<PAGE>
SCHEDULE 14A
(Rule 14(a) - 101)
Information Required
on Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIOTRANSPLANT INCORPORATED
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 1999
The 1999 Annual Meeting of Stockholders of BioTransplant Incorporated (the
"Company") will be held at Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, on Monday, May 24, 1999 at 10:00 a.m., local time, to consider
and act upon the following matters:
1. To elect seven directors for the ensuing year.
2. To approve an amendment to the Company's 1997 Stock Incentive Plan
increasing from 750,000 to 1,500,000 the number of shares of Common Stock
reserved for issuance under the 1997 Stock Incentive Plan.
3. To approve an amendment to the Company's 1994 Directors' Equity Plan
increasing from 50,000 to 100,000 the number of shares of Common Stock
reserved for issuance under the 1994 Directors' Equity Plan.
4. To ratify the selection by the Board of Directors of Arthur Andersen LLP as
the Company's independent accountants for 1999.
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Stockholders of record at the close of business on April 1, 1999 are
entitled to notice of, and to vote at, the meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's Common
Stock.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
STEVEN D. SINGER, SECRETARY
Charlestown, Massachusetts
April 12, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BioTransplant Incorporated (the "Company")
for use at the 1999 Annual Meeting of Stockholders to be held on May 24, 1999
(the "Annual Meeting") and at any adjournment or adjournments of that meeting.
All proxies will be voted in accordance with the instructions contained therein,
and if no choice is specified, the proxies will be voted in favor of the matters
set forth in the accompanying Notice of Meeting. Any proxy may be revoked by a
stockholder at any time before it is exercised by delivery of written revocation
to the Secretary of the Company.
The Company's Annual Report on Form 10-K for the year ended December 31,
1998 is being mailed to stockholders with the mailing of this Notice and Proxy
Statement on or about April 12, 1999.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT
FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST OF THE VICE PRESIDENT OF FINANCE, BIOTRANSPLANT INCORPORATED, BUILDING
75, THIRD AVENUE, CHARLESTOWN NAVY YARD, CHARLESTOWN, MASSACHUSETTS 02129.
VOTING SECURITIES AND VOTES REQUIRED
On April 1, 1999, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 8,583,338 shares of Common Stock of the
Company, $.01 par value per share ("Common Stock"). Each share is entitled to
one vote.
Under the Company's Bylaws, the holders of a majority of the shares of
Common Stock issued, outstanding and entitled to vote on any matter shall
constitute a quorum with respect to that matter at the Annual Meeting. Shares of
Common Stock present in person or represented by proxy (including shares which
abstain or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for purposes of determining whether a
quorum is present.
The affirmative vote of the holders of a plurality of votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of a majority of the shares of
Common Stock voting on the matter is required for the approval of each of the
other matters to be voted upon.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees, who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the votes cast or
shares voting on a matter, such as the election of directors and the
ratification of independent accountants.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of January 31, 1999
or such later date as is noted, with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director and nominee, (iii) each executive officer named in the Summary
Compensation Table under the heading "Compensation of Executive Officers" below
and (iv) all directors and executive officers of the Company as a group.
The number of shares of Common Stock beneficially owned by each director or
executive officer is determined under the rules of the Securities and Exchange
Commission (the "Commission"), and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire within 60 days after January 31, 1999 through the exercise
of any stock option, warrant or other similar right. Unless otherwise indicated,
each person has sole investment and voting power (or shares such power with his
spouse) with respect to the shares set forth in the following table. The
inclusion herein of any shares deemed beneficially owned does not constitute an
admission of beneficial ownership of those shares.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OUTSTANDING
- ---------------------------------------------------------------------------------- -------------- -----------------
<S> <C> <C>
Entities affiliated with HealthCare Ventures LLC (1).............................. 2,703,500 30.8%
44 Nassau Street
Princeton, New Jersey 08542
Rho Management Trust II (2)....................................................... 750,288 8.7
c/o Rho Management Company, Inc.
767 Fifth Avenue
New York, New York 10153
Funds managed by Hambrecht & Quist Capital Management Inc. (3).................... 740,451 8.3
50 Rowes Wharf
Boston, Massachusetts 02110
Novartis Pharma Inc............................................................... 532,125 6.2
Lichstrasse
CH--40002
Basel, Switzerland
Joseph A. Cohen (4)............................................................... 484,441 5.6
c/o The Garnet Group, Inc., 825 Third Avenue,
40th Floor, New York, NY 10022
State of Wisconsin Investment Board (5)........................................... 435,000 5.1
P.O. Box 7842
Madison, Wisconsin 53707
Elliot Lebowitz, Ph.D. (6)........................................................ 234,405 2.7
Donald R. Conklin (7)............................................................. 7,375 *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OUTSTANDING
- ---------------------------------------------------------------------------------- -------------- -----------------
<S> <C> <C>
William W. Crouse (8)............................................................. 2,703,500 30.8
James C. Foster, J.D. (9)......................................................... 15,356 *
Michael S. Perry, D.V.M., Ph.D. (10).............................................. 532,125 6.2
Robert A. Vukovich, Ph.D.(11)..................................................... 15,000 *
Daniel O. Hauser, Ph.D............................................................ 625 *
James Hope, Ph.D. (12)............................................................ 51,837 *
Julia L. Greenstein, Ph.D. (13)................................................... 56,416 *
Mary White-Scharf, Ph.D. (14)..................................................... 44,073 *
Richard Capasso (15).............................................................. 16,873 *
All directors and executive officers as a group (11 persons) (16)................. 3,677,585 40.0
</TABLE>
- ------------------------
* Represents holdings of less than one percent.
(1) Includes 1,570,886 shares of Common Stock held by HealthCare Ventures II,
L.P. ("HCV II") (including 78,877 shares which HCV II has the right to
acquire within 60 days of January 31, 1999 upon the exercise of warrants),
874,539 shares of Common Stock held by HealthCare Ventures III, L.P. ("HCV
III") (including 99,705 shares which HCV III has the right to acquire within
60 days of January 31, 1999 upon the exercise of warrants), and 258,075
shares of Common Stock held by HealthCare Ventures IV, L.P. ("HCV IV")
(including 29,571 shares which HCV IV has the right to acquire within 60
days of January 31, 1999 upon the exercise of warrants).
(2) Includes 38,466 shares of Common Stock which Rho Management Trust II
("RMT-II") has the right to acquire within 60 days of January 31, 1999 upon
the exercise of warrants. Jan Philipp F. Reemtsma, Joshua Ruch and Fero
Ventures Limited may be deemed to beneficially own the shares held by
RMT-II, and retain voting and dispositive rights for such shares.
(3) Includes 360,108 shares of Common Stock held by Hambrecht & Quist Health
Care Investors ("H&Q Health") (including 10,210 shares which H&Q Health has
the right to acquire within 60 days of January 31, 1999 upon the exercise of
warrants) and 300,432 shares of Common Stock held by Hambrecht & Quist Life
Science Investors ("H&Q Life") (including 17,722 shares which H&Q Life has
the right to acquire within 60 days of January 31, 1999 upon the exercise of
warrants). Hambrecht & Quist Capital Management Inc. serves as the
investment advisor to H&Q Health and H&Q Life. The respective general
partners of H&Q Health and H&Q Life exercise sole voting and investment
power with respect to the shares held by each fund.
(4) Information based solely on a Schedule 13G filed with the Commission on
November 10, 1998.
(5) Information based solely on a Schedule 13G filed with the Commission on
January 16, 1999.
(6) Includes 160,331 shares of Common Stock which Dr. Lebowitz has the right to
acquire within 60 days of January 31, 1999 upon the exercise of stock
options.
3
<PAGE>
(7) Includes 4,375 shares of Common Stock which Mr. Conklin has the right to
acquire within 60 days of January 31, 1999 upon the exercise of stock
options.
(8) Consists solely of shares held of record by HCV II, HCV III and HCV IV. Mr.
Crouse is a general partner of HealthCare Partners II, L.P., HealthCare
Partners III, L.P., HealthCare Partners IV, L.P. ("HCP II", "HCP III" and
"HCP IV", respectively), the general partners, respectively, of HCV II, HCV
III and HCV IV. Mr. Crouse, together with the other general partners of HCV
II, HCV III and HCV IV, respectively, shares voting and investment control
with respect to the shares owned by HCV II, HCV III and HCV IV. The same
individuals serve as general partners of HCP II, HCP III and HCP IV,
respectively.
(9) Includes 2,856 shares of Common Stock owned by Charles River Laboratories,
Inc., a wholly-owned subsidiary of Bausch & Lomb, Inc. ("CRL"). Mr. Foster,
a director of the Company, is the President and Chief Executive Officer of
CRL and may be deemed to beneficially own the shares held by CRL, although
he disclaims beneficial ownership.
(10) Consists solely of shares of Common Stock owned by Novartis Pharma Inc.
("Novartis"). Dr. Perry, a director of the Company, is the President & Chief
Executive Officer of SyStemix, Inc. and Genetic Therapy, Inc., both
affiliates of Novartis. Dr. Perry may be deemed to beneficially own the
shares held by Novartis although he disclaims beneficial ownership.
(11) Includes 11,875 shares of Common Stock which Dr. Vukovich has the right to
acquire within 60 days of January 31, 1999 upon the exercise of stock
options.
(12) Includes 51,537 shares of Common Stock which Dr. Hope has the right to
acquire within 60 days of January 31, 1999 upon the exercise of stock
options. Also includes 300 shares of Common Stock held by Dr. Hope's minor
children. Dr. Hope disclaims beneficial ownership of the shares held by his
children.
(13) Consists solely of shares of Common Stock which Dr. Greenstein has the
right to acquire within 60 days of January 31, 1999 upon the exercise of
stock options.
(14) Includes 43,473 shares of Common Stock which Dr. White-Scharf has the right
to acquire within 60 days of January 31, 1999 upon the exercise of stock
options. Also includes 600 shares of Common Stock held by Dr. White-Scharf's
minor children. Dr. White-Scharf disclaims beneficial ownership of the
shares held by her children.
(15) Consists solely of shares of Common Stock which Mr. Capasso has the right
to acquire within 60 days of January 31, 1999 upon the exercise of stock
options.
(16) Includes 619,431 shares of Common Stock which all directors and executive
officers as a group may acquire upon the exercise of outstanding stock
options and warrants exercisable within 60 days of January 31, 1999.
4
<PAGE>
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors the
seven nominees named below, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to elect as directors the nominees named below, each of whom
is currently a member of the Board of Directors of the Company.
Each director will be elected to hold office until the 2000 Annual Meeting
of Stockholders and until his successor is duly elected and qualified. The
nominees have indicated their willingness to serve, if elected; however, if any
nominee should be unable to serve, the shares of Common Stock represented by
proxies may be voted for a substitute nominee designated by the Board of
Directors.
There are no family relationships between or among any officers or directors
of the Company.
Set forth below are the name and age of each member of the Board of
Directors, and the positions and offices held by him, his principal occupation
and business experience during the past five years, the names of other publicly
held companies of which he serves as a director and the year of the commencement
of his term as a director of the Company. Information with respect to the number
of shares of Common Stock beneficially owned by each director, directly or
indirectly, as of January 31, 1999, appears above under the heading "Stock
Ownership of Certain Beneficial Owners and Management."
NOMINEES FOR DIRECTOR
ELLIOT LEBOWITZ, PH.D., age 58, has served as President and Chief Executive
Officer and as a member of the Board of Directors of the Company since April
1991. From 1985 to 1991, he served as Vice President for Research and
Development at C.R. Bard, Inc., a medical device company ("Bard"), directing
internal and collaborative research and development programs for Bard's Vascular
Systems, Cardiosurgery and Cardiopulmonary Divisions. From 1981 until 1985, Dr.
Lebowitz served as Director of Long Range Research and Development at DuPont
Corporation, a diversified health care company, developing
immunopharmaceuticals. From 1977 until 1981, he served as Division Manager of
the Medical Products Division of New England Nuclear Corporation which
developed, manufactured and sold radiopharmaceuticals for in vivo diagnosis.
Earlier in his career, Dr. Lebowitz served at Brookhaven National Laboratories,
a United States Department of Energy research facility, where he developed
Thallium-201, a radiopharmaceutical for the diagnosis of coronary artery
disease. Dr. Lebowitz was a founder of Diagnostic Isotopes, Inc., a
radiopharmaceutical company which was subsequently acquired by Hoffmann-La Roche
Inc., a pharmaceutical company. He was also a founder of Procept, Inc., a
biopharmaceutical company which focuses on rational drug design. He holds a B.A.
from Columbia College and a Ph.D. from Columbia University.
DONALD R. CONKLIN, age 62, has served as a director of the Company since
January 1997. From February to December 1996, he served as Chairman of
Schering-Plough Health Care Products ("Schering-Plough Health Care"), a
wholly-owned subsidiary of Schering-Plough Corporation, a pharmaceutical
company. From 1995 to February 1996, he served as President of Schering-Plough
Health Care, and from 1986 until September 1994, he served as Executive Vice
President and President of Schering-Plough Pharmaceuticals. He received his B.A.
from Williams College and his M.B.A. from Rutgers University. Mr. Conklin also
serves on the Board of Directors of Cytotherapeutics, Inc. and Vertex
Pharmaceuticals, Inc.
5
<PAGE>
WILLIAM W. CROUSE, age 56, has served as a director of the Company since
June 1995. Since 1994, Mr. Crouse has served as Vice Chairman of HealthCare
Ventures LLC and as a general partner of HealthCare Partners I, L.P. ("HCP I"),
HCP II, HCP III and HCP IV, the general partners of HealthCare Ventures I, L.P.
("HCV I"), HCV II, HCV III, and HCV IV, respectively. Mr. Crouse served as
Worldwide President of Ortho Diagnostic Systems, a medical device company, and
Vice President of Johnson & Johnson International, a pharmaceutical company,
from 1987 to 1994. Mr. Crouse has more than 30 years experience in the
pharmaceutical industry. He also serves as a director of Dendreon Corporation,
Allelix Biopharmaceuticals, Raritan Bancorp, The New York Blood Center and
Liberty Science Center. Mr. Crouse received his B.S. in finance and economics
from Lehigh University and his M.B.A. from Pace University.
JAMES C. FOSTER, J.D., age 48, has served as a director of the Company since
February 1992. Since 1992, he has served as President and Chief Executive
Officer of Charles River Laboratories, Inc., a wholly-owned subsidiary of Bausch
& Lomb, Inc. ("CRL"), a supplier of research animals and animal-related products
and services. Previously, he served in various capacities with CRL since 1976.
Mr. Foster received his B.S. in psychology from Lake Forest College, his J.D.
from the Boston University School of Law and his M.A. in Science and Management
from the Massachusetts Institute of Technology.
DANIEL O. HAUSER, PH.D., age 61, has served as a director of the Company
since January 1994. From 1997 to 1998, he served as the head of Preclinical
Development & Project Management, Operations in the United States for Novartis,
a pharmaceutical corporation. From 1992 until January 1997, he served as
President of Sandoz Research Institute, in East Hanover, New Jersey and as
Senior Vice President of Research and Development for Sandoz Pharmaceutical
Corporation, the predecessor of Novartis, "Sandoz". From 1965 to 1992, he served
in various positions at the Pharma Division of Sandoz Pharma Ltd. (Switzerland)
and from 1985 to 1992, served as Senior Vice President. Dr. Hauser received his
M.S. and Ph.D. in chemistry from the Swiss Federal Institute of Technology
(Switzerland) and was a Post-doctoral Research Fellow in the Department of
Chemistry at the Israel Institute of Technology (Haifa).
MICHAEL S. PERRY, D.V.M., PH.D., age 39, has served as a director of the
Company since January 1999. Since 1998, he has served as President and Chief
Executive Officer of Genetic Therapy, Inc. ("Genetic Therapy"). and since 1997,
he has served as President and Chief Executive Officer of SyStemix, Inc.
("SyStemix"). Genetic Therapy and SyStemix are biopharmaceutical corporations
which are wholly-owned by Novartis. During 1997, Dr. Perry served as Vice
President, Drug Regulatory Affairs, North America for Novartis. From 1995 to
1996, he served as Vice President, Drug Registration and Regulatory Affairs
(North America) for Sandoz. From 1994 to 1995, he served as Vice President, Drug
Registration and Regulatory Affairs (USA) for Sandoz. Prior to 1994, Dr. Perry
served in various capacities with Syntex Corporation and Schering-Plough
Corporation, both pharmaceutical corporations. Dr. Perry received his Ph.D. in
pharmacology (cardiopulmonary) and his D.V.M. from the Ontario Veterinary
College, University of Guelph (Canada).
ROBERT A. VUKOVICH, PH.D., age 55, has served as a director of the Company
since March 1994. Since 1997, he has served as Chairman of the Board of Roberts
Pharmaceutical Corporation, a pharmaceutical company he founded. From 1983 to
1997, he served as Chairman of the Board and Chief Executive Officer of Roberts
Pharmaceutical Corporation. From 1979 to 1983, he served as the Director of the
Division of Developmental Therapeutics of the Revlon Health Care Group, a
pharmaceutical company. He received his B.S. from Allegheny College and his
Ph.D. in Pharmacology-Toxicology with a minor in Pathology from Jefferson
Medical College. Dr. Vukovich also serves on the Board of Directors of Cypros
Pharmaceutical Corp. and Pacific Pharmaceuticals, Inc.
6
<PAGE>
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
provides the opportunity for direct contact between the Company's independent
accountants and the Board of Directors. The Audit Committee has responsibility
for recommending the appointment of the Company's independent accountants,
reviewing the scope and results of audits and reviewing the Company's internal
accounting control policies and procedures. The Audit Committee held two
meetings in 1998. The members of the Audit Committee are Messrs. Foster and
Conklin.
The Company also has a standing Compensation Committee of the Board of
Directors, which makes recommendations concerning salaries and incentive
compensation for employees of, and consultants to, the Company, establishes and
approves salaries and incentive compensation for certain senior officers and
employees and administers and grants stock options pursuant to the Company's
stock option plans. The Compensation Committee held two meetings during 1998.
The members of the Compensation Committee are Mr. Crouse and Dr. Vukovich. See
"Report of the Compensation Committee" below.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors held six meetings during 1998. Each director attended
at least 75% of the total number of meetings of the Board of Directors and all
committees of the Board on which he served.
COMPENSATION FOR DIRECTORS
The Company's non-employee directors who are not affiliated with Novartis
each receive $1,000, plus reasonable travel and out-of-pocket expenses, for each
meeting of the Board of Directors attended and are entitled to participate in
the Company's 1994 Directors' Equity Plan, as amended to date (the "Equity
Plan"), as described below.
On January 2, 1999, options to purchase 3,125 shares of Common Stock at an
exercise price of $2.50 per share and 625 shares of Common Stock, which are
subject to a repurchase option in favor of the Company, at a purchase price of
$0.04 per share were granted to Dr. Hauser under the Equity Plan, and options to
purchase an additional 12,500 shares of Common Stock at an exercise price of
$2.50 per share were granted to Dr. Hauser under the Company's 1997 Stock
Incentive Plan (the "1997 Plan").
SUMMARY OF THE EQUITY PLAN
Under the Equity Plan, directors of the Company who are neither officers or
employees of the Company or of any subsidiary of the Company, nor affiliated
with Novartis, shall each receive upon either (i) his or her appointment as a
director of the Company or (ii) such time he or she ceases to be an employee or
affiliate of Novartis: (A) nonstatutory stock options to purchase 3,125 shares
of Common Stock at fair market value on the date of grant ("Initial Options");
and (B) 625 shares of common stock, which are subject to a repurchase option in
favor of the Company, at a purchase price of $0.04 per share (the "Restricted
Stock"). The Initial Options vest over five equal annual installments beginning
on the first anniversary of the date of grant and the Restricted Stock will vest
in four equal annual installments beginning on the first anniversary of the date
of grant.
The Board of Directors may suspend or discontinue the Equity Plan or amend
it in any respect; provided, however, that without the approval of the
stockholders, no amendment may change the number of shares subject to the Equity
Plan, change the designation of the class of directors eligible to receive
7
<PAGE>
awards, or materially increase the benefits accruing to participants under the
Equity Plan. The Equity Plan may not be amended more than once during any
six-month period.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information with respect to the annual and long-term compensation for the last
three fiscal years of the Company's Chief Executive Officer and the Company's
five other most highly compensated executive officers whose total annual salary
and bonus for 1998 exceeded $100,000 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION -----------------------
--------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- --------------------------------------------------------- --------- ---------- --------- -----------------------
<S> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D.................................... 1998 $ 252,956 $ -- 100,000
Chief Executive Officer 1997 240,559 -- 65,133
1996 228,913 -- 71,021
James Hope, Ph.D......................................... 1998 $ 182,619 $ 22,423 36,800
Senior Vice President of Development 1997 172,482 -- 16,100
1996 164,135 -- 22,670
Julia L. Greenstein, Ph.D................................ 1998 $ 200,723 $ 19,372 40,700
Senior Vice President of Research 1997 193,717 -- 30,000
1996 185,193 -- 22,930
Robert Kauffman, M.D., Ph.D.(1).......................... 1998 $ 135,858 $ 30,000 --
Vice President of Clinical Affairs 1997 190,300 -- 5,000
1996 95,138 63,000 50,000
Mary White-Scharf, Ph.D.................................. 1998 $ 146,107 $ 13,662 45,200
Vice President of Research 1997 136,624 -- 39,200
1996 131,602 -- 31,322
Richard Capasso, C.P.A................................... 1998 $ 116,997 $ 10,493 20,000
Vice President, Finance and Treasurer 1997 103,391 -- 30,233
1996 98,958 -- 8,413
</TABLE>
- ------------------------
(1) Dr. Kauffman left the Company in September 1998.
8
<PAGE>
OPTION GRANT TABLE. The following table sets forth certain information
regarding options granted during the year ended December 31, 1998 by the Company
to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#)(1) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
- ------------------------------ --------------- ----------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D......... 35,000 7.1% $ 5.63 1/05/08 $ 123,924 $ 314,047
27,000 5.5% 3.13 8/11/08 53,148 134,687
38,000 7.7% 1.88 12/07/08 44,928 113,856
James Hope, Ph.D.............. 15,300 3.1% 3.19 8/05/08 30,694 77,786
7,700 1.6% 3.13 8/11/08 15,157 38,411
13,800 2.8% 1.88 12/07/08 16,316 41,348
Julia L. Greenstein, Ph.D..... 13,000 2.7% 6.00 1/29/08 49,053 124,312
9,900 2.0% 3.13 8/11/08 19,487 49,385
17,800 3.6% 1.88 12/07/08 21,045 53,333
Robert Kauffman, M.D., Ph.D... -0- -- -- -- -- --
Mary White-Scharf, Ph.D....... 9,000 1.8% 3.13 8/11/08 17,716 44,896
20,000 4.0% 2.13 9/10/08 26,791 67,893
16,200 3.2% 1.88 12/07/08 19,153 48,539
Richard Capasso, C.P.A........ 4,300 0.9% 3.13 8/11/08 8,464 21,450
8,000 1.6% 1.75 12/03/08 8,804 22,312
7,700 1.6% 1.88 12/07/08 9,104 23,071
</TABLE>
- ------------------------
(1) Options granted in 1998 become exercisable in four equal annual
installments, commencing twelve months after the vesting commencement date,
which is typically the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for options if
exercised at the end of the option term. These gains are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from the
date options were granted to their expiration date. Actual gains, if any, on
stock option exercises will depend on the future performance of the Common
Stock on the date on which options are exercised.
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<PAGE>
YEAR-END OPTION TABLE. The following table sets forth certain information
regarding stock options held as of December 31, 1998 by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
-------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D..................................... 144,490 188,523 $ -0- $ 23,803
James Hope, Ph.D.......................................... 50,592 62,790 -0- 8,625
Julia L. Greenstein, Ph.D................................. 50,116 76,514 -0- 11,125
Robert Kauffman, M.D., Ph.D.(2)........................... -- -- -0- -0-
Mary White-Scharf, Ph.D................................... 41,512 93,271 11,875 17,625
Richard Capasso, C.P.A.................................... 16,271 47,206 -0- 10,813
</TABLE>
- ------------------------
(1) Value is based on the closing sales price of the Company's Common Stock on
the Nasdaq Stock Market on December 31, 1998 ($2.50), the last trading day
of the Company's 1998 fiscal year, less the applicable option exercise
price.
(2) Dr.Kauffman left the Company in September 1998.
SEVERANCE AGREEMENTS WITH EXECUTIVE OFFICERS
Under the terms of an agreement with Dr. Lebowitz, the Company's President
and Chief Executive Officer, in the event of involuntary termination of Dr.
Lebowitz' employment, he is eligible to receive six months of base salary from
the Company. Under the terms of agreements with Dr. Hope, Senior Vice President
of Development, Dr. Greenstein, Senior Vice President of Research and Chief
Scientific Officer, Dr. White-Scharf, Vice President of Research and Mr.
Capasso, Vice President, Finance and Treasurer, in the event of a termination of
employment without cause, the terminated officer is eligible to receive six
months of base salary, which will be discontinued if the officer secures other
employment. Furthermore, if at the end of such six-month period Dr. Hope is
unable to secure other employment, then Dr. Hope and the Company have agreed to
negotiate an additional severance payment of up to six months of base salary.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by all officers of the
Company who are persons required to file reports ("Reporting Persons") pursuant
to Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company believes that during fiscal 1998 all filings
required to be made by its Reporting Persons were timely made in accordance with
the requirements of the Exchange Act.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company, which is currently comprised of
two non-employee directors, Mr. Crouse and Dr. Vukovich, makes recommendations
concerning salaries and incentive compensation for employees of and consultants
to the Company, establishes and approves salaries and incentive compensation for
certain senior officers and employees and administers and grants stock options
pursuant to the Company's stock option plans.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
combination of base salary and stock-based incentives. The Compensation
Committee considers stock incentives to be a critical component of an
executive's compensation package in order to help align executive interests with
stockholder interests.
COMPENSATION PHILOSOPHY
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Compensation Committee's
executive compensation philosophy is based on the principles of competitive and
fair compensation and sustained performance.
- COMPETITIVE AND FAIR COMPENSATION
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Compensation Committee compares the
Company's compensation practices with those of other companies in the
industry and sets the Company's compensation guidelines based on this
review. The Compensation Committee believes compensation for the
Company's executive officers is within the range of compensation paid to
executives with comparable qualifications, experience and
responsibilities in the same or similar business and of comparable size
and success. The Compensation Committee also strives to achieve equitable
relationships both among the compensation of individual officers and
between the compensation of officers and other employees throughout the
organization.
- SUSTAINED PERFORMANCE
Executive officers are rewarded based upon a subjective assessment of
corporate performance and individual performance. Corporate performance
is evaluated by reviewing the extent to which strategic and business plan
goals are met, including such factors as achievement of operating
budgets, establishment of strategic licensing and development alliances
with third parties, timely development of new processes and products and
performance relative to competitors. Individual performance is evaluated
by reviewing attainment of specified individual objectives and the degree
to which teamwork and Company values are fostered.
In evaluating each executive officer's performance, the Compensation
Committee generally conforms to the following process:
- Company and individual goals and objectives generally are set at the
beginning of the performance cycle.
11
<PAGE>
- At the end of the performance cycle, the accomplishment of the executive's
goals and objectives and his or her contributions to the Company are
evaluated and the results are communicated to the executive.
- The executive's performance is then compared with peers within the Company
and the comparative results, combined with comparative compensation
practices of other companies in the industry, is then used to determine
salary and stock compensation levels.
Annual compensation for the Company's executives generally consists of two
elements--salary and stock options.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual individual
performance against targeted performance and various subjective performance
criteria. Targeted performance criteria vary for each executive based on his or
her area of responsibility, and may include continued innovation in development
of the Company's technology, implementation of financing strategies and
establishment of strategic licensing and development alliances with third
parties. Subjective performance criteria include an executive's ability to
motivate others, develop the skills necessary to grow as the Company matures,
recognize and pursue new business opportunities and initiate programs to enhance
the Company's growth and success. The Compensation Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his or her contributions to the Company, including his or her
success in achieving the individual performance criteria described above. The
option program generally uses a four-year vesting period to encourage key
employees to continue in the employ of the Company. All stock options granted to
executive officers in 1998 were granted at fair market value on the date of
grant. During 1998, all current executive officers received options to purchase
an aggregate of 242,700 shares of Common Stock, at a weighted average exercise
price of $3.03 per share.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), disallows a tax
deduction to public companies for compensation over $1.0 million paid to the
corporation's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Company
intends to structure the performance-based portion of the compensation of its
executive officers in a manner that complies with Section 162(m) of the Code to
mitigate any disallowance of deductions.
DR. LEBOWITZ' 1998 COMPENSATION
Dr. Lebowitz is eligible to participate in the same executive compensation
plans available to the other executive officers of the Company. The Compensation
Committee believes that Dr. Lebowitz' annual compensation, including the portion
of his compensation based upon the Company's stock option program, has been set
at a level competitive with other companies in the industry.
12
<PAGE>
Dr. Lebowitz' salary for 1998 increased to $252,956 from $240,559 in 1997 in
light of the financial performance of the Company during 1998 and the Company's
achievement of targeted goals for the development of the Company's products
under development. In 1998, Dr. Lebowitz was granted stock options to purchase
an aggregate of 100,000 shares of the Company's Common Stock at a weighted
average exercise price of $3.53 per share. All such options were granted to Dr.
Lebowitz at an exercise price equal to the fair market value of the Company's
Common Stock on the date of grant. In determining whether to grant stock options
to Dr. Lebowitz, the Compensation Committee considered Dr. Lebowitz' overall
compensation package relative to that of other chief executives in the Company's
industry and past option grants as well as an assessment of continuing progress
of the Company's business plan.
Compensation Committee
William W. Crouse
Robert A. Vukovich, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Crouse and
Vukovich. No member of the Compensation Committee was at any time during 1998,
or formerly, an officer or employee of the Company or any subsidiary of the
Company, nor has any member of the Compensation Committee had any relationship
with the Company requiring disclosure under Item 404 of Regulation S-K under the
Exchange Act.
No executive officer of the Company has served as a director or member of
the Compensation Committee (or other committee serving an equivalent function)
of any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
COMPARATIVE STOCK PERFORMANCE
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from May 8,
1996, the date of the Company's initial public offering, through December 31,
1998 with the cumulative total return on (i) the Total Return Index for the
Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Composite Index") and (ii) the
Nasdaq Pharmaceutical Index (assuming the investment of $100 in the Company's
Common Stock (at the initial public offering price), in the Nasdaq Composite
Index and in the Nasdaq Pharmaceutical Index on May 8, 1996 and reinvestment of
all dividends). Measurement points are on May 8, 1996, and the last trading day
of the years ended December 31, 1996, 1997 and 1998.
13
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ NASDAQ
<S> <C> <C> <C>
BioTransplant Composite Pharmaceutical
Incorporated Index Index
5/8/96 $100.00 $100.00 $100.00
12/31/96 $68.00 $109.00 $91.00
12/31/97 $61.00 $134.00 $97.00
12/31/98 $26.00 $188.00 $125.00
</TABLE>
<TABLE>
<CAPTION>
5/8/96 12/31/96 12/31/97 12/31/98
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BioTransplant Incorporated............................................... $ 100.00 $ 68.00 $ 61.00 $ 26.00
Nasdaq Composite Index................................................... 100.00 109.00 134.00 188.00
Nasdaq Pharmaceutical Index.............................................. 100.00 91.00 97.00 125.00
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1991, the Company entered into a supply agreement with CRL. The
agreement was amended in 1998. Under the terms of the agreement, as amended, CRL
provides the Company with miniswine and miniswine organs for research and
development purposes in exchange for payments based on future commercial sales
of miniswine products by the Company. The Company paid CRL $877,500 under this
agreement in 1998. James C. Foster, President and Chief Executive Officer of
CRL, is a director of the Company.
In 1993, the Company and Novartis entered into a collaboration agreement for
the development and commercialization of xenotransplantation products utilizing
gene transduction, which was subsequently amended and restated in September
1995. Novartis has also agreed to fund all of the development and premarketing
costs of the licensed products, a portion of which may be repayable from the
Company's operating profits from sales of the XenoMune System if the Company
elects to co-promote, and a portion of which must be repaid within 90 days
following submission of a product license application to the Food and Drug
Administration for such products.
In October 1997, and as amended in October 1998, the Company entered into a
collaboration and license agreement with Novartis to develop and commercialize
transplantation products utilizing the Company's proprietary mixed bone marrow
chimerism technology. Under the agreement, the Company
14
<PAGE>
may receive from Novartis research funding, license fees and milestone payments
of up to $36.0 million, assuming the agreement continues for its full term and
certain milestones are achieved. In addition, Novartis has agreed to provide
support for certain costs associated with the Company's proprietary miniswine.
As of December 31, 1998, research funding of $8.0 million and license fees of
$3.0 million had been received. In addition to research funding, Novartis will
also fund certain development and premarketing costs of products which may arise
under the collaboration and portions of these costs, under certain
circumstances, may be repayable.
Dr. Perry, a director of the Company, is President & Chief Executive Officer
of Genetic Therapy and SyStemix, affiliates of Novartis.
APPROVAL OF AMENDMENT TO 1994 DIRECTORS' EQUITY PLAN
The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting and retaining qualified directors.
Currently, 24,375 shares remain available for future awards under the Company's
1994 Directors' Equity Plan (the "Equity Plan"). Accordingly, on February 22,
1999, the Board of Directors adopted, subject to stockholder approval, an
amendment to the Equity Plan that increased from 50,000 to 100,000 the number of
shares of Common Stock available for issuance under the Equity Plan (subject to
a proportionate adjustment for certain changes in the Company's capitalization,
such as a stock split).
GENERAL
Under the Equity Plan, directors of the Company who are not officers of or
employees of the Company or of any subsidiary of the Company, nor affiliated
with Novartis, shall each receive upon his or her appointment as a director of
the Company, (i) nonstatutory stock options to purchase 3,125 shares of Common
Stock at fair market value on the date of grant ("Initial Options") and (ii) 625
shares of restricted stock, subject to a repurchase option, at a purchase price
of $0.04 per share (the "Restricted Stock"). The Initial Options vest over five
equal annual installments beginning on the first anniversary of the date of
grant of the Restricted Stock will vest in four equal annual installments
beginning on the first anniversary of the date of grant.
ADMINISTRATION
The Board of Directors may suspend or discontinue the Equity Plan or amend
it in any respect; provided, however, that without the approval of the
stockholders, no amendment may change the number of shares subject to the Equity
Plan, change the designation of the class of directors eligible to receive
awards, or materially increase the benefits accruing to participants under the
Equity Plan. The Equity Plan may not be amended more than once during any
six-month period.
DESCRIPTION OF AWARDS UNDER THE EQUITY PLAN
NONSTATUTORY OPTIONS. Optionees receive the right to purchase a specified
number of shares of Common Stock at an option price and subject to such terms
and conditions as are specified at the time of the grant. All options may be
granted at an exercise price that may be less than, equal to or greater than the
fair market value of the Common Stock on the date of grant.
15
<PAGE>
RESTRICTED STOCK. Restricted Stock awards entitle recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares, at a purchase price of $0.04 per share.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to awards granted under the
Equity Plan and with respect to the sale of Common Stock acquired under the
Equity Plan.
NONSTATUTORY STOCK OPTIONS
A participant will not recognize taxable income upon the grant of a
nonstatutory stock option under the Equity Plan. Unlike the case of an incentive
stock option, however, a participant who exercises a nonstatutory stock option
generally will recognize ordinary compensation income in an amount equal to the
excess of the fair market value of the common stock acquired through the
exercise of the option ("NSO") Stock on the exercise date over the exercise
price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
NSO Stock for more than one year prior to the date of the sale.
RESTRICTED STOCK AWARDS
A participant will not recognize taxable income upon the grant of a
restricted stock award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the Common Stock at the time the award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, the participant will recognize ordinary compensation income, at the time
that the forfeiture provisions or restrictions on transfer lapse, in an amount
equal to the difference between the fair market value of the Common Stock at the
time of such lapse and the original purchase price paid for the Common Stock.
The participant will have a tax basis in the Common Stock acquired equal to the
sum of the price paid and the amount of ordinary compensation income recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. The gain or loss will be a long-term capital gain or
loss if the shares are held for more than one year. For this purpose, the
holding period shall begin just after the date on which the forfeiture
provisions or restrictions lapse if a Section 83(b) Election is not made, or
just after the award is granted if a Section 83(b) Election is made.
TAX CONSEQUENCES TO THE COMPANY
The grant of an award under the Equity Plan will have no tax consequences to
the Company. Moreover, in general, the sale of any Common Stock acquired under
the Equity Plan will not have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction,
16
<PAGE>
however, with respect to any ordinary compensation income recognized by a
participant under the Equity Plan, including as a result of the exercise of a
nonstatutory stock option or a Section 83(b) Election.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT TO THE
EQUITY PLAN IS IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
THEREFORE RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
APPROVAL OF AMENDMENT TO 1997 STOCK INCENTIVE PLAN
The Board of Directors believes that the continued growth and potential
future profitability of the Company depends, in large part, upon the ability of
the Company to maintain a competitive position in attracting and retaining
qualified personnel. Currently, 6,219 shares remain available for future awards
under the 1997 Stock Incentive Plan (the "1997 Plan"). Accordingly, on February
22, 1999, the Board of Directors adopted, subject to stockholder approval, an
amendment to the 1997 Plan that increased from 750,000 to 1,500,000 the number
of shares of Common Stock available for issuance under the 1997 Plan (subject to
a proportionate adjustment for certain changes in the Company's capitalization,
such as a stock split).
DESCRIPTION OF AWARDS
The 1997 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code, nonstatutory stock options, restricted
stock awards and other stock-based awards, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights (collectively, "Awards").
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS. Optionees receive
the right to purchase a specified number of shares of Common Stock at some time
in the future at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Options may be
granted at an exercise price which may be less than, equal to or greater than
the fair market value of the Common Stock on the date of grant. Under present
law, however, incentive stock options and options intended to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the Common Stock
on the date of grant (or less than 110% of the fair market value in the case of
incentive stock options granted to optionees holding more than 10% of the voting
power of the Company). Options may not be granted for a term in excess of ten
years. The 1997 Plan permits the Board of Directors to determine the manner of
payment of the exercise price of options, including through payment by cash,
check or in connection with a "cashless exercise" through a broker, by surrender
to the Company of shares of Common Stock, by delivery to the Company of a
promissory note, or by any other lawful means.
RESTRICTED STOCK AWARDS. Restricted stock Awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award.
OTHER STOCK-BASED AWARDS. Under the 1997 Plan, the Board of Directors has
the right to grant other Awards having such terms and conditions as the Board of
Directors 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.
17
<PAGE>
ELIGIBILITY TO RECEIVE AWARDS
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to be granted Awards under the 1997 Plan. Under
present law, however, incentive stock options may only be granted to employees.
The maximum aggregate number of shares with respect to which an Award may be
granted to any participant under the 1997 Plan may not exceed 100,000 shares
during any calendar year of the Plan.
As of March 31, 1999, approximately 70 persons were eligible to receive
Awards under the 1997 Plan, including the Company's executive officers and
nonemployee directors. The granting of Awards under the 1997 Plan is
discretionary, and the Company cannot now determine the number or type of Awards
to be granted in the future to any particular person or group.
On March 31, 1999, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $2.19.
ADMINISTRATION
The 1997 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 1997 Plan and to interpret the provisions of the 1997
Plan. Pursuant to the terms of the 1997 Plan, the Board of Directors may
delegate authority under the 1997 Plan to one or more committees of the Board,
and subject to certain limitations, to one or more executive officers of the
Company. The Board has authorized the Compensation Committee to administer
certain aspects of the 1997 Plan, including the granting of options to executive
officers. Subject to any applicable limitations contained in the 1997 Plan, the
Board of Directors, the Compensation Committee, or any other committee or
executive officer to whom the Board delegates authority, as the case may be,
selects the recipients of Awards and determines (i) the number of shares of
Common Stock covered by options and the dates upon which such options become
exercisable, (ii) the exercise price of options, (iii) the duration of options
and (iv) the number of shares of Common Stock subject to any restricted stock or
other stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price.
The Board of Directors is required to make appropriate adjustments in
connection with the 1997 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 1997 Plan) any
outstanding Awards shall become immediately fully exercisable. If any Award
expires or is terminated, surrendered, canceled or forfeited, the unused shares
of Common Stock covered by such Award will again be available for grant under
the 1997 Plan.
AMENDMENT OR TERMINATION
No Award may be made under the 1997 Plan after April 10, 2007, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 1997 Plan, except that no outstanding
Award designated as subject to Section 162(m) of the Code by the Board of
Directors after the date of such amendment shall become exercisable, realizable
or vested (to the extent such amendment was required to grant such Award) unless
and until such amendment shall have been approved by the Company's stockholders.
18
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
1997 Plan and with respect to the sale of Common Stock acquired under the 1997
Plan.
INCENTIVE STOCK OPTIONS. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from the
Exercise Date (a "Disqualifying Disposition"), then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO stock
for more than one year prior to the date of the sale.
RESTRICTED STOCK AWARDS. A participant will not recognize taxable income
upon the grant of a restricted stock Award, unless the participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize compensation ordinary income, for the
year in which the Award is granted, in an amount equal to the difference between
the fair market value of the Common Stock at the time the Award is granted and
the purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, the participant will recognize ordinary compensation income, at the time
that the forfeiture provisions or restrictions on transfer lapse, in an amount
equal to the difference between the fair market value of the Common Stock at the
time of such lapse and the original purchase price paid for the Common
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<PAGE>
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. The gain or loss will be a long-term capital gain or
loss if the shares are held for more than one year. For this purpose, the
holding period shall begin just after the date on which the forfeiture
provisions or restrictions lapse if a Section 83(b) Election is not made, or
just after the Award is granted if a Section 83(b) Election is made.
OTHER STOCK-BASED AWARDS. The tax consequences associated with any other
stock-based Award granted under the 1997 Plan will vary depending on the
specific terms of such Award, including, whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the Award, the applicable holding period
and the participant's tax basis.
TAX CONSEQUENCES TO THE COMPANY. The grant of an Award under the 1997 Plan
will have no tax consequences to the Company. Moreover, in general, neither the
exercise of an incentive stock option nor the sale of any Common Stock acquired
under the 1997 Plan will have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the 1997 Plan, including as a result of the exercise of a nonstatutory stock
option, a Disqualifying Disposition or a Section 83(b) Election. Any such
deduction will be subject to the limitations of Section 162(m) of the Code. The
Company will have a withholding obligation with respect to any ordinary
compensation income recognized by participants with respect to the exercise of a
nonstatutory option or Restricted Stock Award under the 1997 Plan who are
employees or otherwise subject to withholding.
THE BOARD OF DIRECTORS BELIEVES THE APPROVAL OF THE AMENDMENT TO THE 1997
PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen LLP as the Company's independent
accountants for the current fiscal year. Arthur Andersen LLP has served as the
Company's independent accountants since inception. Although stockholder approval
of the Board of Directors' selection of Arthur Andersen LLP is not required by
law, the Board of Directors believes that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors will reconsider its selection of Arthur
Andersen LLP. Representatives of Arthur Andersen LLP are expected to be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons
20
<PAGE>
named in the accompanying proxy to vote, or otherwise act, in accordance with
their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their reasonable
out-of-pocket expenses incurred in connection with the distribution of proxy
materials.
Subject to the terms and conditions set forth herein, all Proxies received
by the Corporation will be effective, notwithstanding any transfer of the shares
to which such Proxies relate, unless at or prior to the Annual Meeting the
Corporation receives a written notice of revocation signed by the person who, as
of the record date, was the registered holder of such shares. The Notice of
Revocation must indicate the certificate number and number of the shares to
which such revocation relates and the aggregate number of shares represented by
such certificate(s).
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
In order to be included in Proxy material for the 2000 Annual Meeting of
Stockholders, pursuant to Rule 14(a)-8 under the Exchange Act, Stockholders'
proposed resolutions must be received by the Corporation at its offices,
Building 75, Third Avenue, Charlestown Navy Yard, Charlestown, Massachusetts
02129 on or before December 14, 1999. The Corporation suggests that proponents
submit their proposals by certified mail, return receipt requested, addressed to
the Secretary of the Corporation.
If a Stockholder of the Corporation wished to present a proposal before the
2000 Annual Meeting of Stockholders, pursuant to Rule 14(a)-4 under the Exchange
Act, such Stockholder must give written notice to the Secretary of the
Corporation at the address noted above. The Secretary must receive such notice
at least 45 days prior to the anniversary of the mailing of this year's proxy
material. If a Stockholder fails to provide timely notice of a proposal to be
presented at the 2000 Annual Meeting of Stockholders, the proxies designated by
the Board of Directors of the Corporation will have discretionary authority to
vote on any such proposal.
By Order of the Board of Directors,
STEVEN D. SINGER, SECRETARY
April 12, 1999
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
21
<PAGE>
APPENDIX A
BIOTRANSPLANT INCORPORATED
PROXY SOLICITED BY BOARD OF DIRECTORS
Annual Meeting of Stockholders -- May 24, 1999
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Elliot Lebowitz, Richard Capasso and Steven D. Singer, or each of
them with full power of substitution, as proxies for those signing on the
reverse side to act and vote at the 1999 Annual Meeting of Stockholders of
BioTransplant Incorporated and at any adjournments thereof as indicated upon all
matters referred to on the reverse side and described in the Proxy Statement for
the Meeting, and, in their discretion, upon any other matters which may properly
come before the Meeting.
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder(s). If no other indication is made, proxies shall vote
"for" proposal numbers 1, 2, 3, 4 and 5.
A vote for the director nominees, and for proposal numbers 2, 3, 4 and 5 is
recommended by the Board of Directors.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BIOTRANSPLANT INCORPORATED
MAY 24, 1999
A /X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C>
FOR all nominees WITHOLD AUTHORITY
listed at right (except as in vote for all
marked to the contrary) nominees listed at right NOMINEES: Elliott Lebowitz, PHD
1. ELECTION OF / / / / Donald R. Conklin
DIRECTORS William W. Crouse
INSTRUCTIONS: TO WITHOLD AUTHORITY TO VOTE FOR INDIVIDUAL James C. Foster, J.D.
NOMINEE(S), MARK THE BOX LABLED "FOR" AND SRIKE A LINE Daniel O. Hauser, Ph.D.
THROUGH SUCH NOMINEE(S) NAME IN THE LIST AT RIGHT. YOUR Michael S. Perry D.V.M., Ph.D.
SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S). Robert A. Vukovich, Ph.D.
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S FOR AGAINST ABSTAIN
1997 STOCK INCENTIVE PLAN INCREASING FROM
750,000 TO 1,500,000 THE NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE UNDER THE
1997 STOCK INCENTIVE PLAN. / / / / / /
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S
1994 DIRECTORS' EQUITY PLAN INCREASING FROM
50,000 TO 100,000 THE NUMBER OF SHARES OF
COMMON STOCK RESERVED FOR ISSUANCE UNDER THE
1994 DIRECTORS' EQUITY PLAN. / / / / / /
4. TO RATIFY THE SELECTION OF ARTHUR ANDERSON LLP AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR
1999 / / / / / /
5. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
PLEASE READ THE REVERSE SIDE OF THIS CARD.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------ ------------------------
------------------------ ------------------------
------------------------ ------------------------
Signature Date: Signature Date:
---------------------------- ----------------- ----------------------------- ----------------
NOTE: Please sign this proxy exactly as your name appears hereon. Joint owners should each sign personally. Trustees and
fiduciaries should indicate the capacity in which they sign. If a corporation or partnership, this signature should be that
of an authorized officer who should state his or her title.
</TABLE>
<PAGE>
APPENDIX B
AMENDMENT NO. 1 TO
1997 STOCK INCENTIVE PLAN OF
BIOTRANSPLANT INCORPORATED
The 1997 Stock Incentive Plan, as amended (the "Plan") of BioTransplant
Incorporated be, and hereby by is, amended as follows:
1. Section 4, paragraph (a) is deleted in its entirety and the
following is substituted in its place:
"(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 1,500,000 shares of Common Stock. If any
Award expires or is terminated, surrendered or cancelled 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."
Adopted by the Board of Directors on February 11, 1999
[Adopted by the Stockholders on May 24, 1999]
<PAGE>
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>
(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>
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>
(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.
- 4 -
<PAGE>
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
- 5 -
<PAGE>
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.
- 6 -
<PAGE>
(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
- 7 -
<PAGE>
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.
- 8 -
<PAGE>
APPENDIX C
AMENDMENT NO. 3 TO
1994 DIRECTORS' EQUITY PLAN OF
BIOTRANSPLANT INCORPORATED
The 1994 Directors' Equity Plan, as amended (the "Plan") of
BioTransplant Incorporated be, and hereby by is, amended as follows:
1. Section 4, paragraph (a) is deleted in its entirety and the
following is substituted in its place:
"(a) The maximum number of shares which may be issued under the Plan
shall be 100,000 shares of the Company's Common Stock, $.01 par value per share
("Common Stock"), subject to subsequent adjustment as provided in Section 10."
Adopted by the Board of Directors on February 11, 1999
[Adopted by the Stockholders on May 24, 1999]
<PAGE>
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.
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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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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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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>
(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>
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
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<PAGE>
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.
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