to strive to increase the
value of the Company's Common Stock.

1998 EXECUTIVE COMPENSATION

For each of the executive officers, base salaries were increased in
February based on their previous base salary as well as the surveys noted above
and other information available to the Committee. Under the Company's IBC
Program, for 1998 performance, the CEO determined that the executive officers
individually achieved their objectives in various ranges. Based upon the CEO's
recommendations and review of the supporting data for such, the Committee
concluded that the executive officers' objectives were met, and the Committee
awarded cash bonuses to its executive officers. The Committee awarded bonuses
based on the percentage of base salary for which a bonus was available after
giving effect to the degree to which the Committee believed each such executive
officer realized his or her objectives. In addition, stock options were granted
as part of the annual review of performance.

CHIEF EXECUTIVE OFFICER COMPENSATION

Dr. Chow's 1998 bonus and salary were set by the Committee with due regard
to her industry experience, competitive salary information and current market
conditions. As with other executive officers, the amount of Dr. Chow's total
compensation was based on the Company's 1998 results and her individual
performance with
17
<PAGE> 19

respect to meeting previously established performance objectives. The Committee
recommended that a bonus of $97,255 be paid to Dr. Chow based upon the
completion of her and the Company's objectives. In particular, the Committee
considered the timely enrollment of more than the targeted number of patients in
our second Phase III trial of GL701 for lupus, successful hiring of qualified
scientists for key research programs, management to budget and attainment of a
specified cash level at year end, approval of the DARPA grant, the renewal of
Genelabs' collaboration with DuPont and screening of chemistry libraries for
identification of DNA-binding molecules.

COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986

The Company's Stock Option Plan meets the requirements of Section 162(m) of
the Internal Revenue Code of 1986. None of the Company's Executive Officers have
received cash compensation exceeding the statutory limit under Section 162(m).

HUMAN RESOURCES COMMITTEE

Frank L. Douglas
Edgar G. Engleman

18
<PAGE> 20

COMPANY STOCK PRICE PERFORMANCE

The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the five-year period from December 31, 1993
through December 31, 1998 with the cumulative total return on the NASDAQ Stock
Market Index (U.S. companies) and the NASDAQ Pharmaceuticals Stock Index over
the same period (assuming the investment of $100 in the Company's Common Stock
and in each of the indexes on December 31, 1993, and reinvestment of all
dividends).

<TABLE>
<CAPTION>
GENELABS TECHNOLOGIES, INC. NASDAQ STOCK MARKET NASDAQ PHARMACEUTICALS
--------------------------- ------------------- ----------------------
<S> <C> <C> <C>
12/31/93 100.0 100.0 100.0
12/31/94 28.4 97.8 75.3
12/31/95 116.4 138.3 138.0
12/31/96 146.3 170.0 138.5
12/31/97 67.2 208.6 143.0
12/31/98 65.7 293.2 183.0
</TABLE>

INDEPENDENT AUDITORS

Ernst & Young LLP, independent auditors, audited the financial statements
of the Company for the year ended December 31, 1998. Representatives of Ernst &
Young LLP are expected to attend the Annual Meeting, will have the opportunity
to make a statement if they desire to do so, and are expected to be available to
respond to appropriate questions.

CERTAIN TRANSACTIONS

From January 1, 1998 to the present, there have been no transactions in
which the amount involved exceeded $60,000 to which the Company or any of its
subsidiaries was a party and in which any executive officer, director, 5%
beneficial owner of the Company's Common Stock or member of the immediate family
of any of the foregoing persons had or have a direct or indirect material
interest, except certain transactions identified below.

19
<PAGE> 21

The Company has entered into an agreement dated as of January 26, 1996 with
Edgar G. Engleman, pursuant to which Dr. Engleman shall receive a fee based on
the Company's net sales of GL701 for the treatment of lupus. There have been no
such sales to date nor are any anticipated in 1999.

SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received by the Company at its principal
office between March 18, 2000 and April 17, 2000 in order to be included in the
Company's Proxy Statement and proxy card for the meeting.

COMPLIANCE UNDER SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the SEC. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms that
they file.

Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements were met.

OTHER BUSINESS

The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.

20
<PAGE> 22

APPENDIX A

GENELABS TECHNOLOGIES, INC.

1995 STOCK OPTION PLAN

Adopted April 14, 1995

(As Amended May 30, 1996, September 17, 1997, February 6, 1998 and January
22, 1999)

1. Purpose. This 1995 Stock Option Plan (this "Plan") is established as a
compensatory plan to attract, retain and provide equity incentives to selected
persons to promote the financial success of Genelabs Technologies, Inc., a
California corporation (the "Company"). Capitalized terms not previously defined
herein are defined in Section 17 of this Plan.

2. Types of Options and Shares. Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(b) non-qualified stock options ("NQSOs"), as designated at the time of grant.
The shares of stock that may be purchased upon exercise of Options granted under
this Plan (the "Shares") are shares of the Common Stock of the Company.

3. Number of Shares. Shares of Common Stock remaining available for future
grants of stock options under the Company's 1985 Employee Stock Option Plan (the
"1985 Plan") and shares of Common Stock issuable upon exercise or currently
outstanding pursuant to the 1985 Plan that expire or become unexercisable for
any reason without having been exercised in full, will be available for issuance
under the Plan, subject to adjustment as provided in this Plan. Upon adoption of
the Plan by the Company's shareholders on June 2, 1995, the number of shares of
Common Stock reserved for issuance under this Plan was 3,912,889, which was
comprised of 5,000,000 shares available for issuance under the 1985 Plan less
1,087,111 shares issued under that plan. On May 30, 1996, the Company's
shareholders approved an amendment to increase the aggregate number of shares
that may be issued pursuant to options granted under this Plan to 4,912,889
shares. On January 22, 1999 the Company's Board approved an amendment to
increase the aggregate number of shares that may be issued pursuant to options
granted under this Plan to 6,912,889. At all times during the term of this Plan,
the Company shall reserve and keep available such number of Shares as shall be
required to satisfy the requirements of outstanding Options under this Plan.

4. Eligibility. Options may be granted to employees, directors,
consultants, officers, independent contractors and advisers (provided such
consultants, independent contractors and advisers render bona fide services not
in connection with the offer and sale of securities in a capital-raising
transaction) of the Company or any Parent, Subsidiary or Affiliate of the
Company. ISOs may be granted only to employees (including officers and directors
who are also employees) of the Company or a Parent or Subsidiary of the Company.
Non-Employee Directors shall only be eligible for grants of NQSOs pursuant to
Section 7. The Committee (as defined in Section 14) in its sole discretion shall
select the recipients of Options ("Optionees"). An Optionee may be granted more
than one Option under this Plan. No one Optionee shall be eligible to receive
more than 500,000 Shares during any single calendar year during the term of this
Plan pursuant to the grant of Options hereunder.

5. Terms and Conditions of Options. For grants other than to Non-Employee
Directors pursuant to Section 7, the Committee shall determine whether each
Option is to be an ISO or an NQSO, the number of Shares subject to the Option,
the exercise price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:

(a) Form of Option Grant. Each Option granted under this Plan shall be
evidenced by a written Stock Option Grant (the "Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to
time approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.

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(b) Date of Grant. The date of grant of an Option shall be the date on
which the Committee makes the determination to grant such Option unless
otherwise specified by the Committee. The Grant representing the Option
will be delivered to Optionee with a copy of this Plan within a reasonable
time after the granting of the Option.

(c) Exercise Price. The exercise price of an Option shall be
determined by the Committee on the date the Option is granted; provided
that (i) the exercise price of an NQSO shall be not less than 85% of the
Fair Market Value of the Shares on the date the Option is granted; (ii) the
exercise price of an ISO shall be not less than 100% of the Fair Market
Value of the Shares on the date the Option is granted; and (iii) the
exercise price of any ISO granted to a person owning more than l0% of the
total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company ("Ten Percent Shareholder") shall not
be less than 110% of the Fair Market Value of the Shares on the date the
Option is granted.

(d) Exercise Period. Options shall be exercisable within the times or
upon the events determined by the Committee as set forth in the Grant;
provided, however, that no Option shall be exercisable after the expiration
of ten (10) years from the date the Option is granted, and provided further
that no ISO granted to a Ten Percent Shareholder shall be exercisable after
the expiration of five (5) years from the date the Option is granted.

(e) Limitations on ISOs. The aggregate Fair Market Value (determined
as of the time an Option is granted) of stock with respect to which ISOs
are exercisable for the first time by an Optionee during any calendar year
(under this Plan or under any other incentive stock option plan of the
Company or any Parent or Subsidiary of the Company) shall not exceed
$100,000. If the Fair Market Value of Shares with respect to which ISOs are
exercisable for the first time by an Optionee during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of Shares to
become exercisable in such year shall be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that year shall be
NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the effective date of this Plan to provide for a
different limit on the Fair Market Value of Shares permitted to be subject
to ISOs, such different limit shall be incorporated herein and shall apply
to any Options granted after the effective date of such amendment.

(f) Options Non-Transferable. Options granted under this Plan, and any
interest therein, shall not be transferable or assignable by Optionee, and
may not be made subject to execution, attachment or similar process,
otherwise than by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of Optionee only by Optionee;
provided, however, that NQSOs may be transferred to such family members,
trusts and charitable institutions as the Committee, in its sole
discretion, shall approve at the time of the grant of such Option.

(g) Assumed Options. In the event the Company assumes an option
granted by another company, the terms and conditions of such option shall
remain unchanged (except the exercise price and the number and nature of
shares issuable upon exercise, which will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new option rather than assuming an existing option, such new option
may be granted with a similarly adjusted exercise price.

6. Exercise of Options.

(a) Notice. Options may be exercised only by delivery to the Company
of a written stock option exercise agreement (the "Exercise Agreement") in
a form approved by the Committee (which need not be the same for each
Optionee), stating the number of Shares being purchased, the restrictions
imposed on the Shares, if any, and such representations and agreements
regarding Optionee's investment intent and access to information, if any,
as may be required by the Company to comply with applicable securities
laws, together with payment in full of the exercise price for the number of
Shares being purchased.

(b) Payment. Payment for the Shares may be made in cash (by check) or,
where approved by the Committee in its sole discretion at the time of grant
and where permitted by law: (i) by cancellation of
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indebtedness of the Company to the Optionee; (ii) by surrender of shares of
Common Stock of the Company having a Fair Market Value equal to the
applicable exercise price of the Options, that have been owned by Optionee
for more than six (6) months (and which have been paid for within the
meaning of Securities and Exchange Commission ("SEC") Rule 144 and, if such
Shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares), or were obtained by
Optionee in the open public market; (iii) by tender of a full recourse
promissory note having such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid imputation of income under
Sections 483 and 1274 of the Code; (iv) by waiver of compensation due or
accrued to Optionee for services rendered; (v) provided that a public
market for the Company's stock exists, through a "same day sale" commitment
from Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby Optionee
irrevocably elects to exercise the Option and to sell a portion of the
Shares so purchased to pay for the exercise price and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; (vi) provided that a public market
for the Company's stock exists, through a "margin" commitment from Optionee
and an NASD Dealer whereby Optionee irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
exercise price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the
Company; or (vii) by any combination of the foregoing. Optionees who are
not employees of the Company shall not be entitled to purchase Shares with
a promissory note unless the note is adequately secured by collateral other
than the Shares.

(c) Withholding Taxes. Prior to issuance of the Shares upon exercise
of an Option, Optionee shall pay or make adequate provision for any federal
or state withholding obligations of the Company, if applicable.

(d) Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following:

(i) If Optionee ceases to be employed or retained by the Company or
any Parent, Subsidiary or Affiliate of the Company for any reason except
death or disability, Optionee may exercise such Optionee's ISOs or NQSOs
to the extent (and only to the extent) that they would have been
exercisable upon the date of termination, within three (3) months after
the date of termination (or such shorter time period as may be specified
in the Grant).

(ii) If Optionee's employment or retention with the Company or any
Parent, Subsidiary or Affiliate of the Company is terminated because of
the death of Optionee or disability of Optionee within the meaning of
Section 22(e)(3) of the Code, Optionee's ISOs or NQSOs may be exercised
to the extent (and only to the extent) that they would have been
exercisable by Optionee on the date of termination, by Optionee (or
Optionee's legal representative) within twelve (12) months after the
date of termination (or such shorter time period as may be specified in
the Grant), but in any event no later than the expiration date of the
ISOs.

(iii) The Committee shall have discretion to determine whether
Optionee has ceased to be employed or retained by the Company or any
Parent, Subsidiary or Affiliate of the Company and the effective date on
which such employment terminated.

(iv) In the case of an Optionee who is a director, consultant,
independent contractor or adviser, the Committee will have the
discretion to determine whether Optionee is employed or retained by the
Company or any Parent, Subsidiary or Affiliate of the Company pursuant
to the foregoing Sections.

(v) The Committee may specify a reasonable minimum number of Shares
that may be purchased on any exercise of an Option, provided that such
minimum number will not prevent Optionee from exercising the full number
of Shares as to which the Option is then exercisable.

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<PAGE> 25

(vi) An Option shall not be exercisable unless such exercise is in
compliance with the Securities Act of 1933, as amended (the "Securities
Act"), all applicable state securities laws and the requirements of any
stock exchange or national market system upon which the Shares may then
be listed, as they are in effect on the date of exercise. The Company
shall be under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or national
market system, and the Company shall have no liability for any inability
or failure to do so.

7. Option Grants for Non-Employee Directors

(a) Eligibility and Award Formula. Options may be granted only to such
Non-Employee Directors of the Company or any Parent, Subsidiary or
Affiliate of the Company as the Committee shall select from time to time in
its sole discretion. Directors may be granted more than one option under
the Plan. Each director, upon his or her first election to the Board, will
be granted an option to purchase 20,000 shares of the Company's Common
Stock. At the Company's Annual Meeting of Shareholders following the second
anniversary of his or her election to the Board, and at each subsequent
Annual Meeting of Shareholders, each director will be granted an additional
option to purchase 10,000 shares.

(b) Terms and Conditions of Options. The Committee shall determine the
exercise price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:

(i) Date of Grant. The date of grant of an Option shall be the
dates described in Section 7(a) above. The Grant representing the Option
will be delivered to the Optionee within a reasonable time after the
granting of the Option.

(ii) Exercise Price. The exercise price of an Option shall be not
less than the Fair Market Value of the Shares at the time that the
Option is granted.

(iii) Exercise Period. Options shall be exercisable as to 50% of
the Shares on the first anniversary of the date of grant and the
remaining 50% on the second anniversary thereof; provided however, that
no Option shall be exercisable after the expiration of ten years from
the date the Option is granted.

(iv) Limitation on Exercise. If the Optionee ceases to be a
director for any reason except death or disability, Optionee may
exercise his or her options to the extent (and only to the extent) that
they would have been exercisable upon the date of termination, within
six (6) months after the date of termination. If the Optionee ceases to
be a director because of death or disability, Optionee (or Optionee's
legal representative) may exercise his or her options to the extent (and
only to the extent) that they would have been exercisable upon the date
of termination, within twelve (12) months after the date of termination.

8. Modification, Extension and Renewal of Options. The Committee shall have
the power to modify, extend or renew outstanding Options and to authorize the
grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of Optionee, impair any rights under any Option
previously granted. Any outstanding ISO that is modified, extended, renewed or
otherwise altered shall be treated in accordance with Section 424(h) of the
Code. The Committee shall have the power to reduce the exercise price of
outstanding Options without the consent of Optionees by a written notice to the
Optionees affected; provided, however, that the exercise price per Share may not
be reduced below the minimum exercise price that would be permitted under
Section 5(c) of this Plan for Options granted on the date the action is taken to
reduce the exercise price.

9. Privileges of Stock Ownership. No Optionee shall have any of the rights
of a shareholder with respect to any Shares subject to an Option until such
Option is properly exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to such date,
except as provided in this Plan. Upon written request, the Company shall provide
to each Optionee a copy of the annual financial

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statements of the Company at such time after the close of each fiscal year of
the Company as such statements are released by the Company to its common
shareholders generally.

10. No Obligation to Employ. Nothing in this Plan or any Option granted
under this Plan shall confer on any Optionee any right to continue in the employ
of, as a director of, or other relationship with, the Company or any Parent,
Subsidiary or Affiliate of the Company or limit in any way the right of the
Company or any Parent, Subsidiary or Affiliate of the Company to terminate
Optionee's employment or other relationship at any time, with or without cause.

11. Adjustment of Option Shares. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration, or
if a substantial portion of the assets of the Company are distributed, without
consideration in a spin-off or similar transaction, to the shareholders of the
Company, the number of Shares available under this Plan and the number of Shares
subject to outstanding Options and the exercise price per Share of such Options
shall be proportionately adjusted, subject to any required action by the Board
of Directors (the "Board") or shareholders of the Company and compliance with
applicable securities laws; provided, however, that a fractional share shall not
be issued upon exercise of any Option and any fractions of a Share that would
have resulted shall either be cashed out at Fair Market Value or the number of
Shares issuable under the Option shall be rounded up to the nearest whole
number, as determined by the Committee; and provided further that the exercise
price may not be decreased to below the par value, if any, for the Shares.

12. Assumption of Options by Successors. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the surviving
corporation, a transaction in which 100% of the then-outstanding voting stock is
sold or otherwise transferred or the sale of substantially all of the assets of
the Company any or all outstanding Options shall, notwithstanding any contrary
terms of the Grant, accelerate and become exercisable in full at least 10 days
prior to (and shall expire on) the consummation of such dissolution,
liquidation, merger or sale of assets on such conditions as the Committee shall
determine unless the successor corporation assume the outstanding options or
substitutes substantially equivalent options. The aggregate Fair Market Value of
ISOs which first become exercisable in the year of such dissolution,
liquidation, merger or sale of assets cannot exceed $100,000. Any remaining
accelerated options shall be treated as NQSOs.

13. Adoption and Shareholder Approval. This Plan shall become effective on
the date that it is adopted by the Board of the Company. This Plan shall be
approved by the shareholders of the Company, in any manner permitted by
applicable corporate law, within twelve months before or after the date this
Plan is adopted by the Board. Upon the effective date of the Plan, the Board may
grant Options pursuant to this Plan; provided that, in the event that
shareholder approval is not obtained within the time period provided herein, all
Options granted hereunder shall terminate. No Option that is issued as a result
of any increase in the number of shares authorized to be issued under this Plan
shall be exercised prior to the time such increase has been approved by the
shareholders of the Company and all such Options granted pursuant to such
increase shall similarly terminate if such Shareholder approval is not obtained.

14. Administration. This Plan may be administered by the Board or a
committee appointed by the Board (the "Committee"). As used in this Plan,
references to the "Committee" shall mean either such Committee or the Board if
no Committee has been established. If the Company is registered under the
Exchange Act and two or more members of the Board are Non-Employee Directors,
the Committee shall be comprised of at least two members of the Board, all of
whom are Non-Employee Directors. The interpretation by the Committee of any of
the provisions of this Plan or any Option granted under this Plan shall be final
and binding upon the Company and all persons having an interest in any Option or
any Shares purchased pursuant to an Option. The Committee may delegate to
officers of the Company the authority to grant Options under this Plan to
Optionees who are not officers or directors of the Company whose transactions in
the Company's Common Stock are subject to Section 16(b) of the Exchange Act.

15. Term of Plan. Options may be granted pursuant to this Plan from time to
time within a period of ten (10) years from the date on which this Plan is
adopted by the Board.
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16. Amendment or Termination of Plan. The Committee may at any time
terminate or amend this Plan in any respect including (but not limited to)
amendment of any form of grant, exercise agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Committee shall not, without
the approval of the shareholders of the Company, amend this Plan in any manner
that requires such shareholder approval pursuant to the Code or the regulations
promulgated thereunder as such provisions apply to ISO plans or pursuant to the
Exchange Act or Rule 16b-3 (or its successor) promulgated thereunder.

17. Certain Definitions. As used in this Plan, the following terms shall
have the following meanings:

(a) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
the granting of the Option, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.

(b) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time
of granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

(c) "Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to cause the direction of the
management and policies of the corporation, whether through the ownership
of voting securities, by contract or otherwise.

(d) "Fair Market Value" shall mean the fair market value of the Shares
as determined by the Committee from time to time in good faith. If a public
market exists for the Shares, the Fair Market Value shall be the average of
the last reported bid and asked prices for common stock of the Company on
the last trading day prior to the date of determination, or in the event
the common stock of the Company is listed on the Nasdaq National Market,
the Fair Market Value shall be the average of the high and low prices of
the common stock on the option grant date as quoted on the Nasdaq National
Market and reported in the Wall Street Journal.

(e) "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee
director" for purposes of Rule 16b-3.

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APPENDIX B

GENELABS TECHNOLOGIES, INC.

EMPLOYEE STOCK PURCHASE PLAN

(ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 24, 1991)
AS AMENDED FEBRUARY 11, 1994, SEPTEMBER 20, 1995,
JANUARY 26, 1996, MAY 22, 1997, AND FEBRUARY 25, 1999

1. Establishment of Plan

Genelabs Technologies, Inc. (the "Company") proposes to grant options for
purchase of the Company's Common Stock (an "Offering") to eligible employees of
the Company and its Subsidiaries (as hereinafter defined) pursuant to this
Employee Stock Purchase Plan (this "Plan"). For purposes of this Plan, "Parent
Corporation" and "Subsidiary" (collectively, "Subsidiaries") shall have the same
meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company intends the Plan to qualify as an "employee stock purchase
plan" under Section 423 of the Code (including any amendments to or replacements
of such Section), and the Plan shall be so construed. Any term not expressly
defined in the Plan but defined for purposes of Section 423 of the Code shall
have the same definition herein. A total of 1,500,000 shares of the Company's
Common Stock are reserved for issuance under the Plan. Such number shall be
subject to adjustments effected in accordance with Section 14 of the Plan.

2. PURPOSE

The purpose of the Plan is to provide employees of the Company and
Subsidiaries designated by the Board of Directors of the Company (the "Board")
as eligible to participate in the Plan with a convenient means of acquiring an
equity interest in the Company through payroll deductions, to enhance such
employees' sense of participation in the affairs of the Company and
Subsidiaries, and to provide an incentive for continued employment.

3. ADMINISTRATION

This plan may be administered by the Board or a committee appointed by the
Board (the "Committee"). If, at the time the Company registers under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), a majority of
the Board is not comprised of Disinterested Persons as defined in Rule 16b-3(d)
promulgated under the Exchange Act, the Board shall appoint a committee
consisting of not less than three (3) persons (who need not be members of the
Board), each of whom is a Disinterested Person. As used in this Plan, references
to the "Committee" shall mean either such committee or the Board if no committee
has been established. After registration of the Company under the Exchange Act,
Board members who are not Disinterested Persons may not vote on any matters
affecting the administration of this Plan, but any such member may be counted
for determining the existence of a quorum at any meeting of the Board. Subject
to the provisions of the Plan and the limitations of Section 423 of the Code or
any successor provision in the Code, all questions of interpretation or
application of the Plan shall be determined by the Board and its decisions shall
be final and binding upon all participants. Members of the Board shall receive
no compensation for their services in connection with the administration of the
Plan, other than standard fees as established from time to time by the Board for
services rendered by Board members serving on Board committees. All expenses
incurred in connection with the administration of the Plan shall be paid by the
Company.

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4. ELIGIBILITY

Any employee of the Company or the Subsidiaries is eligible to participate
in an Offering Period (as hereinafter defined) under the Plan except the
following:

(a) employees who are not employed by the Company or Subsidiaries on
the fifteenth (15th) day of the month before the beginning of such Offering
Period;

(b) employees who are customarily employed for less than 20 hours per
week;

(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own
stock or hold options to purchase stock or who, as a result of being
granted an option under the Plan with respect to such Offering Period,
would own stock or hold options to purchase stock possessing 5 percent or
more of the total combined voting power or value of all classes of stock of
the Company or any of its Subsidiaries.

5. OFFERING DATES

The Offering Periods of the Plan (the "Offering Period") shall be of
twenty-four (24) months duration commencing on January 2 and July 2 of each year
and ending on July 1 and January 1 of each year. Each Offering Period shall
consist of four (4) six-month purchase periods (individually, a "Purchase
Period") during which payroll deductions of the participants are accumulated
under the Plan. The first business day of each Offering Period is referred to as
the "Offering Date". The last business day of each Offering Period is referred
to as the "Purchase Date". Notwithstanding the foregoing, if the fair market
value of the Company's Common Stock on any Purchase Date is less than it was on
an Offering Date, then the Offering Period (s) for such Offering Date(s) shall
immediately terminate and a new Offering Period shall commence for those
employees participating in such terminated Offerings (See also Section 11(c)
below). The Board shall have the power to change the duration of Offering
Periods or Purchase Periods with respect to offerings without shareholder
approval if such change is announced at least fifteen (15) days prior to the
scheduled beginning of the first Offering Period or Purchase Period to be
affected.

6. PARTICIPATION IN THE PLAN

Eligible employees may become participants in an Offering Period under the
Plan upon the commencement of the next Purchase Period after satisfying the
eligibility requirements by delivering a subscription agreement to the Company's
or Subsidiary's (whichever employs such employee) Treasury Department (the
"Treasury Department") not later than the 15th day of the month before such
Purchase Period begins unless a later time for filing the subscription agreement
authorizing payroll deductions is set by the Board for all eligible employees
with respect to a given Purchase Period. An eligible employee who does not
deliver a subscription agreement to the Treasury Department by such date after
becoming eligible to participate in such Purchase Period shall not participate
in that Purchase Period or any subsequent Purchase Period unless such employee
enrolls in the Plan by filing a subscription agreement with the Treasury
Department not later than the 15th day of the month preceding the beginning of a
subsequent Purchase Period. Once an employee becomes a participant in a Purchase
Period, such employee will automatically participate in the next Purchase Period
unless the employee withdraws from the Plan or terminates further participation
in the Purchase Period as set forth in Section 11 below. Such participant is not
required to file any additional subscription agreement in order to continue
participation in the Plan.

7. GRANT OF OPTION ON ENROLLMENT

Enrollment by an eligible employee in the Plan with respect to an Offering
Period will constitute the grant (as of the Offering Date) by the Company to
such employee of an option to purchase on the Purchase Date up to that number of
shares of Common Stock of the Company determined by dividing the amount
accumulated in such employee's payroll deduction account during such Purchase
Period by the lower of (i) eighty-five percent (85%) of the fair market value of
a share of the Company's Common Stock on the Offering Date (the
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"Entry Price") or (ii) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Purchase Date; provided, however,
that the number of shares of the Company's Common Stock subject to any option
granted pursuant to this Plan shall not exceed the lesser of (a) the maximum
number of shares set by the Board pursuant to Section 10(c) below with respect
to the applicable Purchase Period, or (b) the maximum number of shares which may
be purchased pursuant to Section 10(b) below with respect to the applicable
Purchase Period. Fair market value of a share of the Company's Common Stock
shall be determined as provided in Section 8 hereof.

8. PURCHASE PRICE

The purchase price per share at which a share of Common Stock will be sold
during any Offering Period shall be 85 percent of the lesser of:

(a) The fair market value on the Offering Date; or

(b) The fair market value on the Purchase Date.

For purposes of the Plan, the term "fair market value" on a given date
shall mean the closing price from the previous day's trading of a share of the
Company's Common Stock as reported on The Nasdaq National Market.

9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF SHARES

(a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Purchase Period. The deductions are made as a
percentage of the participant's compensation in one percent increments not
less than 2 percent nor greater than 10 percent, not to exceed $25,000 per
year or such other limit set by the Committee. Compensation shall mean all
W-2 compensation, including, but not limited to base salary, wages,
commissions, overtime, shift premiums and bonuses, plus draws against
commissions; provided, however, that for purposes of determining a
participant's compensation, any election by such participant to reduce his
or her regular cash remuneration under Sections 125 or 401(k) of the Code
shall be treated as if the participant did not make such election. Payroll
deductions shall commence on the first payday following the Offering Date
and shall continue to the end of the Purchase Period unless sooner altered
or terminated as provided in the Plan.

(b) A participant may lower (but not increase) the rate of payroll
deductions during a Purchase Period by filing with the Treasury Department
a new authorization for payroll deductions, in which case the new rate
shall become effective for the next payroll period commencing more than 15
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Purchase Period unless changed as
described below. Such change in the rate of payroll deductions may be made
at any time during a Purchase Period, but not more than one change may be
made effective during any Purchase Period. A participant may increase or
decrease the rate of payroll deductions for any subsequent Purchase Period
by filing with the Treasury Department a new authorization for payroll
deductions not later than the 15th day of the month before the beginning of
such Purchase Period. An increase or decrease in your payroll deduction
does not start a new Offering Period.

(c) All payroll deductions made for a participant are credited to his
or her account under the Plan and are deposited with the general funds of
the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for
any corporate purposes, and the Company shall not be obligated to segregate
such payroll deductions.

(d) On each Purchase Date, so long as the Plan remains in effect and
provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the
participant wishes to withdraw from that Purchase Period under the Plan and
have all payroll deductions accumulated in the account maintained on behalf
of the participant as of that date returned to the participant, the Company
shall apply the funds then in the participant's account to the purchase of
whole shares of Common Stock reserved under the option granted to such
participant with respect to the Purchase Period to the extent that such
option is exercisable on the Purchase Date. The purchase price
B-3
<PAGE> 31

per share shall be as specified in Section 8 of the Plan. Any cash
remaining in a participant's account after such purchase of shares shall be
refunded to such participant in cash, without interest; provided, however,
that any amount remaining in such participant's account on a Purchase Date
which is less than the amount necessary to purchase a full share of Common
Stock of the Company shall be carried forward, without interest, into the
next Purchase Period. In the event that the Plan has been oversubscribed,
all funds not used to purchase shares on the Purchase Date shall be
returned to the participant, without interest. No Common Stock shall be
purchased on a Purchase Date on behalf of any employee whose participation
in the Plan has terminated prior to such Purchase Date.

(e) As promptly as practicable after the Purchase Date, the Company
shall arrange the delivery to each participant of a certificate
representing the shares purchased upon exercise of his option; provided
that the Board may deliver certificates to a broker or brokers that hold
such certificate in a street name for the benefit of each such participant.

(f) During a participant's lifetime, such participant's option to
purchase shares hereunder is exercisable only by him or her. The
participant will have no interest or voting right in shares covered by his
or her option until such option has been exercised. Shares to be delivered
to a participant under the Plan will be registered in the name of the
participant or in the name of the participant and his or her spouse.

10. LIMITATIONS ON SHARES TO BE PURCHASED

(a) No employee shall be entitled to purchase stock under the Plan at
a rate which, when aggregated with his or her rights to purchase stock
under all other employee stock purchase plans of the Company or any
Subsidiary, exceeds $25,000 in fair market value, determined as of the
Offering Date (or such other limit as may be imposed by the Code) for each
calendar year in which the employee participates in the Plan.

(b) No more than 200% of the number of shares determined by using 85%
of the fair market value of a share of the Company's Common Stock on the
Offering Date as the denominator may be purchased by a participant on any
single Purchase Date.

(c) No employee shall be entitled to purchase more than the Maximum
Share Amount (as defined below) on any single Purchase Date. Not less than
thirty days prior to the commencement of any Purchase Period, the Board
may, in its sole discretion, set a maximum number of shares which may be
purchased by any employee at any single Purchase Date (hereinafter the
"Maximum Share Amount"). In no event shall the Maximum Share Amount exceed
the amounts permitted under Section 10(b) above. If a new Maximum Share
Amount is set, then all participants must be notified of such Maximum Share
Amount not less than fifteen days prior to the commencement of the next
Purchase Period. Once the Maximum Share Amount is set, it shall continue to
apply with respect to all succeeding Purchase Dates and Purchase Periods
unless revised by the Board as set forth above.

(d) If the number of shares to be purchased on a Purchase Date by all
employees participating in the Plan exceeds the number of shares then
available for issuance under the Plan, the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Board shall determine to be equitable. In such
event, the Company shall give written notice of such reduction of the
number of shares to be purchased under a participant's option to each
participant affected thereby.

(e) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section
10 shall be returned to the participant as soon as practicable after the
end of the Purchase Period, without interest.

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<PAGE> 32

11. WITHDRAWAL

(a) Each participant may withdraw from a Purchase Period under the
Plan by signing and delivering to the Treasury Department notice on a form
provided for such purpose. Such withdrawal may be elected at any time at
least 15 days prior to the end of a Purchase Period.

(b) Upon withdrawal from the Plan, the accumulated payroll deductions
shall be returned to the withdrawn participant, without interest, and his
or her interest in the Plan shall terminate. In the event a participant
voluntarily elects to withdraw from the Plan, he or she may not resume his
or her participation in the Plan during the same Purchase Period, but he or
she may participate in any Purchase Period under the Plan which commences
on a date subsequent to such withdrawal by filing a new authorization for
payroll deductions in the same manner as set forth above for initial
participation in the Plan.

(c) For an Offering Period in which a participant is enrolled, if the
fair market value of the Company's Common Stock on the Purchase Date is
less than it was on the Offering Date, the Company will automatically
enroll such participant in the subsequent Offering Period. A participant
does not need to file any forms with the Company to automatically be
enrolled in the subsequent Offering Period.

12. TERMINATION OF EMPLOYMENT

Termination of a participant's employment for any reason, including
retirement, death or the failure of a participant to remain an eligible
employee, immediately terminates his or her participation in the Plan. In such
event, the payroll deductions credited to the participant's account will be
returned to him or her or, in the case of his or her death, to his or her legal
representative, without interest. For purposes of this Section 12, an employee
will not be deemed to have terminated employment or failed to remain in the
continuous employ of the Company in the case of sick leave, military leave, or
any other leave of absence approved by the Board; provided that such leave is
for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.

13. RETURN OF PAYROLL DEDUCTIONS

In the event a participant's interest in the Plan is terminated by
withdrawal, termination of employment or otherwise, or in the event the Plan is
terminated by the Board, the Company shall promptly deliver to the participant
all payroll deductions credited to his account. No interest shall accrue on the
payroll deductions of a participant in the Plan.

14. CAPITAL CHANGES

Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
shall be final, binding and conclusive. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an option.

In the event of the proposed dissolution or liquidation of the Company, the
Purchase Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under the Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or

B-5
<PAGE> 33

her option as to all of the optioned stock, including shares which would not
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, that the participant shall have the right to exercise the option
as to all of the optioned stock. If the Board makes an option exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify the participant that the option shall be fully
exercisable for a period of twenty (20) days from the date of such notice, and
the option will terminate upon the expiration of such period.

The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, or
in the event of the Company being consolidated with or merged into any other
corporation.

15. NONASSIGNABILITY

Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 22 hereof) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect.

16. REPORTS

Individual accounts will be maintained for each participant in the Plan.
Each participant shall receive promptly after the end of each Purchase Period a
report of his account setting forth the total payroll deductions accumulated,
the number of shares purchased, the per share price thereof and the remaining
cash balance, if any, carried forward to the next Purchase Period.

17. NOTICE OF DISPOSITION

Each participant shall notify the Company if the participant disposes of
any of the shares purchased in any Purchase Period pursuant to this Plan if such
disposition occurs within two years from the Offering Date or within one year
from the Purchase Date on which such shares were purchased (the "Notice
Period"). Unless such participant is disposing of any of such shares during the
Notice Period, such participant shall keep the certificates representing such
shares in his or her name (and not in the name of a nominee) during the Notice
Period. The Company may, at any time during the Notice Period, place a legend or
legends on any certificate representing shares acquired pursuant to the Plan
requesting the Company's transfer agent to notify the Company of any transfer of
the shares. The obligation of the participant to provide such notice shall
continue notwithstanding the placement of any such legend on the certificates.

18. NO RIGHTS TO CONTINUED EMPLOYMENT

Neither this Plan nor the grant of any option hereunder shall confer any
right on any employee to remain in the employ of the Company or any Subsidiary,
or restrict the right of the Company or any Subsidiary to terminate such
employee's employment.

19. EQUAL RIGHTS AND PRIVILEGES

All eligible employees shall have equal rights and privileges with respect
to the Plan so that the Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 or any successor provision of the Code and the
related regulations. Any provision of the Plan which is inconsistent with
Section 423 or any successor provision of the Code shall, without further act or
amendment by the Company or the Board, be reformed to comply with the
requirements of Section 423. This Section 19 shall take precedence over all
other provisions in the Plan.
B-6
<PAGE> 34

20. NOTICES

All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

21. SHAREHOLDER APPROVAL OF AMENDMENTS

Any required approval by the shareholders of the Company shall be solicited
substantially in accordance with Section 14(a) of the Exchange Act, and the
rules and regulations promulgated thereunder. Such approval of an amendment
shall be solicited at or prior to the first annual meeting of shareholders held
subsequent to the grant of an option under the Plan to an employee of the
Company. If such shareholder approval is obtained at a duly held shareholders'
meeting, it must be obtained by a majority of all of the outstanding shares of
the Company, or if such shareholder approval is obtained by written consent, it
must be obtained by a majority of all shareholders of the Company; provided,
however, that approval at a meeting or by written consent may be obtained by a
lesser degree of shareholder approval if the Board determines, in its discretion
after consultation with the Company's legal counsel, that such lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 423 of the Code or Rule 16b-3
promulgated under the Exchange Act ("Rule 16b-3").

22. DESIGNATION OF BENEFICIARY

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to the
end of a Purchase Period but prior to delivery to him or her of such shares
and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to a Purchase Date.

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who
is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent
or relative is known to the Company, then to such other person as the
Company may designate.

23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES

Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

24. APPLICABLE LAW

The Plan shall be governed by the substantive laws (excluding the conflict
of laws rules) of the State of California.

25. AMENDMENT OR TERMINATION OF THE PLAN

This Plan shall be effective July 1, 1991, subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board and the Plan shall continue until the earlier to occur of
termination by the Board, issuance of all of the shares of Common Stock reserved
for

B-7
<PAGE> 35

issuance under the Plan, or ten (10) years from the adoption of the Plan by the
Board. No purchase of shares pursuant to the Plan shall occur prior to such
shareholder approval. The Board may at any time amend or terminate the Plan,
except that any such termination cannot affect options previously granted under
the Plan, nor may any amendment make any change in an option previously granted
which would adversely affect the right of any participant, nor may any amendment
be made without approval of the shareholders of the Company obtained in
accordance with Section 21 hereof within 12 months of the adoption of such
amendment (or earlier if required by Section 21) if such amendment would:

(a) increase the number of shares that may be issued under the Plan;

(b) change the designation of the employees (or class of employees)
eligible for participation in the Plan; or

(c) constitute an amendment for which shareholder approval is required
in order to comply with Rule 16b-3 (or any successor rule) of the Exchange
Act.

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<PAGE> 36

PROXY

GENELABS TECHNOLOGIES, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JUNE 16, 1999

The undersigned hereby appoints Irene A. Chow and James A.D. Smith, and each of
them, with power of substitution, to represent the undersigned at the Annual
Meeting of Shareholders of Genelabs Technologies, Inc. (the "Company") to be
held at the Company's principal executive offices located at 505 Penobscot
Drive, Redwood City, California 94063 on June 16, 1999, at 10:00 a.m. P.D.T.,
and any adjournment thereof, and to vote the number of shares the undersigned
would be entitled to vote if personally present at the meeting on the following
matters:

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

FOLD AND DETACH HERE
<PAGE> 37

WITHHELD
1. ELECTION OF DIRECTORS FOR FOR ALL
Irene A. Chow Frank L. Douglas Alan Y. Kwan [ ] [ ]
J. Richard Crout Arthur Gray, Jr. James A.D. Smith
Thomas E. Dewey, Jr. H.H. Haight Nina K. Wang
Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name on the
space provided below.

----------------------------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF AMENDMENTS TO THE 1995 STOCK OPTION PLAN. [ ] [ ] [ ]

FOR AGAINST ABSTAIN
3. APPROVAL OF AN AMENDMENT TO THE EMPLOYEE STOCK [ ] [ ] [ ]
PURCHASE PLAN.

I PLAN TO ATTEND THE MEETING. [ ]

The Board of Directors recommends a vote FOR all nominees for election and FOR
Proposal 2 and 3.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE, IN THE ABSENCE OF DIRECTION, THIS
PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEES FOR ELECTION AND FOR PROPOSAL 2
AND 3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities
and Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.

Signature(s) Date
----------------------------------------------- ----------------
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares of stock are held of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be exactly by the president or vice president and
the secretary or assistant secretary. Executors, administrators, or other
fiduciaries who exercise the above proxy for a decreased shareholder should give
their full title. Please date the proxy.