GLYKO BIOMEDICAL LTD.
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario
M5H 3C2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TAKE NOTICE THAT an Annual Meeting of Shareholders of GLYKO BIOMEDICAL LTD. will
be held at Suite 2100, Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H
3C2 on Thursday, the 18th day of June, 1998 at the hour of 8:30 o'clock in the
morning (Local Time), for the following purposes:
1. To receive the Consolidated Financial Statements of the Corporation for the
year ended December 31, 1997, together with the Report of the Auditors
thereon and the Annual Report of the Directors;
2. To elect Directors;
3. To appoint Auditors and authorize the Directors to fix their remuneration;
4. To transact such other business as properly may be brought before the Annual
Meeting or any adjournment or adjournments thereof.
Shareholders who are unable to attend the Annual Meeting in person are requested
to sign and return to the Corporation the enclosed form of proxy.
The Corporation's Consolidated Financial Statements for the year ended December
31, 1997 and the Report of the Auditors thereon to the Shareholders and the
Annual Report of the Directors are enclosed herewith.
<PAGE>
The Board of Directors has fixed the close of business on May 8, 1998 as the
record date for the determination of Shareholders entitled to the Notice of
Annual Meeting and any adjournment or adjournments thereof.
DATED at Toronto this 1st day of May, 1998.
By order of the Board
/s/John C. Klock, M.D.
John C. Klock, M.D.
President and
Chief Executive Officer
GLYKO BIOMEDICAL LTD.
1997 Annual Information Circular
May 1, 1998
<PAGE>
GLYKO BIOMEDICAL LTD.
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario
M5H 3C2
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
This Management Information Circular is furnished in connection with the
solicitation of proxies by the Management of Glyko Biomedical Ltd. (the
"Corporation") for use at the Annual Meeting of Shareholders of the Corporation
(the "Meeting") to be held at the time and place and for the purposes set forth
in the attached Notice of Annual Meeting of Shareholders. It is anticipated that
the solicitation will be by mail primarily, but proxies may also be solicited
personally by regular employees of the Corporation. The cost of such
solicitation will be borne by the Corporation.
The form of proxy forwarded to Shareholders on May 14, 1998 with the Notice of
Annual Meeting confers discretionary authority upon the proxy nominees with
respect to various matters identified in the Notice of Annual Meeting of
Shareholders or other matters which may properly come before the Meeting.
The form of proxy affords the Shareholder the opportunity to specify that the
shares registered in his name shall be voted or withheld from voting on and to
vote for or against any ballot that may be called for, in accordance with the
specifications made by Shareholders.
In respect of proxies in which the Shareholders have not specified that the
proxy nominees are required to vote, vote for, withhold from voting or vote
against, the shares represented by such proxies will be voted at the meeting in
favour of management nominees and will be voted for other applicable
resolutions.
<PAGE>
2
APPOINTMENT AND REVOCATION OF PROXIES
A Shareholder has the right to appoint a person (who need not be a Shareholder)
to attend and act for him and on his behalf at the Meeting other than the
persons designated in the enclosed form of proxy. Such right may be exercised by
striking out the names of the persons designated in the enclosed form of proxy
and by inserting in the blank space provided for that purpose the name of the
desired person or by completing another proper form of proxy and, in either
case, delivering the completed and executed proxy to the Corporation before the
time of the Meeting or any adjournment thereof.
A Shareholder who has given a proxy may revoke it at any time in so far as it
has not been exercised. A proxy may be revoked, as to any matter on which a vote
shall not already have been cast pursuant to the authority conferred by such
proxy, by instrument in writing executed by the Shareholder or by his attorney
authorized in writing or, if the Shareholder is a body corporate, under its
corporate seal or by an officer or attorney thereof duly authorized, and
deposited either at the registered office of the Corporation at any time up to
and including the last business day preceding the day of the Meeting, or any
adjournment thereof, at which the proxy is to be used or with the Chairman of
such Meeting on the day of the Meeting or any adjournment thereof, and upon
either of such deposits the proxy is revoked. A proxy may also be revoked in any
other manner permitted by law.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On May 1, 1998, 22,282,504 Common Shares without par value of the Corporation
were issued and outstanding. Each Common Share entitles the holder thereof to
one vote at all meetings of Shareholders.
All Common Shareholders of record as of the time of the Meeting or any
adjournment thereof are entitled either to attend and vote thereat in person the
Common Shares held by them or, provided a completed and executed proxy shall
have been delivered to the Corporation, to attend and vote thereat by proxy the
Common Shares held by them.
<PAGE>
3
The following table lists certain information regarding beneficial ownership of
Glyko's Common Shares as of May 1, 1998, by (i) those persons who own more than
5% of the Corporation's common stock, (ii) each of the Corporation's "Named
Executive Officers" (as defined below), (iii) each of the Corporation's
directors, and (iv) by the Corporation's officers and directors as a group. The
statements as to the shares of the Corporation beneficially owned or over which
control or direction is exercised by the nominees for election as Directors
hereinafter named are in each instance based upon information furnished by the
person concerned.
<TABLE>
============================== ---------------------------------- ---------------------- ----------------------
<CAPTION>
Name and Address of Beneficial Number of Shares Held Percent of Class
Title of Class Owner
============================== ---------------------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Gwynn R. Williams
c/o Life Science Research Ltd.
3rd Floor Salisbury House
15 Victoria Street
Douglas, Isle of Man
Common Shares British Isles, UK 3,465,115 (1) 15.2
============================== ---------------------------------- ---------------------- ----------------------
Millipore Corp.
80 Ashby Road
Common Shares Bedford, MA 01730 2,450,000 11.0
============================== ---------------------------------- ---------------------- ----------------------
New York Life Insurance Company
51 Madison Avenue
New York, NY 10010
Common Shares 4,528,750(2) 18.6
============================== ---------------------------------- ---------------------- ----------------------
Trianon Opus One Inc.
Julius Baer Securities Inc.
330 Madison Avenue
Common Shares New York, NY 10017 3,528,000(3) 14.7
============================== ---------------------------------- ---------------------- ----------------------
Glycomed Inc.
10275 Science Center Drive
Common Shares San Diego, CA 92121 1,326,654 6.0
============================== ---------------------------------- ---------------------- ----------------------
John C. Klock
c/o Glyko, Inc.
11 Pimentel Court
Common Shares Novato, CA 94949 1,052,780 (4) 4.6
============================== ================================== ====================== =======================
</TABLE>
<PAGE>
4
<TABLE>
- ------------------------------ ------------------------------ -------------------------- --------------------------
<CAPTION>
Name and Address of Number of Shares Held Percent of Class
Title of Class Beneficial Owner
- ------------------------------ ------------------------------ -------------------------- --------------------------
<S> <C> <C> <C>
Christopher M. Starr
c/o Glyko, Inc.
11 Pimentel Court
Common Shares Novato, CA 94949 277,639 (5) 1.2
- ------------------------------ ------------------------------ -------------------------- --------------------------
John H. Craig
c/o Cassels Brock &
Blackwell, Scotia Plaza,
Suite 2100, 40 King Street
West, Toronto M5H 3C2
Common Shares Canada 103,448 (6) *
============================== ------------------------------ -------------------------- --------------------------
R. William Anderson
c/o Fusion Medical Tech.
1804 North Shoreline Blvd.
Common Shares Mountain View, CA 94043 102,447 (6) *
============================== ------------------------------ -------------------------- --------------------------
John S. Glass
Milkhaus Laboratory, Inc.
48 Main Street
Common Shares Boxford, MA 01921 99,000 (7) *
- ------------------------------ ------------------------------ -------------------------- --------------------------
Mark I. Young
c/o Cassels Brock &
Blackwell, Scotia Plaza,
Suite 2100, 40 King Street
West, Toronto M5H 3C2
Common Shares Canada 32,000(8) *
- ------------------------------ ------------------------------ -------------------------- --------------------------
Common Shares All Officers and Directors 5,132,429 (9) 21.3
============================== ============================== ========================== ==========================
<FN>
* Less than 1%
(1) Includes 102,447 Common Shares issuable upon exercise of options within 60
days of May 1, 1998 and 416,758 Common Shares issuable upon exercise of
common stock warrants.
(2) Includes 2,092,500 Common Shares issuable upon exercise of common stock
warrants.
(3) Includes 1,764,000 Common Shares issuable upon exercise of common stock
warrants.
(4) Includes 679,428 Common Shares issuable upon exercise of options within 60
days of May 1, 1998 and 20,207 Common Shares issuable upon exercise of
common stock warrants.
(5) Includes 261,695 Common Shares issuable upon exercise of options within 60
days of May 1, 1998 and 7,772 Common Shares issuable upon exercise of
common stock warrants.
(6) Includes 102,447 Common Shares issuable upon exercise of options within 60
days of May 1,1998.
(7) Includes 99,000 Common Shares issuable upon exercise of options within 60
days of May 1,1998.
(8) Includes 31,000 Common Shares issuable upon exercise of options within 60
days of May 1,1998.
(9) Includes 1,378,464 Common Shares issuable upon exercise of options within
60 days of May 1, 1998 and 444,747 Common Shares issuable upon exercise of
common stock warrants excludes shares held by LaMont Asset Management S.A.,
New York Life, Trianon Opus One, Inc. and Glycomed, Inc..
</FN>
</TABLE>
<PAGE>
5
ELECTION OF DIRECTORS
The articles of the Corporation provide that there shall be cumulative voting
for the election of directors. Therefore, each shareholder of the Corporation
entitled to vote for the election of directors has the right to cast a number of
votes equal to the number of votes attached to all the shares held by him
multiplied by the number of directors to be elected. A shareholder may cast all
such votes in favour of one candidate or distribute them among the candidates in
such manner as he sees fit.
For example, if a shareholder holds 100 Common Shares and desires to vote them
for the election of directors, the shareholder would be entitled to cast 600
votes, a number arrived at by multiplying the total number of Common Shares held
by the shareholder by the number (6) of directors to be elected. The 600 votes
resulting from such multiplication would be cast in favour of one candidate or
distributed among any number of candidates in any portion desired.
If a shareholder votes for more than one candidate without specifying the
distribution of his votes among the candidates, he will be deemed to have
distributed his votes equally among the candidates for whom he voted. If the
number of candidates nominated for director exceeds the number of positions to
be filled, the candidates who receive the least number of votes shall be
eliminated until the number of candidates remaining equal the number of
positions to be filled. A separate vote of shareholders shall be taken with
respect to each candidate nominated for director unless a resolution is passed
unanimously permitting two or more persons to be elected by a single resolution.
The present term of office of each director of the Corporation will expire
immediately prior to the election of directors at the Annual Meeting of
Shareholders. Each of the persons whose name appears hereunder is proposed to be
elected as a director of the Corporation to serve until the next Annual Meeting
of Shareholders or until his successor is elected or appointed. It is intended
that on any ballot that may be called for relating to the election of directors
the shares represented by the proxies in favour of Management nominees will be
voted in favour of the election of the persons whose names are set out below,
with such votes being equally distributed among such persons as directors of the
Corporation. Unless a shareholder has specified in his proxy that his shares are
to be withheld from voting in the event that any vacancies occur in the slate of
Management nominees, it is intended that discretionary authority shall be
exercised to vote the share represented by such proxies for the election of such
other person or persons as directors in accordance with the best judgment of
Management proxy nominees.
Management does not contemplate that any of the nominees will be unable to serve
as a Director but if that should occur for any reason prior to the Meeting it is
intended that discretionary authority shall be exercised by the persons named in
the enclosed form of proxy to vote the proxy for the election of any other
person or persons in place of any nominee or nominees unable to serve.
<PAGE>
6
DIRECTORS AND EXECUTIVE OFFICERS
The names of all of the members of the Board of Directors and the Executive
Officers of the Company, their principal occupations or employment during the
last 5 years and the dates on which they became Directors or Executive Officers
are as follows:
<TABLE>
=========================================================== ========================================================
<CAPTION>
Name and Present Principal Occupation Date First Appointed Director/Executive Officer
=========================================================== ========================================================
<S> <C>
R. William Anderson *
Vice President, Finance and Chief Financial Officer
Fusion Medical Technologies, Inc. June 26, 1992 (Director)
=========================================================== ========================================================
John H. Craig
Partner
Cassels Brock and Blackwell June 26, 1992 (Director)
=========================================================== ========================================================
John S. Glass
Vice President and Chief Financial Officer
Milkhaus Laboratory, Inc. August 3, 1994 (Director)
=========================================================== ========================================================
John C. Klock *
President and Chief Executive Officer January 1, 1991 (President, Chief Executive Officer)
Glyko Biomedical Ltd. June 26, 1992 (Director)
=========================================================== ========================================================
Christopher M. Starr
Vice President, Research and Development
Glyko Biomedical Ltd. July 1, 1991 (Vice President R&D)
=========================================================== ========================================================
Gwynn R. Williams *
Physicist June 26, 1992 (Director)
=========================================================== ========================================================
Mark I. Young
Partner
Cassels Brock and Blackwell March 14, 1997 (Director)
=========================================================== ========================================================
<FN>
* - member of the Audit Committee
</FN>
</TABLE>
All Directors and Executive Officers have held the above positions throughout
the past five years, except that: Mr. Anderson was also Vice-President, Finance
and Chief Financial Officer of Fidus Medical Technology, Inc. and a Director
(Consultant) at Recombinant Capital during the five year period; prior to August
1994 Mr. Craig was a partner of the firm Holden Day Wilson, Barristers and
Solicitors; prior to June 1994 Mr. Glass was Director of Investor Relations and
Vice President of Millicorp, a venture capital subsidiary of Millipore
Corporation; and prior to August, 1994, Mr. Young was a partner of the firm
Holden Day Wilson, Barristers and Solicitors.
<PAGE>
7
All Directors hold office until the next Annual Meeting of Shareholders or until
their successors are elected and qualified. Officers are appointed by the Board
of Directors and serve at the discretion of the Board. There are no family
relationships among the officers and directors of the Corporation.
Mr. R. William Anderson has served as a Director since 1992. Since 1997, he has
been Vice President, Finance and Chief Financial Officer at Fusion Medical
Technologies, Inc., a surgical sealant company. He held the same position at
Fidus Medical Technology, Inc., a developer of microwave cardiac ablation
equipment from 1996 to 1997. From 1994 to 1996 Mr. Anderson was a Director at
Recombinant Capital, a consulting firm specializing in strategic alliances in
the biotechnology industry. From 1989 to 1994 he served as Vice-President
Finance and Chief Financial Officer at Glycomed Incorporated, a therapeutic
pharmaceutical company based on complex carbohydrates. Mr. Anderson also held
financial positions as chief financial officer at Chiron Corporation and as
controller and as director of financial planning and analysis at Syntex
Laboratories. Mr. Anderson holds an MBA from the Harvard Business School.
Mr. John H. Craig has served as a Director and Secretary of the Corporation
since 1992 and has been a solicitor and partner with Cassels Brock and Blackwell
and previously with Holden Day Wilson, Toronto law firms, since 1973. Mr. Craig
is a director of a number of public companies including Argentina Gold Corp.,
Consolidated HCI Holding Corporation, Consolidated Stanford Corporation, Derland
Industries Limited, Gulfstream Resources Canada Limited, International Curator
Resources Ltd., LatinGold Inc., Lundin Oil AB, Oro Nevada Resources Inc., Red
Sea Oil Corporation, Scorpion Minerals Inc., TVX Gold Inc.
and Tenke Mining Corporation.
Mr. John S. Glass has served as a Director since August 1994 and is Vice
President and Chief Financial Officer of Milkhaus Laboratory, Inc., a
clinical stage biopharmaceutical company. From 1968 to 1994 he served in
various capacities at Millipore Corporation, most recently as Director of
Investor Relations and Vice President of Millicorp, a venture capital
subsidiary. Previously Mr. Glass was a research and development manager at
Polaroid Corporation. Mr. Glass holds a Masters degree in management from
the Massachusetts Institute of Technology. Mr. Glass was also a director of
PDI, Inc. from 1987 to 1990.
Dr. John C. Klock was formerly an academic physician and carbohydrate researcher
at the University of California at San Francisco (1976-1981), Scientific
Director of the Institute of Cancer Research of California Pacific Medical
Center in San Francisco (1982-1986), a research director at Murex Corporation, a
diagnostic pharmaceutical company (1985-1986) and the scientific founder of
Glycomed Incorporated, a therapeutical company based on complex carbohydrate
technology (1986-1990). As of July 1, 1997 Dr. Klock devotes 30% of his time to
Glyko and 70% to BioMarin.
<PAGE>
8
Christopher M. Starr, Ph.D. has been the Vice President of Research and
Development for Glyko since 1992 and for the year prior, he was Glyko's
Director of Research and Development. Dr Starr was a National
Research Council Associate and Intramural Research Training Award Fellow with
the National Institutes of Health prior to joining Glyko. Dr. Starr holds
a BS in Biology from Syracuse University and a Ph.D. from SUNY, Health
Science Center in Syracuse, New York. As of July 1, 1997 Dr. Starr devotes 30%
of his time to Glyko and 70% to BioMarin.
Mr. Gwynn R. Williams is a founder of Glyko (established 1990). He was
also founder and owner of Astromed and Astroscan, U.K. manufacturers of
scientific equipment established in 1984, which are now both merged into Life
Science Research Ltd., a U.K. company. Mr. Williams was a partner in Arthur
Andersen & Co. (1971-1982). Previously, he was a mathematician with General
Motors Research in Detroit(1961-1970) and with British Steel (1958-1960).
Mr. Williams also serves on the Board of BioMarin.
Mr. Mark I. Young has served a Director of the Corporation since March, 1997
and has been the Assistant Secretary of the Corporation since 1992.
Mr. Young is a solicitor and partner with Cassels Brock and Blackwell
practicing in the areas of corporate commercial and securities law. Mr. Young
is an officer or director of a number of public companies listed on The Toronto
Stock Exchange.
<PAGE>
9
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
officers and directors, and persons who own ten percent or more of a registered
class of the Corporation's equity securities, to file with the Securities
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Corporation. Officers, directors and ten percent or more stockholders are
required by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.
To the Corporation's knowledge, based solely on review of the copies of such
reports furnished to the Corporation or written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
officers, directors, and ten percent stockholders complied with all Section
16(a) filing requirements, except that the Forms 5 for all officers, directors
and ten percent stockholders were filed late.
Board Meetings and Committees
The Board of Directors of the Corporation held a total of two meetings during
the year ended December 31, 1997 on June 26 and October 22. No director
participated in fewer than 75 percent of all such meetings and actions of the
Board of Directors and the committees, if any, upon which such director served.
The Board of Directors has an Audit committee and a Compensation committee. It
does not have a Nominating Committee or a committee performing the functions of
a Nominating Committee.
The Audit Committee of the Board of Directors consists of Messrs. Anderson and
Williams and Dr. Klock. The Audit Committee recommends engagement of the
Corporation's independent accountants, and is primarily responsible for
reviewing and approving the scope of the audit and other services performed by
the Corporation's independent accountants and for reviewing and evaluating the
Corporation's accounting principles and its systems of internal accounting
controls.
The Audit Committee has reviewed the Corporation's 1997 financial statements and
has recommended that the Board of Directors approve those financial statements.
The Audit Committee met on May 12, 1997.
The Compensation Committee of the Board of Directors consists of Messrs.
Anderson and Williams. The Compensation Committee reviews the Company's
compensation structure for appropriateness and competitiveness, recommends
officer salaries to the Board, recommends officer and staff bonuses to the Board
and reviews retirement plan investments for adequate performance. The
Compensation Committee met on May 12, 1997.
<PAGE>
10
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table contains information about the compensation paid to, or
earned by, those who were, at December 31, 1997, the Corporation's President,
Chief Executive Officer and Chief Financial Officer and Vice-President, Research
and Development, being the only executive officers of the Corporation
(collectively, the "Named Executive Officers"). Specific aspects of their
compensation are dealt with in further detail in subsequent tables.
Glyko Biomedical Ltd. (1):
<TABLE>
========================== ====== ========================================== ================== ===================
<CAPTION>
All Other
Name and Principal Long-term Compensation
Position Year Annual Compensation Compensation (U.S.$)
------------ ---------- ------------------ ------------------ ------------------
Securities Under
Other Annual Options Granted
Salary Bonus Compensation (#)
(U.S.$) (U.S.$) (U.S.$)
- ------------------------- ------- ------------ ---------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
John C. Klock
President ,Chief 1997 97,226 -- -- 64,740 --
Executive Officer 1996 187,297 -- -- -- --
------- ------------ ---------- ------------------ ------------------ ------------------
and Chief Financial 1995 192,500 -- -- 128,218 --
------- ------------ ---------- ------------------ ------------------ ------------------
Officer 1994 184,200 -- -- 482,330 --
- ------------------------- ------- ------------ ---------- ------------------ ------------------ ------------------
Christopher M. Starr
Vice-President, Research
and Development 1997 84,013 -- -- 40,350 --
1996 126,528 -- -- -- --
------- ------------ ---------- ------------------ ------------------ ------------------
1995 130,000 -- -- 80,249 --
------- ------------ ---------- ------------------ ------------------ ------------------
1994 118,800 -- -- 7,660 --
========================== ======= ============ ========== ================== ================== ==================
<FN>
(1) On April 1, 1998, the Company hired Brian Brandley, Ph.D. as a General
Manager. Dr. Brandley is expected to handle certain of the functions
previously assigned to Dr. Christopher Starr.
</FN>
</TABLE>
<PAGE>
11
BioMarin Pharmaceutical, Inc. (BioMarin) (1):
<TABLE>
========================== ======= ========================================== ================= ===================
<CAPTION>
All Other
Name and Principal Long-term Compensation
Position Year Annual Compensation Compensation (U.S.$)
------------ ---------- ------------------ ------------------ ------------------
Securities Under
Other Annual Options Granted
Salary Bonus Compensation (#)
(U.S.$) (U.S.$) (U.S.$)
- ------------------------- ------- ------------ ---------- ------------------ ------------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
John C. Klock
President and
1997 146,914 -- -- -- --
Chief Financial
Officer
- ------------------------- ------- ------------ ---------- ------------------ ------------------ --------------------
Christopher M. Starr
Vice-President, Research
1997 65,653 -- -- -- --
========================== ======= ============ ========== ================== ================== ===================
<FN>
(1) As discussed herein and in the Annual Report provided under separate cover,
as of December 31, 1997, Glyko Biomedical Ltd. owned 41% of BioMarin
Pharmaceutical, Inc. Certain Executive Officers and Directors of Glyko are
also Executive Officers and Directors of BioMarin. As discussed herein and
in the Annual Report, in 1997, both Drs. Klock and Starr purchased 800,000
and 400,000 shares of common stock of BioMarin, respectively, in exchange
for notes maturing on July 31, 2000. The notes are secured by the
underlying stock.
</FN>
</TABLE>
Long-term Compensation Plans
Option Grants in 1997
Pursuant to the Corporation's stock option plan (the "Plan"), the Board of
Directors may from time to time authorize the granting to directors, officers,
employees and consultants of the Corporation of options to purchase up to
3,000,000 common shares. Granting of options in excess of the 3,000,000 share
maximum is subject to shareholder approval. Certain options granted in 1994 and
1995 are subject to regulatory approval by the Toronto Stock Exchange. The
exercise price of any option shall be fixed by the Board of Directors provided
that such price may not be less than the market price of the shares at the time
the option is granted and payment of such exercise price must be made in full at
the time of exercise.
<PAGE>
12
Options under the Plan may be granted for any term up to ten years, are
non-assignable, and are subject to earlier termination upon the termination of
an optionee's employment for any cause including retirement, permanent
disability but not death. In the event of death of an optionee, his estate may
be entitled for a period of six months thereafter to exercise any option which a
deceased optionee would have been entitled to exercise if then alive but in any
event not after the date of expiration of the option. No individual may hold
options to purchase more than 5% of the number of common shares outstanding from
time to time.
The purpose of the Plan is to attract and motivate the directors, officers,
employees and consultants of the Corporation and to advance the Corporation by
affording such persons the opportunity to acquire an equity interest in the
Corporation. In determining whether options will be granted, the Board of
Directors will review the financial position of the Corporation, the performance
of such individuals in carrying out their duties and their willingness to serve
the needs of the Corporation in general and the general state of the financial
markets.
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
% of Total
Options
Name and Principal Position # of Granted to Exercise
Options Employees in Price of Expiration Date of
Granted 1997 Options Options
<S> <C> <C> <C> <C>
John C. Klock, M.D.
President, Chief Executive Officer & Director 64,740 27% Cdn$0.65 December 31, 2001
Christopher M. Starr, Ph.D.
Vice-President, Research and Development 17% Cdn$0.65 December 31, 2001
</TABLE>
40,350
Neither Dr. Klock nor Dr. Starr had been granted any options to purchase
capital stock of BioMarin in 1997. Drs. Klock and Starr purchased 800,000
and 400,000 shares of common stock of BioMarin, respectively, in
exchange for notes maturing on July 31, 2000. The notes are secured by the
underlying stock.
<PAGE>
13
Options Exercised and Options Remaining
The following table provides detailed information regarding options exercised by
the Named Executive Officers and directors of the Corporation during 1997. In
addition, details on remaining options held are provided.
<TABLE>
========================= ============== ============ ==================================== ====================================
<CAPTION>
Value of Unexercised
Unexercised Options at in-the-money Options at
December 31, 1997 December 31, 1997(1)
------------- -------------
---------------- ------------------- ----------------- ------------------
Securities
Acquired Aggregate
on Exercise Value
(#) Realized Exercisable Unexercisable Exercisable Unexercisable
Name (C$) (#) (#) (C$) (C$)
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
R. William Anderson -- -- 94,007 513 $37,352 $128
- -------------------------------------- ------------- ---------------- ------------------- ----------------- ------------------
John H. Craig -- -- 94,007 513 $37,352 $128
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
John S. Glass -- -- 91,000 -- $41,600 --
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
John C. Klock -- -- 664,752 10,536 $119,295 $2,634
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
Christopher M. Starr -- -- 278,093 166 $101,808 $42
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
Gwynn R. Williams -- -- 94,007 513 $37,352 $128
- ------------------------- ------------- ------------- ---------------- ------------------- ----------------- ------------------
Mark I. Young -- -- 23,000 -- $13,800 --
========================= ============= ============= ================ =================== ================= ==================
<FN>
(1) Based on the closing price of common shares on The Toronto Stock
Exchange on December 31, 1997 of $1.25.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
Each non-officer Director of the Corporation received 23,000 stock options in
1997 at an exercise price of Cdn$0.65 expiring on December 31, 2001 in lieu of
compensation for services rendered in their capacity as directors.
Mr. Gwynn Williams and Dr. John Klock are each Directors of both Glyko and
BioMarin. In 1997, Mr. Williams was granted 20,000 options to purchase
BioMarin common stock at $1.00 per share expiring on November 30, 2002, and
23,000 options to purchase Glyko common stock at Cdn.$0.65 expiring on December
31, 2001. Dr. Klock did not receive any compensation for his capacity as
a Director of Glyko and of BioMarin.
<PAGE>
14
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
To the best of Management's knowledge none of the Directors or senior officers
of the Corporation or any of their associates or affiliates had any direct or
indirect interest in any material transactions of the Corporation entered into
during the past twelve months, save and except that:
(i) Investment in Subsidiary - On March 21, 1997, the Company closed a Cdn.$2.0
million financing (the Q197 Financing) to fund the start-up of BioMarin
Pharmaceutical, Inc. which was formed to develop the Company's pharmaceutical
products. As a result of this financing, the Company issued 4.0 million units at
Cdn.$0.50 per unit, each unit consisting of one common share and one common
share purchase warrant. Each warrant can be exercised for one share of common
stock at Cdn.$1.00 per share, expiring on March 21, 1999. An additional 280,000
units and 280,000 warrants together valued at approximately $161,000 were
distributed to the brokers in exchange for services rendered in connection with
the Q197 Financing. The Company utilized the Black-Scholes model to value all
the warrants issued in the Q197 Financing at approximately $496,000. As a result
of additional funds raised by BioMarin during 1997 (see Footnote 6 to Glyko
Biomedical, Ltd. Financial Statements), the Company's ownership in BioMarin was
reduced to 41% of BioMarin's outstanding common stock at December 31, 1997.
Future fundraising efforts of BioMarin could result in a further reduction the
Company's ownership percentage.
(ii) License Agreement with Subsidiary - BioMarin and the Company have entered
into a License Agreement dated June 26, 1997, pursuant to which the Company
granted BioMarin an exclusive, worldwide, perpetual, irrevocable, royalty-free
right and license to certain worldwide patents, trade secrets, copyrights and
other proprietary rights to all know-how, processes, formulae, concepts, data
and other such intellectual property, whether patented or not, owned or licensed
by the Company. and its subsidiaries as of the date of the License Agreement for
application in therapeutic uses, including, without limitation, drug discovery
and genomics. Under the same License Agreement, BioMarin granted the Company an
exclusive, worldwide, perpetual, irrevocable, royalty-free cross-license to all
improvements BioMarin may make upon the licensed intellectual property. As
consideration for this license, BioMarin issued the Company 7,000,000 shares of
BioMarin common stock.
(iii) Sublease to Subsidiary - The Company subleases office and lab space,
certain administrative and research and development functions to BioMarin.
BioMarin reimburses the Company for rent, salaries and related benefits and
other administrative costs and the Company reimburses BioMarin for salaries and
related benefits. The Company reimbursed BioMarin $133,000 during the year ended
December 31, 1997, and BioMarin reimbursed the Company $ 373,848 during the year
ended December 31, 1997. The Company also provided analytical services and
products to BioMarin at a 27% discount in 1997. Total receipts to the Company
from sales to BioMarin total $39,301 during 1997.
<PAGE>
15
(iv) Employment Agreement - The Corporation's wholly-owned subsidiary, Glyko,
Inc., first entered into an employment agreement (the "Employment Agreement")
with Dr. John C. Klock, M.D. ("Klock") on December 20, 1990. The Board of
Directors has renewed the Employment Agreement for an additional two years
effective January 1, 1996 retaining Klock as the Corporation's president. Under
the Employment Agreement, the Corporation's Board of Directors annually reviews
Klock's salary and makes adjustments which the Board of Directors in its
discretion deems to be appropriate. Glyko, Inc. is obligated to continue paying
Klock's compensation for a period of six months following Klock's mental or
physical incapacity or his death. The Employment Agreement may be renewed for
subsequent periods, subject to agreement by the parties on Klock's compensation
for the renewal terms. The Employment Agreement may be terminated by Klock upon
three months' notice and by Glyko, Inc. upon six months' notice or immediately
upon a breach of Klock's duties required under the Employment Agreement. By its
terms, the Employment Agreement does not terminate upon a merger, consolidation
or sale of substantially all of Glyko, Inc.'s assets and the obligations under
the Employment Agreement shall be delegated to the successor entity in such
situation.
Effective July 1, 1997, Drs. Klock and Starr signed employment agreements with
BioMarin committing 70% of their efforts to BioMarin and 30% to Glyko, Inc.
(v) Other Transactions with Subsidiary - In 1997, both Drs. Klock and Starr
purchased 800,000 shares and 400,000 shares of common stock of BioMarin,
respectively, in exchange for notes maturing on July 31, 2000. The notes are
secured by the underlying stock.
Effective July 1, 1997, Drs. Klock and Starr signed employment agreements with
BioMarin committing 70% of their efforts to BioMarin and 30% to Glyko, Inc.
Mr. Gwynn Williams and Dr. John Klock are each Directors of both Glyko and
BioMarin. In 1997, Mr. Williams was granted 20,000 options to purchase
BioMarin common stock at $1.00 per share expiring on November 30, 2002, and
23,000 options to purchase Glyko common stock at Cdn.$0.65 expiring on December
31, 2001. Dr. Klock did not receive any compensation for his capacity as
a Director of Glyko and of BioMarin.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
During fiscal 1997, other than routine indebtedness, no loans were made by the
Corporation to any senior officer or Director or any key employee of the
Corporation or any of their other respective associates.
As discussed above, both Drs. Klock and Starr purchased 800,000 shares and
400,000 shares of common stock of BioMarin, respectively, in exchange for notes
maturing on July 31, 2000. The notes are secured by the underlying stock.
<PAGE>
16
CORPORATE GOVERNANCE
Mandate of the Board
The mandate of the Corporation's board of directors is to provide guidance to
the Corporation's management in the following areas:
- long term strategic planning
- risk analysis and monitoring of risk management systems
- overseeing the appointment and training of senior management
and monitoring their performance, including succession planning
- establishing and monitoring the Corporation's communications
policy and ensuring that it addresses the feedback and concerns
of shareholders in particular
- ensuring the integrity of the Corporation's systems for internal
controls and management information
- developing and implementing the Corporation's corporate
governance guidelines
- approval of the annual operating and capital budgets
Composition of the Board
The Corporation's Board consists of six directors. Five members of the board are
outside directors who are not members of management. A majority of the Board can
be considered "unrelated" directors in that they do not have any interest or
business or other relationship which could or could reasonably be perceived to
materially interfere with their ability to act with a view to the best interests
of the Corporation.
The Corporation does not have a significant shareholder who is able to elect a
majority of the Corporation's Board.
Committees
The Board presently has an Audit Committee and a Compensation and Retirement
Plan Committee which have been assigned the specific responsibilities described
below. However, due the size of the Corporation and its board, the functions of
a Nominating or Executive Committee are performed by the entire Board.
<PAGE>
17
Audit Committee
The Audit Committee consists of three directors, a majority of whom are outside
directors. It carries our the following responsibilities:
- reviewing the Corporation's audited financial statements
- meeting with the Corporation's management and auditors for that purpose
Compensation and Retirement Plan Committee
The Compensation and Retirement Plan Committee consists of two directors, both
of whom are outside directors. It carries our the following responsibilities:
- review compensation structure for appropriateness and
competitivenes
- recommend officer salaries to the Board of Directors
- recommend officer and staff bonuses to the Board of Directors
- reviews retirement plan investments for adequate performance
APPOINTMENT OF AUDITORS
Unless authority to do so is withheld, the persons named in the enclosed form of
proxy intend to vote for the appointment of the firm of Arthur Andersen LLP, as
auditors of the Corporation, to hold office until the next Annual Meeting of
Shareholders at a remuneration to be fixed by the Directors.
Auditors
Arthur Andersen LLP will not be represented at the Annual Meeting.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposals by shareholders for consideration at the next annual meeting must
be received by the Company no later than November 15, 1998.
GENERAL
The Directors will lay before the Meeting their Annual Report and the
Consolidated Financial Statements of the Corporation for the years ended
December 31, 1997 and 1996 and the Report of the Auditors to the Shareholders
will be presented. Receipt at the Meeting of the Annual Report of the Directors
and the Corporation's Financial Statements for its last completed fiscal year,
<PAGE>
18
together with the Report of the Auditors, will not constitute approval or
disapproval by the Shareholders of any matters referred to therein.
Except as otherwise indicated, information contained herein is given as of May
1, 1998. Management knows of no matters to come before the Meeting other than
the matters referred to in the Notice of Annual Meeting of Shareholders.
However, if any other matters which are not now known to Management should come
properly before the Meeting, the proxy will be voted on such matters in
accordance with the best judgment of the person voting it.
APPROVAL
The contents of this Management Information Circular and the sending thereof to
the Shareholders have been authorized by the Board of Directors of the
Corporation.
DATED at Toronto this 1st day of May, 1998
John C. Klock, M.D. [signed]
John C. Klock, M.D.
President and
Chief Executive Officer
GLYKO BIOMEDICAL LTD.
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
Canada
FORM OF PROXY SOLICITED BY THE MANAGEMENT FOR USE AT THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 18, 1998
The undersigned Shareholder(s) of GLYKO BIOMEDICAL LTD. hereby appoint(s) John
C. Klock, President and Chief Executive Officer, or failing him John H. Craig,
Secretary, or failing him, Mark I. Young, Assistant-Secretary, or in lieu of the
foregoing ________________________ as nominee of the undersigned to attend,
act and vote for the undersigned at the Annual Meeting of the Shareholders
of the Corporation to be held on the 18th day of June, 1998, and at any
adjournment or adjournments thereof to the same extent and with the same
power as if the undersigned was present at the Annual Meeting or adjournment
or adjournments thereof and, without limiting the generality of the power
hereby conferred, the nominees designated above are directed to:
(a) VOTE ( ) WITHHOLD FROM VOTING ( ) in respect of the election of
Directors;
(b) VOTE ( ) WITHHOLD FROM VOTING ( ) in respect of the appointment of
Auditors and authorizing the
Directors to fix their remuneration;
(c) VOTE ( ) WITHHOLD FROM VOTING ( ) on such other matters as may come
properly before the Annual Meeting:
hereby revoking any proxy previously given.
If any amendments or variations to matters identified in the Notice of Annual
Meeting are proposed at the Annual Meeting or any adjournment or adjournments
thereof or if any other matters properly come before the Annual Meeting or any
adjournment or adjournments thereof, this proxy confers discretionary authority
to vote on such amendments or variations or such other matters according to the
best judgment of the person voting the proxy at the Annual Meeting or any
adjournment or adjournments thereof.
This proxy is solicited by the Management of the Corporation. A Shareholder has
the right to appoint a person to represent him and to attend and act for him on
his behalf at the Annual Meeting or any adjournment or adjournments thereof
other than the nominees designated above and may exercise such right by striking
out the names of the persons designated above and inserting the name of his
nominee in the blank space provided above for that purpose.
<PAGE>
DATED the day of , 1998.
Signature of Shareholder(s)
Name(s) of Shareholder(s)
(Please Print)
Number of Shares Represented
by this Proxy
Notes:
1. This form of proxy must be dated and signed by the Shareholder or his
attorney authorized in writing or, if the Shareholder is a body corporate, this
form of proxy must be executed under its corporate seal or by an officer or
attorney thereof duly authorized.
2. The shares represented by this proxy will be voted, voted for, withheld from
voting or voted against in accordance with the instructions of the Shareholder
on any ballot that may be called for. Where no specification is made to vote or
withhold from voting in respect of the election of Directors or the appointment
of Auditors, the nominees are directed to vote the shares represented by this
proxy.
3. This proxy ceases to be valid one year from its date.
4. Please date the proxy. If not dated, the proxy shall be deemed to be dated on
the day on which it is mailed.
5. If your address as shown is incorrect, please give your correct address when
returning this proxy.
Return all forms of proxy to:
Montreal Trust Company of Canada
151 Front Street West, 8th Floor
Toronto, Ontario M5J 2N1
Canada
GLYKO BIOMEDICAL LTD.
11 PIMENTEL COURT
NOVATO, CA 94949
U.S.A.
GLYKO BIOMEDICAL LTD. CUSIP # 379904105
In accordance with National Policy Statement No. 41/Shareholder Communication,
beneficial shareholders may elect annually to have their name added to an
issuers supplemental mailing list in order to receive financial statements. If
you are interested in receiving such statements, please complete and return this
form to Glyko Biomedical Ltd., Attention: Investor Relations.
NAME:
-------------------------------------------------
ADDRESS:
-------------------------------------------------
-------------------------------------------------
SIGNATURE:
-------------------------------------------------
I certify that I am a beneficial shareholder
