SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
BIOTRANSPLANT INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
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and 0-11.
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BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 9, 2001
The 2001 Annual Meeting of Stockholders of BioTransplant Incorporated (the
"Company") will be held at Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, on July 9, 2001 at 10:00 a.m., local time, to consider and act
upon the following matters:
1. To elect seven directors for the ensuing year.
2. To approve an amendment to the Company's 1997 Stock Incentive Plan
increasing from 1,500,000 to 3,500,000 the number of shares of common stock
reserved for issuance under the plan.
3. To ratify the selection by the Board of Directors of Arthur Andersen LLP as
the Company's independent accountants for 2001.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Stockholders of record at the close of business on May 11, 2001 are entitled
to notice of, and to vote at, the meeting. The stock transfer books of the
Company will remain open for the purchase and sale of the Company's common
stock.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
STEVEN D. SINGER
SECRETARY
Charlestown, Massachusetts
June 5, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
PROXY STATEMENT FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 9, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BioTransplant Incorporated
("BioTransplant," or the "Company") for use at the 2001 Annual Meeting of
Stockholders to be held on July 9, 2001 (the "Annual Meeting") and at any
adjournment of that meeting.
All proxies will be voted in accordance with the instructions contained
therein, and if no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by delivery of
written revocation to the Secretary of the Company.
The Company's Annual Report on Form 10-K for the year ended December 31,
2000, as amended, is being mailed to stockholders with the mailing of this
Notice and Proxy Statement on or about June 5, 2001.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2000, AS AMENDED, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, EXCEPT FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER UPON WRITTEN REQUEST OF THE VICE PRESIDENT OF FINANCE, BIOTRANSPLANT
INCORPORATED, BUILDING 75, THIRD AVENUE, CHARLESTOWN NAVY YARD, CHARLESTOWN,
MASSACHUSETTS 02129.
VOTING SECURITIES AND VOTES REQUIRED
On May 11, 2001, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 11,800,223 shares of common stock of the
Company, $.01 par value per share. Each share is entitled to one vote.
Under the Company's Bylaws, the holders of a majority of the shares of
common stock issued, outstanding and entitled to vote at the Annual Meeting
shall constitute a quorum for the transaction of business at the Annual Meeting.
Shares of common stock present in person or represented by proxy (including
shares which abstain or do not vote with respect to one or more of the matters
presented for stockholder approval) will be counted for purposes of determining
whether a quorum is present.
If a quorum is present, the affirmative vote of the holders of a plurality
of the shares of common stock present (in person or by proxy) and entitled to
vote is required for the election of directors and the affirmative vote of the
holders of a majority of the shares of common stock present (in person or by
proxy) and entitled to vote is required for the approval of each of the other
matters to be voted upon.
For purposes of tabulating the vote, abstentions will be treated as shares
that are present and entitled to vote. Accordingly, an abstention will have the
same effect as a vote against the matter. In
1
addition, if a broker or nominee holding stock in "street name" indicates on the
proxy that it does not have discretionary authority to vote as to a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that particular matter. Accordingly, a "broker non-vote" will have no
effect on the outcome of the voting on such matter.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the number of shares of the
Company's common stock beneficially owned as of May 15, 2001 by:
- each person that beneficially owns more than 5% of the outstanding shares
of common stock of the Company;
- each director of the Company;
- the Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company (the "Named Executive
Officers"); and
- the Company's executive officers and directors as a group.
The number of shares of common stock beneficially owned by each person is
determined under the rules of the Securities and Exchange Commission and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares which the
individual has the right to acquire within 60 days after May 15, 2001 through
the exercise of any stock option, warrant or other similar right. Unless
otherwise indicated, each person has sole investment or voting power (or shares
such power with his spouse) with respect to the shares set forth in the
following table. The inclusion of any shares deemed beneficially owned in this
table does not constitute an admission of beneficial ownership of those shares.
On May 15, 2001, the Company acquired Eligix, Inc. in a stock-for-stock
merger pursuant to which Eligix became a wholly-owned subsidiary of the Company.
In connection with the merger, each outstanding share of capital stock of Eligix
was converted into a number of shares of common stock of the Company based upon
an exchange ratio. The information set forth in the following table is presented
on a post-merger basis after giving affect to the shares of the Company's common
stock issued in the merger.
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PERCENTAGE OF
NUMBER OF COMMON
SHARES STOCK
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED
------------------------ ------------ -------------
5% BENEFICIAL OWNERS
Entities affiliated with InterWest Partners V, L.P.(1)...... 1,218,774 7.3%
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025
The Wallace H. Coulter Foundation(2)........................ 1,013,924 6.1
790 NW 107th Avenue, Suite 215
Miami, FL 33172
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Elliot Lebowitz, Ph.D.(3)................................... 386,062 2.2
James C. Foster, J.D.(4).................................... 24,606 *
Daniel O. Hauser(5)......................................... 15,375 *
Walter C. Ogier(6).......................................... 112,560 *
Arnold L. Oronsky, Ph.D.(7)................................. 1,214,882 7.3
Michael S. Perry, D.V.M., Ph.D.(8).......................... 7,500 *
Susan M. Racher(2).......................................... 1,013,924 6.1
James Hope, Ph.D.(9)........................................ 85,007 *
Julia L. Greenstein, Ph.D.(10).............................. 114,832 *
Mary White-Scharf, Ph.D.(11)................................ 114,110 *
Howard Grossberg, M.D.(12).................................. 12,500 *
All directors and executive officers as a group (16
individuals)(13).......................................... 3,276,738 16.5
------------------------
* Beneficial ownership does not exceed 1% of the outstanding shares of common
stock.
(1) Represents shares held by InterWest Partners V, L.P., InterWest Investors V,
InterWest Partners VI, L.P. and InterWest Investors VI, L.P.
(2) Susan Racher, a director of BioTransplant, is the Chief Financial Officer of
the Wallace H. Coulter Foundation and may be deemed to exercise voting and
investment control with respect to shares held by the Foundation.
Ms. Racher disclaims beneficial ownership of these shares.
(3) Includes 311,988 shares of common stock which Dr. Lebowitz has the right to
acquire within 60 days of May 15, 2001 upon the exercise of stock options.
(4) Includes 2,856 shares of common stock owned by Charles River
Laboratories, Inc. Mr. Foster, a director of BioTransplant, is the President
and Chief Executive Officer of Charles River Laboratories and may be deemed
to beneficially own the shares held of record by Charles River Laboratories,
although he disclaims beneficial ownership. Also includes 9,250 shares of
common stock which Mr. Foster has the right to acquire within 60 days of
May 15, 2001 upon the exercise of stock options.
(5) Includes 14,750 shares of common stock which Dr. Hauser has the right to
acquire within 60 days of May 15, 2001 upon the exercise of stock options.
(6) Includes 112,560 shares of common stock which Mr. Ogier has the right to
acquire within 60 days of May 15, 2001 upon the exercise of stock options.
Does not include 162,295 shares which Mr. Ogier has the right to receive
pursuant to the Eligix Management Equity Incentive Plan which
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was assumed by the Company in the merger. These 162,295 shares are subject
to repurchase by the Company in accordance with a vesting schedule if
Mr. Ogier's employment is terminated by the Company for cause or by
Mr. Ogier without good reason.
(7) Arnold L. Oronsky, a director of BioTransplant, is general partner of
InterWest Management Partners V, L.P., the sole general partner of InterWest
Partners V, L.P. Dr. Oronsky also serves as Managing Director of InterWest
Management Partners VI, L.L.C., the sole general partner of InterWest
Partners VI, L.P. and InterWest Investors VI, L.P. Dr. Oronsky, together
with the other general partners of InterWest Partners V, L.P., InterWest
Partners VI, L.P. and InterWest Investors VI, L.P., respectively, shares
voting and investment control with respect to the shares owned by InterWest
Partners V, L.P., InterWest Partner VI, L.P. and InterWest Investors VI,
L.P. Dr. Oronsky disclaims beneficial ownership of the shares held by
InterWest Partners V, L.P., InterWest Partners VI, L.P. and InterWest
Investors VI, L.P. except to the extent of his pecuniary interest therein.
(8) Includes 7,500 shares of common stock which Dr. Perry has the right to
acquire within 60 days of May 15, 2001 upon the exercise of stock options.
(9) Includes 84,707 shares of common stock which Dr. Hope has the right to
acquire within 60 days of May 15, 2001 upon the exercise of stock options.
Includes 300 shares of common stock owned by Dr. Hope's minor children.
(10) Represents 114,832 shares of common stock which Dr. Greenstein has the
right to acquire within 60 days of May 15, 2001 upon the exercise of stock
options. Dr. Greenstein resigned as Senior Vice President, Research of
BioTransplant, effective January 1, 2001, in order to assume the position of
Chief Executive Officer of Immerge BioTherapeutics AG and Immerge
BioTherapeutics, Inc., the operating entities of BioTransplant's joint
venture with Novartis. Dr. Greenstein continues to serve as an employee of
BioTransplant but no longer has the duties or title of an officer.
(11) Includes 102,359 shares of common stock which Dr. White-Scharf has the
right to acquire within 60 days of May 15, 2001 upon the exercise of stock
options. Also includes 600 shares of common stock owned by
Dr. White-Scharf's minor children.
(12) Represents 12,500 shares of common stock which Dr. Grossberg has the right
to acquire within 60 days of May 15, 2001 upon the exercise of stock
options. Dr. Grossberg resigned from the Company in February 2001 and now
serves as a consultant to BioTransplant.
(13) Includes 3,174,632 shares of common stock which all directors and executive
officers as a group may acquire upon the exercise of outstanding stock
options and warrants exercisable within 60 days of May 15, 2001. Does not
include 649,180 shares of common stock which certain executive officers have
the right to receive pursuant to the Eligix Management Equity Incentive
Plan. All of these shares, when issued, will be subject to repurchase by the
Company in accordance with a vesting schedule if the Company terminates the
executive officer with cause or if the employee terminates his or her
employment with the Company without good reason.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors the
seven nominees named below, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to elect as directors the nominees named below.
Each director will be elected to hold office until the 2002 Annual Meeting
of Stockholders and until his or her successor is duly elected and qualified.
The nominees have indicated their willingness to
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serve, if elected; however, if any nominee should be unable to serve, the shares
of common stock represented by proxies may be voted for a substitute nominee
designated by the Board of Directors.
Set forth below are the name and age of each nominee for member of the Board
of Directors, and the positions and offices held by him or her, his or her
principal occupation and business experience during the past five years, the
names of other publicly held companies of which he or she serves as a director
and, if applicable, the year of the commencement of his or her term as a
director of the Company. Information with respect to the number of shares of
common stock beneficially owned by each director, directly or indirectly, as of
May 15, 2001, appears above under the heading "Stock Ownership of Certain
Beneficial Owners and Management." There are no family relationships between or
among any officers or directors of the Company.
NOMINEES FOR DIRECTOR
ELLIOT LEBOWITZ, PH.D., age 60, has served as Chairman, Chief Executive
Officer and as a member of the Board of Directors of BioTransplant since
April 1991 and served as President of BioTransplant from April 1991 until
May 2001. From 1985 to 1991, he served as Vice President for Research and
Development at C.R. Bard, Inc., a medical device company, directing internal and
collaborative research and development programs for Bard's Vascular Systems,
Cardiosurgery and Cardiopulmonary Divisions. From 1981 until 1985, Dr. Lebowitz
served as Director of Long Range Research and Development at DuPont Corporation,
a diversified health care company, developing immunopharmaceuticals. From 1977
until 1981, he served as Division Manager of the Medical Products Division of
New England Nuclear Corporation, which developed, manufactured and sold
radiopharmaceuticals for in vivo diagnosis. Earlier in his career, Dr. Lebowitz
served at Brookhaven National Laboratories, a United States Department of Energy
research facility, where he developed Thallium-201, a radiopharmaceutical for
the diagnosis of coronary artery disease. Dr. Lebowitz was a founder of
Diagnostic Isotopes, Inc., a radiopharmaceutical company which was subsequently
acquired by Hoffmann-La Roche Inc., a pharmaceutical company. He was also a
founder of Procept, Inc., a biopharmaceutical company which focused on rational
drug design. He holds a B.A. from Columbia College and a Ph.D. from Columbia
University.
JAMES C. FOSTER, J.D., age 50, has served as a director of BioTransplant
since February 1992. Since 1992, he has served as President and Chief Executive
Officer of Charles River Laboratories, Inc., or CRL, a supplier of research
animals and animal-related products and services. Previously, he served in
various other capacities with CRL. Mr. Foster currently serves as a director of
CRL. Mr. Foster received his B.S. in psychology from Lake Forest College, his
J.D. from the Boston University School of Law and his M.A. in Science and
Management from the Massachusetts Institute of Technology.
DANIEL O. HAUSER, PH.D., age 63, has served as a director of BioTransplant
since January 1994. Dr. Hauser is currently retired. From 1997 to 1998, he
served as the Senior Vice President of Preclinical Development & Project
Management, Operations in the United States for Novartis AG, a pharmaceutical
corporation. From 1992 until December 1996, he served as President of Sandoz
Research Institute and as Senior Vice President of Research and Development for
Sandoz Pharmaceutical Corporation, the predecessor of Novartis. From 1965 to
1992, he served in various positions at the Pharma Division of Sandoz
Pharma Ltd. (Switzerland), including Senior Vice President from 1985 to 1992.
Dr. Hauser received his M.S. and Ph.D. in chemistry from the Swiss Federal
5
Institute of Technology (Switzerland) and was a Post-doctoral Research Fellow in
the Department of Chemistry at the Israel Institute of Technology (Haifa).
WALTER C. OGIER, age 44, has served as President, Chief Operating Officer
and as a member of the Board of Directors of BioTransplant since May 2001. From
November 1997 until May 2001, Mr. Ogier served as President and Chief Executive
Officer and as a member of the board of directors of Eligix, Inc., a private
biomedical company engaged in the research and development of cellular therapies
to enhance human immune response in cancers, autoimmune diseases and solid organ
transplantation. Eligix was acquired by BioTransplant in May 2001. From 1994 to
1997, he served as Vice President, Marketing and, initially, Director of
Marketing, at Aastrom Biosciences, Inc., a cell therapy company. From 1987 to
1994, Mr. Ogier held various management positions with Baxter Healthcare
Corporation's Immunotherapy and Fenwal divisions. He has also served from 1986
to 1987 as a financial analyst at Roger G. Ibbotson and Associates, a financial
investment consulting company, and from 1979 to 1985 as an industrial economist
and research scientist at Stanford Research Institute (SRI International), a
management consulting and contract research organization. He received his B.A.
degree in chemistry from Williams College and his M.B.A. degree from the Yale
School of Management.
ARNOLD ORONSKY, PH.D., age 60, has served as a director of BioTransplant
since May 2001. Dr. Oronsky has been affiliated with InterWest Partners since
1989, where he became a General Partner in 1995. From 1977 to 1994, he served in
positions of increasing responsibility at the Lederle Laboratories division of
American Cyanamid Company, a pharmaceutical company, most recently serving as
Vice President of Discovery Research. Dr. Oronsky has also served as a Research
Fellow and an Assistant Professor at Harvard Medical School. Dr. Oronsky
currently serves as a director of Corixa Corporation, an immunotherapeutics
development company. Dr. Oronsky holds a B.S. degree from New York University
and a Ph.D. from Columbia University's College of Physicians and Surgeons.
MICHAEL S. PERRY, D.V.M., PH.D., age 41, has served as a director of
BioTransplant since January 1999. Since October 2000, he has served as Vice
President, Global Research and Development of Baxter Healthcare Corporation, a
hospital supply and medical technology company. From 1998 until September 2000,
he served as President and Chief Executive Officer of Genetic Therapy, Inc., and
since 1997, he has served as President and Chief Executive Officer of
SyStemix, Inc. Genetic Therapy and SyStemix are biopharmaceutical corporations
which are wholly-owned by Novartis. During 1997, Dr. Perry served as Vice
President, Drug Regulatory Affairs, North America for Novartis. From 1995 to
1996, he served as Vice President, Drug Registration and Regulatory Affairs
(North America) for Sandoz Pharmaceutical Corporation, the predecessor of
Novartis. From 1994 to 1995, he served as Vice President, Drug Registration and
Regulatory Affairs (USA) for Sandoz. Dr. Perry received his Ph.D. in
pharmacology (cardiopulmonary) and his D.V.M. from the Ontario Veterinary
College, University of Guelph (Canada).
SUSAN M. RACHER, age 48, has served as a director of BioTransplant since
May 2001. Since 1998, Ms. Racher has served as Chief Financial Officer of the
Wallace H. Coulter Foundation, a charitable entity dedicated to the improvement
of healthcare through medical technology and research, and as a member of its
executive committee. From 1997 to 1998, Ms. Racher served as Director of the
Career Office at the University of Miami Graduate School of Business. From 1978
to 1997, Ms. Racher served in positions of increasing responsibility with
BankAmerica and its predecessor, Continental Bank. Most recently she served as
Senior Vice President and Manager of BankAmerica's Florida Corporate
6
Division, where she held responsibility for all commercial banking and
investment banking relationships in Florida. Ms. Racher received her B.A. degree
from Smith College and an M.B.A. in Finance and Accounting from the University
of Chicago Graduate School of Business.
BOARD AND COMMITTEE MEETINGS
AUDIT COMMITTEE. The Audit Committee consists of three directors,
Mr. Hauser, Mr. Oronsky and Ms. Racher. The Audit Committee acts under a written
charter first adopted and approved by the Company in fiscal year 2000. A copy of
the charter is attached to this proxy statement as Annex A. The Board of
Directors has examined the composition of the Audit Committee in light of the
new rules of the National Association of Securities Dealers ("NASD") governing
audit committees, and has confirmed that all current members of the Audit
Committee are "independent" within the meaning of the new rules, with the
exception of Dr. Hauser, who, until December 1998, served as the Senior Vice
President of Preclinical Development and Project Management, Operations in the
United States for Novartis Pharma AG, an entity from which BioTransplant has
received significant research and development payments for each of the past
three years. For a discussion of the relationship between Novartis and
BioTransplant see "Certain Relationships and Related Transactions." As a result
of Dr. Hauser being employed by Novartis during the past three years,
Dr. Hauser would be disqualified for membership on the Audit Committee pursuant
to Rule 4200(a)(14) of the NASD. After discussing this issue, the Board reached
the determination specified in Rule 4350(d)(2) of the NASD that, in its business
judgment, based on Dr. Hauser's business experience and his financial literacy,
Dr. Hauser's membership on the Audit Committee is in the best interests of the
Company and its stockholders and, accordingly, re-elected Dr. Hauser to the
Audit Committee. The functions and activities of the Audit Committee are
described below under the heading "Report of the Audit Committee." The Audit
Committee held one meeting in the last fiscal year. The members of the Audit
Committee in 2000 were Dr. Hauser and Donald Conklin, who is not standing for
reelection.
COMPENSATION COMMITTEE. The Company also has a standing Compensation
Committee of the Board of Directors, which makes recommendations concerning
salaries and incentive compensation for employees of, and consultants to, the
Company, establishes and approves salaries and incentive compensation for
certain senior officers and employees and administers and grants stock options
pursuant to the Company's stock option plans. The Compensation Committee held
two meetings during 2000. The members of the Compensation Committee during 2000
were Messrs. Crouse and Foster. The current members of the Compensation
Committee are Mr. Foster and Dr. Perry. See "Report of the Compensation
Committee" below.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors held 10 meetings during 2000. Each director, except
Dr. Perry and Mr. Foster, attended at least 75% of the total number of meetings
of the Board of Directors and all committees of the Board on which he served.
7
COMPENSATION OF DIRECTORS
The Company's non-employee directors who are not affiliated with Novartis
each receive $1,500, plus reasonable travel and out-of-pocket expenses, for each
meeting of the Board of Directors they attend.
The Board of Directors intends to make awards of stock options to directors
as compensation for service on the Board of Directors under BioTransplant's 1997
Stock Incentive Plan. Currently, the Board of Directors grants each director,
upon his or her initial election to the Board of Directors, an option to
purchase 15,000 shares of common stock at an exercise price equal to the then
fair market value. In addition, each director is eligible to receive an option
to purchase 6,000 shares of common stock, at an exercise price equal to the then
fair market value, upon his or her reelection to the Board of Directors at each
annual meeting of stockholders.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information with respect to the annual and long-term compensation for the last
three fiscal years for each of the Company's Named Executive Officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) COMPENSATION
--------------------------- -------- --------- -------- ------------ ------------
Elliot Lebowitz, Ph.D..................... 2000 $266,000 $40,000 64,500 $2,625
Chairman and Chief Executive Officer 1999 252,956 -- 67,098 --
1998 252,956 -- 100,000 --
James Hope, Ph.D.......................... 2000 206,000 20,000 22,000 2,625
Senior Vice President of Development 1999 195,038 5,000 23,000 --
1998 182,619 22,423 26,800 --
Julia L. Greenstein, Ph.D.(1)............. 2000 227,000 33,000 24,500 2,625
Former Senior Vice President of Research 1999 187,567 -- 16,000 --
1998 200,723 19,372 40,700 --
Mary White-Scharf, Ph.D................... 2000 168,000 20,000 26,000 2,625
Vice President of Research 1999 155,424 -- 27,000 --
1998 146,107 13,622 45,200 --
Howard Grossberg, M.D.(2)................. 2000 221,000 50,400 10,500 2,625
Former Vice President of Medical Affairs 1999 6,800 -- 50,000 --
------------------------
(1) Dr. Greenstein has resigned as Senior Vice President of Research of
BioTransplant effective January 1, 2001 to assume the position of Chief
Executive Officer of Immerge BioTherapeutics
8
AG and Immerge BioTherapeutics, Inc., the operating entities of
BioTransplant's joint venture with Novartis. Dr. Greenstein will continue to
serve as an employee of BioTransplant but will no longer have the duties or
title of an officer.
(2) Dr. Grossberg resigned from the Company in February 2001.
OPTION GRANT TABLE. The following table sets forth certain information
regarding stock options granted during the year ended December 31, 2000 by the
Company to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF STOCK
NUMBER OF GRANTED TO EXERCISE PRICE APPRECIATION FOR
SECURITIES EMPLOYEES IN OR BASE OPTION TERM(2)
UNDERLYING OPTIONS FISCAL YEAR PRICE EXPIRATION -----------------------
NAME GRANTED (#)(1) (%) ($/SH) DATE 5%($) 10%($)
---- ------------------ ------------- -------- ---------- ---------- ----------
Elliot Lebowitz, Ph.D......... 4,500 1.4% $6.94 12/20/10 $ 19,634 $ 49,758
60,000 18.6 8.89 12/4/10 335,490 850,198
James Hope, Ph.D.............. 20,000 6.2 14.25 9/11/10 179,235 454,217
2,000 0.6 6.94 12/20/10 8,727 22,115
Julia L. Greenstein, Ph.D..... 21,000 6.5 7.63 1/31/10 100,702 255,198
3,500 1.1 6.94 12/20/10 15,271 38,701
Mary White-Scharf, Ph.D....... 24,000 7.5 10.00 8/23/10 150,935 382,498
2,000 0.6 6.94 12/20/10 8,727 22,115
Howard Grossberg, M.D......... 8,000 2.5 7.00 12/26/10 35,218 89,250
2,500 0.8 6.94 12/20/10 10,908 27,643
------------------------
(1) Options granted in 2000 become exercisable in four equal annual
installments, commencing twelve months after the vesting commencement date,
which is typically the date of grant.
(2) These amounts represent hypothetical gains that could be achieved for
options if exercised at the end of the option term. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded annually
from the date of the options were granted to their expiration date. Actual
gains, if any, on stock option exercises will depend on future performance
of the common stock on the date on which options are exercised.
9
YEAR-END OPTION TABLE. The following table sets forth certain information
regarding stock options held as of December 31, 2000 by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE($) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
Elliot Lebowitz, Ph.D........... -- -- 282,138 179,928 $1,130,552 $526,119
James Hope, Ph.D................ $12,000 $145,631 84,707 61,675 349,190 162,323
Julia L. Greenstein, Ph.D....... 6,000 96,354 96,832 64,298 356,685 223,817
Mary White-Scharf, Ph.D......... 11,151 147,329 97,234 79,398 342,014 228,139
Howard Grossberg, M.D........... -- -- 12,500 48,000 35,938 125,692
------------------------
(1) The value of the unexercised in-the-money options at year end has been
calculated based on $8.69, which was the closing sales price of the
BioTransplant common stock on the Nasdaq National Market on December 29,
2000, the last trading day of BioTransplant's 2000 fiscal year, less the
applicable option exercise price.
AGREEMENTS WITH EXECUTIVE OFFICERS
Under the terms of an arrangement with Dr. Lebowitz, the Company's Chief
Executive Officer, in the event of involuntary termination of Dr. Lebowitz'
employment, he is eligible to receive a severance payment in an amount equal to
base salary from the Company until the earlier of six months after termination
or the date on which he receives other employment.
Under the terms of an agreement with Mr. Ogier, the Company's President and
Chief Operating Officer, in the event of involuntary termination of Mr. Ogier's
employment, he is eligible to receive a severance payment in an amount equal to
two times base salary from the Company until the earlier of one year after
termination or the date on which he receives other employment. The Company has
also agreed to provide Mr. Ogier with monthly mortgage assistance payments of
$584.00 until March 31, 2002.
Under the terms of an agreement with Dr. Hope, Senior Vice President of
Development, in the event of involuntary termination of employment, he is
eligible to receive a severance payment in an amount equal to six months base
salary from the Company until the earlier of six months after termination or the
date on which he receives other employment. Furthermore, if at the end of such
six month period Dr. Hope is unable to secure other employment, then Dr. Hope
and the Company have agreed to negotiate an additional severance payment of up
to six months.
Under the terms of an agreement with Dr. White-Scharf, Vice President of
Research, in the event of involuntary termination of Dr. White-Scharf's
employment, she is eligible to receive a severance payment in an amount equal to
six months base salary from the Company until the earlier of six months after
termination or the date on which she receives other employment.
10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed and representations
made to the Company by all officers of the Company who are persons required to
file reports ("Reporting Persons") pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company believes that
during fiscal 2000 all filings required to be made by its Reporting Persons were
timely made in accordance with the requirements of the Exchange Act except for
the following: Dr. Hauser received 3,000 shares of common stock on February 22,
2000 upon the exercise of stock options and sold 3,000 shares of common stock on
March 3, 2000, and the Form 5 reporting these transactions was not filed until
February 14, 2001; Dr. Hope received 6,000 shares of common stock on March 2,
2000 upon the exercise of stock options and sold 6,000 shares of common stock on
March 2, 2000, and the Form 5 reporting these transactions was not filed until
February 14, 2001; and Mr. Capasso received 5,000 shares of common stock on
March 2, 2000 upon the exercise of stock options and sold 5,000 shares of common
stock on March 2, 2000, and the Form 5 reporting these transactions was not
filed until February 14, 2001.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company makes recommendations concerning
salaries and incentive compensation for employees of and consultants to the
Company, establishes and approves salaries and incentive compensation for
certain senior officers and employees and administers and grants stock options
pursuant to the Company's stock option plans.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns.
Executive compensation consists of a combination of base salary and
stock-based incentives. The Compensation Committee considers stock incentives to
be a critical component of an executive's compensation package in order to help
align executive interests with stockholder interests.
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Compensation Committee's
executive compensation philosophy is based on the principles of competitive and
fair compensation and sustained performance.
- Competitive and Fair Compensation
The Company is committed to providing an executive compensation program that
helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Compensation Committee compares the
Company's compensation practices with those of other companies in the
industry and sets the Company's compensation guidelines based on this
review. The Compensation Committee believes compensation for the Company's
executive officers is within the range of compensation paid to executives
with comparable qualifications, experience and responsibilities in the same
or similar business and of comparable size and success. The Compensation
Committee also strives to achieve equitable relationships both among the
compensation of individual officers and between the compensation of officers
and other employees throughout the organization.
11
- Sustained Performance
Executive officers are rewarded based upon a subjective assessment of
corporate performance and individual performance. Corporate performance is
evaluated by reviewing the extent to which strategic and business plan goals
are met, including such factors as achievement of operating budgets,
establishment of strategic licensing and development alliances with third
parties, timely development of new processes and products and performance
relative to competitors. Individual performance is evaluated by reviewing
attainment of specified individual objectives and the degree to which
teamwork and Company values are fostered.
In evaluating each executive officer's performance, the Compensation
Committee generally conforms to the following process:
- Company and individual goals and objectives generally are set at the
beginning of the performance cycle.
- At the end of the performance cycle, the accomplishment of the
executive's goals and objectives and his or her contributions to the
Company are evaluated and the results are communicated to the
executive.
- The executive's performance is then compared with peers within the
Company and the comparative results, combined with comparative
compensation practices of other companies in the industry, are then
used to determine salary and stock compensation levels.
Annual compensation for the Company's executives generally consists of two
elements--salary and stock options.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual individual
performance against targeted performance and various subjective performance
criteria. Targeted performance criteria vary for each executive based on his or
her area of responsibility, and may include continued innovation in development
of the Company's technology, implementation of financing strategies and
establishment of strategic licensing and development alliances with third
parties. Subjective performance criteria include an executive's ability to
motivate others, develop the skills necessary to grow as the Company matures,
recognize and pursue new business opportunities and initiate programs to enhance
the Company's growth and success. The Compensation Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his or her contributions to the Company, including his or her
success in achieving the individual performance criteria described above. The
option program generally uses a four-year vesting period to encourage key
employees to continue in the employ of the Company. All stock options granted to
executive officers in 2000 were granted at fair market value on the date of
grant. During 2000, all current
12
executive officers received options to purchase an aggregate of 177,500 shares
of common stock, at a weighted average exercise price of $8.91 per share.
INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), generally disallows a tax
deduction to public companies for compensation over $1.0 million paid to the
corporation's Chief Executive Officer and the four other most highly compensated
executive officers. Certain compensation, including qualifying performance-based
compensation, will not be subject to the deduction limit if certain requirements
are met. In general, the Company structures and administers its stock option
plans in a manner intended to comply with the performance-based exception to
Section 162(m). Nevertheless, there can be no assurance that compensation
attributable to awards granted under the Plan will be treated as qualified
performance-based compensation under Section 162(m). In addition, the
Compensation Committee reserves the right to use its judgment to authorize
compensation payments that may be subject to the limit when the Compensation
Committee believes such payments are appropriate and in the best interests of
the Company and its stockholders, after taking into consideration changing
business conditions and the performance of its employees.
DR. LEBOWITZ' 2000 COMPENSATION. Dr. Lebowitz is eligible to participate in
the same executive compensation plans available to the other executive officers
of the Company. The Compensation Committee believes that Dr. Lebowitz' annual
compensation, including the portion of his compensation based upon the Company's
stock option program, has been set at a level competitive with other companies
in the industry.
Dr. Lebowitz' salary for 2000 increased to $266,000 from $252,956 in 1999.
Dr. Lebowitz was granted stock options to purchase an aggregate of 64,500 shares
of the Company's common stock at a weighted average exercise price of $8.75 per
share. All such options were granted to Dr. Lebowitz at an exercise price equal
to the fair market value of the Company's common stock on the date of grant. In
determining Dr. Lebowitz' 2000 compensation, the Compensation Committee
considered, among other things, the financial performance of the Company, the
Company's achievement of targeted goals for the development of the Company's
products under development, an assessment of continuing progress of the
Company's business plan, Dr. Lebowitz' overall compensation package relative to
that of other chief executives in the Company's industry and past option grants.
Compensation Committee
James C. Foster, J.D.
Michael S. Perry, D.V.M., Ph.D.
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 2000 were Messrs. Crouse
and Foster. No member of the Compensation Committee was at any time during 2000,
or formerly, an officer or employee of the Company or any subsidiary of the
Company.
For a discussion of an arrangement between the Company and Charles River
Laboratories, an entity of which Mr. Foster is President and Chief Executive
Officer, see "Certain Relationships and Related Transactions."
No executive officer of the Company has served as a director or member of
the Compensation Committee (or other committee serving an equivalent function)
of any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
REPORT OF THE AUDIT COMMITTEE
Prior to May 15, 2001, the Audit Committee was comprised of Dr. Hauser and
Mr. Conklin, who is not standing for re-election. On May 24, 2001, the Board
designated Dr. Hauser, Dr. Oronsky, and Ms. Racher to serve as the members of
the Audit Committee. See "Board and Committee Meetings--Audit Committee."
At a meeting held on March 9, 2001 (the "March 2001 Audit Committee
Meeting"), the Audit Committee reviewed the Company's audited financial
statements for the fiscal year ended December 31, 2000 and discussed these
financial statements with the Company's management. Management is responsible
for the Company's internal controls and the financial reporting process. The
Company's independent accountants are responsible for performing an independent
audit of the Company's financial statements in accordance with generally
accepted accounting principles and to issue a report on those financial
statements. The Audit Committee is responsible for monitoring and overseeing
these processes. As appropriate, the Audit Committee reviews and evaluates, and
discusses with the Company's management, internal accounting, financial and
auditing personnel and the independent auditors, the following:
- the plan for, and the independent auditors' report on, each audit of the
Company's financial statements;
- the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange Commission
or sent to shareholders;
- changes in the Company's accounting practices, principles, controls or
methodologies;
- significant developments or changes in accounting rules applicable to the
Company; and
- the adequacy of the Company's internal controls and accounting, financial
and auditing personnel.
Management represented to the Audit Committee that the Company's financial
statements had been prepared in accordance with generally accepted accounting
principles.
At the March 2001 Audit Committee Meeting, the Audit Committee also reviewed
and discussed the audited financial statements and the matters required by
Statement on Auditing Standards 61 (Communication with Audit Committees) with
Arthur Andersen LLP, the Company's independent
14
auditors. SAS 61 requires the Company's independent auditors to discuss with the
Company's Audit Committee, among other things, the following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions regarding
the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). Independence
Standards Board Standard No. 1 requires auditors annually to disclose in writing
all relationships that in the auditor's professional opinion may reasonably be
thought to bear on independence, confirm their perceived independence and engage
in a discussion of independence. In addition, the Audit Committee discussed with
the independent auditors their independence from the Company.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors at the March 2001 Audit Committee Meeting, the Audit
Committee recommended to the Company's Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.
Audit Committee
Daniel O. Hauser, Ph.D., elected on
February 15, 2000
Arnold L. Oronsky, Ph.D., elected on
May 24, 2001
Susan M. Racher, elected on May 24, 2001
INDEPENDENT AUDITOR FEES
AUDIT FEES. Arthur Andersen LLP billed the Company an aggregate of $51,500
in fees for professional services rendered in connection with the audit of the
Company's financial statements for the most recent fiscal year and the reviews
of the financial statements included in each of the Company's Quarterly Reports
on Form 10-Q during the fiscal year ended December 31, 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Arthur
Andersen LLP did not bill the Company for any professional services rendered to
the Company and its affiliates for the fiscal year ended December 31, 2000 in
connection with financial information systems design or implementation, the
operation of the Company's information system or the management of its local
area network.
ALL OTHER FEES. Arthur Anderson LLP billed the Company an aggregate of
$83,000 in fees for other services rendered to the Company and its affiliates
for the fiscal year ended December 31, 2000.
15
COMPARATIVE STOCK PERFORMANCE
The Company's common stock has been listed on the Nasdaq National Market
under the symbol "BTRN" since May 8, 1996.
The following graph compares the cumulative stockholder return on the common
stock of the Company for the period from May 8, 1996, the date of the Company's
initial public offering, through December 31, 2000 with the cumulative total
return on (i) the Total Return Index for the Nasdaq Stock Market (U.S.
Companies) (the "Nasdaq Composite Index") and (ii) the Nasdaq Pharmaceutical
Index.
This graph assumes the investment of $100 on May 8, 1996 in the Company's
common stock (at the initial public offering price), in the Nasdaq Composite
Index and in the Nasdaq Pharmaceutical Index, and assumes the reinvestment of
all dividends. Measurement points are on May 8, 1996, and the last trading day
of the years ended December 31, 1996, 1997, 1998, 1999 and 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
5/8/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
BioTransplant Incorporated 100 68 61 26 86.16 91.45
Nasdaq Composite Index 100 109 134 188 340.26 206.61
Nasdaq Pharmaceutical Index 100 91 97 125 231.99 290.76
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Perry, a director of BioTransplant, was, until October 2000, President
and Chief Executive Officer of Genetic Therapy and SyStemix, affiliates of
Novartis. From 1993 through October 2000, BioTransplant was party to two
collaboration agreements with Novartis to research, develop and commercialize
xenotransplantation products. During the collaboration, BioTransplant received
an aggregate of $33.5 million in research funding and $16.5 million in license
fees and milestone payments from Novartis. During 2000 BioTransplant received $0
from Novartis. In September 2000, the Company entered into an agreement with
Novartis to combine their respective expertise in the filed of
xenotransplantation into a newly-formed, independently-run company named Immerge
BioTherapeutics AG ("Immerge"), and the Company terminated its prior
collaborations in xenotransplantation.
Novartis has committed to provide an aggregate of $30.0 million in research
funding over three years to the joint venture. Both the Company and Novartis
have exclusively licensed to the joint venture patent rights and technology in
the field of xenotransplantation. The joint venture has granted to Novartis an
exclusive, worldwide, royalty-bearing license to develop and commercialize any
xenotransplantation products resulting from its research. The Company will
receive royalties from the sale of xenotransplantation products by Novartis, if
any.
In December 2000, Immerge formed a wholly-owned Delaware operating
subsidiary, Immerge BioTherapeutics, Inc. Effective January 1, 2001,
BioTransplant entered into a contract research agreement with the Delaware
subsidiary, under which BioTransplant has committed approximately 20 full-time
employees to perform specified research activities exclusively for Immerge and
has agreed to provide administrative services and support at agreed upon rates.
Amounts due BioTransplant under this agreement are being recorded as offsets to
the relevant BioTransplant expenses incurred.
Novartis holds 67% of the shares of the joint venture and the Company holds
the remaining 33%. All income, gain, profit or loss of the joint venture will be
allocated to the Company and Novartis pro rata based on their respective equity
ownership of the joint venture in effect in the period in which these items
accrue. Initially, the board of directors of Immerge will consist of four
directors: one selected by the Company, one selected by Novartis and two
additional directors, one each designated by the Company and Novartis, who are
experts in the field of xenotransplantation. Immerge has agreed not to
undertake, or permit its subsidiaries to undertake, specified fundamental
corporate actions without the consent of both shareholders. The joint venture
began operations in January 2001.
Mr. Foster, a director of BioTransplant, is President and Chief Executive
Officer of Charles River Laboratories. In March 1991, BioTransplant entered into
a supply agreement with Charles River Laboratories. BioTransplant amended the
agreement in 1998. Under the terms of the agreement, as amended, Charles River
Laboratories provides BioTransplant with miniature swine and miniature swine
organs for research and development purposes in exchange for payments under a
research and supply agreement. BioTransplant paid Charles River Laboratories
$988,000 under this agreement in 2000. In October 2001, BioTransplant assigned
its rights in the field of xenotransplantation under this agreement to its joint
venture with Novartis.
APPROVAL OF AMENDMENT TO 1997 STOCK INCENTIVE PLAN
The Board of Directors believes that the continued growth and potential
future profitability of the Company depends, in large part, upon the ability of
the Company to maintain a competitive position in
17
attracting and retaining qualified personnel. Currently, 239,198 shares remain
available for future awards under the 1997 Stock Incentive Plan (the "1997
Plan"). Accordingly, on April 24, 2001, the Board of Directors adopted, subject
to stockholder approval, an amendment to the 1997 Plan that increased from
1,500,000 to 3,500,000 the number of shares of common stock available for
issuance under the 1997 Plan (subject to a proportionate adjustment for certain
changes in the Company's capitalization, such as a stock split).
DESCRIPTION OF THE 1997 PLAN
The following is a brief summary of the 1997 Plan. The following summary is
qualified in its entirety by reference to the 1997 Plan.
DESCRIPTION OF AWARDS
The 1997 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code, nonstatutory stock options, restricted
stock awards and other stock-based awards, including the grant of shares based
upon certain conditions, the grant of securities convertible into common stock
and the grant of stock appreciation rights (collectively, "Awards").
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS. Optionees receive
the right to purchase a specified number of shares of common stock at some time
in the future at a specified option price and subject to such terms and
conditions as are specified in connection with the option grant. Options may be
granted at an exercise price which may be less than, equal to or greater than
the fair market value of the common stock on the date of grant. Under present
law, however, incentive stock options and options intended to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the common stock
on the date of grant (or, in the case of incentive stock options, less than 110%
of the fair market value in the case of incentive stock options granted to
optionees holding more than 10% of the voting power of the Company, its parent
or subsidiary). Options may not be granted for a term in excess of ten years.
The 1997 Plan permits the Board of Directors to determine the manner of payment
of the exercise price of options, including through payment by cash, check or in
connection with a "cashless exercise" through a broker, by surrender to the
Company of shares of common stock, by delivery to the Company of a promissory
note, or by any other lawful means.
RESTRICTED STOCK AWARDS. Restricted Stock Awards entitle recipients to
acquire shares of common stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award.
OTHER STOCK-BASED AWARDS. Under the 1997 Plan, the Board of Directors has
the right to grant other Awards having such terms and conditions as the Board of
Directors may determine, including the grant of shares based upon certain
conditions, the grant of securities convertible into common stock and the grant
of stock appreciation rights.
18
ELIGIBILITY TO RECEIVE AWARDS
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to be granted Awards under the 1997 Plan. Under
present law, however, incentive stock options may only be granted to employees.
The maximum aggregate number of shares with respect to which an Award may be
granted to any participant under the 1997 Plan may not exceed 100,000 shares
during any calendar year.
As of April 30, 2001, approximately 90 persons were eligible to receive
Awards under the 1997 Plan, including the Company's executive officers and
nonemployee directors. The granting of Awards under the 1997 Plan is
discretionary, and the Company cannot now determine the number or type of Awards
to be granted in the future to any particular person or group.
On April 30, 2001, the last reported sale price of the Company's common
stock on the Nasdaq National market was $6.05.
ADMINISTRATION
The 1997 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 1997 Plan and to interpret the provisions of the 1997
Plan. Pursuant to the terms of the 1997 Plan, the Board of Directors may
delegate authority under the 1997 Plan to one or more committees of the Board,
and subject to certain limitations, to one or more executive officers of the
Company. The Board has authorized the Compensation Committee to administer
certain aspects of the 1997 Plan, including the granting of options to executive
officers and employees of the Company. Subject to any applicable limitations
contained in the 1997 Plan, the Board of Directors, the Compensation Committee,
or any other committee to whom the Board delegates authority, as the case may
be, selects the recipients of Awards and determines (i) the number of shares of
common stock covered by options and the dates upon which such options become
exercisable, (ii) the exercise price of options, (iii) the duration of options
and (iv) the number of shares of common stock subject to any restricted stock or
other stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price.
The Board of Directors is required to make appropriate adjustments in
connection with the 1997 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of an Acquisition
Event (as defined in the 1997 Plan) any outstanding Awards shall become
immediately fully exerciseable. If any Award expires or is terminated,
surrendered, canceled or forfeited, the unused shares of common stock covered by
such Award will again be available for grant under the 1997 Plan.
AMENDMENT OR TERMINATION
No Award may be made under the 1997 Plan after April 9, 2007, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 1997 Plan, except that no outstanding
Award designated as subject to Section 162(m) of the Code by the Board of
Directors after the date of such amendment shall become exercisable, realizable
or vested (to the extent such amendment was required to grant such Award) unless
and until such amendment shall have been approved by the Company's stockholders.
19
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
1997 Plan and with respect to the sale of common stock acquired under the 1997
Plan. This summary is based on the federal tax laws in effect on the date of
this proxy statement. Changes to these laws could alter the tax consequences
described below.
INCENTIVE STOCK OPTIONS. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of common stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from the
Exercise Date (a "Disqualifying Disposition"), then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the common stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO Stock
for more than one year prior to the date of the sale.
RESTRICTED STOCK AWARDS. A participant will not recognize taxable income
upon the grant of a restricted stock Award, unless the participant makes a valid
election under Section 83(b) of the Code
20
(a "Section 83(b) Election"). If the participant makes a valid Section 83(b)
Election within 30 days of the date of the grant, then the participant will
recognize ordinary compensation income, for the year in which the Award is
granted, in an amount equal to the difference between the fair market value of
the common stock at the time the Award is granted and the purchase price paid
for the common stock. If a valid Section 83(b) Election is not made, then the
participant will recognize ordinary compensation income, at the time that the
forfeiture provisions or restrictions on transfer lapse, in an amount equal to
the difference between the fair market value of the common stock at the time of
such lapse and the original purchase price paid for the common stock. The
participant will have a tax basis in the common stock acquired equal to the sum
of the price paid and the amount of ordinary compensation income recognized.
Upon the disposition of the common stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the common stock and the participant's tax
basis in the common stock. This capital gain or loss will be a long-term capital
gain or loss if the shares are held for more than one year.
OTHER STOCK-BASED AWARDS. The tax consequences associated with any other
stock-based Award granted under the 1997 Plan will vary depending on the
specific terms of such Award. Among the relevant factors are, whether or not the
Award has a readily ascertainable fair market value, whether or not the Award is
subject to forfeiture provisions or restrictions on transfer, the nature of the
property to be received by the participant under the Award and the participant's
holding period and tax basis for the Award or underlying common stock.
TAX CONSEQUENCES TO THE COMPANY. The grant of an Award under the 1997 Plan
generally will have no tax consequences to the Company. Moreover, in general,
neither the exercise of an incentive stock option nor the sale of any common
stock acquired under the 1997 Plan will have any tax consequences to the
Company. The Company generally will be entitled to a business-expense deduction,
however, with respect to any ordinary compensation income recognized by a
participant under the 1997 Plan, including in connection with a restricted stock
Award or as a result of the exercise of a nonstatutory stock option or a
Disqualifying Disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE AMENDMENT TO THE 1997
PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
21
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen LLP as the Company's independent
accountants for the current fiscal year. Arthur Andersen LLP has served as the
Company's independent accountants since inception. Although stockholder approval
of the Board of Directors' selection of Arthur Andersen LLP is not required by
law, the Board of Directors believes that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors will reconsider its selection of Arthur
Andersen LLP. Representatives of Arthur Andersen LLP are expected to be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. The
Company's directors, officers and regular employees, without additional
remuneration, may solicit proxies by mail, telephone, facsimile and personal
interviews. In addition, the Company has retained Innisfree M&A Incorporated to
solicit proxies by mail, telephone and facsimile and to request brokers,
custodians and fiduciaries to forward proxy soliciting material to the owners of
stock held in their names. For these services the Company will pay a fee of
approximately $10,000. The Company will reimburse brokers, custodians and
fiduciaries for their reasonable out of pocket expenses incurred in connection
with the distribution of proxy materials.
Subject to the terms and conditions set forth herein, all proxies received
by the Company will be effective, notwithstanding any transfer of the shares to
which such proxies relate, unless at or prior to the Annual Meeting the Company
receives a written notice of revocation signed by the person who, as of the
record date, was the registered holder of such shares. The Notice of Revocation
must indicate the certificate number and number of the shares to which such
revocation relates and the aggregate number of shares represented by such
certificate(s).
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
In order to be included on the proxy card and included in the proxy
statement for the 2002 Annual Meeting of Stockholders, pursuant to Rule 14a-8
under the Exchange Act, stockholder proposals must be received by the Company at
its offices, Building 75, Third Avenue, Charlestown Navy Yard, Charlestown,
Massachusetts 02129 on or before February 5, 2002. The Company suggests that any
stockholders wishing to include a proposal in such materials submit their
proposals by certified mail, return receipt requested, addressed to the
Secretary of the Company.
22
If a stockholder of the Company wishes to present a proposal before the 2002
annual meeting of stockholders, pursuant to Rule 14a-4 under the Exchange Act,
such stockholder must give written notice to the Secretary of the Company at the
address noted above. The required notice must be given within a prescribed time
frame, which is generally calculated by reference to the date of the most recent
annual meeting. To be timely, generally a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the Company not
less than 60 days nor more than 90 days prior to the 2002 annual meeting.
However, if the Company gives notice of the annual meeting, or prior public
disclosure of the annual meeting is made, less than 70 days' from the date of
the annual meeting, to be timely, notice by the stockholder must be received not
later than the close of business on the 10th day following the date that notice
of the meeting was mailed or public disclosure of the meeting was made,
whichever occurs first. If a stockholder fails to provide timely notice of a
proposal to be presented at the 2002 Annual Meeting of Stockholders, the proxies
designated by the Board of Directors of the Company will have discretionary
authority to vote on any such proposal.
By Order of the Board of Directors,
STEVEN D. SINGER
SECRETARY
June 5, 2001
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING AND YOUR COOPERATION WILL
BE APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
23
APPENDIX A
BIOTRANSPLANT INCORPORATED
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall be composed of directors who are
independent of the management of BioTransplant Incorporated ("BioTransplant" or
"the Company") and are free of any relationship that, in the opinion of the
Board of Directors, would interfere with their exercise of independent judgment
as a Committee member.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors and the financial management of the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Company and its
subsidiaries.
- Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized, and at the conclusion thereof review such
audit, including any comments or recommendations of the independent
auditors.
- Review with the independent auditors the Company's financial and
accounting personnel, the adequacy and effectiveness of the accounting and
financial controls of the Company, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of such internal controls to
expose any payments, transactions or procedures that might be deemed
illegal or otherwise improper. Further, the Audit Committee periodically
should review company policy statements to determine their adherence to
the Code of Conduct.
A-1
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed.
- Provide sufficient opportunity for the independent auditors to meet with
the members of the Audit Committee without members of management present.
Among items to be discussed in these meetings are the independent
auditors' evaluation of the Company's financial and accounting personnel,
and the cooperation that the independent auditors received during the
course of the audit.
- Review accounting and financial human resources and succession planning
within the Company.
- Submit all minutes of meetings of the Audit Committee to, or discuss the
matters discussed at each meeting with, the Board of Directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
A-2
Appendix B
AMENDMENT NO. 2 TO
1997 STOCK INCENTIVE PLAN
OF
BIOTRANSPLANT INCORPORATED
The 1997 Stock Incentive Plan, as amended (the "Plan") of BioTransplant
Incorporated be, and hereby by is, amended as follows:
1. Section 4, paragraph (a) is deleted in its entirety and the following is
substituted in its place:
"(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 3,500,000 shares of common stock. If any
Award expires or is terminated, surrendered or cancelled without having been
fully exercised or is forfeited in whole or in part or results in any common
stock not being issued, the unused common stock covered by such Award shall
again be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares."
Adopted by the Board of Directors on April 24, 2001
B-1
BIOTRANSPLANT INCORPORATED
1997 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1997 Stock Incentive Plan (the "Plan") of BioTransplant
Incorporated, a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any present or future subsidiary corporations of BioTransplant Incorporated as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the common
stock, $0.01 par value per share, of the Company (the "common stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee
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director" as defined in Rule 16b-3 promulgated under the Exchange Act." All
references in the Plan to the "Board" shall mean the Board or a Committee of the
Board or the executive officer referred to in Section 3(b) to the extent that
the Board's powers or authority under the Plan have been delegated to such
Committee or executive officer.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards may
be made under the Plan for up to 750,000 shares of common stock. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any common stock not
being issued, the unused common stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c), for
Awards granted after the common stock is registered under the Exchange Act, the
maximum number of shares with respect to which an Award may be granted to any
Participant under the Plan shall be 100,000 per calendar year. The
Per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
(c) ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of common stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 4(c) applies and Section 8(e)(1)
also applies to any event, Section 8(e)(1) shall be applicable to such event,
and this Section 4(c) shall not be applicable.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase common stock (each,
an "Option") and determine the number of shares of common stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any
B-3
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) EXERCISE OF OPTION. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.
(f) PAYMENT UPON EXERCISE. common stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may otherwise provide in an Option Agreement,
delivery of an irrevocable and unconditional undertaking by a credit worthy
broker to deliver promptly to the Company sufficient funds to pay the
exercise price, or delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a credit worthy broker to
deliver promptly to the Company cash or a check sufficient to pay the
exercise price;
(3) to the extent permitted by the Board and explicitly provided in an
Option Agreement (i) by delivery of shares of common stock owned by the
Participant valued at their fair market value as determined by the Board in
good faith ("Fair Market Value"), which common stock was owned by the
Participant at least six months prior to such delivery, (ii) by delivery of
a promissory note of the Participant to the Company on terms determined by
the Board, or (iii) by payment of such other lawful consideration as the
Board may determine; or
(4) any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of common stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise
B-4
rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the common
stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into common stock and the grant of stock appreciation rights.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each type
of Award may be made alone or in addition or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board need
not treat Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) ACQUISITION EVENTS
(1) CONSEQUENCES OF ACQUISITION EVENTS. Except to the extent otherwise
provided in the instrument evidencing the Award or in any other agreement
between the Participant and the Company, upon the occurrence of an
Acquisition Event or with respect to Options or any other similar Awards
only, upon the execution by the Company of any agreement with respect to an
Acquisition Event, (i) the Board shall provide written notice to the
Participants that all Options then outstanding shall become immediately
exercisable in full as of a specified date (the "Acceleration Date") prior
to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by
the Participants between the Acceleration Date and the consummation of such
Acquisition Event; (ii) all Restricted Stock then outstanding shall become
immediately free of all restrictions; (iii) all other stock-based Awards all
become immediately exercisable, realizable or vested in full, or shall be
immediately free of all restrictions or conditions, as the case may be.
B-5
(2) An "Acquisition Event" shall mean (a) any merger or consolidation
which results in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; (b) any sale of all or
substantially all of the assets of the Company; (c) the complete liquidation
of the Company; or (d) the acquisition of "beneficial ownership" (as defined
in Rule 13-d-3 under the Exchange Act) of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities (other than through a merger or consolidation or an
acquisition of securities directly from the Company) by any "person", as
such term is used in Sections 13(d) and 14(d) of the Exchange Act other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of the stock of the Company.
(3) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may grant
Awards under the Plan in substitution for stock and stock-based awards held
by employees of another corporation who become employees of the Company as a
result of a merger or consolidation of the employing corporation with the
Company or the acquisition by the Company of property or stock of the
employing corporation. The substitute Awards shall be granted on such terms
and conditions as the Board considers appropriate in the circumstances.
(f) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of common stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(h) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of common stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
B-6
(i) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of common stock to be distributed with
respect to an Award until becoming the record holder of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant designated as subject to Section 162(m) by the Board shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders. No Awards shall be
granted under the Plan after the completion of ten years from the earlier of
(i) the date on which the Plan was adopted by the Board or (ii) the date the
Plan was approved by the Company's stockholders, but Awards previously granted
may extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.
(e) STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder approval
shall mean approval by a vote of the stockholders in accordance with the
requirements of Section 162(m) of the Code.
(f) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
B-7
AMENDMENT NO. 1 TO
1997 STOCK INCENTIVE PLAN
OF
BIOTRANSPLANT INCORPORATED
The 1997 Stock Incentive Plan, as amended (the "Plan") of BioTransplant
Incorporated be, and hereby by is, amended as follows:
1. Section 4, paragraph (a) is deleted in its entirety and the following is
substituted in its place:
"(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 1,500,000 shares of common stock. If any
Award expires or is terminated, surrendered or cancelled without having been
fully exercised or is forfeited in whole or in part or results in any common
stock not being issued, the unused common stock covered by such Award shall
again be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares."
Adopted by the Board of Directors on February 11, 1999
Adopted by the Stockholders on May 24, 1999
B-8
APPENDIX C
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BIOTRANSPLANT INCORPORATED
JULY 9, 2001
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election Of Directors
/ / For all nominees listed at / / WITHOLD AUTHORITY for all NOMINEES: Elliot Lebowitz, Ph.D.
right (except as marked to the nominees listed at right James C. Foster, J.D.
contrary) Daniel O. Hauser, Ph.D.
Walter C. Ogier
Arnold Oronsky, Ph.D.
Michael S. Perry, D.V.M., Ph.D.
Susan M. Racher
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL
NOMINEE(S), MARK THE BOX LABELED "FOR" AND STRIKE A LINE
THROUGH SUCH NOMINEE(S) NAME IN THE LIST AT RIGHT. YOUR
SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. To approve an amendment to the Company's 1997 Stock FOR AGAINST ABSTAIN
Incentive Plan increasing from 1,500,000 to 3,500,000 the
number of shares of common stock reserved for issuance under
the plan.
/ / / / / /
3. To ratify the selection of Arthur Anderson LLP as the
Company's independent accountants for 2001.
/ / / / / /
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
/ / / / / /
PLEASE READ THE REVERSE SIDE OF THIS CARD
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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Signature: Signature:
Date: Date:
NOTE: Please sign this proxy exactly as your name appears hereon. Joint owners
should each sign personally. Trustees and fiduciaries should indicate the
capacity in which they sign. If a corporation or partnership, this signature
should be that of an authorized officer who should state his or her title.