<PAGE>
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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BOSTON LIFE SCIENCES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BOSTON LIFE SCIENCES, INC
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
BOSTON LIFE SCIENCES, INC.
31 NEWBURY STREET, SUITE 300
BOSTON, MASSACHUSETTS 02116
(617) 425-0200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 28, 1999
TO ALL HOLDERS OF SHARES OF COMMON STOCK AND SERIES A CONVERTIBLE PREFERRED
STOCK:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Meeting") of BOSTON LIFE SCIENCES, INC. (the "Company") will be held at The
Ritz-Carlton Hotel, 15 Arlington Street, Boston, Massachusetts 02116 on June 28,
1999 at 10:00 a.m. for the following purposes:
1. To consider and act upon a proposal to elect seven directors for a term
ending at the next Annual Meeting and until each such director's successor
is duly elected and qualified.
2. To approve an amendment (the "Certificate Amendment") to increase to
35,000,000 the number of shares of Common Stock authorized for issuance
under the Company's Amended and Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on March 29, 1996, as amended (the
"Current Certificate"), an increase of 10,000,000 shares.
3. To approve an amendment (the "1998 Plan Amendment") to the Company's 1998
Omnibus Stock Option Plan to increase to 1,000,000 the number of shares
issuable upon the exercise of options granted thereunder, an increase of
500,000 shares.
4. To approve an amendment (the "1990 Plan Amendment") to the Company's
Amended and Restated 1990 Non-Employee Directors' Non-Qualified Stock
Option Plan to increase to 650,000 the number of shares issuable upon the
exercise of options granted thereunder, an increase of 200,000 shares;
5. To consider and take action upon such other business as may properly come
before the Meeting or any postponements or adjournments thereof.
Management presently knows of no other business to be presented at the
Meeting. If any other matters come before the Meeting, the persons named in the
enclosed proxy will vote in accordance with their judgment in such matters.
The Board of Directors has fixed April 29, 1999 as the record date for the
Meeting. Only those stockholders of record at the close of business on the
record date will be entitled to notice of and to vote at the Meeting or any
postponements or adjournments thereof. A complete list of stockholders entitled
to vote at the Meeting will be open to the examination of any stockholder, for
any purpose germane to the Meeting, during ordinary business hours, at least ten
days prior to the Meeting at the principal executive offices of the Company
listed above.
Directors will be elected by a plurality of the votes cast by holders of
Common Stock and Series A Convertible Preferred Stock (voting together with the
Common Stock as a single class on an as converted basis and represented in
person or by proxy at the meeting). The affirmative vote of a majority of the
outstanding shares of Common Stock and Series A Convertible Preferred Stock (on
an as converted basis) voting together as a class is required to approve the
Certificate Amendment. The affirmative vote of holders of a majority of the
shares of Common Stock and Series A Convertible Preferred Stock
<PAGE>
(voting together with the Common Stock as a single class on an as converted
basis) present in person or by proxy and entitled to vote is required to approve
the other proposals.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Meeting. To ensure that
your vote is counted, please complete, date and sign the enclosed proxy and
return it promptly in the enclosed envelope, whether or not you plan to attend
the Meeting in person. A self-addressed, postage paid envelope is enclosed for
your convenience. You may also complete your proxy by telephone by calling
1-800-454-8683, or through the internet at www.proxyvote.com.
If you do attend the Meeting, you may then withdraw your proxy and vote
your shares in person. In any event, you may revoke your proxy prior to its
exercise. Shares represented by proxies which are returned properly signed but
unmarked will be voted in favor of each proposal.
By Order of the Board of Directors,
Joseph P. Hernon
May __, 1999 Secretary
Boston, Massachusetts
YOUR VOTE IS IMPORTANT.
PLEASE FILL IN, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING.
NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
ALTERNATIVELY, YOU MAY COMPLETE YOUR PROXY TELEPHONICALLY, OR VIA THE INTERNET.
2
<PAGE>
BOSTON LIFE SCIENCES, INC.
31 Newbury Street, Suite 300
Boston, Massachusetts 02116
Telephone: (617) 425-0200
Telecopy: (617) 425-0996
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Boston Life Sciences, Inc. (the
"Company") of proxies to be voted at its Annual Meeting of Stockholders and at
any adjournments thereof (the "Meeting"), which is scheduled to be held on June
28, 1999, 10:00 a.m. at The Ritz-Carlton Hotel, 15 Arlington Street, Boston,
Massachusetts 02116, for the purposes set forth in the accompanying notice of
meeting. It is expected that this proxy statement, the foregoing notice and the
enclosed proxy card are first being mailed to stockholders entitled to vote on
or about May 15, 1999. Sending a signed proxy, or completing the proxy
telephonically or via the internet, will not affect a stockholder's right to
attend the Meeting and vote in person since the proxy is revocable. Any
stockholder giving a proxy has the power to revoke it by, among other methods,
giving written notice to the Secretary of the Company at any time before the
proxy is exercised, delivering a duly executed proxy bearing a later date, or
attending the Meeting and voting in person.
When your proxy card is returned properly signed, or you complete the
proxy telephonically or via the internet, the shares represented will be voted
in accordance with your directions. The Board knows of no matters that are
likely to be brought before the Meeting, other than the matters specifically
referred to in the notice of the Meeting. If any other matters properly come
before the Meeting, however, the persons named in the enclosed proxy, or their
duly appointed substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment in such matters. In the
absence of instructions, the shares represented at the Meeting by the enclosed
proxy will be voted "FOR" the seven nominees of the Board in the election of
directors; "FOR" the approval of the amendment (the "Certificate Amendment") to
increase to 35,000,000 the number of shares of Common Stock authorized for
issuance under the Company's Amended and Restated Certificate of Incorporation
dated March 29, 1996, as amended (the "Current Certificate"), an increase of
10,000,000 shares; "FOR" the amendment (the "1998 Plan Amendment") of the 1998
Omnibus Stock Option Plan (the "1998 Plan") to increase to 1,000,000 the amount
of shares of Common Stock of the Company authorized for issuance under the 1998
Plan , an increase of 500,000 shares; and "FOR" the amendment (the "1990 Plan
Amendment") of the Amended and Restated 1990 Non-Employee Directors'
Non-Qualified Stock Option Plan (the "1990 Plan") to increase to 650,000 the
amount
1
<PAGE>
of shares of Common Stock of the Company authorized for issuance under the 1990
Plan , an increase of 200,000 shares.
SOLICITATION OF PROXIES
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone or telecopy by officers or other regular employees of the Company,
without additional compensation. The Company is required to pay the reasonable
expenses incurred by record holders of the Company's common stock, $.01 par
value per share (the "Common Stock") and Series A Convertible Preferred Stock,
$.01 par value per share (the "Series A Preferred Stock") who are brokers,
dealers, banks or voting trustees, or other nominees, for mailing proxy material
and annual stockholder reports to any beneficial owners of Common Stock and
Series A Preferred Stock they hold of record, upon request of such record
holders.
VOTING SECURITIES
Holders of record of the Company's Common Stock and Series A Preferred
Stock as of the close of business on April 29, 1999 (the "Record Date"), will be
entitled to notice of and to vote at the Meeting and at any adjournments
thereof. As of the Record Date, there were__________ shares of Common Stock and
_____ shares of Series A Preferred Stock outstanding. On an as converted basis,
the Series A Preferred Stock is entitled to cast votes equivalent to __________
shares of Common Stock. Accordingly, there are a total of __________ shares
entitled to vote. The holders of the Company's Common Stock and Series A
Preferred Stock may vote on all matters presented to the Meeting and will vote
together as a class. Each outstanding share of Common Stock entitles the holder
to one vote. Each outstanding share of Series A Preferred Stock (on an as
converted basis as described above) entitles the holder to the number of votes
equal to the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock as of the Record Date. Each share of Series A Preferred
Stock is convertible into approximately 17.5 shares of Common Stock.
VOTE REQUIRED FOR ELECTION OF DIRECTORS, APPROVAL OF THE CERTIFICATE
AMENDMENT, APPROVAL OF THE 1998 PLAN AMENDMENT AND APPROVAL OF THE 1990 PLAN
AMENDMENT.
2
<PAGE>
The presence, in person or by proxy, of the holders of at least a
majority of the outstanding Common Stock and Series A Preferred Stock (on an as
converted basis) entitled to vote is necessary to constitute a quorum for the
taking of any action at the Meeting.
At the Meeting, seven directors will be elected. Directors will be
elected by a plurality of the votes cast by holders of the Common Stock and
Series A Preferred Stock (on an as converted basis), voting together as a class,
represented in person or by proxy at the Meeting. Votes withheld with respect to
the election of directors will be counted for the purpose of determining whether
a quorum is present at the Meeting but will not be considered as votes cast and
will have no effect on the result of the vote for directors.
Approval of the Certificate Amendment will require the affirmative vote
of a majority of the outstanding shares of Common Stock and Series A Preferred
Stock (on an as converted basis) voting together as a single class.
Approval of the 1998 Plan Amendment and the 1990 Plan Amendment, and
approval of any other proposals will require the affirmative vote of a majority
of the Common Stock and Series A Preferred Stock (on an as converted basis),
voting together as a class, represented in person or by proxy, and entitled to
vote at the Meeting. The Company is not aware of any matter, other than as
referred to in this proxy statement, to be presented at the Meeting.
Abstentions with respect to all proposals will be counted for the
purpose of determining whether a quorum is present at the Meeting and as votes
cast, and will have the effect of a no vote.
Broker non-votes with respect to all proposals will be counted in
determining the presence of a quorum. Broker non-votes with respect to the
approval of the Certificate Amendment will have the effect of a no vote. Broker
non-votes with respect to the other proposals will not be considered as present
and entitled to vote, and thus will have no effect on the results of any such
vote.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
MANAGEMENT
As of April 15, 1999 the following directors, named executive officers
and directors and executive officers as a group, beneficially own (as defined in
regulations issued by the Securities and Exchange Commission (the "SEC")) the
amounts of the Company's outstanding Common Stock set forth below. No executive
officer or director owns any Preferred Stock.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
--------------- ----------------------- -----------
<S> <C> <C>
Colin B. Bier, Ph.D. 42,692 *
Director (3)
Edson D. de Castro 105,076 *
Director (3)
Adrian M. Gerber 25,000 *
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
--------------- ----------------------- -----------
<S> <C> <C>
Director (3) (8)
Joseph P. Hernon *
Chief Financial Officer and 128,583
Secretary (3)
S. David Hillson, Esq.
Chairman of the Board, 582,905 3.95%
President and Chief
Executive Officer (4)
Marc E. Lanser, M.D.
Director, Executive Vice President and Chief 475,092 3.25%
Scientific Officer (5)
Ira W. Lieberman, Ph.D. 58,740 *
Director (6)
E. Christopher Palmer, CPA 63,740 *
Director (6)
All directors and executive officers as a group 1,481,828 10.14%
(7 persons) (7)
</TABLE>
- -------------------
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise specified in footnotes to this table, the persons
named in this table have sole voting and investment power with respect
to all shares of Common Stock owned. The information in the table was
furnished by the owners listed.
(2) The amounts of shares owned and the percentages in this table are based
on the number of shares of Common Stock outstanding as of April 15,
1999 or issuable upon the exercise of options which are exercisable or
which will become exercisable within 60 days of April 15, 1999.
(3) Consists of shares of Common Stock issuable upon exercise of options.
(4) Includes 456,385 shares of Common Stock issuable upon exercise of
options.
(5) Includes 295,420 shares of Common Stock issuable upon exercise of
options, and 20,321 shares held in trust for the benefit of his
children.
4
<PAGE>
(6) Includes 51,140 shares of Common Stock issuable upon exercise of
options.
(7) Includes 1,145,436 shares of Common Stock issuable upon exercise of
options.
(8) Mr. Gerber joined the Company as Executive Vice President, Business
Development & Corporate Planning on May 1, 1998 and resigned effective
December 31, 1998.
5
<PAGE>
PRINCIPAL STOCKHOLDERS
As of April 15, 1999, the following person was known to the Company to
be beneficial owner (as defined in regulations issued by the SEC) of more than
five percent of the Company's outstanding Common Stock and/or Series A Preferred
Stock (on an as converted basis).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership(1) of Class (2)
- -------------- ------------------- ----------------------- ------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock (3) The Tail Wind Fund, Ltd. 744,818 5.17%
Windermere House
404 East Bay Street
P.O. Box SS-5539
Nassau, Bahamas
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________________________
(1) Except as otherwise specified in footnotes to this table, the persons
named have sole voting and investment power with respect to all shares
of Common Stock owned. The information in the table was furnished by
the listed owner in reports provided to the Company and through filings
with the SEC or through information otherwise available to the Company.
(2) The amounts of shares owned and the percentages in this table are based
on the number of shares of Common Stock (on an as converted basis),
outstanding as of April 15, 1999 or which are issuable to the persons
listed upon the exercise of certain warrants and options which are
exercisable or will become exercisable within 60 days of April 15,
1999.
(3) Includes 97,150 shares of Common Stock issuable upon the exercise of
warrants.
Information relating to The Tail Wind Fund, Ltd. is based on
information that was furnished by the Tail Wind Fund, Ltd. in a
Schedule 13G dated March 3, 1999 filed with the SEC pursuant to Section
13(d) or 13(g) of the Exchange Act, and other information available to
the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven directors.
At the Meeting, the stockholders will elect seven directors for a term ending at
the next Meeting and until each such director's successor is duly elected and
qualified.
The table below sets forth the name of each person nominated by the
Board to serve for a term expiring on the date of the next annual meeting and
until his respective successor is elected and qualified. All of the nominees are
currently directors of the Company for terms expiring at the Meeting. Each
nominee has consented to be named as a nominee and, to the present knowledge of
the Company, is willing and able to serve as a director, if elected. Should any
of the nominees not remain a candidate at the end of the Meeting (a situation
which is not expected), proxies solicited hereunder will be voted in favor of
those who remain as candidates and may be voted for substitute nominees, unless
the Board determines to reduce the number of directors. Unless contrary
instructions are given on the proxy, the shares represented by a properly
executed proxy will be voted "FOR" the election of Colin B. Bier, Ph.D., Edson
D. de
6
<PAGE>
Castro, Adrian M. Gerber, S. David Hillson, Esq., Marc E. Lanser, M.D., Ira W.
Lieberman, Ph.D., and E. Christopher Palmer, CPA.
7
<PAGE>
<TABLE>
<CAPTION>
Nominees for Additional Term Age Year First Elected a Director*
- ---------------------------- --- ----------------------------
<S> <C> <C>
Colin B. Bier, Ph.D. (1)(3) 53 1996
Edson D. de Castro (2) 60 1993
Adrian M. Gerber 61 1998
S. David Hillson, Esq. (3) 59 1994
Marc E. Lanser, M.D. 50 1994
Ira W. Lieberman, Ph.D. (1) 56 1992
E. Christopher Palmer, CPA (2)(3) 58 1992
</TABLE>
____________________
* Includes periods of service as a director of Boston Life
Sciences, Inc. ("Old BLSI"), the privately-held company
existing prior to the merger (the "Merger") with Greenwich
Pharmaceuticals Incorporated ("Greenwich") in which Greenwich
survived and changed its name to "Boston Life Sciences, Inc."
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Press Release Review Committee
The principal occupations and qualifications of each nominee for
Director are as follows:
COLIN B. BIER, PH.D. Dr. Bier has been a member of the Board since February
1996. Since 1990, Dr. Bier has been the Managing and Scientific Director of ABA
BioResearch, Inc., an independent bioregulatory consulting firm, located in
Montreal, Canada, providing expertise for technology assessment, strategic
management and regulatory development of biopharmaceuticals. Dr. Bier is a
special advisor to the Mount Sinai Hospital in Montreal, Lecturer in Pathology,
Faculty of Medicine, McGill University and an Associate in the Department of
Internal Medicine, Montreal General Hospital. Dr. Bier is also a member of the
Board of Directors of Sparta Pharmaceuticals, Inc., Maxim Pharmaceuticals, Inc,
Nymox Corporation, Dr. Bier is also a member of the Board of Directors and on
the Scientific Advisory Boards of several private companies. Prior to his
association with ABA BioResearch, Inc., Dr. Bier was founder, President and
Chief Executive Officer of ITR Laboratories, Inc. Before founding ITR
Laboratories, Inc., Dr. Bier spent over ten years with Bio-Research
Laboratories, Ltd., a contract research laboratory where he was Vice President
and Director of Experimental Toxicology and Clinical Pathology. Dr. Bier has
published more than twenty-five scientific articles in his field in peer-
reviewed journals and received his Ph.D. from Colorado State University.
8
<PAGE>
EDSON D. DE CASTRO Mr. de Castro has been a member of the Board since June
1995, and served as Chairman of the Board until September 1996. Prior to the
Merger, Mr. de Castro held the same positions with Old BLSI from August 1993.
Mr. de Castro was one of five founders of Data General Corporation ("DGC") and
was responsible for the designs of the original NOVA computers. He served as
DGC's President and Chief Executive Officer until 1989 and as its Chairman of
the Board of Directors from 1989 to 1990 Mr. de Castro was Chairman of the Board
of Directors and Chief Executive Officer of Xenometrix Inc. until January 1997.
Mr. de Castro is also a member of the Board of Directors of UOL Publishing Inc.
and AVAX Technologies Inc. He is a Trustee of Boston University. Mr. de Castro
received his B.S. in Electrical Engineering from the University of Lowell, MA.
ADRIAN M. GERBER Adrian M. Gerber is currently Vice President of Worldwide
Business Development for McNeil Consumer Healthcare (a division of Johnson &
Johnson), a position that he has held since January 1999. He had previously held
the position of Executive Vice President, Business Development and Corporate
Planning with Boston Life Sciences from May 1998 to December 1998. Mr. Gerber is
also a member of the Board of Directors of IOTEK, Inc. He has spent over thirty
years in the pharmaceutical industry. From February 1996 through December 1997,
he served as Executive Vice President, Business Development and Licensing at
Fuisz Technologies, Ltd. He joined Fuisz from Adrian Gerber, Inc., a
pharmaceutical business development company he founded in October 1995. From May
1990 through September 1995, Mr. Gerber served as Executive Vice President,
Business Development and Executive Vice President, Commercial Development, at
ALZA Corporation. He joined ALZA from Merck & Co., Inc., where, during a 23 year
career, he was head of Corporate Licensing, with previous responsibilities in
sales, marketing and strategic planning. Mr. Gerber holds a degree in pharmacy
from the Natal School of Pharmacy in Durban, South Africa.
S. DAVID HILLSON, ESQ. Mr. Hillson has been President, Chief Executive Officer
and a member of the Board since November, 1994 (prior to the merger). He has
also served as Chairman of the Board since September 1996. From January to
November 1994, Mr. Hillson was Senior Vice President of Josephthal, Inc. in the
investment banking and research divisions and from October 1992 to January 1994,
Mr. Hillson was the Senior Managing Director, investment banking, at The
Stamford Company in New York City. From October 1990 until October 1992, Mr.
Hillson was an Executive Vice President of the asset management division of
Mabon Securities. Earlier in his career as an investment manager, Mr. Hillson
was a Senior Vice President with Shearson, Lehman, Hutton from 1983 to 1990
where he managed three mutual funds, primarily in the emerging growth and
venture capital area, for the SLH Asset Management division. Prior to these
responsibilities, he was Chairman of the Equity Committee for Hutton Investment
Management (1976-1982). He began his business career as an attorney in New York
City, having received his Juris Doctorate from New York University School of
Law. He also attended the Columbia University School of Business Administration
and received a Bachelor of Arts degree from Columbia College.
MARC E. LANSER, M.D. Dr. Lanser has been Executive Vice President, Chief
Scientific Officer and a member of the Board since June 1995. Prior to the
Merger, Dr. Lanser held the same
9
<PAGE>
position with Old BLSI from November 1994. From October 1992 until November
1994, Dr. Lanser was President and Chief Executive Officer of Old BLSI. Prior to
assuming the position of President and Chief Executive Officer of Old BLSI, Dr.
Lanser was an Assistant Professor of Surgery at Harvard Medical School and
member of the full-time academic faculty, where he directed a NIH funded
research project in immunology and received a NIH Research Career Development
Award. Dr. Lanser has published more than 30 scientific articles in his field in
peer-reviewed journals. Dr. Lanser received his M.D. from Albany Medical
College.
IRA W. LIEBERMAN, PH.D. Dr. Lieberman has been a member of the Board since the
inception of Old BLSI in 1992. Dr. Lieberman is a Senior Manager at the World
Bank where he is the CEO of the Consulting Group to Assist the Poorest (CGAP).
He is also currently involved in corporate restructuring in East Asian countries
in crisis. From 1987 to 1992, Dr. Lieberman was President of LIPAM
International, Inc. an international consulting and investment firm. From 1985-
1987 he was on the staff of the World Bank and from 1975 to 1982, he was a
senior executive with ICC Industries, Inc. where he served as Chief Financial
Officer, Executive Vice President and President of ICC's Manufacturing Group
including CEO of Primex Plastics, Inc. one of ICC's subsidiary companies. He
also served on the Board of Director of various ICC subsidiaries and affiliates.
Dr. Lieberman received his B.A. from Lehigh University, an M.B.A. from Columbia
University and a Ph.D. (D. Phil,) from Oxford University.
E. CHRISTOPHER PALMER, CPA Mr. Palmer has been a member of the Board since the
inception of Old BLSI in 1992. Mr. Palmer is a certified public accountant and
founder of a firm providing tax and financial advisory services to high net-
worth family groups. Prior to establishing his own firm in 1977, Mr. Palmer was
a partner in the accounting firm of Peat Marwick Mitchell & Co. Mr. Palmer is a
Director of Boston Private Financial Holdings, Inc. and a director and Chairman
of the Trust and Investment Committee of Boston Private Bank & Trust Company, a
Director of Coastal International Inc. and a trustee of two private foundations.
Mr. Palmer received his M.B.A. from Rutgers University and his A.B. from
Dartmouth College.
Meetings and Committees of the Board of Directors
- -------------------------------------------------
The Board held six meetings during the Company's fiscal year. Each of
the Company's directors attended at least 75% of the aggregate of all meetings
of the Board and of all committees on which he was a member held during the
year. Mr. Gerber was elected to the Board in June 1998 and attended all three
meetings held during the balance of 1998. The standing committees of the Board
are the Audit Committee, the Compensation Committee and the Press Release Review
Committee. The Company does not have an executive committee or a nominating
committee. The Audit Committee, consisting of Messrs. de Castro and Palmer, met
one time during the last fiscal year. The Audit Committee reviews the results
and scope of audits, internal accounting controls, tax and other accounting
related matters and reviews with the Company's independent auditors the scope
and results of their engagement. The Compensation Committee, consisting of
Messrs. Lieberman and Bier, met one time during the last fiscal year. The
Compensation Committee reviews and evaluates the compensation of the Company's
executive officers. The Press Release Review
10
<PAGE>
Committee, consisting of Messrs. Hillson and Palmer and Dr. Bier, reviewed
fourteen press releases during the last fiscal year. The Press Release Review
Committee assists in the review and approval of press releases from the Company,
including those involving the testing of new drugs, or the FDA new drug review
and approval process for investigational new drugs being developed by the
Company.
11
<PAGE>
Compensation of Directors
- -------------------------
Annual Retainers
----------------
Directors who are not employees of the Company ("Non-Employee
Directors"), receive cash compensation in the amount of $500 per meeting
attended in person and $250 per meeting attended telephonically, although all
directors are reimbursed for ordinary and reasonable expenses of attending any
board or committee meetings. Commencing January 1, 1999, Non-Employee Directors
will receive cash compensation in the amount of $1,000 per meeting attended in
person and $500 per meeting attended telephonically. In addition, Non-Employee
Directors were compensated in fiscal 1998 with an annual retainer with a value
of $5,000 and will receive the same amount in fiscal 1999. Currently, the annual
retainer is not paid in cash but is paid to the Non-Employee Directors through
options to purchase shares of the Company's Common Stock pursuant to the 1990
Plan (the Board has approved the 1990 Plan Amendment and it is being submitted
for stockholder approval pursuant to this Proxy Statement), valued as described
below. Each Non-Employee Director elected at an annual meeting of stockholders
of the Company will automatically be granted options on the thirteenth trading
day after the date of such annual meeting (the "Retainer Grant Date") to
purchase a number of shares of the Company equal to the lesser of (a) 2,500
shares and (b) the quotient of the value of the annual retainer for service as
an Non-Employee Director of the Company and 80% of the average of the fair
market value of a share of the Company's Common Stock on the ten trading days
following the third trading day after the date of such annual meeting of
stockholders. If the number of shares of the Company's Common Stock calculated
pursuant to clause (b) above exceeds 2,500 shares, each Non-Employee Director
will automatically receive on the Retainer Grant Date, in addition to options to
purchase 2,500 shares of the Company's common stock, a cash payment equal to the
remaining portion of the value of the annual retainer not provided for by the
grant of such options. Additionally, pursuant to the 1990 Plan, each
Non-Employee Director received in fiscal 1998 a discretionary grant of options
to purchase 15,000 shares of the Company's Common Stock., except for Dr. Bier
who received a discretionary grant of options to purchase 17,500 shares of the
Company's Common Stock. Each director who serves as Chairman of a committee of
the Board receives an annual retainer of $1,000. The Chairmen of the Audit
Committee and the Compensation Committee who received this annual retainer in
fiscal 1998 were Mr. Palmer, and Dr. Lieberman, respectively. There was not a
Chairman of the Press Release Review Committee during 1998.
Exercise and Vesting
--------------------
The options granted to the Non-Employee Directors pursuant to the
annual retainer are exercisable at a per share price of 20% of the average fair
market value per share (as described above) of the Company's Common Stock used
to calculate such grant. Subject to provisions regarding expiration and
termination of options, the options become exercisable as to 75% of the shares
of Common Stock of the Company issuable upon exercise of such options six months
after the date of grant and as to 100% of such shares, on the later of six
months after the date of grant and December 31 of the year in which the grant is
made.
12
<PAGE>
The options granted to the Non-Employee Directors pursuant to the
discretionary grant in 1998 are exercisable as follows: 50 % exercisable as
of January 4, 1998; 75% exercisable as of November 15, 1998; 100% exercisable as
of November 15, 1999.
New Director Options
--------------------
Each person who is elected or appointed a Non-Employee Director for the
first time automatically upon such election or appointment (the "Automatic Grant
Date") will be granted an option to purchase 7,500 shares of the Company's
Common Stock ("New Director Options"). The exercise price of any New Director
Options granted under the 1990 Plan may not be less than 100% of the fair market
value of shares of the Company's Common Stock subject thereto on the Automatic
Grant Date. Subject to provisions regarding expiration and termination of
options, any New Director Options become exercisable as to 20% of the shares of
the Company's Common Stock subject thereto on the Automatic Grant Date and
become exercisable as to an additional 20% of the shares of the Company's Common
Stock issuable upon exercise thereof on each of the first, second, third and
fourth anniversaries of such Automatic Grant Date.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES PRESENTED.
13
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid by the
Company for the year ended December 31, 1998 for services rendered in all
capacities to each of the most highly compensated executive officers whose total
annual salary and bonus for that period exceeded $100,000 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation (1) Awards-
----------------------- ------
Common Stock
Name and Underlying All Other
Principal Position Year Salary(2) Bonus(2) Options Compensation(3)
- ------------------ ---- ----------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C>
S. David Hillson 1998 $ 195,000 $ 0 125,000 $ 5,556
Chairman of the Board, President 1997 195,000 72,500 (4) 150,000 5,564
and Chief Executive Officer 1996 170,000 200,000 (5) 25,000 None
Marc E. Lanser, M.D 1998 $ 180,000 $ 0 95,000 $ 13,277
Executive Vice President 1997 180,000 17,500 100,000 13,391
and Chief Scientific Officer 1996 166,000 50,000 25,000 13,349
Joseph P. Hernon 1998 $ 126,000 $ 0 35,000 $ 4,088
Executive Vice President, 1997 90,000 14,000 46,000 4,113
Chief Financial Officer, Secretary 1996 36,750 (6) 10,000 24,000 None
Adrian M. Gerber (7) 1998 $ 116,667 $ 0 100,000 $ 0
Executive Vice President,
Business Development &
Corporate Planning
</TABLE>
________
(1) Includes compensation only for the period of the applicable year during
which the individual was employed by the Company.
(2) Amounts shown represent cash compensation earned by the Named Executive
Officers in the fiscal years presented even if paid in subsequent
years.
(3) All other compensation for Mr. Hillson for 1998 and 1997 includes the
dollar value of premiums paid by the Company with respect to life
insurance and disability insurance for the benefit of Mr. Hillson in
the amounts of $5,556 and $5,564, respectively. All other compensation
for Dr. Lanser includes the following amounts for fiscal 1998, 1997,
and 1996, respectively: the dollar value of matching contributions
under the Company's 401(k) plan, in the amount of $0, $0, and $4,500,
respectively; the dollar value of premiums paid by the Company with
respect to life insurance and disability insurance for the benefit of
Dr. Lanser in the amount of $11,177, $11,291, and $6,749, respectively;
and the dollar value attributable to parking reimbursement in excess of
the limits permitted under the Internal Revenue Code of $2,100, $2,100,
and $2,100, respectively. All other compensation for Mr. Hernon for
1998 and 1997 includes the dollar value of premiums paid by the Company
with respect to life insurance and disability insurance for the benefit
of Mr. Hernon in the amount of $660 and $813, respectively, and the
dollar value of matching contributions under the Company's 401(k) plan
in the amount of $3,428 and $3,300, respectively.
(4) In connection with the renewal of his employment agreement through
December 31, 1998, Mr. Hillson received a contract renewal payment of
$50,000. Mr. Hillson was awarded a bonus of $22,500 for the year ended
December 31, 1997.
(5) Mr. Hillson received a non-discretionary bonus in 1996 from the Company
based upon the Board's determination that he had met certain
performance targets specified in his agreement of employment, dated
November 7, 1994, which by its terms expired in December 1998, but was
extended until December 31, 2000.
(6) Mr. Hernon joined the Company in August 1996.
(7) Mr. Gerber joined the Company in April 1998. Mr. Gerber resigned
effective December 31, 1998, but remains a non-employee Director of the
Company.
STOCK OPTION INFORMATION
The following table sets forth, for each of the Named Executive
Officers, certain information concerning the grant of options to such persons in
fiscal 1998.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock
Appreciation for Option
Individual Grants Term (3)
- -------------------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price Expiration
Name Granted (#) (1) Fiscal Year ($/sh) (2) Date 5% 10%
---- --------------- ----------- ---------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
S. David Hillson 125,000 29.9% $2.16 1/4/08 $439,802 $700,310
Marc E. Lanser 95,000 22.7% $2.16 1/4/08 $334,249 $532,236
Joseph P. Hernon 35,000 8.4% $2.16 1/4/08 $123,144 $196,087
Adrian M. Gerber (4) 100,000 24.0% $2.13 4/1/08 $346,955 $552.467
</TABLE>
_____________________
(1) All options granted to Mr. Hillson, Dr. Lanser, and Mr. Hernon are
exercisable as follows: 50% exercisable as of January 4, 1998; 75%
exercisable as of November 15, 1998; and 100% exercisable as of November
15, 1999. All options granted to Mr. Gerber were exercisable
as follows: 25% exercisable as of October 1, 1998; 50% exercisable as
of April 1, 1999; 75% exercisable as of October 1, 1999 and 100%
exercisable as of April 1, 2000. 25,000 of Mr. Gerber's options had
vested as of the date of his resignation. The remaining 75,000 options
were cancelled.
(2) The exercise price for each option is equal to the fair market value of
the Company's Common Stock on the date of grant.
(3) Potential realizable value is based on the assumed annual growth rates
listed, compounded annually for the ten-year option term. The dollar
amounts set forth under this heading are the results of calculations at
the 5% and 10% assumed rates established by the SEC and are not
intended to forecast possible future appreciation, if any, of the value
of the Common Stock.
(4) Mr. Gerber joined the Company as Executive Vice President, Business
Development & Corporate Planning in May 1998 and resigned effective
December 31, 1998.
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the value of unexercised options at December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at Fiscal
at Fiscal Year-End (#) Year-End ($) (1)
-----------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
S. David Hillson 182,405 $ 123,770 398,980/218,250 $102,534/$34,178
Marc E. Lanser 295,420/137,250 $96,377/$25,976
Joseph P. Hernon 128,583/96,417 $28,710/$9,570
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
Adrian M. Gerber (2) 25,000/0 $27,500/$0
</TABLE>
________________________
(1) The fair market value of "in-the-money" options was calculated on the
basis of the difference between the exercise price of the options held
and the closing price per share for Common Stock on the NASDAQ SmallCap
Market of $3.25 on December 31, 1998, multiplied by the number of options
held.
(2) Mr. Gerber resigned as an officer effective December 31, 1998.
EMPLOYMENT CONTRACTS
S. David Hillson, Esq. and Marc E. Lanser, M.D. have entered into
employment agreements (individually an "Employment Agreement" and, collectively,
the "Employment Agreements") with the Company. Pursuant to the terms of Mr.
Hillson's original Employment Agreement dated November 7, 1994, which includes
confidentiality and non-competition provisions, Mr. Hillson was employed as
President and Chief Executive Officer of the Company and was entitled to an
annual base salary of at least $170,000, plus other incidental benefits, plus
additional cash payments should certain events occur. Mr. Hillson's Employment
Agreement was amended as of January 1, 1997 to extend the term thereof to
December 31, 1998 and to increase his annual base salary to $195,000. Upon
signing the amendment, Mr. Hillson received a renewal payment of $50,000. Mr.
Hillson's Employment Agreement was further amended as of January 1, 1999 to
extend the term thereof to December 31, 2000 and to increase his annual base
salary to $250,000. Pursuant to the terms of Dr. Lanser's Employment Agreement
dated July 7, 1993, as amended, which includes confidentiality and
non-competition provisions, Dr. Lanser is employed as Executive Vice President
and Chief Scientific Officer of the Company and is entitled to receive an annual
salary of at least $150,000, plus other incidental benefits.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview
- --------
The Boston Life Sciences, Inc. compensation program for its executive
officers consists of four parts: base salary, annual bonus, stock options, and
additional benefits. In maintaining this program, the Company's overall
recruitment and compensation philosophy is a very important consideration. This
philosophy is to hire individuals possessing excellent professional skills,
coupled with demonstrated track records, who can be expected to help achieve the
Company's goal of moving from a development-stage company to a broad-based,
diversified product, revenue-generating biotechnology company.
The Company has a continued commitment to recruit, motivate and retain
executive officers with demonstrated talent and leadership skills, typically
gained from successful experiences in positions of meaningful responsibility in
other industry settings. This approach should enable the Company to acquire the
requisite management leadership to fulfill its stated mission.
16
<PAGE>
An inherent part of this philosophy is the leveraging of the
compensation program by placing a major emphasis on equity participation. This
is accomplished by offering a significant capital accumulation opportunity to
key managers, which also conserves the Company's cash and blends the interests
of stockholders with those of management. The Company's target from a personnel
perspective is for total compensation to be competitive with that for other
biotechnology companies.
Performance Criteria - General
- ------------------------------
Because the Company is still in the process of developing its
proprietary products and because of the highly volatile nature of the stock
price in biotechnology companies in general, the use of traditional corporate
performance standards, such as sales, profit levels and stock performance, to
measure the success of the Company and an individual's role in contributing to
that success, is not appropriate.
Accordingly, the compensation of executive officers is based, for the
most part, on realistically timely achievement of certain product research and
development goals by the Company and the positive contribution by the
individuals concerned. The Committee will evaluate the Company's progress and
performance using criteria such as the extent to which key research, clinical,
product manufacturing, product sales and financial objectives of the Company
have been met during the preceding fiscal year, including the achievement by the
Company of certain milestones, whether specified in agreements with third party
collaborators or determined internally. In addition, the Committee may take into
account the Company's success in the development, acquisition and licensing of
key technologies. The Committee will also evaluate the individual executive
officer's performance, using criteria such as the executive officer's
involvement in and responsibility for the development and implementation of
strategic planning and the attainment of strategic objectives of the Company
including beneficial supervision of other management. An executive officer's
contribution in this regard may also involve both the participation by the
executive officer in the relationship between the Company and the investment
community as well as the contribution by the executive officer to the ongoing
scientific development activities of the Company. In evaluating each facet of
performance and compensation, the Committee is likely to consider the necessity
of being competitive with other companies in the biotechnology industry, taking
into account relative company size, stage of development and geographic
location.
Base Salary
- -----------
Company philosophy regarding base salary is to maintain it at a
competitive level, sufficient to recruit and retain individuals possessing the
skills and experience necessary to achieve the Company's vision and mission over
the long term. Determinations of appropriate base salary levels will generally
be made with the input of various industry and industry-related surveys and
special studies, such as the 1998 Leadership and Biotechnology Survey published
jointly by J. Robert Scott and PricewaterhouseCoopers LLP, as well as by
monitoring
17
<PAGE>
developments in the biotechnology industry. This information is also used in
evaluating other compensation elements. Periodic adjustments in base salary will
often relate to competitive factors and to individual performance evaluated
against criteria such as those noted above. Other benefits are maintained at
what the Committee believes is an industry-competitive level.
18
<PAGE>
Annual Bonus
- ------------
The Compensation Committee of the Board, in its discretion, may award bonuses to
executive officers, and the Company expects to pay such bonuses based on the
evaluation of the performance of each executive officer for the year as a whole.
The Company is also required under certain circumstances under the Employment
Agreements with Mr. Hillson and Dr. Lanser to pay certain bonuses. The intent of
the annual bonus is to motivate and reward high level performance of executive
officers as measured against distinct and clearly articulated goals and in light
of the competitive compensation practices of the whole biotechnology industry.
The exact goals vary with each executive officer's responsibilities rather than
being fixed by reference to overall measures of the Company's performance.
Annual bonus awards are determined by the Compensation Committee of the Board
with assistance from senior management. None of the executives received bonuses
in fiscal 1998.
Stock Options
- -------------
Stock options are viewed as a fundamental element in the total
compensation program and, in keeping with the Company's basic philosophy,
emphasize long-term Company performance, as measured by creation and enhancement
of stockholder value. Additionally, stock options foster a community of interest
between stockholders and participants. The Company believes that because of this
community of interest, the use of stock options is preferable to other forms of
stock compensation such as restricted stock. Options under the plans are granted
to all executive officers as incentive to contribute significantly to the growth
and successful operation of the Company. The specific determination of the
number of options to be granted, however, is not based upon any specific
criteria.
Although options may be granted at any price equal to or greater than
50% of fair market value of the Common Stock, generally options have been
granted to executive officers, as a matter of Company policy, at 100% of the
fair market value on the date of grant. The Company has generally awarded
options to executive officers on employment and at regular intervals thereafter,
but awards may be made at other times as well. Vesting of stock options is
determined by the Compensation Committee. To date, options granted to executive
officers fully vest within four years after the date of grant.
Qualifying Executive Compensation for Deductibility Under Applicable Provisions
- -------------------------------------------------------------------------------
of the Internal Revenue Code
- ----------------------------
Section 162(m) of the Internal Revenue Code, adopted in 1993, provides
that a publicly held corporation generally may not deduct compensation for its
chief executive officer or for each of certain other executive officers to the
extent that such compensation exceeds $1,000,000 for the executive or does not
qualify as a "performance based" compensation arrangement. The Committee intends
to take such actions as may be appropriate to qualify compensation received by
such executives upon exercise of options granted under the Company's stock
option plans for
19
<PAGE>
deductibility under Section 162(m). The Committee notes that base salary and
bonus levels are expected to remain well below the $1,000,000 limitation in the
foreseeable future.
Chief Executive Officer Compensation
- ------------------------------------
In fiscal 1998, pursuant to the terms of his amended Employment
Agreement dated January 1, 1997, Mr. Hillson received an annual base salary of
$195,000 plus other incidental benefits.
COMPENSATION COMMITTEE
Ira Lieberman, Ph.D.
Colin Bier, Ph.D
.
This report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act") or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under the Securities Act and the Exchange
Act and shall not be deemed soliciting material.
Performance Graph
- -----------------
The following graph compares the yearly percentage change in
cumulative total stockholder return on the Common Stock from 1993 to the present
with the cumulative total return on the Nasdaq Total Return Index and the Nasdaq
Pharmaceutical Stock Index over the same period. The Company is the surviving
entity of the Merger between Old BLSI and Greenwich, which was effective as of
June 15, 1995. This Stock Performance Graph therefore reflects the performance
of the Company's stock as Greenwich stock prior to the Merger, as well as the
Company's stock after the Merger. The comparison assumes $100 was invested on
January 1, 1993 in the Common Stock and in each of the indices and assumes
reinvestment of dividends, if any, since that date. The Company has not paid
cash dividends on the Common Stock. Historic stock price is not indicative of
future stock price performance.
[Performance Graph appears here]
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
BOSTON LIFE SCIENCES INC. 100.00 3.41 27.27 25.00 8.30 11.82
PEER GROUP BROAD MARKET
THE PEER GROUP CHOSEN WAS: 100.00 75.26 138.04 138.47 142.98 183.02
NASDAQ PHARMACEUTICAL INDEX
THE BROAD MARKET INDEX CHOSEN WAS: 100.00 104.99 136.18 169.23 207.00 291.96
NASDAQ MARKET INDEX
</TABLE>
This Stock Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under the Securities Act
and the Exchange Act and shall not be deemed soliciting material.
20
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Boston Private Bank & Trust Company (the "Bank") is the Company's
primary banking institution. E. Christopher Palmer, CPA, a director of the
Company, is a Director and Chairman of the Trust and Investment Committee of the
Bank and a director of Boston Private Financial Holdings, Inc., which is an
affiliate of the Bank. Fees paid to the Bank during fiscal 1998, primarily for
investment management advisory services, totaled approximately $34,000.
In April 1997, the Bank loaned $150,000 to Dr. Lanser, the Company's
Executive Vice President and Chief Scientific Officer (the "Loan"). The Loan
bears interest at the prime rate. The Loan originally matured in September 1997
but has been subsequently extended to September 30, 1999. As a condition to and
as security for the Loan, the Bank requested that the Company pledge to the Bank
a certificate of deposit in the amount of $155,000 (the "Company Pledge"). In
recognition of Dr. Lanser's past and expected future contributions to the
Company and as an additional motivation and incentive to Dr. Lanser, which the
Company's Board of Directors determined would reasonably benefit the Company,
the Company agreed to provide the Company Pledge. As security for the Company,
however, in the event Dr. Lanser defaults on the Loan and the Bank forecloses on
the Company Pledge, Dr. Lanser has executed and delivered to the Company his
contingent note in the amount of $150,000, bearing interest identical to the
Loan (the "Contingent Note") and a perfected pledge of 50,000 shares of Common
Stock of the Company which he beneficially owns. The Company will demand payment
of the Contingent Note only in the event that the Bank forecloses on the Company
Pledge as a result of Dr. Lanser's defaulting on his payment of the Loan.
PROPOSAL NO. 2
APPROVAL OF THE CERTIFICATE AMENDMENT
The Company's stockholders are being asked to consider and approve an
amendment (also referred to herein and previously defined as the "Certificate
Amendment") of the Company's current Amended and Restated Certificate of
Incorporation, filed with the Secretary of State of Delaware on March 29, 1996,
as heretofore amended (the "Current Certificate").
21
<PAGE>
The Current Certificate authorizes 25,000,000 shares of Common Stock
and 1,000,000 shares of Preferred Stock, each having a par value of $.01 per
share. The Board of Directors believes this capital structure does not provide
for sufficient authorized shares of Common Stock for the future needs of the
Company. Therefore, the Board of Directors unanimously approved, on March 22,
1999, the Certificate Amendment, which increases the authorized number of shares
of Common Stock from twenty-five million (25,000,000) shares to thirty-five
million (35,000,000) shares, an increase of ten million (10,000,000) shares. The
Certificate Amendment will be formally implemented, assuming approval by the
stockholders at the Meeting, by its filing with the Secretary of State of
Delaware. The Form of the Certificate Amendment is attached hereto as Appendix
A.
REASONS FOR AND EFFECT OF AMENDMENT
On April 29,1999, _____ shares of Common Stock were outstanding. There
were also _____ and ______ shares of Series A Preferred Stock and Series C
Convertible Preferred Stock ("Series C Stock") outstanding, respectively, which
were convertible into ______ and ______ shares of Common Stock, respectively,
Under certain circumstances, the Company may be obligated to increase the number
of shares of common shares into which each share of Series C Preferred Stock is
convertible. In addition, approximately 3,000,000 warrants and approximately
2,000,000 stock options were outstanding to acquire an aggregate of up to
approximately 5,000,000 shares of Common Stock. After giving effect to the
reservations of shares of Common Stock issuable upon conversion of the Company's
Series A Preferred Stock, the Series C Preferred Stock (including the maximum
number of common shares into which each share of Series C Preferred Stock may be
converted), the exercise of the aforementioned warrants and the exercise of
stock options previously granted or available for grant under the Company's
stock option plans, the Company presently has ______ shares of authorized but
unissued and unreserved Common Stock.
If the stockholders approve the Certificate Amendment, then the Board
of Directors would generally have the authority, without further action of the
stockholders, to issue the proposed additional shares of Common Stock from time
to time as the Board of Directors deems necessary. The Board of Directors
believes it is desirable to have the ability to issue such additional shares of
Common Stock for general corporate purposes. Potential uses of the additional
authorized shares may include acquisition of other businesses, equity
financings, stock dividends or distributions and issuances of options pursuant
to the Company's Stock Option Plans. Any or all of these issuances could take
place without further action by the stockholders, unless such stockholder action
was required by applicable law or rules of any stock exchange on which the
Company's securities may then be listed. The Company's Board of Directors has no
current plan, understanding or arrangement to issue any of the additional shares
of Common Stock.
The proposed increase in the authorized number of shares of Common
Stock could have a number of effects on the Company's stockholders depending
upon the exact nature and circumstances of any actual issuances of authorized
but unissued shares. The increase could
22
<PAGE>
deter takeovers, in that additional shares could be issued (within the limits
imposed by applicable law) in one or more transactions that could make a change
in control or takeover of the Company more difficult. For example, additional
shares could be issued by the Company so as to dilute the stock ownership or
voting rights of persons seeking to obtain control of the Company. Similarly,
the issuance of additional shares to certain persons allied with the Company's
management could have the effect of making it more difficult to remove the
Company's current management by diluting the stock ownership or voting rights of
persons seeking to cause such removal. In addition, an issuance of additional
shares by the Company could have an effect on the potential realizable value of
a stockholder's investment. In the absence of a proportionate increase in the
Company's earnings and book value, an increase in the aggregate number of
outstanding shares of the Company caused by the issuance of the additional
shares would dilute the earnings per share and book value per share of all
outstanding shares of the Company's Common Stock. If such factors were reflected
in the price per share of Common Stock, the potential realizable value of a
stockholder's investment could be adversely affected. The Common Stock has no
preemptive rights to purchase additional shares.
The favorable vote of a majority of the outstanding shares of Common
Stock and Series A Preferred Stock (on an as converted basis), voting together
as a single class, is required for approval of the Certificate Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CERTIFICATE
AMENDMENT.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE 1998 OMNIBUS STOCK OPTION PLAN
The Company's 1998 Omnibus Stock Option Plan (also referred to herein
and previously defined as the "1998 Plan") currently authorizes the issuance of
options to purchase up to 500,000 shares Common Stock. In March 1999, the Board
-------
amended the 1998 Plan (also referred to herein and previously defined as the
"1998 Plan Amendment"), subject to stockholder approval, to increase the
aggregate number of shares authorized for issuance upon exercise of options
granted under the 1998 Plan to 1,000,000. The 1998 Plan Amendment was designed
to enhance the flexibility of the Board of Directors to grant stock options to
the Company's directors, employees, independent contractors, scientific advisors
and consultants and to ensure that the Company can continue to grant stock
options to such persons at levels determined to be appropriate by the Board of
Directors.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Meeting and entitled to vote on the 1998 Plan
Amendment will be required to approve the 1998 Plan Amendment.
As of April 15, 1999, the closing price of the Company's Common Stock
on the Nasdaq SmallCap Market was $7 3/8.
23
<PAGE>
Set forth below is a summary of the 1998 Plan, as amended by the 1998
Plan Amendment, which is qualified in its entirety by the terms of the 1998
Plan. The 1998 Plan is set forth in full as Appendix B to this Proxy Statement
and is incorporated herein by reference.
DESCRIPTION OF THE 1998 PLAN
The purpose of the 1998 Plan is to assist the Company in attracting and
retaining employees, advisors and consultants of outstanding ability, and to
foster a community of interest of such employees, advisors, and consultants with
those of the Company's stockholders.
The 1998 Plan is administered by a committee established by the Board
of Directors (or the entire Board of Directors which may constitute such
committee). The 1998 Plan is currently administered by the Board of Directors.
For such purposes of this discussion of the 1998 Plan, such administrator shall
be referred to as the "Committee." The total number of options to be granted in
any year under the 1998 Plan, the number and selection of persons to receive
options, the number of options granted to each and the other terms and
provisions of such options are wholly within the discretion of the Committee,
subject to the limitations set forth in the 1998 Plan. Under the terms of the
1998 Plan, "incentive stock options" ("ISOs") within the meaning of Section 422
of the Code and "non- qualified stock options" ("NSOs") may be granted by the
Committee to selected employees, directors, consultants, independent contractors
and members of the Scientific Advisory Board, except that ISOs may be granted
only to persons who are employees of the Company or any of its subsidiaries at
the time the ISOs are granted. The 1998 Plan contains no limitation upon the
number of shares which may be issued upon exercise of options, whether ISOs or
NSOs, that may be granted to an individual employee, consultant, independent
contractor or member of the Scientific Advisory Board over the term of the 1998
Plan; provided, however, that the aggregate fair market value (as of the date of
grant) of shares of Company Common Stock subject to ISOs under the 1998 Plan and
all other plans of the Company which become exercisable for the first time by
any optionee during any calendar year shall not exceed $100,000.
Option Grants and Exercise
Under the 1998 Plan, after giving effect to the 1998 Plan Amendment, up
to an aggregate of 1,000,000 shares of Company Common Stock may be issued
---------
(subject to adjustments in the event of stock dividends, stock splits, reverse
stock splits, combinations, reclassifications or like changes in the capital
structure of the Company) and may be granted to employees, consultants,
directors, independent contractors and members of the Scientific Advisory Board
of the Company or any of its subsidiaries. Under the terms of the 1998 Plan, the
exercise price of an ISO may not be less than 100% of the fair market value of
shares of Company Common Stock subject thereto on the date of grant, except
that, in the case of an ISO granted to an individual who, at the time such ISO
is granted, owns shares of capital stock of the Company possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company (a "Ten-Percent Stockholder"), such exercise price may not be less than
110% of such fair market value. The exercise price of an NSO may not be less
than 50% of the fair market value of a share
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of Company Common Stock on the date of grant, but in no event shall the exercise
price be less than par value.
The exercise price of options granted under the 1998 Plan may be paid
in cash or, at the discretion of the Committee, in shares of Company Common
Stock previously owned by the optionee with a value equal to the total option
exercise price, or in any combination thereof. Not less than ten shares may be
purchased at any time upon the exercise of an option unless the number of shares
so purchased constitutes the total number of shares issuable upon exercise of
the option. During the lifetime of an optionee, an option may be exercised only
by the optionee or such optionee's guardian or legal representative. Generally,
an option may not be transferred or assigned, except by will or the laws of
descent and distribution.
Under the 1998 Plan, the option exercise price also may be paid, under
certain circumstances at the discretion of the Committee, in shares of Company
Common Stock issuable upon exercise of options then exercisable by the optionee
having a fair market value equal to the option exercise price on the date of
exercise. This provision permits an optionee not only to use then-held shares of
stock in a single exercise of stock options, but also to use the stock received
upon the exercise of stock options to exercise additional stock options in a
process known as "pyramiding." Such pyramiding permits an optionee to effect a
cashless exercise of all or a portion of his options then exercisable (no matter
what the number) without surrendering any shares of stock or making any
additional cash investment. An optionee who exercises options by pyramiding will
own, after the exercise, a number of additional shares equal in value to the
spread between the fair market value of a share of Company Common Stock on the
date of exercise and the option exercise price multiplied by the number of
options exercised.
Each ISO will be exercisable over a period, determined by the Committee
in its discretion, not to exceed ten years from the date of grant, except that
in the case of an ISO granted to a Ten-Percent Stockholder, the exercise period
for an ISO may not exceed five years from the date of grant, as required by the
Code. In the case of an NSO, the exercise period shall not exceed ten years from
the date of grant. Subject to the terms of the 1998 Plan, stock options may be
exercisable during the exercise period at such times, in such amount, in
accordance with such terms and conditions of, and subject to such restrictions
as are set forth in, the option agreement evidencing the grant of such stock
options. The Committee may, in its discretion, accelerate the exercisability of
any options granted under the 1998 Plan which would otherwise be unexercisable.
Adjustments
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, shares of Company Common Stock, or
other property), recapitalization, stock split, reverse split, reorganization,
merger, consolidated, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Company Common Stock
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of optionees under the 1998 Plan, then the Committee
shall
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make such equitable changes or adjustments as it deems necessary or appropriate
to any or all of (i) the number and kind of shares of Company Common Stock which
may thereafter be issued in connection with options, (ii) the number and kind of
shares of Company Common Stock issued or issuable in respect of outstanding
options, and (iii) the exercise price relating to any option; provided that,
with respect to ISOs, such adjustment shall not constitute a "modification"
under Section 424(h) of the Code.
In addition, in the event that a "Change in Control" occurs while any
option remains outstanding under the 1998 Plan, all options granted that are
outstanding as of the time of such change of control will become immediately
exercisable in full, without regard to the time period that has elapsed from the
date of grant or to the vesting provisions. Generally, a Change in Control will
be deemed to occur upon the earlier of (i) any person or entity becoming the
beneficial owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding voting securities, (ii) a change in the composition of the Board of
Directors of the Company during any period of not more than two consecutive
years such that individuals who constitute the Board of Directors of the Company
at the beginning of such period cease for any reason to constitute at least a
majority, (iii) the approval by the stockholders of the Company of a merger or
consolidation of the Company with any other company whereby the combined voting
power of the Company's securities no longer represents at least 50% of the
combined voting power of the surviving or parent entity outstanding after such
merger (other than the Merger) or consolidation or (iv) the stockholders of the
Company approve a plan of complete liquidation or an agreement for the sale of
all or substantially all of the assets of the Company.
Termination of Eligibility
If an individual to whom options have been granted under the 1998 Plan
ceases to be a director, employee, consultant, scientific advisor or independent
contractor of the Company as the result of a termination without cause (other
than due to death or disability), (A) any options held by such person that were
exercisable on the date of such termination may be exercised by that person for
the later of: i) a period of one year following the date of such termination, or
ii) a period of one year from the date any option vests in the twelve month
period following such termination, and (B) any options held by such person that
were not exercisable on the date of such termination will continue to vest in
accordance with their original vesting schedule for a period of 12 months
following the date of termination, and any options that vest during such
12-month period may be exercised by that person for a period of one year
following the date of such vesting.
If an individual to whom options have been granted under the 1998 Plan
ceases to be a director, employee, consultant, scientific advisor or independent
contractor of the Company as the result of a voluntary resignation (other than
due to death or disability), (A) any options held by such person that were
exercisable on the date of such resignation may be exercised by that person for
the later of: i) a period of one year following the date of such resignation, or
ii) a period of one year from the date any option vests in the twelve month
period following such
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resignation, and (B) any options held by such person that were not exercisable
on the date of such resignation will continue to vest in accordance with their
original vesting schedule for a period of 12 months following the date of
resignation, and any options that vest during such 12-month period may be
exercised by that person for a period of one year following the date of such
vesting, provided that the individual has been a director, employee, consultant,
scientific advisor or independent contractor of the Company for at least three
years and has signed a non-compete agreement with the Company (such agreement to
include biotechnology companies, academic and/or research organizations
encompassing biotechnology, and venture capital companies in the biotechnology
sector).
If any recipient of an option under the 1998 Plan dies within the one
year period following termination of employment or other relationship, such
optionee's designated or legally determined beneficiary (the "Beneficiary") may
exercise such optionee's options, to the extent exercisable or vested at the
time of death, for a period not to exceed one year after such date, but in no
event later than expiration of the such option's term. If any recipient of an
option ceases employment or other relationship with the Company and its
subsidiaries due to death or disability, such optionee's options (whether or not
otherwise exercisable at the time of such optionee's termination of employment
or other relationship due to death or disability) shall be come fully
exercisable by such optionee, or by the Beneficiary, for a period not to exceed
one year after the optionee's death or termination of employment or other
relationship due to death or disability, but in no event later than the
expiration date of such option. Shares of Company Common Stock issuable upon
exercise of options granted under the 1998 Plan that have expired or been
surrendered or terminated will be returned to the 1998 Plan and become available
for issuance upon exercise of future options granted under the 1998 Plan.
Termination of Plan
The 1998 Plan will terminate by its terms on April 23, 2008, except
with respect to options outstanding on such date. The Company's Board of
Directors may sooner terminate or amend the 1998 Plan at any time, subject to
its terms; provided, that the Board of Directors may seek stockholder approval
of an amendment if determined to be required by or advisable under regulations
of the Securities and Exchange Commission or the Internal Revenue Service, the
rules of any stock exchange or system on which Company Common Stock is listed or
other applicable law or regulation.
Options Outstanding, Exercisable and Available for Future Grant Under the 1998
Plan
As of April 29, 1999, options to purchase __________ shares were
outstanding under the 1998 Plan, of which options to purchase __________ shares
were exercisable. The exercise prices for the outstanding options ranged from
$____ to $_______ per share. At April 29, 1999, options to purchase __________
shares (plus any options that expire or are canceled in the future) were
available for future grant, exclusive of the additional shares covered by the
1998 Plan Amendment.
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Federal Income Tax Consequences of the 1998 Plan
The following summary is intended only as a general summary of the
United States Federal income tax consequences under current law with respect to
participation in the 1998 Plan, and does not attempt to describe all possible
Federal or other tax consequences of such participation. Furthermore, the tax
consequences of options are complex and subject to change, and a taxpayer's
particular situation may be such that some variation of the described rules is
applicable.
ISOS. ISOs granted under the 1998 Plan are each intended to qualify
for taxation as an "incentive stock option" within the meaning of Section 422 of
the Code.
GRANT -- Upon the grant of an ISO, the optionee will not recognize any
income and the Company will not be entitled to a deduction with respect to such
grant.
EXERCISE -- Upon the timely exercise of an ISO, the optionee will not
recognize any income and the Company will not be entitled to a deduction with
respect to such exercise. (The timely exercise of an ISO may, however, affect
the optionee's liability under the alternative minimum tax.) The exercise of an
ISO by an optionee will be timely if made while the optionee is employed by the
Company or within three months after the cessation of such employment. If the
exercise of an ISO is not timely, the ISO will be taxed according to the rules
for NSOs. An optionee's aggregate basis for shares acquired upon exercise of an
ISO will be equal to the exercise price paid for such shares. The holding period
for the shares will begin on the day following the date of exercise and,
accordingly, will not include the period during which the ISO was held.
SALE -- If an optionee makes a disposition of shares acquired pursuant
to an ISO, and such shares were held for more than two years from the date of
the grant of such ISO and one year from the date of exercise of such ISO then
any gain or loss realized upon such disposition will be treated as long-term
capital gain or loss, currently taxable at a maximum rate of 20%. Under such
circumstances, the Company will not be entitled to a deduction with respect to
such disposition.
If, however, the optionee makes a disposition of shares acquired
pursuant to an ISO within either two years from the date of the grant of such
ISO or one year from the date of exercise of such ISO (other than a mere pledge
or hypothecation of the shares or a transfer by reason of death, bequest or
inheritance) ("disqualifying disposition"), then the optionee will generally be
required to recognize (i) as ordinary income, an amount equal to the excess over
the exercise price of the option of the fair market value of the shares on the
exercise date and (ii) as capital gain, an amount equal to the excess, if any,
of the amount realized on the disqualifying disposition over the fair market
value of the shares on the exercise date. However, in the case where the
disqualifying disposition is a sale or exchange, the amount that the optionee
will be required to recognize as ordinary income may not exceed the excess of
the amount realized on such sale or exchange over the exercise price. In the
case of such a disqualifying disposition, the Company will be entitled to a
deduction equal to the amount recognized by the optionee as
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ordinary income. Any loss recognized upon a disqualifying disposition will
generally be a capital loss, and will be long-term capital loss if the holding
period for the disposed shares is more than one year.
The option exercise price of options granted under the 1998 Plan may be
paid by the transfer to the Company of shares of Company Common Stock with a
fair market value equal to the aggregate exercise price of the option. If the
optionee transfers to the Company shares of Company Common Stock issued upon
exercise of an ISO before both the one and two-year holding periods have
expired, the transfer will be treated as a disqualifying disposition of such
shares with the tax consequences described above. If the shares so transferred
were not issued upon exercise of an ISO or, if they are such shares and both the
one and two-year periods have expired, such transfer to the Company will not be
a taxable event.
NSOS. Any other option granted under the 1998 Plan will qualify for
taxation as a NSO.
GRANT -- Upon the grant of a NSO, an optionee will not recognize any
income and the Company will not be entitled to a deduction with respect to such
grant.
EXERCISE -- Except as described below, upon the exercise of a NSO the
optionee will recognize ordinary income in an amount equal to the excess of the
fair market value of the shares acquired over the exercise price. The Company
will be entitled to a deduction corresponding to the amount recognized as
ordinary income by the optionee. If, however, the shares acquired are subject to
a "substantial risk of forfeiture" under Section 83 of the Code, the optionee
will not recognize ordinary income until the lapse of such risk (unless the
optionee makes an election under Section 83(b) of the Code to recognize ordinary
income at the time of exercise).
Under the short-swing profit rules of the Exchange Act, the purchase of
shares upon exercise of a NSO by an "insider" (e.g. an officer or director of
the Company) will not be deemed a purchase triggering a six-month period of
short-swing liability. The short-swing rules will not subject the acquired
shares to a substantial risk of forfeiture under Section 83 of the Code unless
the shares are disposed of during the six-month period following the date of the
grant of the NSO. If an insider exercises a NSO after such period, the insider
will recognize ordinary income as of the exercise date. If an insider exercises
a NSO during such period, taxation will ordinarily be deferred until the date
six months after the grant date, unless the insider makes an election under
Section 83(b) of the Code to recognize ordinary income at the time of exercise.
The aggregate basis for shares acquired upon exercise of a NSO will be
equal to the fair market value of such shares on the date that governs the
determination of the optionee's ordinary income. The holding period for such
shares will commence on such date and, accordingly, will not include the period
during which the NSO was held.
SALE -- In the event of a sale of shares received upon exercise of a
NSO, any gain or loss after the date on which taxable compensation is recognized
by the optionee in respect of the option exercise will generally be a capital
gain or loss, assuming the shares are held as capital
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assets. The capital gain or loss will be a long-term capital gain (currently
taxable at a maximum rate of 20%) or loss if the shares were held for more than
one year after the date on which taxable compensation was recognized by the
optionee in respect of the option exercise.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE 1998 PLAN AMENDMENT
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED
1990 NON-EMPLOYEE DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
The Company's Amended and Restated 1990 Non-Employee Directors'
Non-Qualified Stock Option Plan (also referred to herein and previously defined
as the "1990 Plan") currently authorizes the issuance of options to purchase up
to 450,000 shares Common Stock. In March 1999, the Board amended the 1990 Plan
(also referred to herein and previously defined as the "1990 Plan Amendment"),
subject to stockholder approval, to increase the aggregate number of shares
authorized for issuance upon exercise of options granted under the 1990 Plan to
650,000. The 1990 Plan Amendment was designed to enhance the flexibility of the
Board in granting stock options to the Company's directors, employees,
independent contractors and consultants and to ensure that the Company can
continue to grant stock options to such persons at levels determined to be
appropriate by the Committee.
The affirmative vote of a majority of the votes present in person or
represented by proxy at the meeting and entitled to vote on the 1990 Plan
Amendment will be required to approve the 1990 Plan Amendment.
As of April 15, 1999, the closing price of the Company's Common Stock
on the Nasdaq SmallCap Market was $7 3/8.
Set forth below is a summary of the 1990 Plan, as amended by the 1990
Plan Amendment, which summary is qualified in its entirety by the actual terms
of the 1990 Plan. The 1990 Plan is set forth in full as Appendix C to this Proxy
Statement and is incorporated herein by reference.
DESCRIPTION OF THE 1990 PLAN
Under the 1990 Plan, after giving effect to the 1990 Plan Amendment, up
to an aggregate of 650,000 shares of Company Common Stock may be issued (subject
to adjustments in the event of stock dividends, stock splits, reverse stock
splits, combinations, reclassifications or like changes in the capital structure
of the Company). Options may be granted under the 1990 Plan to members of the
Company's Board of Directors who are not employees of the Company and who have
not been employees of the Company for a period of at least one year prior to the
date of grant of an option thereunder ("Non-Employee Directors"). Options also
may be granted under the 1990 Plan to selected employees, independent
contractors and consultants of the Company. The purpose of the options and other
awards issuable under the 1990 Plan is to assist the Company in attracting and
retaining experienced and knowledgeable Non-Employee Directors,
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selected employees, independent contractors, and consultants and to foster a
community of interests with the Company's stockholders.
Annual Retainer Options
Annual Retainers
All compensation to be paid to Non-Employee Directors for serving as
such, except for fees for attending any meeting of the Company Board of
Directors or committee thereof and reimbursements related thereto, will be paid
pursuant to the 1990 Plan. Each Non-Employee Director elected at an annual
meeting of stockholders of the Company will automatically be granted options on
the thirteenth trading day after the date of such annual meeting (the "Retainer
Grant Date") to purchase a number of shares of Company Common Stock equal to the
lesser of (a) 2,500 shares and (b) the annual retainer for service as an
Non-Employee Director of the Company multiplied by 80% of the average of the
fair market value of a share of Company Common Stock on the ten trading days
following the third trading day after the date of such annual meeting of
stockholders. If the number of shares of Company Common Stock calculated
pursuant to clause (b) of the immediately preceding sentence exceeds 2,500
shares, each Non-Employee Director will automatically receive on the Retainer
Grant Date, in addition to options to purchase 2,500 shares of Company Common
Stock, a cash payment equal to the remaining portion of the annual retainer not
provided for by the grant of such options.
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Pro-Rata Retainers for Non-Employee Directors not Elected at Annual
Meeting
Each person who is newly elected or appointed Non-Employee Director,
but not by election at an annual meeting of the Company's stockholders, shall
automatically on the thirteenth trading day after the date of such election or
appointment be granted options to purchase a fixed number of shares of Company
Common Stock equal to the lesser of (a) 2,500 shares and (b) an amount
determined by taking the pro-rated portion of the annual retainer based on the
number of months remaining for the newly elected Non-Employee Director to serve
until the next annual meeting of stockholders divided by 80% of the fair market
value of a share of the Company Common Stock on the ten trading days following
the third trading day after the date of such election or appointment. If the
number of shares of Company Common Stock calculated pursuant to this paragraph
exceeds 2,500 shares, each such Non-Employee Director will also receive, in
addition to such number of shares of Company Common Stock, a cash payment equal
to the remaining portion of the annual retainer not provided for by the grant of
such options.
Exercise and Vesting
The options granted pursuant to the foregoing terms shall be
exercisable at a per share price of 20% of the average fair market value per
share of Company Common Stock used to calculate such grant. Subject to the
provisions regarding expiration and termination of options, the foregoing
options will become exercisable as to 75% of the shares of Company Common Stock
issuable upon exercise of such options six months after the date of grant and as
to 100% of such shares on the later of six months after the date of grant and
December 31 of the year in which the grant is made.
Options for New Non-Employee Directors Elected at Annual Meeting
Each person who is elected or appointed a Non-Employee Director for the
first time at an annual meeting will automatically upon such election or
appointment (the "Automatic Grant Date") be granted an option to purchase 7,500
shares of Company Common Stock ("New Director Options"). The exercise price of
any New Director Options granted under the 1990 Plan will be 100% of the fair
market value of shares of Company Common Stock subject thereto on the Automatic
Grant Date. Subject to the provisions regarding expiration and termination of
options, any New Director Options will become exercisable as to 20% of the
shares of Company Common Stock subject thereto on the Automatic Grant Date and
shall become exercisable as to an additional 20% of the shares of Company Common
Stock issuable upon exercise thereof on each of the first, second, third and
fourth anniversaries of such Automatic Grant Date.
General Provisions
Plan Administration
The 1990 Plan will be administered by a committee established by the
Board of Directors (or the entire Board of Directors which may constitute such
committee). The 1990 Plan is
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currently administered by the Board of Directors. For purposes of this
discussion of the 1990 Plan, such administrator shall be referred to as the
"Committee." Subject to the express provisions of the 1990 Plan, the Committee
may make such rules and establish such procedures as it deems appropriate. In
the event of any disagreement as to the interpretation of the 1990 Plan or any
rule or procedure thereunder, the decision of the Committee shall be final and
binding upon all persons in interest.
Payment Upon Option Exercise
Under the 1990 Plan, all options must be exercised, if at all, within
ten years from their respective dates of grant. The exercise price of options
granted under the 1990 Plan may be paid in cash, services rendered, personal
property (including shares of Company Common Stock having a fair market value on
the date of exercise equal to the option price), real property, leases of real
property or any combination thereof. This provision permits an optionee not only
to use then-held shares of Company Common Stock in a single exercise of stock
options, but also to use the shares of Company Common Stock received upon the
exercise of stock options to exercise additional stock options in a process
known as "pyramiding". Such pyramiding permits an optionee to effect a cashless
exercise of all of the optionee's options then exercisable (no matter what the
number) without surrendering any shares of Company Common Stock or making any
additional cash investment. An optionee who exercises options by pyramiding will
own, after the exercise, a number of additional shares equal in value to the
spread between the fair market value of a share of Company Common Stock on the
date of exercise and the option exercise price of the options exercised. Not
less than ten shares may be purchased at any time upon the exercise of an option
granted under the 1990 Plan unless the number of shares so purchased constitutes
the total number of shares then issuable upon exercise of the option. During the
lifetime of an optionee, an option may be exercised only by the optionee or such
optionee's legal representative. An option may not be transferred or assigned,
except by will or the laws of descent and distribution.
Adjustments
The exercise price of, and the number of shares issuable upon exercise
of, options granted under the 1990 Plan will be adjusted to reflect stock
dividends, stock splits, reverse stock splits, combinations, other
recapitalizations, reorganizations or reclassifications or changes affecting the
number or kind of outstanding shares of Company Common Stock. The 1990 Plan also
provides for certain adjustments to be made to the aggregate number of shares
which may be issued upon exercise of options granted under the 1990 Plan in the
event of any stock dividends, stock splits, reverse stock splits, combinations,
other recapitalizations, reorganizations or reclassifications or changes
affecting the number or kind of outstanding shares of Company Common Stock.
In addition, in the event that a "Change in Control" occurs while any
option remains outstanding under the 1990 Plan, all options granted under the
1990 Plan that are outstanding as of the time of such change of control will
become immediately exercisable in full, without regard to the time period that
has elapsed from the date of grant or to the vesting provisions. Generally,
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a Change in Control will be deemed to occur upon the earlier of (i) any person
or entity becoming the beneficial owner, directly or indirectly, of securities
of the Company representing 30% or more of the combined voting power of the
Company's then outstanding voting securities, (ii) a change in the composition
of the Board of Directors of the Company during any period of not more than two
consecutive years such that individuals who constitute the Board of Directors of
the Company at the beginning of such period cease for any reason to constitute
at least a majority of such board, (iii) the approval by the stockholders of the
Company of a merger or consolidation of the Company with any other company
whereby the combined voting power of the Company's securities no longer
represents at least 50% of the combined voting power of the surviving or parent
entity outstanding after such merger or consolidation or (iv) the stockholders
of the Company approve a plan of complete liquidation or an agreement for the
sale of all or substantially all of the assets of the Company.
Termination of Eligibility
If an individual to whom options have been granted under the 1990 Plan
ceases to be a director, employee, consultant or independent contractor of the
Company as the result of a termination without cause (other than due to death or
disability), (A) any options held by such person that were exercisable on the
date of such termination may be exercised by that person until the later of: (i)
a period of one year following the date of such termination, or (ii) a period of
one year from the date any option vests in the twelve month period following
such termination, and (B) any options held by such person that were not
exercisable on the date of such termination will continue to vest in accordance
with their original vesting schedule for a period of 12 months following the
date of termination, and any options that vest during such 12-month period may
be exercised by that person for a period of one year following the date of such
vesting.
If an individual to whom options have been granted under the 1990 Plan
ceases to be a director, employee, consultant, or independent contractor of the
Company as the result of a voluntary resignation (other than due to death or
disability), (A) any options held by such person that were exercisable on the
date of such resignation may be exercised by that person until the later of: (i)
a period of one year following the date of such resignation, or (ii) a period of
one year from the date any option vests in the twelve month period following
such resignation, and (B) any options held by such person that were not
exercisable on the date of such resignation will continue to vest in accordance
with their original vesting schedule for a period of 12 months following the
date of resignation, and any options that vest during such 12-month period may
be exercised by that person for a period of one year following the date of such
vesting, provided that the individual has been an employee, consultant or
director of the Company for at least three years and has signed a non-compete
agreement with the Company (such agreement to include biotechnology companies,
academic and/or research organizations encompassing biotechnology, and venture
capital companies in the biotechnology sector.
If any recipient of an option under the 1990 Plan dies within the one
year period following termination of employment or other relationship, such
optionee's designated or legally
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determined beneficiary (the "Beneficiary") may exercise such optionee's options,
to the extent exercisable or vested at the time of death, for a period not to
exceed one year after such date, but in no event later than expiration of such
option's term. If any recipient of an option ceases employment or other
relationship with the Company and its subsidiaries due to death or disability,
such optionee's options may be exercised at any time within 12 months following
the optionee's death or termination of employment or other relationship due to
death or disability, by the optionee, the optionee's legal representative or the
person or persons to whom the optionee's rights under the 1990 Plan shall pass
by will or by the laws of descent or distribution but in no event later than the
expiration date of such option. Shares of Company Common Stock issuable upon
exercise of options granted under the 1990 Plan that have expired or been
surrendered or terminated will be returned to the 1990 Plan and become available
for issuance upon exercise of future options granted under the 1990 Plan.
Termination of Plan
The 1990 Plan will terminate on April 23, 2008, except with respect to
options outstanding on such date. The Company's Board of Directors may sooner
terminate or amend the 1990 Plan at any time, subject to its terms; provided,
however, that the Board may seek stockholder approval of an amendment if
determined to be required by or advisable under regulations of the Securities
and Exchange Commission or the Internal Revenue Service, the rules of any stock
exchange or system on which the Company Common Stock is listed or other
applicable law or regulation.
Options Outstanding, Exercisable and Available for Future Grant Under the 1990
Plan
As of April 29, 1999, options to purchase __________ shares were
outstanding under the 1990 Plan, of which options to purchase ___________ shares
were exercisable. The exercise prices for the outstanding options ranged from
$___ to $_______ per share. At April 29, 1999, options to purchase __________
shares (plus any options that expire or are canceled in the future) were
available for future grant, exclusive of the additional shares covered by the
proposed amendment.
Federal Income Tax Consequences of the 1990 Plan
The Federal income tax consequences of a NSO granted under the 1990
Plan are the same as the Federal income tax consequences described for NSOs
granted under the 1998 Plan, set forth above under "Description of 1998 Plan."
in Proposal 3. With respect to any cash payments received under the 1990 Plan,
the recipient will recognize ordinary income and the Company will be entitled to
a deduction for such cash payment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE 1990 PLAN AMENDMENT.
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GENERAL AND OTHER MATTERS
The Board knows of no matter, other than as referred to in this proxy
statement, which will be presented at the Meeting. However, if other matters
properly come before the Meeting, or any of its adjournments, the person or
persons voting the proxies will vote them in accordance with their judgment in
such matters.
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INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, independent auditors, audited the financial
statements of the Company for the year ended December 31, 1998. Representatives
of PricewaterhouseCoopers LLP are expected to attend the Annual Meeting, will
have the opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers (including a person performing a principal policy-making
function) and persons who own more than 10% of a registered class of the
Company's equity securities ("10% Holders") to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Directors, officers and 10% Holders are
required by SEC regulations to furnish the Company with copies of all of the
Section 16(a) reports they file. Based solely upon a review of the copies of the
forms furnished to the Company and the representations made by the reporting
persons to the Company, the Company believes that during fiscal 1998 its
directors, officers and 10% Holders complied with all substantive filing
requirements under Section 16(a) of the Exchange Act, except that Mr. Hillson
filed one late Form 5 related to the exercise of certain stock options.
AVAILABLE INFORMATION
THE COMPANY WILL PROVIDE, WITHOUT CHARGE TO EACH PERSON SOLICITED BY
THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K/A, AS AMENDED, FOR FISCAL 1998 (INCLUDING
THE FINANCIAL STATEMENTS, BUT EXCLUDING EXHIBITS), AS FILED WITH THE SEC. SUCH
WRITTEN REQUEST SHOULD BE DIRECTED TO THE CORPORATE SECRETARY AT THE ADDRESS OF
THE COMPANY APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
STOCKHOLDER PROPOSALS - 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual
Meeting of Stockholders in 2000 must be received by January 15, 2000 in order to
be considered for inclusion in the Company's proxy statement and form of proxy
relating to that Meeting. If any shareholder wishes to present a proposal to the
2000 annual meeting of stockholders that is not included in the Company's proxy
statement for that meeting and fails to submit such proposal to the Secretary of
the Company on or before March 30, 2000, then the Company will be allowed to use
its discretionary voting authority when the proposal is raised at the annual
meeting, without any discussion of the matter in its proxy statement.
Stockholder proposals should be
37
<PAGE>
directed to the Corporate Secretary, at the address of the Company set forth on
the first page of this proxy statement.
By Order of the Board of Directors,
Joseph P. Hernon
Secretary
May__, 1999
<PAGE>
APPENDIX A
FORM OF
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
BOSTON LIFE SCIENCES, INC
Pursuant to Section 242 of the
Delaware General Corporation Law
BOSTON LIFE SCIENCES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
1. The Amended and Restated Certificate of Incorporation of the
Corporation was filed in the office of the Secretary of State of Delaware on
March 29, 1996 and amendments thereto were subsequently duly filed and recorded
(the Amended and Restated Certificate of Incorporation together with such
amendments shall be hereinafter referred to as the "Certificate").
2. That the Board of Directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendment (the
"Amendment") to the Certificate:
RESOLVED, that the Board of Directors hereby approves and recommends
to the Company's stockholders that the first sentence of Article
FOURTH of the Certificate be, and it hereby is, subject to stockholder
approval at the 1999 Annual Meeting of Stockholders of the
Corporation, amended and restated in its entirety to read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 36,000,000 to be divided into (a)
35,000,000 shares of Common Stock, par value $.01 per share, (b)
1,000,000 shares of Preferred Stock, par value $.01 per share, of
which 13,404 shares are designated as Series A Convertible Preferred
Stock, par value $.01 per share, with the powers, preferences and
other rights as described on Exhibit A attached hereto and made a part
hereof."
FURTHER RESOLVED, that all other provisions of the Certificate, as
heretofore amended, and all exhibits, attachments and certificates to
the Certificate shall remain unchanged and in full force and effect,
including but
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not limited to, all Certificates of Designation, Decrease and
Elimination relating to the Corporation's Preferred Stock.
3. That thereafter a majority of the holders of the stock of the
Corporation entitled to vote thereon voted in favor of the Amendment at a
meeting of the stockholders duly held on June 28, 1999.
4. That the foregoing amendment to the Certificate of Incorporation
was duly adopted in accordance with the provisions of Section 242 of the General
Corporation Law.
IN WITNESS WHEREOF, said Boston Life Sciences, Inc. has caused this
Certificate to be executed by its duly authorized officers this ____ day of
June, 1999.
BOSTON LIFE SCIENCES, INC.
By: /s/ S. David Hillson
________________________________
Name: S. David Hillson
Title: Chief Executive Officer
A-2
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APPENDIX B
BOSTON LIFE SCIENCES, INC.
1998 OMNIBUS STOCK OPTION PLAN
1. Purpose; Types of Options; Construction.
---------------------------------------
The purpose of the Boston Life Sciences, Inc. 1998 Omnibus Stock Option
Plan is to afford an incentive to selected employees, consultants, independent
contractors, directors and Scientific Advisors of Boston Life Sciences, Inc.
(the "Company"), or any Subsidiary which now exists or hereafter is organized or
acquired, to acquire a proprietary interest in the Company, to continue as
employees, independent contractors, consultants, directors or Scientific
Advisors, as the case may be, to increase their efforts on behalf of the Company
and to promote the success of the Company's business. The Plan provides for
grants of stock options (including "incentive stock options" and "nonqualified
stock options").
2. Definitions.
-----------
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Beneficiary" means the person, persons, trust or trusts which have
been designated by an Optionee in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon his or her death, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Committee" means the committee established by the Board to administer
the Plan, the composition of which shall at all times satisfy the provisions of
Rule 16b-3.
(e) "Company" means Boston Life Sciences, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.
(g) "Fair Market Value" per share of Stock as of a particular date shall
mean (i) the closing price per share of Stock on the national securities
exchange or National Market System of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") on which the Stock is principally
traded, for the last preceding date on which there was a sale of
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<PAGE>
such Stock on such exchange or system, or (ii) if the shares of Stock are not
then traded on any such exchange or system, the average of the closing bid and
asked prices for the shares of Stock quoted on NASDAQ for the last preceding
date on which a sale of Stock was reported, or (iii) if the shares of Stock are
not then traded on an exchange or system or quoted on NASDAQ, such value as the
Committee, in its sole discretion, shall determine.
(h) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(i) "NSO" means any Option that is designated as a nonqualified stock
option or that does not meet the requirements to be an ISO.
(j) "Option" means a right, granted to an Optionee under Section 6(b), to
purchase shares of Stock. An Option may be either an ISO or an NSO, provided
that ISO's may not be granted to independent contractors or Scientific Advisors.
(k) "Option Agreement" means any written agreement, contract, or other
instrument or document evidencing the grant of an Option.
(l) "Optionee" means a person who, as an employee, Scientific Advisor,
director, consultant or independent contractor of the Company or a Subsidiary
has been granted an Option under the Plan.
(m) "Plan" means this Boston Life Sciences, Inc. 1998 Omnibus Stock Option
Plan, as amended from time to time.
(n) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, including any successor to such Rule.
(o) "Scientific Advisor" means any member of the Scientific Advisory Board
who neither (i) is an employee of the Company, nor (ii) receives compensation
from the Company pursuant to a research, sponsored research or similar agreement
with the Company (other than a Scientific Advisory and Consulting Agreement
entered into generally by the Company and members of the Scientific Advisory
Board which may provide for compensation for each meeting of the Scientific
Advisory Board which the Scientific Advisor attends and for the reimbursement of
certain expenses), nor (iii) is the discoverer of, or a principal investigator
or researcher with respect to, any technology subject to the Company's research
and development programs as determined by the Committee in its sole discretion.
(p) "Scientific Advisory Board" means the Board of Scientific Advisors of
the Company.
(q) "Stock" means shares of the common stock, par value $.01 per share, of
the Company.
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(r) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Option, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
(s) "Ten Percent Stockholder" shall mean a prospective optionee of the
Company who, at the time an ISO is to be granted to such optionee, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company.
3. Administration.
--------------
The Plan shall be administered by the Committee. The Committee shall have
the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the persons to whom and
the time or times at which Options shall be granted; to determine the type and
number of Options to be granted, the number of shares of Stock to which an
Option may relate and the terms and conditions relating to any Option; and to
determine whether, to what extent, and under what circumstances an Option may be
settled, cancelled, forfeited, exchanged, or surrendered; to make adjustments in
the terms and conditions of Options in recognition of unusual or nonrecurring
events affecting the Company or any Subsidiary or the financial statements of
the Company or any Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles; to construe and interpret the Plan and
any Option Agreement; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Option
Agreements (which need not be identical for each Optionee); and to make all
other determinations deemed necessary or advisable for the administration of the
Plan.
The Committee may appoint a chairperson and a secretary and may make such
rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary or Optionee (or any person claiming
any rights under the Plan from or through any Optionee) and any stockholder.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
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4. Eligibility.
-----------
Options may be granted to selected employees, Scientific Advisors,
directors, consultants and independent contractors of the Company and its
present or future Subsidiaries, in the discretion of the Committee.
5. Stock Subject to the Plan.
--------------------------
The maximum number of shares of Stock that may be issued under the Plan
shall be 1,000,000.
----------
In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Optionees under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock which may thereafter be issued in
connection with Options, (ii) the number and kind of shares of Stock issuable in
respect of outstanding Options, and (iii) the exercise price relating to any
Option; provided that, with respect to ISOs, such adjustment shall be made in
accordance with Section 424(h) of the Code.
6. Specific Terms of Options.
-------------------------
(a) General. The Committee may impose on any Option or the exercise
thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.
(b) Options. The Committee is authorized to grant Options to Optionees on
the following terms and conditions:
(i) Type of Option. The Option Agreement evidencing the grant of an
Option under the Plan shall designate the Option as an ISO or an NSO.
(ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee; provided
that, in the case of an ISO, except as set forth in Section 6(c)(ii), such
exercise price shall be not less than the Fair Market Value of a share on
the date of grant of such Option, and, in the case of an NSO, such exercise
price shall be not less than 50% of the Fair Market Value of a share on the
date of grant of such Option, but in no event shall the exercise price for
the purchase of shares be less than par value. The exercise price for
Stock subject to an Option may be paid in cash or, at the discretion of the
Committee, by an exchange of Stock previously owned by the Optionee, or a
combination of both, in an amount having a combined value
B-4
<PAGE>
equal to such exercise price. An Optionee may also elect to pay all or a
portion of the aggregate exercise price by having shares of Stock with a
Fair Market Value on the date of exercise equal to the aggregate exercise
price withheld by the Company or sold by a broker-dealer under
circumstances meeting the requirements of 12 C.F.R. (S)220 or any successor
thereof.
(iii) Term and Exercisability of Options. Except as set forth in
Section 6(c)(ii) hereof, the term of each Option shall be up to ten (10)
years from the date of grant of such Option. The date on which the
Committee adopts a resolution expressly granting an Option, or such other
date as is set forth in such resolution, shall be considered the day on
which such Option is granted. Options shall be exercisable over the
exercise period, at such times and upon such conditions as the Committee
may determine, as reflected in the Option Agreement; provided that, the
Committee shall have the authority to accelerate the exercisability of any
outstanding Option at such time and under such circumstances as it, in its
sole discretion, deems appropriate. An Option may be exercised to the
extent of any or all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or
its designated agent; provided that, no Option may be exercised for fewer
than 10 shares of Stock unless the number of shares with respect to which
the Option is exercised constitutes the total number of shares as to which
the Option is then exercisable.
(iv) Termination of Employment or Other Relationship.
(a) If an Optionee ceases to be an employee,
independent contractor, consultant,
Scientific Advisor or director of the
Company as the result of a termination
without cause (other than due to death or
disability), his options will continue to
vest for a period of one year pursuant to
the vesting schedule established at the time
the Option was granted and (A) any Options
held by such Optionee that were exercisable
on the date of such termination may be
exercised by the Optionee until the later
of: i) one year following the date of such
termination, or, ii) one year from the date
any Option vests in the twelve month period
following such termination and (B) any
Options held by such Optionee that vested
during the 12 months following the date of
termination may be exercised by the Optionee
for a period of one year following the date
of such vesting.
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<PAGE>
(b) If an Optionee ceases to be an employee,
consultant, independent contractor,
Scientific Advisor or director of the
Company as the result of a voluntary
resignation (other than due to death or
disability), his options will continue to
vest for a period of one year pursuant to
the vesting schedule established at the time
the Option was granted and provided that the
Optionee has been an employee, consultant,
independent contractor, Scientific Advisor
or director of the Company for at least
three years and has signed a non-compete
agreement with the Company (such agreement
to include biotechnology companies, academic
and/or research organizations encompassing
biotechnology, and venture capital companies
in the biotechnology sector), and (A) any
Options held by such Optionee that were
exercisable on the date of such resignation
may be exercised by the Optionee until the
later of: i) one year following the date of
such resignation, or, ii) one year from the
date any Option vests in the twelve month
period following such resignation and (B)
any Options held by such Optionee that
vested during the 12 months following the
date of resignation may be exercised by the
Optionee for a period of one year following
the date of such vesting.
provided, that, if the Optionee dies within such one-year period following
termination of employment or other relationship, the Option (to the extent
exercisable at the time of death) shall be exercisable by the Optionee's
Beneficiary for a period of one (1) year following the Optionee's death
(but in no event after the expiration date of the Option), and shall
thereafter terminate.
(v) Death or Disability. If the Optionee's employment or other
relationship with the Company is terminated because of death or disability,
the Optionee (or, where applicable, the Beneficiary) will be entitled to
exercise the Option with respect to the total number of shares of Stock
subject to such Option and without regard to the extent to which such
Option was exercisable at the time of the termination of employment or
other relationship due to death or disability for a period of one (1) year
following the Optionee's death or termination of employment or other
relationship due to death or disability (but in no event after the
expiration date of the Option), and the Option shall thereafter terminate.
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<PAGE>
(vi) Other Provisions. Options may be subject to such other conditions
including, but not limited to, restrictions on transferability of the
shares acquired upon exercise of such Options, as the Committee may
prescribe in its discretion.
(c) Incentive Stock Options. Options granted as ISOs shall be subject to
the following special terms and conditions, in addition to the general terms and
conditions specified in this Section 6.
(i) Value of Shares. The aggregate Fair Market Value (determined as
of the date the ISO is granted) of the shares of Stock with respect to
which ISOs granted under this Plan and all other plans of the Company
become exercisable for the first time by each Optionee during any calendar
year shall not exceed $100,000.
(ii) Ten Percent Stockholder. In the case of an ISO granted to a Ten
Percent Stockholder, (x) the exercise price shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the shares of Stock
on the date of grant of such ISO, and (y) the exercise period shall not
exceed five (5) years from the date of grant of such ISO.
7. General Provisions.
------------------
(a) Compliance with Local and Exchange Requirements. The Plan, the granting
and exercising of Options thereunder, and the other obligations of the Company
under the Plan and any Option Agreement or other agreement shall be subject to
all applicable federal and state laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Stock under
any Option until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any state, federal or
foreign law, rule or regulation as the Company may consider appropriate, and may
require any Optionee to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
Stock in compliance with applicable laws, rules and regulations.
(b) Nontransferability. Options shall not be transferable by an Optionee
except by will or the laws of descent and distribution or, if then permitted
under Rule 16b-3, pursuant to a qualified domestic relations order as defined
under the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and shall be exercisable during the
lifetime of an Optionee only by such Optionee or his guardian or legal
representative.
(c) No Right to Continued Employment, etc. Nothing in the Plan or in any
Option granted or any Option Agreement or other agreement entered into pursuant
hereto shall confer
B-7
<PAGE>
upon any Optionee the right to continue in the employ of or to continue as an
independent contractor or Scientific Advisor of the Company or any Subsidiary or
to be entitled to any remuneration or benefits not set forth in the Plan or such
Option Agreement or other agreement or to interfere with or limit in any way the
right of the Company or any such Subsidiary to terminate such Optionee's
employment, independent contractor or Scientific Advisor relationship.
(d) Taxes. The Company or any Subsidiary is authorized to withhold from any
distribution of Stock, or any other payment to a Optionee, amounts of
withholding and other taxes due in connection with any transaction involving an
Option, and to take such other action as the Committee may deem advisable to
enable the Company and Optionees to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Option. This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect thereof in satisfaction of a Optionee's tax
obligations.
(e) Amendment and Termination of the Plan. The Board may at any time and
from time to time alter, amend, suspend, or terminate the Plan in whole or in
part; provided that, the Company will seek stockholder approval if the Board of
Directors determines that it is necessary or desirable in order to comply with
the Code, federal or state securities law or any other applicable rules or
regulations in which case such amendment shall not be effective unless the same
shall be approved by the requisite vote of the stockholders of the Company
entitled to vote thereon. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Optionee, without such Optionee's
consent, under any Option theretofore granted under the Plan.
(f) Change in Control. Notwithstanding any other provision of the Plan to
the contrary, if, while any Options remain outstanding under the Plan, a "Change
in Control" of the Company (as defined in this Section 7(f)) shall occur, all
Options granted under the Plan that are outstanding at the time of such Change
in Control shall become immediately exercisable in full, without regard to the
years that have elapsed from the date of grant.
For purposes of this Section 7(f), a Change in Control of the Company
shall occur upon the happening of the earliest to occur of the following:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than (1) the Company, (2) any trustee or other
fiduciary holding securities under an employee benefit plan of Company, or
(3) any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
Stock (each an "excluded person"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company or
its affiliates) representing 30% or more of the combined voting power of
the Company's then outstanding voting securities;
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(ii) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this paragraph (f)) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved (other than approval given in connection with an actual or
threatened proxy or election contest), cease for any reason to constitute
at least a majority of the Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result 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 parent entity) 50% or more of the combined
voting power of the voting securities of the Company or such surviving or
parent entity outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
hereinabove defined) acquired 0% or more of the combined voting power of
the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
(g) No Rights to Options; No Stockholder Rights. No Optionee shall have any
claim to be granted any Option under the Plan, and there is no obligation for
uniformity of treatment of Optionees. Except as provided specifically in the
applicable Option Agreement, an Optionee or Beneficiary shall have no rights as
a stockholder with respect to any shares covered by the Option until the date of
exercise of the Option.
(h) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Option. The Committee shall determine
whether cash, other Options, or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
(i) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without
giving effect to the conflict of laws principles thereof.
(j) Term of the Plan. The Plan shall terminate on April 23, 2008, except
with respect to Options outstanding on such date and no Option may be granted
thereafter.
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APPENDIX C
BOSTON LIFE SCIENCES, INC. AMENDED AND RESTATED 1990 NON-EMPLOYEE DIRECTORS'
NON-QUALIFIED STOCK OPTION PLAN
1. Objectives
----------
The objectives of the Boston Life Sciences, Inc. Amended and Restated 1990
Non-Employee Directors' Non-Qualified Stock Option Plan (as amended from time to
time, the "Plan") are to assist Boston Life Sciences, Inc. (the "Company") in
attracting and retaining experienced and knowledgeable independent Directors, to
further promote the identification of such Directors' interests with those of
the Company's stockholders, and to attract and retain experienced and
knowledgeable employees, independent contractors and consultants. The Boston
Life Sciences, Inc. Amended and Restated 1990 Non-Employee Directors' Non-
Qualified Stock Option Plan is hereby amended and restated for a second time.
2. Maximum Number of Shares to be Optioned and Adjustments in Optioned
-------------------------------------------------------------------
Shares
- ------
The maximum number of shares of common stock, par value $.01 per share (the
"Common Stock"), of the Company which may be issued hereunder is 650,000 (the
---------
"Shares"). Notwithstanding any other provisions of the Plan to the contrary,
the number of Shares subject to option, the number of Shares previously optioned
and not theretofore delivered and the option price per Share shall be adjusted
if the number of outstanding Shares of the Company is increased or reduced by
split-up, reclassification, stock dividend or the like.
3. Administration and Interpretation
---------------------------------
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board"). Subject to the express
provisions of the Plan, the Committee may make such rules and establish such
procedures as it deems appropriate for the administration of the Plan. In the
event of any disagreement as to the interpretation of the Plan or any rule or
procedure thereunder, the decision of the Committee shall be final and binding
upon all persons in interest.
4. Annual Grant of Options
-----------------------
Each member (a "Director") of the Board who is not an employee of the
Company and who has not been an employee of the Company for a period of at least
one year prior to the date of grant of an option under the Plan (a "Non-Employee
Director") shall automatically be granted an option on the thirteenth trading
day after the date of the annual meeting of stockholders of the Company
("Retainer Grant Date") to purchase such number of Shares equal to the lesser of
(a) 2,500 Shares and (b) the quotient of the annual retainer for service as a
Non-Employee Director of the Company and 80% of the average of the fair market
value of a share of Common Stock on
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the ten trading days following the third trading day after the date of such
annual meeting of stockholders of the Company (such average a "Ten Day Average-
Value"). If the number of Shares calculated pursuant to clause (b) of the
immediately preceding sentence exceeds 2,500, each Non-Employee Director
entitled to receive Shares under this paragraph of Section 4 will automatically
receive on the Retainer Grant Date a cash payment equal to the annual retainer
minus the product of 2,500 and 80% of the Ten Day Average Value. The "fair
market value" of Shares shall be determined to be the closing price per Share on
the principal national securities exchange on which the Share is listed or
admitted to trading, or, if not listed or traded on any such exchange, on the
Nasdaq National Market, or if not listed or traded on any such exchange or
system, the average of the bid and asked price per Share on Nasdaq or, if such
quotations are not available, the fair market value of a Share as determined in
good faith by the Committee, which determination shall be conclusive.
Each person who is newly elected or appointed a Non-Employee Director after
the Company's annual meeting of stockholders held in 1995, but not by election
at a subsequent Company annual meeting of stockholders, shall automatically, on
the thirteenth trading day after the date of such election or appointment (the
"Mid-Year Grant Date"), be granted options to purchase such number of Shares
equal to the lesser of (a) 2,500 Shares and (b) the quotient of (i) the product
of (x) the annual retainer for service as a Director of the Company and (y) a
fraction (the "Fraction"), the numerator of which is the number of whole months
from the date of such election or appointment as a Non-Employee Director until
the date of the next annual meeting of stockholders and the denominator of which
is 12 (such product hereinafter known as the "Mid-Year Retainer Amount") and
(ii) 80% of the average of the fair market value of a Share on the ten trading
days following the third trading day after the date of such election or
appointment (such average a "Mid-Year Ten Day Average Value"). If the number of
Shares calculated pursuant to clause (b) of the immediately preceding sentence
exceeds 2,500, each Non-Employee Director entitled to receive Shares under this
paragraph of Section 4 will automatically receive on the Mid-Year Grant Date a
cash payment equal to the MidYear Retainer Amount minus the product of 2,500 and
80% of the MidYear Ten Day Average Value.
5. Grants to New Non-Employee Directors
------------------------------------
Each Non-Employee Director who, after the Company's annual meeting of
stockholders held in 1994, is elected or appointed to the Board for the first
time, and who was not immediately prior to such date serving on the Board of
Directors of Boston Life Sciences, Inc., will, at the time such director is
elected or appointed and duly qualified, be granted automatically (the
"Automatic Grant Date") an option to purchase 7,500 Shares.
6. Grants to Employees, Consultants, and Independent Contractors
-------------------------------------------------------------
The Board may, in its discretion grant stock options under the Director
Plan to any employee, independent contractor or consultant of the Company (each,
an "Employee") or to any Non-Employee Director, and such options will have the
terms and conditions set by the Board at the time the option is granted.
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7. Option Terms
------------
Subject to the limitations prescribed in Sections 4 and 5 above, the
options granted under the Plan shall be on the terms stated in subsections 7(a)
through (g) below.
(a) The option exercise price per share for options granted pursuant to
Section 4 of this Plan shall be 20% of the Ten Day Average Value or Mid-Year Ten
Day Average Value per Share, as appropriate. The option exercise price per share
for options granted pursuant to Section 5 of this Plan shall be 100% of the fair
market value of a share of Common Stock on the Automatic Grant Date.
(b) Subject to the provisions herein regarding expiration or termination
of options, an option granted pursuant to Section 4 of the Plan shall become
exercisable as to 75% of the Shares subject thereto six months after the
Retainer Grant Date or Mid-Year Grant Date of the option, as appropriate, and
shall become exercisable as to 100% of the Shares subject thereto on the later
of six months after the Retainer Grant Date or Mid-Year Grant Date, as
appropriate, and December 31 of the year in which the option is granted. Subject
to the provisions herein regarding expiration or termination of options, an
option granted pursuant to Section 5 of the Plan shall be exercisable as to 20%
of the Shares subject thereto on the Automatic Grant Date of the option, and
shall become exercisable as to an additional 20% of the Shares subject thereto
each of the first, second, third and fourth anniversaries of such Automatic
Grant Date. No partial exercise of the option may be for less than 10 full
Shares, unless the number of shares so purchased constitutes the total number of
shares then purchasable under such option. In no event shall the Company be
required to issue fractional Shares.
(c) Notwithstanding any other provisions of the Plan to the contrary, no
option shall be granted later than ten years after the date the Plan is adopted
by the Board.
(d) The option price shall be payable in cash, services rendered, personal
property (including Shares having a fair market value equal to the option
price), real property, leases of real property or any combination thereof.
(e) The option shall not be transferable otherwise than by will or the
laws of descent and distribution and shall be exercisable, during the optionee's
lifetime, only by such optionee or the optionees Representative (as hereinafter
defined).
(f) The option shall expire ten years after the date of grant, unless an
earlier date is fixed by operation of Section 7 hereof.
(g) Change in Control
Notwithstanding any other provision of the Plan to the contrary, if, while
any options remain outstanding under the Plan, a "Change in Control" of the
Company (as defined in this
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<PAGE>
Section 7(g)) shall occur, all options granted under the Plan that are
outstanding at the time of such Change in Control shall become immediately
exercisable in full, without regard to the years that have elapsed from the date
of grant.
For purposes of this Section 7(g), a Change in Control of the Company shall
occur upon the happening of the earliest to occur of the following:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than (1) the Company, (2) any trustee or other
fiduciary holding securities under an employee benefit plan of Company, or
(3) any corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
Stock (each an "excluded person"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company or
its affiliates) representing 30% or more of the combined voting power of
the Company's then outstanding voting securities;
(ii) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this paragraph (g)) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved (other than approval given in connection with an actual or
threatened proxy or election contest), cease for any reason to constitute
at least a majority of the Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result 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 parent entity) 50% or more of the combined
voting power of the voting securities of the Company or such surviving or
parent entity outstanding immediately after such merger or consolidation,
(B) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no "person" (as hereinabove
defined) acquired 30% or more of the combined voting power of the Company's
then outstanding securities or (C) the transaction contemplated by the
Merger Agreement (as defined below); or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
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<PAGE>
8. Exercise Rights upon Ceasing to be a Director, Employee, Independent
--------------------------------------------------------------------
Contractor or Consultant
-------------------------
(a) In the event that a Director, employee, independent contractor or
consultant ceases to serve as a Director, employee, independent contractor or
consultant of the Company and its subsidiaries due to death or Disability (as
hereinafter defined), such optionee's options may be exercised at any time
within 12 months following such optionee's death or Disability (subject to the
limitations prescribed in Sections 4 or 5, as appropriate, and subsection 7(f)
above) by the optionee, the optionee's legal representative or the person or
persons to whom the optionee's rights under the options shall pass by will or by
the laws of descent or distribution (each a "Representative"), but only to the
extent that the optionee's options were exercisable on the date of such
optionee's death or Disability.
(b) If an optionee ceases to be a Director, employee, independent
contractor or consultant of the Company as the result of a termination without
cause (other than due to death or disability), his options will continue to vest
for a period of one year pursuant to the vesting schedule established at the
time the option was granted, and (A) any options held by such optionee that were
exercisable on the date of such termination may be exercised by the optionee
until the later of: i) one year following the date of such termination, or ii)
one year from the date any option vests in the twelve month period following
such termination, and (B) any options held by such optionee that vested during
the 12-month period following the date of termination may be exercised by the
optionee for a period of one year following the date of such vesting (subject to
the limitations prescribed in Sections 4 or 5, as appropriate, and subsection
7(f) above).
(c) If an optionee ceases to be an employee, independent contractor,
consultant or director of the Company as the result of a voluntary resignation
(other than due to death or disability), his options will continue to vest for a
period of one year pursuant to the vesting schedule established at the time the
option was granted, provided that the optionee has been an employee, independent
contractor, consultant or director of the Company for at least three years and
has signed a non-compete agreement with the Company (such agreement to include
biotechnology companies, academic and/or research organizations encompassing
biotechnology, and venture capital companies in the biotechnology sector), and
(A) any options held by such optionee that were exercisable on the date of such
resignation may be exercised by the optionee until the later of: i) one year
following the date of such resignation, or ii) one year from the date any option
vests in the twelve month period following such resignation, and (B) any options
held by such optionee that vested during the 12-month period following the date
of resignation may be exercised by the optionee for a period of one year
following the date of such vesting (subject to the limitations prescribed in
Sections 4 or 5, as appropriate, and subsection 7(f) above)
provided, that, if the optionee dies within such one-year period
following termination of employment or other relationship, the option (to the
extent exercisable at the time of death) shall
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<PAGE>
be exercisable by the optionee's Beneficiary for a period of one (1) year
following the optionee's death (but in no event after the expiration date of the
option), and shall thereafter terminate.
The provisions of this paragraph 8 shall not apply to options held by any
person who was a Non-Employee Director of the Company prior to the Effective
Date of the Merger (as those terms are defined in the Agreement of Merger by and
between Greenwich Pharmaceuticals Incorporated and Boston Life Sciences, Inc.,
dated August 8, 1994 (the "Merger Agreement") and who resigns as such director
of the Company immediately after such Effective Date. Any options issued to the
persons identified in the immediately preceding sentence and that remain
outstanding as of the Effective Date will remain outstanding for the remainder
of their respective terms not to exceed ten years from the date of grant. The
term "Disability" shall mean the inability, due to illness or injury, to engage
in any gainful occupation for which the individual is suited by education,
training or experience, which condition continues for at least six months.
9. Exercise and Additional Requirements
------------------------------------
Any optionee or Representative exercising an option may exercise the option
(to the extent exercisable as of such date) by delivery to the Company of (a)
written notice of exercise of the option as to a specified number of Shares; and
(b) payment of the option exercise price for such Shares.
Upon the exercise of an option granted hereunder the Board may require the
optionee or Representative, as the case may be, exercising the option to deliver
the following:
(a) A written statement that the optionee or Representative, as the case
may be, is purchasing the Shares for investment and not with a view toward their
distribution or sale and will not sell or transfer any Shares received upon the
exercise of the option except in accordance with the Securities Act of 1933, as
amended, and applicable state securities laws;
(b) Evidence reasonably satisfactory to the Company that, at the time of
exercise, the optionee or Representative, as the case may be, meets such other
requirements as the Board of Directors may determine;
(c) Evidence reasonably satisfactory to the Company that, at the time of
exercise, the exercise of the option by the optionee or Representative, as the
case may be, and the delivery of Shares by the Company comply with all
applicable federal and state securities laws; and
(d) Evidence reasonably satisfactory to the Company that, at the time of
exercise of the option by the optionee, such optionee has complied with the
requirements of all applicable federal, state and local income tax withholding
laws.
10. Common Stock Subject to Option
------------------------------
The Shares issuable upon exercise of options granted hereunder may be
unissued shares of treasury shares, including shares bought on the open market.
The Company at all times during the term of the Plan shall reserve for issuance
the number of Shares issuable upon exercise of options granted hereunder.
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<PAGE>
11. Compliance with Governmental and Other Regulations.
--------------------------------------------------
The Company will not be obligated to issue and sell the Shares issued
pursuant to options granted hereunder if, in the opinion of its counsel, such
issuance and sale would violate any applicable federal or state securities laws.
The Company will seek to obtain from each regulatory commission or agency having
jurisdiction such authority as may be required to issue and sell Shares issuable
upon exercise of any option granted hereunder. Inability of the Company to
obtain from any such regulatory commission or agency authority which counsel to
the Company deems necessary for the lawful issuance and sale of Shares upon
exercise of an option granted hereunder shall relieve the Company from any
liability for failure to issue and sell such Shares until the time when such
authority is obtained or is obtainable.
12. Nonassignment of Options
------------------------
Except as otherwise provided in subsection 6(e) hereof, any option granted
hereunder and the rights and privileges conferred hereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of such option, right or privilege contrary to the provisions
hereof, or upon the levy of any attachment or similar process upon the rights
and privileges conferred hereby, such option and the rights and privileges
conferred hereby shall immediately terminate.
13. Rights of Optionee in Stock
---------------------------
Neither any optionee nor the Representative, heirs, legatees or
distributees of any optionee, shall be deemed to be the holder of, or to have
any of the rights of a holder with respect to any Shares issuable upon exercise
of an option granted hereunder unless and until such Shares are issued to such
optionee or Representative, as the case may be, and a certificate has been
issued therefor.
14. Delivery of Shares Issued Pursuant to Option
--------------------------------------------
Subject to the other terms and conditions of the Plan, upon the exercise of
an option granted hereunder, the Company shall sell and deliver to the optionee
or Representative, as the case may be, the Shares with respect to which the
option has been exercised.
15. Withholding of Applicable Taxes
-------------------------------
The Company shall have the right to reduce the number of Shares otherwise
required to be issued upon exercise of an option granted hereunder by an amount
equal to all federal, state, city or other taxes as shall be required to be
withheld by the Company pursuant to any statute or
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<PAGE>
other governmental regulation or ruling divided by the fair market value per
Share on the date of such exercise (or such other date as may be required under
applicable law). In connection with such withholding, the Company may make any
such arrangements as are consistent with the Plan as it may deem appropriate.
16. Plan and Options Not to Affect Directorship
-------------------------------------------
Neither the Plan nor any option granted hereunder shall confer upon any
individual any right to continue as a Director of the Company.
17. Amendment of Plan
-----------------
The Board may make any amendments to the Plan which it deems necessary or
advisable, provided that the Board may seek stockholder approval of an amendment
if it is determined to be required by or advisable under regulations of the
Securities and Exchange Commission or the Internal Revenue Service, the rules of
any stock exchange or system on which the Company's capital stock is listed or
other applicable law or regulation.
18. Notices
-------
Any notice required or permitted hereunder shall be in writing and shall be
sufficiently given only (i) if personally delivered, (ii) if sent by telex or
facsimile, provided that "answer back" confirmation is received by sender or
(iii) upon receipt, if sent by registered or certified mail, postage prepaid,
addressed to the Company, c/o Boston Life Sciences, Inc., 31 Newbury Street,
Suite 300, Boston, Massachusetts 02116 and to the optionee at the address on
file with the Company at the time of grant hereunder, or to such other address
as either party may hereafter designate in writing by notice similarly given by
one party to the other.
19. Successors
----------
The Plan shall be binding upon and inure to the benefit of any successor or
successors of the Company.
20. Severability
------------
If any part of the Plan shall be determined to be invalid or void in any
respect, such determination shall not affect, impair, invalidate or nullify the
remaining provisions of the Plan which shall continue in full force and effect.
21. Governing Law
-------------
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware without giving effect to
the conflict of laws principles thereof.
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<PAGE>
22. Termination of the Plan
-----------------------
The Board may terminate the Plan at any time; otherwise the Plan shall
terminate on April 23, 2008. Termination of the Plan shall not deprive
optionees of their rights under previously granted options.
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<PAGE>
PROXY
BOSTON LIFE SCIENCES, INC.
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints S. David Hillson, Esq. and Joseph P.
Hernon, and each of them, with power of substitution in each, proxies to appear
and vote all common stock and/or preferred stock of the undersigned in Boston
Life Sciences, Inc. (the "Company") at the Annual Meeting of Stockholders to be
held on June 28, 1999, and at all postponements and adjournments thereof, upon
the matters described below, hereby revoking any proxy heretofore executed by
the undersigned to vote (i) as specified by the undersigned below and (ii) in
the discretion of any proxy upon such other business as may properly come before
the meeting.
The proxies are directed to vote as follows:
PROPOSAL NUMBER 1 - Election Of Directors.
Withhold
Name Vote For Authority to Vote
- ---- -------- -----------------
Colin B. Bier, Ph.D. [_] [_]
Edson D. de Castro [_] [_]
S. David Hillson, Esq. [_] [_]
Marc E. Lanser, M.D. [_] [_]
Adrian M. Gerber [_] [_]
Ira W. Lieberman, Ph.D. [_] [_]
E. Christopher Palmer, CPA [_] [_]
<PAGE>
PROPOSAL NUMBER 2
Approval of an amendment to increase to 35,000,000 the number of shares of
Common Stock authorized for issuance under the Company's Amended and Restated
Certificate of Incorporation filed with the Secretary of the State of Delaware
on March 29, 1996, as heretofore amended, an increase of 10,000,000 shares.
[_] For [_] Against [_] Abstain
PROPOSAL NUMBER 3
To increase the amount of shares of Common Stock authorized for issuance under
the 1998 Omnibus Stock Option Plan from 500,000 to 1,000,000, an increase of
500,000 shares.
[_] For [_] Against [_] Abstain
PROPOSAL NUMBER 4
To increase the amount of shares of Common Stock authorized for issuance under
the Amended and Restated 1990 Non-Employee Directors' Non-Qualified Stock Option
Plan from 450,000 to 650,000, an increase of 200,000 shares.
[_] For [_] Against [_] Abstain
This Proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1, 2, 3, and 4.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING, PROXY STATEMENT AND ANNUAL REPORT OF BOSTON LIFE SCIENCES, INC.
Dated: _______________, 1999
-----------------------------------------
Signature of Stockholder
-----------------------------------------
Signature of Stockholder
Please sign your name exactly as it appears hereon. When
signing as attorney-in-fact, executor, administrator, trustee
or guardian, please add your title as such. When signing as
joint tenants, all parties in the joint tenancy must sign. If
signer is a corporation, please sign in full corporate name
by duly authorized officer or officers and affix the
corporate seal.
