<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
-----------
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
FOR THE PERIOD ENDED JUNE 30, 1997
OR
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER: 0-28324
BIOTRANSPLANT INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 04-3119555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CHARLESTOWN NAVY YARD, BUILDING 75 THIRD AVENUE
CHARLESTOWN, MASSACHUSETTS 02129
(Address of principal executive offices)
(617) 241-5200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
----- -----
As of August 4, 1997, there were 8,570,916 shares of the Registrant's
Common Stock outstanding.
================================================================================
<PAGE> 2
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
FORM 10-Q
INDEX
<TABLE>
PART I. FINANCIAL INFORMATION
<CAPTION>
Page No.
--------
<S> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 1996 and June 30, 1997...................................3
Condensed Consolidated Statement of Operations for the three and six months ended June 30, 1996
and 1997, and for the period from inception (March 20, 1990) to June 30, 1997............................4
Condensed Consolidated Statement of Cash Flows for six months ended June 30, 1996 and 1997,
and for the period from inception (March 20, 1990) to June 30, 1997 .....................................5
Notes to Condensed Consolidated Financial Statements..............................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................8
PART II. OTHER INFORMATION
ITEM 1. - 6. ............................................................................................................11
SIGNATURES..............................................................................................12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30,
December 31, 1997
1996 (Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,563,957 $ 12,867,155
Short-term investments 13,001,472 8,071,018
Accounts receivable - 250,000
Deposits and other prepaid expenses 1,087,516 707,779
------------ ------------
Total current assets 20,652,945 21,895,952
Property and equipment - net 1,285,535 1,104,226
Long-term investments 10,310,778 11,116,327
Other assets 66,377 49,783
============ ============
TOTAL ASSETS $ 32,315,635 $ 34,166,288
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current obligation under capital leases $ 425,986 $ 389,495
Accounts payable 126,003 156,084
Accrued expenses 1,312,964 1,802,902
Deferred revenue 1,000,000 4,500,000
------------ ------------
Total current liabilities 2,864,953 6,848,481
------------ ------------
Long-term obligation under capital leases 188,974 15,487
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, authorized 2,000,000 shares; issued and
outstanding - no shares - -
Common stock, $.01 par value, authorized 25,000,000 shares; issued and
outstanding 8,558,902 shares at December 31, 1996 and 8,570,916 shares
at June 30, 1997 85,589 85,709
Additional paid-in capital 65,285,038 65,322,899
Accumulated deficit (36,108,919) (38,106,288)
------------ ------------
Total stockholders equity 29,261,708 27,302,320
============ ============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,315,635 $ 34,166,288
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE> 4
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended Cumulative
June 30, June 30, Since
1996 1997 1996 1997 Inception
---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
License fees $2,000,000 $3,000,000 $ 2,000,000 $ 3,000,000 $ 12,000,000
Research and development 1,250,000 1,750,000 3,250,000 3,000,000 17,250,000
Interest income 305,315 468,085 381,012 872,802 2,694,422
---------- ---------- ----------- ----------- ------------
Total revenues 3,555,315 5,218,085 5,631,012 6,872,802 31,944,422
---------- ---------- ----------- ----------- ------------
Expenses:
Research and development 3,122,811 3,863,044 5,678,441 7,231,287 55,774,757
General and administrative 559,369 933,653 1,016,175 1,602,237 12,548,216
Interest 31,573 16,541 82,781 36,647 1,727,737
---------- ---------- ----------- ----------- ------------
Total expenses 3,713,753 4,813,238 6,777,397 8,870,171 70,050,710
---------- ---------- ----------- ----------- ------------
Net income (loss) $ (158,438) $ 404,847 $(1,146,385) $(1,997,369) $(38,106,288)
========== ========== =========== =========== ============
Pro forma net income (loss) per common
share $ (0.02) $ 0.05 $ (0.18) $ (0.23)
========== ========== =========== ===========
Shares used in computing pro forma
net income (loss) per common share 7,301,935 8,569,006 6,216,640 8,565,216
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE> 5
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended Cumulative
June 30, Since
1996 1997 Inception
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,146,385) $(1,997,369) $(38,106,288)
Adjustments to reconcile net loss to net cash
provided by (used) in operating activities:
Depreciation and amortization 341,979 292,807 2,837,394
Noncash interest expense 15,583 - 465,477
Noncash expenses related to options and warrants 16,594 16,594 1,135,464
Changes in current assets and liabilities:
Accounts receivable 250,000 (250,000) (250,000)
Deposits and prepaid expenses (608,041) 379,737 (707,779)
Accounts payable (34,211) 30,081 156,084
Accrued expenses 213,681 489,938 1,802,902
Deferred revenue 1,250,000 3,500,000 4,500,000
----------- ----------- ------------
Net cash provided by (used in) operating activities 299,200 2,461,788 (28,166,746)
----------- ----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (68,043) (111,497) (3,316,885)
Disposal of property and equipment, net - - 28,040
Purchases of investments - (9,119,176) (47,319,868)
Proceeds from investments - 13,244,081 28,132,522
----------- ----------- ------------
Net cash provided by (used in) investing activities (68,043) 4,013,408 (22,476,191)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from convertible notes payable to stockholders - - 9,400,000
Payments of obligations under capital leases (235,059) (209,979) (1,789,229)
Proceeds from sale/leaseback of equipment - - 771,968
Net proceeds from equipment leases - - 1,422,240
Net proceeds from sale of redeemable convertible preferred stock 5,889,530 - 25,661,526
Proceeds from sale of common stock 27,963,783 37,981 28,043,587
----------- ----------- ------------
Net cash provided by (used in) financing activities 33,618,254 (171,998) 63,510,092
----------- ----------- ------------
Net increase in cash and cash equivalents 33,849,411 6,303,198 12,867,155
Cash and cash equivalents, beginning of period 2,848,549 6,563,957 -
----------- ----------- ------------
Cash and cash equivalents, end of period $33,697,960 $12,867,155 $ 12,867,155
=========== =========== ============
Supplemental disclosures and noncash transactions:
Increase in equipment under capital leases $ - $ - $ (2,210,270)
=========== =========== ============
Conversion of convertible notes payable to stockholders and
accrued interest into redeemable convertible preferred stock $ 1,055,816 $ - $ 9,905,710
=========== =========== ============
Issuance of warrants $ - $ - $ 741,737
=========== =========== ============
Interest paid during the period $ 67,144 $ 15,285 $ 1,349,114
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE> 6
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND BASIS OF PRESENTATION
BioTransplant Incorporated (the "Company") was incorporated on March 20, 1990.
The Company is developing proprietary anti-rejection pharmaceuticals and organ
transplantation systems which represent a comprehensive approach to inducing
long-term specific transplantation tolerance in humans.
The Company is in the development stage and is devoting substantially all of its
efforts toward product research and development and raising capital. The Company
is subject to a number of risks similar to those of other development stage
companies, including dependence on key individuals, competition from larger
companies, the development of commercially usable products, obtaining regulatory
approval for products under development, the development and marketing of
commercial products, and the need to obtain adequate additional financing
necessary to fund the development of its products.
The interim financial statements herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
representation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission.
2. CASH EQUIVALENTS AND INVESTMENTS
Cash equivalents include short-term, highly liquid investments with original
maturities of less than three months from the date of purchase. Short-term
investments consist primarily of corporate notes and securities issued by the
United States Treasury or other United States government agencies with
maturities of less than one year from the date of purchase. Long-term
investments consist primarily of corporate notes with maturities of greater than
one year. In accordance with Financial Accounting Standards Board Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities", the
Company's investments are classified as held-to-maturity and are stated at
amortized cost, which approximates market value.
The Company held the following investments at December 31, 1996 and June 30,
1997:
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
------------ -----------
<S> <C> <C>
Short-term:
United States Treasury and Agency Securities
(average maturity of 12 months) $ - $ 2,000,000
Corporate Bonds (average maturity of seven and ten months) 12,015,442 6,071,018
Commercial Paper (average maturity of 93 days) 986,030 -
----------- -----------
$13,001,472 $ 8,071,018
=========== ===========
Long-term:
Corporate Bonds (average maturity of 15 months) $10,310,778 $11,116,327
=========== ===========
</TABLE>
6
<PAGE> 7
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
3. NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is based on the pro forma weighted average
number of common shares outstanding during the periods presented, assuming the
automatic conversion of all shares of Series A, B, D and E redeemable
convertible preferred stock into shares of common stock on the date of issuance.
Pursuant to the requirements of the SEC, common stock and preferred stock issued
during the 12 months immediately preceding the initial public offering, plus
shares of common stock that became issuable during the same period pursuant to
the grant of common stock options and warrants, have been included in the
calculation of pro forma weighted average number of common shares outstanding
for all periods presented until the effective date of the Company's initial
public offering using the treasury stock method. Common stock equivalents have
not been included in the computation of net income per share for the three
months ended June 30, 1997 as the Company expects to incur a loss for the year
ended December 31, 1997.
4. NEW ACCOUNTING STANDARD
In March 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share", ("SFAS 128"). SFAS 128 establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. This statement is
effective for fiscal years ending after December 15, 1997 and early adoption is
not permitted. When adopted, this statement will require restatement of prior
years' earnings per share. The Company will adopt this statement for its fiscal
year ended December 31, 1997. The Company believes that the adoption of SFAS 128
will not have a material effect on its financial statements.
5. REVENUE RECOGNITION
Substantially all of the Company's license and research and development revenues
are derived from two collaborative research arrangements. Annual research and
development payments are recognized on a straight-line basis over the period of
the contract, which approximates when work is performed and costs are incurred.
License fee revenue represents technology transfer fees received for rights to
certain technology of the Company. License fees are recognized as revenue as
earned. Deferred revenue represents amounts received in advance for research and
development. Research and development expenses in the accompanying consolidated
statements of operations include funded and unfunded expenses.
7
<PAGE> 8
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company for the three and six months ended June 30, 1996 and 1997 should be
read in conjunction with the accompanying unaudited condensed consolidated
financial statements and the related notes thereto.
This report may contain certain forward looking statements which involve risks
and uncertainties. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "intends," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain factors which
may cause the Company's plans and results to differ significantly from the plans
and results discussed in forward looking statements. Factors that may cause such
differences include, but are not limited to, the progress of the Company's
research and development programs, the Company's ability to compete
successfully, the Company's ability to attract and retain qualified personnel,
including qualified management and scientific staff, the Company's ability to
enter into and maintain collaborations with third parties , the Company's
ability to enter into and progress in clinical trials, the time and costs
involved in obtaining regulatory approvals, the costs involved in obtaining and
enforcing patents, proprietary rights and any necessary licenses, the ability of
the Company to establish development and commercialization capacities or
relationships, the costs of manufacturing, the Company's ability to obtain
additional funds. For a more detailed discussion of these factors, see Item 1 -
"Business - Factors Which May Affect Results" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission.
OVERVIEW
Since commencement of operations in 1990, the Company has been a development
stage company engaged primarily in the research and development of proprietary
anti-rejection pharmaceuticals and organ transplantation systems which represent
a comprehensive approach to inducing long-term specific transplantation
tolerance in humans. The major sources of the Company's working capital have
been the proceeds of equity placements, sponsored research funding and license
fees and capital lease financings. The Company has not generated any revenues
from the sales of products to date, and does not expect to receive any product
revenues for several years. The Company will be required to conduct significant
research, development, testing and regulatory compliance activities that,
together with general and administrative expenses, are expected to result in
significant and increasing operating losses for at least the next several years.
In 1993, and as amended and restated in September 1995, the Company and Novartis
Pharma Inc. ("Novartis") entered into a collaboration agreement for the
development and commercialization of xenotransplantation products utilizing gene
transduction. Under the agreement, Novartis has committed research funding
through March 1998 of $20.0 million, all of which had been received as of June
30, 1997, and agreed to pay license fees of $10.0 million, all of which had been
received as of June 30, 1997. The $9 million payment from Novartis which was
received during March 1997 is comprised of $6 million in research funding for
the gene transduction approach to xenotransplantation, which is being recognized
as revenue on a straight-line basis over the one-year period from April 1, 1997
to March 31, 1998, and $3 million in license fees which was recognized as
revenue in April 1997. Novartis has also agreed to fund certain development and
premarketing costs of such products, portions of which, under certain
circumstances, may be repayable from the Company's operating profits from sales
of such products.
In October 1995, the Company and MedImmune, Inc. ("MedImmune") formed a
collaborative research agreement for the development of products to treat and
prevent organ rejection. MedImmune paid the Company a $2.0 million license fee
at the time of execution of the agreement, and agreed to fund and assume
responsibility for clinical testing and commercialization of BTI-322 and other
related products. MedImmune has agreed to provide research support and make
milestone payments which could total up to an additional $14.0 million, of which
$1.8 million had been recognized as revenue through June 30, 1997.
8
<PAGE> 9
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Revenues increased to $5.2 million for the three months ended June 30, 1997 from
$3.6 million for the three months ended June 30, 1996. The anticipated increase
in revenues was primarily due to the recognition of $4.5 million in license fees
and sponsored research funding from Novartis during the three months ended June
30, 1997, compared to $3.0 million during the three months ended June 30, 1996.
Research and development expenses increased to $3.9 million for the three months
ended June 30, 1997 from $3.1 million for the three months ended June 30, 1996.
This increase was primarily due to increases in sponsored research, research and
development staff and associated increases in supplies and support services.
General and administrative expenses increased to $934,000 for the three months
ended June 30, 1997 from $559,000 for the three months ended June 30, 1996. This
increase was primarily due to increases in outside professional services in
connection with market research and business development and increased
administrative costs as a publicly-traded company.
Interest income increased to $468,000 for the three months ended June 30, 1997
from $305,000 for the three months ended June 30, 1996. The increase was due
primarily to higher cash balances available for investment.
Interest expense decreased to $17,000 for the three months ended June 30, 1997
from $32,000 for the three months ended June 30, 1996. The decrease was
primarily due to decreasing balances on existing obligations under capital
leases.
As a result of the above factors the Company generated net income for the three
months ended June 30, 1997 of $405,000, or $0.05 per share, compared to a net
loss of $159,000, or $0.02 per share for the three months ended June 30, 1996.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Revenues increased to $6.9 million for the six months ended June 30, 1997 from
$5.6 million for the six months ended June 30, 1996. The increase in revenues
was due to increased research and development revenues which primarily consisted
of funding from Novartis of $5.5 million for the six months ended June 30, 1997
compared to $4.8 million for the six months ended June 30, 1996. Interest income
increased to $873,000 for the six months ended June 30, 1997 from $381,000 for
the six months ended June 30, 1996. The increase was due primarily to higher
cash balances available for investment.
Research and development expenses increased to $7.2 million for the six months
ended June 30, 1997 from $5.7 million for the six months ended June 30, 1996.
This increase was primarily due to increases in sponsored research programs and
increases in research and development staff together with the associated
increases in supplies and support services, partially offset by decreased
expenditures related to the human clinical safety trials for BTI-322.
General and administrative expenses increased to $1.6 million for the six months
ended June 30, 1997 from $1.0 million for the six months ended June 30, 1996.
This increase was primarily due to increases in outside professional services in
connection with market research and business development, increased headcount
and related expenses for general and administrative personnel and increased
administrative costs as a publicly-traded company.
9
<PAGE> 10
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company completed an initial public offering of 3,220,000
shares of common stock at a price of $9.50 per share, and received net proceeds
of approximately $28.0 million. In addition, all outstanding shares of
redeemable convertible preferred stock were automatically converted into
5,202,154 shares of common stock upon the closing of the initial public
offering.
Since its inception and prior to the completion of the Company's initial public
offering, the Company's operations have been funded principally through the net
proceeds of an aggregate of $36.2 million from private placements of equity
securities. The Company has also received $30.0 million from a research and
development and collaboration agreement with Novartis, $3.8 million from an
alliance agreement with MedImmune and $2.2 million in equipment lease financing.
The proceeds of the private placements, notes payable and capital leases and
cash generated from the corporate collaborations with Novartis and MedImmune
have been used to fund operating losses of approximately $38.1 million and the
investment of approximately $3.8 million in equipment and leasehold improvements
through June 30, 1997. The Company had no significant commitments as of June 30,
1997 for capital expenditures.
During the six months ended June 30, 1997, the Company paid Stem Cell Sciences
$676,000 for research support for calendar year 1997 and to maintain its pro
rata equity interest in Stem Cell Sciences. In addition, the Company has an
option to purchase additional shares of Stem Cell Sciences prior to December
1997, to maintain its pro rata equity interest. If the Company does not make
such further investment, its rights to certain technologies become nonexclusive.
The Company had cash, cash equivalents, short and long-term investments of $32.0
million as of June 30, 1997.
The Company anticipates that its existing funds and interest earned thereon
should be sufficient to fund its operating and capital requirements as currently
planned through the end of 1998. However, the Company's cash requirements may
vary materially from those now planned, due to many factors, including, but not
limited to, the progress of the Company's research and development programs, the
scope and results of preclinical and clinical testing, changes in existing and
potential relationships with corporate collaborators, the time and cost in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents, proprietary rights and any necessary licenses, the ability of the
Company to establish development and commercialization capacities or
relationships, the costs of manufacturing and other factors.
The Company expects to incur substantial additional costs, including costs
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, manufacturing and the expansion of its
facilities. The Company will need to raise substantial additional funds through
additional financings, including public or private equity offerings and
collaborative arrangements with corporate partners. There can be no assurance
that funds will be available on terms acceptable to the Company, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate certain of its product and technology development programs or
to license to others the right to commercialize products or technologies that
the Company would otherwise seek to develop and commercialize itself, any of
which would have a material and adverse effect on the Company.
10
<PAGE> 11
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Response: None
ITEM 2. CHANGES IN SECURITIES
Response: None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Response: None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on Tuesday, May 20, 1997.
The following represents the results of the voting on proposals submitted to a
vote of stockholders at such meeting:
1. Proposal to elect seven directors for the ensuing year.
<TABLE>
<CAPTION>
Number of Votes
For Abstaining
--------- ----------
<S> <C> <C>
Elliot Lebowitz, Ph.D. 5,412,455 150
Donald R. Conklin 5,412,455 150
William W. Crouse 5,412,455 150
James C. Foster, J.D. 5,411,455 1,150
Daniel O. Hauser, Ph.D. 5,412,455 150
Daniel P. Kearney, J.D. 5,411,455 1,150
Robert A. Vukovich, Ph.D. 5,412,455 150
</TABLE>
2. Proposal to approve the Company's 1997 Stock Incentive Plan.
<TABLE>
<CAPTION>
Number of Votes Number of
For Against Abstaining Broker Non-Votes
--------- --------------- ---------- ----------------
<S> <C> <C> <C>
3,935,340 450,300 1,300 4,175,993
</TABLE>
3. Proposal to approve an amendment to the Company's 1994 Directors' Equity
Plan increasing from 15,000 to 50,000 the number of shares of Common Stock
reserved for issuance under the 1994 Directors' Equity Plan.
<TABLE>
<CAPTION>
Number of Votes Number of
For Against Abstaining Broker Non-Votes
--------- --------------- ---------- ----------------
<S> <C> <C> <C>
3,945,058 449,800 1,500 4,166,583
</TABLE>
4. Proposal to ratify the selection by the Board of Directors of Arthur
Andersen LLP as the Company's independent accountants for 1997.
<TABLE>
<CAPTION>
Number of Votes Number of
For Against Abstaining Broker Non-Votes
--------- --------------- ---------- ----------------
<S> <C> <C> <C>
5,412,605 0 0 3,150,336
</TABLE>
11
<PAGE> 12
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 5. OTHER INFORMATION
Response: None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.1 1997 Stock Incentive Plan
10.2 1994 Directors' Equity Plan, as amended
11.1 Statement: Computation of Pro Forma Net Loss Per Common Share
27 Financial Data Schedule.
b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BioTransplant Incorporated
(Registrant)
Date: August 8, 1997 /s/ Elliot Lebowitz
----------------------------------------------
Elliot Lebowitz
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Richard V. Capasso
----------------------------------------------
Richard V. Capasso
Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
12
<PAGE> 1
EXHIBIT 10.1
BIOTRANSPLANT INCORPORATED
1997 STOCK INCENTIVE PLAN
-------------------------
1. PURPOSE
The purpose of this 1997 Stock Incentive Plan (the "Plan") of
BioTransplant Incorporated, a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any present or future subsidiary corporations of BioTransplant
Incorporated as defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered
by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
<PAGE> 2
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). If and when the
common stock, $0.01 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act." All references in the Plan to the "Board" shall mean
the Board or a Committee of the Board or the executive officer referred to in
Section 3(b) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 750,000 shares of Common Stock. If any
Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part or results in any Common
Stock not being issued, the unused Common Stock covered by such Award shall
again be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c),
for Awards granted after the Common Stock is registered under the Exchange Act,
the maximum number of shares with respect to which an Award may be granted to
any Participant under the Plan shall be 100,000 per calendar year. The
Per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
(c) ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the
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<PAGE> 3
number and class of security and exercise price per share subject to each
outstanding Option, (iii) the repurchase price per security subject to each
outstanding Restricted Stock Award, and (iv) the terms of each other outstanding
stock-based Award shall be appropriately adjusted by the Company (or substituted
Awards may be made, if applicable) to the extent the Board shall determine, in
good faith, that such an adjustment (or substitution) is necessary and
appropriate. If this Section 4(c) applies and Section 8(e)(1) also applies to
any event, Section 8(e)(1) shall be applicable to such event, and this Section
4(c) shall not be applicable.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to
be an "incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the Company and
shall be subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) which is intended to be
an Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price
at the time each Option is granted and specify it in the applicable option
agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) EXERCISE OF OPTION. Options may be exercised only by delivery
to the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
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<PAGE> 4
(2) except as the Board may otherwise provide in an Option
Agreement, delivery of an irrevocable and unconditional undertaking by a credit
worthy broker to deliver promptly to the Company sufficient funds to pay the
exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a credit worthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price;
(3) to the extent permitted by the Board and explicitly
provided in an Option Agreement (i) by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by the Board
in good faith ("Fair Market Value"), which Common Stock was owned by the
Participant at least six months prior to such delivery, (ii) by delivery of a
promissory note of the Participant to the Company on terms determined by the
Board, or (iii) by payment of such other lawful consideration as the Board may
determine; or
(4) any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each,
"Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
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<PAGE> 5
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by
a written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan,
each type of Award may be made alone or in addition or in relation to any other
type of Award. The terms of each type of Award need not be identical, and the
Board need not treat Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on
an Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) ACQUISITION EVENTS
(1) CONSEQUENCES OF ACQUISITION EVENTS. Except to the extent
otherwise provided in the instrument evidencing the Award or in any other
agreement between the Participant and the Company, upon the occurrence of an
Acquisition Event or with respect to Options or any other similar Awards only,
upon the execution by the Company of any agreement with respect to an
Acquisition Event, (i) the Board shall provide written notice to the
Participants that all Options then outstanding shall become immediately
exercisable in full as of a specified date (the "Acceleration Date") prior to
the Acquisition Event and will terminate immediately prior to the consummation
of such Acquisition Event, except to the
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<PAGE> 6
extent exercised by the Participants between the Acceleration Date and the
consummation of such Acquisition Event; (ii) all Restricted Stock then
outstanding shall become immediately free of all restrictions; (iii) all other
stock-based Awards all become immediately exercisable, realizable or vested in
full, or shall be immediately free of all restrictions or conditions, as the
case may be.
(2) An "Acquisition Event" shall mean (a) any merger or
consolidation which results in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; (b) any sale of all or
substantially all of the assets of the Company; (c) the complete liquidation of
the Company; or (d) the acquisition of "beneficial ownership" (as defined in
Rule 13-d-3 under the Exchange Act) of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities (other than through a merger or consolidation or an acquisition of
securities directly from the Company) by any "person", as such term is used in
Sections 13(d) and 14(d) of the Exchange Act other than the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of the stock
of the Company.
(3) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may
grant Awards under the Plan in substitution for stock and stock-based awards
held by employees of another corporation who become employees of the Company as
a result of a merger or consolidation of the employing corporation with the
Company or the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.
(f) WITHHOLDING. Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards to such Participant no later than
the date of the event creating the tax liability. The Board may allow
Participants to satisfy such tax obligations in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value. The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant.
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<PAGE> 7
(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(h) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(i) ACCELERATION. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Stock Awards shall be free of all restrictions or that any other stock-based
Awards may become exercisable in full or in part or free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant designated as subject to Section 162(m) by the Board shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been
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<PAGE> 8
approved by the Company's stockholders. No Awards shall be granted under the
Plan after the completion of ten years from the earlier of (i) the date on which
the Plan was adopted by the Board or (ii) the date the Plan was approved by the
Company's stockholders, but Awards previously granted may extend beyond that
date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.
(e) STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder
approval shall mean approval by a vote of the stockholders in accordance with
the requirements of Section 162(m) of the Code.
(f) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
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<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO
1994 DIRECTORS' EQUITY PLAN
OF
BIOTRANSPLANT INCORPORATED
The 1994 Directors' Equity Plan, as amended (the "Plan") be and hereby
is amended as follows:
1. The number 60,000 in the second line of Section 4(a) of the
Plan shall be deleted and the number 50,000 shall be inserted
in lieu thereof.
Adopted by the Board of Directors on February 24, 1997
Approved by the Stockholders on May 20, 1997
<PAGE> 2
BIOTRANSPLANT, INC.
1994 DIRECTORS' EQUITY PLAN
1. PURPOSE
The purpose of this 1994 Directors' Equity Plan (the "Plan") of
BioTransplant, Inc. (the "Company") is to promote the recruiting and retention
of highly qualified outside directors and to strengthen the commonality of
interest between directors and stockholders. Except where the context otherwise
requires, the term "Company" shall include all subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the International Revenue Code of 1986,
as amended or replaced from time to time (the "Code").
2. ADMINISTRATION
The Plan will be administered by the Compensation Committee of the
Board of Directors of the Company or by the Board of Directors of the Company as
a whole, whose construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. Reference herein to the Board of
Directors relating to the administration and interpretation of the Plan shall
mean the Compensation Committee or the Board of Directors, as the case may be.
Grants of stock options ("Options") and restricted stock awards ("Awards") under
the Plan and the amount and nature of the Options and Awards to be granted shall
be automatic and non-discretionary in accordance with Sections 5 and 6. However,
all questions of interpretation of the Plan or of any Options or Awards issued
under it shall be determined by the Board of Directors and such determination
shall be final and binding upon all persons having an interest in the Plan. No
director shall be liable for any action or determination under the Plan made in
good faith.
3. PARTICIPATION IN THE PLAN
Only directors of the Company who are not employees of the Company
shall be eligible to be granted Options and Awards under the Plan. Directors who
are employed by, or affiliates of, either HealthCare Investment Corporation,
Sandoz Pharma Ltd. or Charles River Laboratories, Inc. or any of their
respective related entities, are ineligible to receive Options or Awards under
the Plan. A director may notify the Company in writing that he or she
irrevocably elects not to participate in the Plan and such director shall
henceforth be deemed to be ineligible.
<PAGE> 3
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares which may be issued under the Plan
shall be 60,000 shares of the Company's Common Stock, $.01 par value per share
("Common Stock"), subject to subsequent adjustment as provided in Section 10.
(b) If any outstanding Option under the Plan for any reason expires or
is terminated without having been exercised in full, or any Common Stock issued
pursuant to an Award shall be repurchased by the Company pursuant to the terms
of such Award, the shares allocable to the unexercised portion of such Option
and/or such repurchased shares shall again become available for grant pursuant
to the Plan.
(c) All Options granted under the Plan shall be non-statutory options
which are not intended to meet the requirements of Section 422 of the Code.
5. TERMS, CONDITIONS AND FORMS OF OPTIONS
Each Option granted under the Plan shall be evidenced by a written
agreement in substantially the form of EXHIBIT A hereto or in such other form as
the Board of Directors shall from time to time approve, which agreements shall
comply with and be subject to the following terms and conditions:
(a) OPTION GRANT DATES. Each eligible director shall automatically be
granted an Option to purchase 12,500 shares of Common Stock upon the later of
(i) his or her initial election as a director, or (ii) the adoption by the Board
of Directors of the Plan.
(b) OPTION EXERCISE PRICE. The option exercise price per share for each
Option granted under the Plan shall equal (i) the last reported sales price per
share of the Company's Common Stock on the Nasdaq National Market (or, if the
Company is traded on a nationally recognized securities exchange on the date of
the grant, the reported exchange) on the date of grant (or if no such price is
reported on such date, such price as reported on the nearest preceding date on
which such price is reported) or (ii) if the Common Stock is not traded on
Nasdaq or an exchange, the fair market value per share on the date of grant as
determined by the Board of Directors.
(c) OPTIONS NON-TRANSFERABLE. Each Option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will or by the
laws of descent and distribution, or pursuant to a qualified domestic relations
order (as defined in Section 414(p) of the Code) and shall be exercised during
the lifetime of the optionee only by such optionee.
(d) EXERCISE PERIOD. Each Option granted under the Plan may be
exercised on a cumulative basis as to 20% of the shares on the first anniversary
of the date of
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<PAGE> 4
grant and an additional 20% at the end of each one-year period thereafter. Each
Option granted under the Plan, to the extent it has vested, may be exercised in
whole or in part at any time prior to the tenth anniversary of the date of
grant, but in no event may it be exercised thereafter.
(e) EXERCISE PROCEDURE. Options may be exercised only by written notice
to the Company at its principal office accompanied by payment of the full
consideration for the shares as to which they are exercised.
(f) PAYMENT OF PURCHASE PRICE. Payment of the exercise price shall be
made (i) by delivery of cash or a check to the order of the Company in an amount
equal to the exercise price, (ii) by delivery to the Company of shares of Common
Stock of the Company already owned and held by the optionee for at least twelve
months and having a fair market value equal in amount to the exercise price of
the Option being exercised, or (iii) by any combination of such methods of
payment. The fair market value of any shares of Common Stock which may be
delivered upon exercise of an Option shall be determined by the Board of
Directors of the Company as of the date that such shares are delivered.
6. TERMS, CONDITIONS AND FORMS OF RESTRICTED STOCK AWARDS
Each Award granted under the Plan shall be evidenced by a written
agreement in substantially the form of EXHIBIT B hereto or in such other form as
the Board of Directors shall from time to time approve, which agreements shall
comply with and be subject to the following terms and conditions:
(a) AWARD GRANT DATES. Each eligible director shall automatically be
granted an Award to purchase 2,500 shares of Common Stock upon the later of (i)
his or her initial election as a director, or (ii) the adoption by the Board of
Directors of the Plan.
(b) AWARD PRICE. The price per share of Common Stock subject to each
Award shall be $.01 per share, payable by cash or check upon execution of the
written agreement evidencing the Award.
(c) VESTING PERIOD. Each Award granted under the Plan shall vest during
the period in which an eligible director continues to serve as a director of the
Company, at the rate of 25% of the shares on the first anniversary of the date
of grant and an additional 25% at the end of each one-year period thereafter.
(d) REPURCHASE RIGHT. The Company shall have the right to repurchase
any or all shares of Common Stock subject to an Award which shall not have
become vested as of the date an eligible director ceases to serve as a director
at a repurchase price of $.01 per share, such right to be exercised within 90
days after such director
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<PAGE> 5
ceases to serve as a director of the Company. The Company shall have the right
to assign or transfer all or part of such repurchase rights to one or more third
parties, including other stockholders of the Company.
7. ASSIGNMENTS
The rights and benefits under the Plan may not be assigned, except as
provided in Section 5.
8. TIME FOR GRANTING OPTIONS AND AWARDS
All Options and Awards subject to the Plan shall be granted, if at all,
not later than six (6) years after the date of the Board's adoption of the Plan.
9. LIMITATION OF RIGHTS
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an Option or Award nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time.
(b) NO STOCKHOLDER RIGHTS FOR OPTIONS. An optionee shall have no rights
as a stockholder with respect to the shares covered by his or her Option under
the date of the issuance to him or her of a stock certificate thereof, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such certificate is issued.
10. ADJUSTMENT PROVISIONS RELATING TO OPTIONS
(a) RECAPITALIZATIONS. If, after the Effective Date of the Plan,
through or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased or decreased or are exchanged
for a different number or kind of shares or other securities of the Company, or
(ii) additional shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to such shares of
Common Stock or other securities, an appropriate and proportionate adjustment
shall be made in (x) the maximum number and kind of shares reserved for issuance
under the Plan, (y) the number and kind of shares or other securities subject to
then outstanding Options under the Plan, and (z) the price for each share
subject to any then outstanding Options under the Plan, without changing the
aggregate purchase price as to which such Options remain exercisable, provided
that no adjustment shall be made pursuant to this Section 10 if such adjustment
would cause the Plan to fail to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, (the "Exchange Act") as amended or any successor rule
("Rule 16b-3").
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<PAGE> 6
(b) REORGANIZATIONS. After the Effective Date of the Plan, in the event
of a consolidation or merger or sale of all or substantially all of the assets
of the Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity
or in the event of a liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the outstanding Options: (i) provide that such Options shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon written notice to
the optionees, provide that all unexercised Options will terminate immediately
prior to the consummation of such transaction unless exercised by the optionee
within a specified period following the date of such notice, (iii) in the event
of a merger under the terms of which holders of the Common Stock of the Company
will receive upon consummation thereof a cash payment for each share surrendered
in the merger (the "Merger Price"), make or provide for a cash payment to the
optionees equal to the difference between (A) the Merger Price times the number
of shares of Common Stock subject to such outstanding Options (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such outstanding Options in exchange for the
termination of such options, and (iv) provide that all outstanding Options shall
become exercisable in full.
11. AMENDMENT OF THE PLAN
(a) The provisions of Sections 3, 5(a), 5(b) and 6 of the Plan shall
not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. Subject to the foregoing, the Board of
Directors may at any time, and from time to time, modify or amend the Plan in
any respect, except that if at any time the approval of the stockholders of the
Company is required as to such modification or amendment under Rule 16b-3. The
Board of Directors may not effect such modification or amendment without such
approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of an eligible director, affect his or her rights under
an Option or Award previously granted to him or her. With the consent of each
eligible director affected, the Board of Directors may amend outstanding option
agreements or restricted stock award agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to amend or modify
the terms and provisions of the Plan or any outstanding Option or Award to the
extent necessary to ensure the qualification of the Plan under Rule 16b-3.
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<PAGE> 7
12. WITHHOLDING
The Company shall have the right to deduct from payments of any kind
otherwise due to an eligible director any federal, state or local taxes of any
kind required by law to be withheld with respect to any shares issued pursuant
to Awards or upon exercise of Options under the Plan.
13. NOTICE
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received by the Company.
14. EFFECTIVE DATE AND DURATION OF THE PLAN
(a) EFFECTIVE DATE. The Plan shall become effective on June 27, 1994,
but no Option granted under the Plan shall become exercisable nor any Award
become vested unless and until the Plan shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, (i) all
Options granted under the Plan shall terminate and no further Options shall be
granted under the Plan, and (ii) all Awards shall be cancelled and no further
Awards shall be granted under the Plan. Amendments to the Plan not requiring
stockholder approval shall become effective when adopted by the Board of
Directors; amendments requiring stockholder approval (as provided in Section
11(a)) shall become effective when adopted by the Board of Directors, but no
Option issued after the date of such amendment shall become exercisable nor
shall any Award vest (to the extent that such amendment to the Plan was required
to enable the Company to grant such Option or Award to a particular eligible
director) unless and until such amendment shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Options granted on
or after the date of such amendment shall terminate, and shares issued pursuant
to an Award shall be cancelled, in each case to the extent that such amendment
to the Plan was required to enable the Company to grant such Option or Award to
a particular eligible director. Subject to this limitation, Options and Awards
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) TERMINATION. Unless earlier terminated pursuant to Section 10, the
Plan shall terminate upon the earlier of (i) June 27, 2000, or (ii) the date on
which all shares available for issuance under the Plan shall have been issued
pursuant to the grant of Awards and exercise of Options granted under the Plan.
If the date of termination is determined under (i) above, then Options and
Awards outstanding on
-6-
<PAGE> 8
such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such Options and awards.
15. GENERAL REQUIREMENTS
(a) INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an Option or Award is granted, as a condition of exercising such Option or
Award, to give written assurance in substance and form satisfactory to the
Company to the effect that such person is acquiring the Common Stock subject to
the Option or Award for his or her own account for investment and not with any
present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate in order to comply
with federal and applicable state securities law.
(b) COMPLIANCE WITH SECURITIES LAWS. Each Option and Award shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such Option or Award upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
or that the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such Option may not be exercised, in
whole or in part, nor such Award issued, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition have been
effected or obtained on conditions acceptable to the Board of Directors. Nothing
herein shall be deemed to require the Company to apply for or to obtain such
listing, registration or qualification, or to satisfy such condition.
16. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Commonwealth of Massachusetts.
Adopted by the Board of Directors on
June 27, 1994
Adopted by the Stockholders on
August 12, 1994.
-7-
<PAGE> 9
Exhibit A
---------
BIOTRANSPLANT, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
------------------------------------
1. GRANTS OF OPTIONS. BioTransplant, Inc. a Delaware corporation
(the "Company"), hereby grants to ____________________ (the "Optionee"), an
option, pursuant to the Company's 1994 Directors' Equity Plan (the "Plan"), to
purchase an aggregate of 12,500 shares of Common Stock, $.01 par value per share
("Common Stock"), of the Company at a price of $_______ per share, purchasable
as set forth in and subject to the terms and conditions of this option and the
Plan. Except where the context otherwise requires, the term "Company" shall
include the parent and all present and future subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code").
2. NON-STATUTORY STOCK OPTION. This option is not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
3. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.
(a) VESTING SCHEDULE. Except as otherwise provided in this
Agreement, this option may be exercised prior to the tenth anniversary of the
date of grant (hereinafter the "Expiration Date") in installments as to not more
than the number of shares set forth in the table below during the respective
installment periods set forth in the table below (less any shares for which this
option was exercised in any prior installment periods).
<TABLE>
<CAPTION>
Number of Shares as to which
Exercise Prior Option is Exercisable
- ------------------------------------ ----------------------------
<S> <C>
Prior to _________________, 19__ -0-
On or after ______________, 19__ but
prior to _________________, 19__ 2,500
On or after ______________, 19__ but
prior to _________________, 19__ 5,000
On or after ______________, 19__ but
prior to _________________, 19__ 7,500
On or after ______________, 19__ but
prior to _________________, 19__ 10,000
On or after ______________, 19__ but 12,500
prior to _________________, 19__
</TABLE>
-8-
<PAGE> 10
The right of exercise shall be cumulative so that if the option is not exercised
to the maximum extent permissible during any exercise period, it shall be
exercisable, in whole or in part, with respect to all shares not so purchased at
any time prior to the Expiration Date or the earlier termination of this option.
This option may not be exercised at any time on or after the Expiration Date.
(b) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Treasurer of the Company, specifying the
number of shares to be purchased and the purchase price to be paid therefor and
accompanied by payment in full in accordance with Section 4. Such exercise shall
be effective upon receipt by the Treasurer of the Company of such written notice
together with the required payment. The Optionee may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.
(c) CONTINUOUS RELATIONSHIP WITH THE COMPANY REQUIRED. Except
as otherwise provided in this Section 3, this option may not be exercised unless
the Optionee, at the time he or she exercises this option, is, and has been at
all times since the date of grant of this option, a director of the Company (an
"Eligible Optionee").
(d) EXERCISE PERIOD UPON TERMINATION OF RELATIONSHIP WITH THE
COMPANY. If the Optionee ceases to be an Eligible Optionee for any reason, then,
except as provided in paragraph (e) below, the right to exercise this option
shall terminate three months after such cessation.
(e) EXERCISE PERIOD UPON DEATH OR DISABILITY. If the Optionee
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an Eligible Optionee of the
Company, or if the Optionee dies within three months after the Optionee ceases
to be an Eligible Optionee, this option shall be exercisable, within the period
of one year following the date or death or disability of the Optionee (but in no
event after the Expiration Date), by the Optionee or by the person to whom this
option is transferred by will or the laws of descent and distribution, PROVIDED
THAT this option shall be exercisable only to the extent that this option was
exercisable by the Optionee on the date of his or her death or disability.
Except as otherwise indicated by the context, the term "Optionee", as used in
this option, shall be deemed to include the estate of the Optionee or any person
who acquires the right to exercise this option by bequest or inheritance or
otherwise by reason of the death of the Optionee.
-9-
<PAGE> 11
4. PAYMENT OF PURCHASE PRICE.
(a) METHOD OF PAYMENT. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by delivery to
the Company of cash or a check to the order of the Company in an amount equal to
the purchase price of such shares, (ii) by delivery to the Company of shares of
Common Stock of the Company then owned by the Optionee having a fair market
value equal in amount to the purchase price of such shares, or (iii) by any
combination of such methods of payment.
(b) VALUATION OF SHARES OR OTHER NON-CASH CONSIDERATION
TENDERED IN PAYMENT OF PURCHASE PRICE. For the purposes hereof, the fair market
value of any share of the Company's Common Stock or other non-cash consideration
which may be delivered to the Company in exercise of this option shall be
determined in such manner as may be prescribed by the Board of Directors of the
Company.
(c) DELIVERY OF SHARES TENDERED IN PAYMENT OF PURCHASE PRICE.
If the Optionee exercises options by delivery of shares of Common Stock of the
Company, the certificate or certificates representing the shares of such Common
Stock of the Company to be delivered shall be duly executed in blank by the
Optionee or shall be accompanied by a stock power duly executed in blank
suitable for purposes of transferring such shares to the Company. Fractional
shares of such Common Stock of the Company will not be accepted in payment of
the purchase price of shares acquired upon exercise of this option.
(d) RESTRICTIONS ON USE OF OPTION STOCK. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be termed in payment of
the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender, through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
5. DELIVERY OF SHARES; COMPLIANCE WITH SECURITY LAWS, ETC.
(a) GENERAL. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee, PROVIDED THAT if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.
(b) LISTING, QUALIFICATIONS, ETC. This option shall be subject
to the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto
upon any securities
-10-
<PAGE> 12
exchange or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in the connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. NONTRANSFERABILITY OF OPTION. Except as provided in
paragraph (e) of Section 3, this option is personal and no rights granted
hereunder may be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) nor shall any such rights be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this option or of such
rights contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon this option or such rights, this option and such rights
shall, at the election of the Company, become null and void.
7. NO SPECIAL RETENTION, OR SIMILAR RIGHTS. Nothing contained in
the Plan or this option shall be construed or deemed by any person under any
circumstances to bind the Company to continue the retention of the Optionee as a
director or maintain any other relationship of the Optionee with the Company for
the period within which this option may be exercised.
8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as
a shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. ADJUSTMENT PROVISIONS.
(a) GENERAL. If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Optionee shall, with respect to
-11-
<PAGE> 13
this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 10(a) of the
Plan.
(b) LIMITS ON ADJUSTMENTS. No adjustment shall be made
under this Section 9 which would, within the meaning of any applicable provision
of the Code, constitute a modification, extension or renewal of this option or a
grant of additional benefits to the Optionee.
10. MERGERS, CONSOLIDATIONS, DISTRIBUTIONS, LIQUIDATIONS, ETC. In
the event of a consolidation or merger or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities cash or other property of any other corporation or
business entity, or in the event of a liquidation of the Company, prior to the
Expiration Date or termination of this option, the Optionee shall, with respect
to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 10(b) of the
Plan.
11. WITHHOLDING TAXES. The Company's obligations to deliver shares
upon the exercise of this option shall be subject to the Optionee's satisfaction
of all applicable federal, state and local income and employment tax withholding
requirements.
12. INVESTMENT REPRESENTATIONS; LEGENDS.
(a) REPRESENTATIONS. The Optionee represents, warrants
and covenants that:
(i) Any shares purchased upon exercise of this
option shall be acquired for the Optionee's account for
investment only, and not with a view to, or for sale in
connection with, any distribution of the shares in violation
of the Securities Act of 1933 (the "Securities Act"), or any
rule or regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he
or she has deemed adequate to obtain from representatives of
the Company such information as is necessary to permit the
Optionee to evaluate the merits and risks of his or her
investment in the Company.
(iii) The Optionee is able to bear the economic
risk of holding such shares acquired pursuant to the exercise
of this option for an indefinite period.
(iv) The Optionee understands that (A) the shares
acquired pursuant to the exercise of this option will not be
registered under the
-12-
<PAGE> 14
Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act; (B) such shares
cannot be sold, transferred or otherwise disposed of unless
they are subsequently registered under the Securities Act or
an exemption from registration is then available; (C) in any
event, an exemption from registration under Rule 144 or
otherwise under the Securities Act may not be available for at
least two years and even then will not be available unless a
public market then exists for the Common Stock, adequate
information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are
complied with; and (D) there is now no registration statement
on file with the Securities and Exchange Commission with
respect to any stock of the Company and Company has no
obligation or current intention to register any shares
acquired pursuant to the exercise of this option under the
Securities Act.
(v) The Optionee agrees that, if the Company offers
any of its Common Stock for sale pursuant to registration
statement under the Securities Act, the Optionee will not,
without the prior written consent of the Company, offer, sell,
contract to sell or otherwise dispose of, directly or
indirectly, any shares purchased upon exercise of this option
for a period of 90 days after the effective date of such
registration statement.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 12.
(b) LEGENDS ON STOCK CERTIFICATE. All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of this
option shall have affixed thereto legends substantially in the following forms,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 and may not
be transferred, sold or otherwise disposed of in the absence
of an effective registration statement with respect to the
shares evidenced by this certificate, filed and made effective
under the Securities Act of 1933, or an opinion of counsel
satisfactory to the Company to the effect that registration
under such Act is not required."
"The shares of stock represented by this certificate are
subject to certain restrictions on transfer contained in an
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<PAGE> 15
Option Agreement, a copy of which will be furnished upon
request by the issuer."
13. MISCELLANEOUS.
(a) Except as provided herein, this option may not be amended
or otherwise modified unless evidenced in writing and signed by the Company and
the Optionee.
(b) All notices under this option be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their names
below or at such other address as may be designated in writing by either of the
parties to one another.
(c) This option shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Date of Grant: BIOTRANSPLANT, INC.
____________________, 199__
By:_______________________________
Title:____________________________
Address: Building 96
13th Street
Charlestown Navy Yard
Charlestown, MA 02129
-14-
<PAGE> 16
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the following option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1994 Directors' Equity Plan.
OPTIONEE
----------------------------------
Address:
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<PAGE> 17
EXHIBIT B
---------
BIOTRANSPLANT, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
-----------------------------------
AGREEMENT made this _____ day of ________, 199_, between BIOTRANSPLANT,
INC., a Delaware corporation (the "Company") and ____________________ (the
"Purchaser").
Background
----------
Pursuant to the Company's 1994 Directors' Equity Plan (the "Plan") each
eligible director receives a restricted stock award of 2,500 shares of Common
Stock of the Company upon his or her initial election to the Board of Directors
or the adoption of the Plan, whichever is later. This Agreement is entered into
pursuant to, and is subject to the terms and conditions of, the Plan.
For valuable consideration, receipt of which is acknowledged, the
parties hereto agree as follows:
1. PURCHASE OF SHARES. The Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company, subject to the
terms and conditions set forth in this Agreement, 2,500 shares (the "Shares") of
common stock, $.01 par value, of the Company ("Common Stock"), at a purchase
price of $.01 per share. The aggregate purchase price for the Shares shall be
paid by the Purchaser by check payable to the order of the Company or such other
method as may be acceptable to the Company. Upon receipt of payment by the
Company for the Shares, the Company shall issue to the Purchaser one or more
certificates in the name of the Purchaser for that number of Shares purchased by
the Purchaser. The Purchaser agrees that the Shares shall be subject to the
Purchase Option set forth in Section 2 of this Agreement and the restrictions on
transfer set forth in Section 4 of this Agreement.
2. PURCHASE OPTION.
(a) In the event that the Purchaser ceases to serve as a
director of the Company for any reason or no reason, with or without cause,
prior to ______________, 199_, the Company shall have the right and option (the
"Purchase Option") to purchase form the Purchaser, for a sum of $.01 per share
(the "Option Price"), up to that percentage of the Shares as is set forth in the
second column of the table set forth below opposite the period in which the
Purchaser ceases to so serve.
-16-
<PAGE> 18
<TABLE>
<CAPTION>
Percentage of Shares
If Cessation of Service Occurs: Subject to Purchase Option
- ------------------------------- --------------------------
<S> <C>
Before ___________________ 100%
On or after ______________
but before ____________ 75%
On or after ______________
but before ____________ 50%
On or after ______________
but before ____________ 25%
On or after ______________ -0-
</TABLE>
3. EXERCISE OF PURCHASE OPTION AND CLOSING.
(a) The Company may exercise the Purchase Option by delivering
or mailing to the Purchaser (or his estate), in accordance with section 14,
within 60 days after the termination of service as a director of the Purchaser
with the Company, a written notice of exercise of the Purchase Option. Such
notice shall specify the number of Shares to be purchased. If and to the extent
the purchase Option is not so exercised by the giving of such a notice within
such 60-day period, the Purchase Option shall automatically expire and terminate
effective upon the expiration of such 60-day period.
(b) Within 10 days after his receipt of the Company's notice
of the exercise of the Purchase Option pursuant to subsection (a) above, the
Purchaser (or his estate) shall tender to the Company at its principal offices
the certificate or certificates representing the Shares which the Company has
elected to purchase, duly endorsed in blank by the Purchaser or with duly
endorsed stock powers attached thereto, all in form suitable for the transfer of
such Shares to the Company. Upon its receipt of such certificate or
certificates, the Company shall deliver or mail to the Purchaser a check in the
amount of the aggregate Option Price therefor.
(c) After the time at which any Shares are required to be
delivered to the Company for transfer to the Company pursuant to subsection (b)
above, the Company shall not pay any dividend to the Purchaser on account of
such Shares or permit the Purchaser to exercise any of the privileges or rights
of a stockholder with respect to such Shares, but shall, in so far as permitted
by law, treat the Company as the owner of such Shares.
-17-
<PAGE> 19
(d) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding indebtedness of
the Purchaser to the Company or in cash (by check) or both.
(e) The Company shall not purchase any fraction of a Share
upon exercise of a Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).
(f) The Company shall have the right to assign or transfer all
or part of its Purchase Option to one or more third parties, including other
stockholders of the Company.
4. RESTRICTIONS ON TRANSFERS.
(a) Except as otherwise provided in subsection (b) below, the
Purchaser shall not, during the term of the Purchase Option, sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer"), any of the Shares, or any interest therein,
unless and until such Shares are no longer subject to the Purchase Option.
(b) Notwithstanding the foregoing, the Purchaser may transfer
Shares to or for the benefit of any spouse, child or grandchild, or to a trust
for their benefit, PROVIDED that such Shares shall remain subject to this
Agreement (including without limitation the restrictions on transfer set forth
in this Section 4 and the Purchase Option) and such permitted transferee shall,
as a condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
5. EFFECT OF PROHIBITED TRANSFER. The Company shall not be
required (a) to transfer on its books any of the Shares; which shall have been
sold or transferred in violation of any of the provisions set forth in this
Agreement, or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.
6. RESTRICTIVE LEGEND. All certificates representing Shares shall
have affixed thereto a legend in substantially the following form, in addition
to any other legends that may be required under federal or state securities
laws:
"The shares of stock represented by this certificate are
subject to restrictions on transfer and an option to purchase
set forth in a certain Restricted Stock Purchase Agreement
between the corporation and the registered owner of these
share (or his predecessor in interest), and such Agreement
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<PAGE> 20
is available for inspection without charge at the office of
the Secretary of the corporation."
7. INVESTMENT REPRESENTATIONS. The Purchaser represents, warrants
and covenants as follows:
(a) The Purchaser is purchasing the Shares for his own account
for investment only, and not with a view to, or for sale in connection with, any
distribution of the Shares in violation of the Securities Act of 1933 (the
"Securities Act"), or any rule or regulation under the Securities Act.
(b) The Purchaser has had such opportunity as he has deemed
adequate to obtain from representatives of the Company such information as is
necessary to permit him to evaluate the merits and risks of his investment in
the Company.
(c) The Purchaser has sufficient experience in business,
financial and investment matters to be able to evaluate the risks involved in
the purchase of the Shares and to make an informed investment decision with
respect to such purchase.
(d) The Purchaser can afford a complete loss of the value of
the Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
(e) The Purchaser understands that (i) the Shares have not
been registered under the Securities Act and are "restricted securities" within
the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available; (iii) in any event, the exemption from registration under Rule 144
will not be available for at least two years and even then will not be available
unless a public market then exists for the Common Stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (iv) there is now no registration
statement on file with the Securities and Exchange Commission with respect to
any stock of the Company and the Company has no obligations or current intention
to register the Shares under the Securities Act.
(f) A legend substantially in the following form will be
placed on the certificate representing the Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under
-19-
<PAGE> 21
such Act or an opinion of counsel satisfactory to the
corporation to the effect that such
registration is not required."
8. ADJUSTMENTS FOR STOCK SPLITS, STOCK DIVIDENDS, ETC.
(a) If from time to time during the term of the Purchase
Option there is any stock split-up, stock dividend, stock distribution or other
reclassification of the Common Stock of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of his ownership of the Shares shall be immediately subject to the
Purchase Option, the restrictions on transfer and other provisions of this
Agreement in the same manner and to the same extent as the Shares, and the
Option Price shall be appropriately adjusted.
(b) If the Shares are converted into or exchanged for, or
stockholders of the Company receive by reason of any distribution in total or
partial liquidation, securities of another corporation, or other property
(including cash), pursuant to any merger of the Company or acquisition of its
assets, then the rights of the Company under this Agreement shall inure to the
benefit of the Company's successor and this Agreement shall apply to the
securities or other property received upon such conversion, exchange or
distribution in the same manner and to the same extent as the Shares.
9. WITHHOLDING TAXES.
(a) The Purchaser acknowledges and agrees that the Company has
the right to deduct from payments of any kind otherwise due to the Purchaser any
federal, state or local taxes of any kind required by law to be withheld with
respect to the purchase of the Shares by the Purchaser.
(b) If the Purchaser elects, in accordance with Section 83(b)
of the internal Revenue Code of 1986, as amended, to recognize ordinary income
in the year of acquisition of the Shares, the Company will require at the time
of such election an additional payment for withholding tax purposes based on the
difference, if any, between the purchase price for such Shares and their fair
market value of such Shares as of the day immediately preceding the date of the
purchase of such Shares by the Purchaser.
10. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.
-20-
<PAGE> 22
11. WAIVER. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of the
Company.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Company and the Purchaser and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.
13. NO RIGHTS TO CONTINUED BOARD SERVICE. Nothing contained in this
Agreement shall be construed as giving the Purchaser any right to be retained,
in any position, as a director of the Company.
14. NOTICE. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 14.
15. PRONOUNS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
17. AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Purchaser.
18. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
-21-
<PAGE> 23
BIOTRANSPLANT, INC.
By:
------------------------------
Address: Building 96
13th Street
Charlestown Navy Yard
Charlestown, MA 02129
PURCHASER
----------------------------------
Address:
-22-
<PAGE> 1
EXHIBIT 11.1
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
COMPUTATION OF PRO FORMA NET LOSS PER COMMON SHARE (1)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income (Loss): $ (158,438) $ 404,847 $(1,146,385) $(1,997,369)
========== ========== =========== ===========
Shares Used in Computing Pro Forma Net Income
(Loss) Per Common Share: Weighted Average
Common Stock Outstanding During the Period 7,027,058 8,569,006 5,741,178 8,565,216
Dilutive Effect of Common Equivalent Shares
Issued Subsequent to March 1, 1995 (2) 274,877 - 475,462 -
---------- ---------- ----------- -----------
7,301,935 8,569,006 6,216,640 8,565,216
---------- ---------- ----------- -----------
Pro Forma Net Income (Loss) Per Common Share $ (0.02) $ 0.05 $ (0.18) $ (0.23)
========== ========== =========== ===========
</TABLE>
- -------------------
(1) Historical net loss per common share has not been separately presented as
the amounts would not be meaningful
(2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock, preferred stock, stock options and warrants issued at
prices below the initial public offering price per share ("cheap stock")
during the twelve month period immediately preceding the filing date of the
Company's Registration Statement for its initial public offering have been
included as outstanding for all periods presented until the effective date
of the Company's initial public offering. The dilutive effect of the common
and common stock equivalents was computed in accordance with the treasury
stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS </LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,867,155
<SECURITIES> 8,071,018
<RECEIVABLES> 250,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,895,952
<PP&E> 3,876,394
<DEPRECIATION> 2,772,168
<TOTAL-ASSETS> 34,166,288
<CURRENT-LIABILITIES> 6,848,481
<BONDS> 0
0
0
<COMMON> 85,709
<OTHER-SE> 65,322,899
<TOTAL-LIABILITY-AND-EQUITY> 34,166,288
<SALES> 0
<TOTAL-REVENUES> 6,872,802
<CGS> 0
<TOTAL-COSTS> 8,870,171
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,647
<INCOME-PRETAX> (1,997,369)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,997,369)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,997,369)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
