-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F4ZJc0rvAppv07aowRJz1k9bXFMyLSiHkStQjIwBEzxiwRIwfhxRZKvOOF1uHRKM QX6I8o8oL64+FeJU+TH7/A== 0000876343-97-000007.txt : 19970425 0000876343-97-000007.hdr.sgml : 19970425 ACCESSION NUMBER: 0000876343-97-000007 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19970424 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOTIME INC CENTRAL INDEX KEY: 0000876343 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 943127919 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12830 FILM NUMBER: 97586684 BUSINESS ADDRESS: STREET 1: 935 PARDEE ST CITY: BERKELEY STATE: CA ZIP: 94710 BUSINESS PHONE: 5108459535 MAIL ADDRESS: STREET 1: 935 PARDEE STREET CITY: BERKELEY STATE: CA ZIP: 94710 DEF 14A 1 DEFINITIVE PROXY STATEMENT [BIOTIME LETTERHEAD] April 23, 1997 Dear Shareholder: You are cordially invited to attend the 1996 Annual Meeting of Shareholders of BioTime, Inc. which will be held on Friday, May 23, 1997 at 10:00 a.m. at the Ritz-Carlton Hotel, 600 Stockton Street, San Francisco, California. The Notice and Proxy Statement on the following pages contain details concerning the business to come before the Meeting. Management will report on current operations and there will be an opportunity for discussion concerning the Company and its activities. Please sign and return your proxy card in the enclosed envelope to ensure that your shares will be represented and voted at the meeting even if you cannot attend. You are urged to sign and return the enclosed proxy card even if you plan to attend the meeting. I look forward to personally meeting all shareholders who are able to attend. Paul Segall, Ph. D. President and Chief Executive Officer NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held May 23, 1997 NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of BioTime, Inc. (the "Company") will be held at the Ritz-Carlton Hotel, 600 Stockton Street, San Francisco, California, on May 23, 1997 at 10:00 a.m. for the following purposes: 1. To elect seven (7) directors of the Company to hold office until the next Annual Meeting of Shareholders and until their respective successors are duly elected and qualified; 2. To amend the Company's 1992 Employee Stock Option Plan by increasing the number of shares available under the Plan. 3. To amend the Company's Articles of Incorporation to increase the number of authorized common shares, no par value, available for issuance in the future. 4. To ratify the appointment of Deloitte & Touche LLP as the independent accountants of the Company for the fiscal year ending June 30, 1997; and 5. To transact such other business as may properly come before the meeting or any adjournments of the meeting. The Board of Directors has fixed the close of business on Wednesday, April 16, 1997, as the record date for determining shareholders entitled to receive notice of and to vote at the Annual Meeting or any postponement or adjournment thereof. Whether or not you expect to attend the meeting in person, you are urged to sign and date the enclosed form of proxy and return it promptly so that your shares of stock may be represented and voted at the meeting. If you should be present at the meeting, your proxy will be returned to you if you so request. By Order of the Board of Directors, Judith Segall Vice President and Secretary Berkeley, California April 23, 1997 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS To Be Held on May 23, 1997 The accompanying proxy is solicited by the Board of Directors of BioTime, Inc., a California corporation (the "Company" or "BioTime") having its principal offices at 935 Pardee Street, Berkeley, California 94710, for use at the Annual Meeting of Shareholders of the Company (the "Meeting") to be held at 10:00 a.m. on Friday, May 23, 1997 at the Ritz-Carlton Hotel, 600 Stockton Street, San Francisco, California. Properly executed proxies in the accompanying form that are received at or before the Meeting will be voted in accordance with the directions noted on the proxies. If no direction is indicated, such shares will be voted FOR (i) each nominee for election as director, (ii) amending the Company's 1992 Employee Stock Option Plan to increase the number of shares available under the Plan, (iii) amending the Company's Articles of Incorporation to increase the number of authorized common shares, no par value, and (iv) approval of the appointment of Deloitte & Touche LLP as independent accountants for the Company for the fiscal year ending June 30, 1997. The enclosed proxy confers discretionary authority to vote with respect to any and all of the following matters that may come before the Meeting: (1) matters that the Company's Board of Directors does not know a reasonable time before the Meeting are to be presented at the Meeting; and (2) matters incidental to the conduct of the Meeting. Management does not intend to present any business for a vote at the Meeting other than the matters set forth in the accompanying Notice of Annual Meeting of Shareholders, and as of the date of this Proxy Statement, no shareholder has notified the Company of any other business that may properly come before the Meeting. If other matters requiring the vote of the shareholders properly come before the Meeting, then it is the intention of the persons named in the attached form of proxy to vote the proxy held by them in accordance with their judgment on such matters. Only shareholders of record at the close of business on April 16, 1997 are entitled to notice of and to vote at the Meeting. On that date, there were 3,203,193 of the Company's Common Shares issued and outstanding, which constitutes the only class of voting securities of the Company outstanding. Each of the Company's Common Shares is entitled to one vote in the election of directors and in all other matters that may be acted upon at the Meeting, except that shareholders may elect to cumulate votes in the election of directors. Under cumulative voting, each shareholder may give one candidate or may distribute among two or more candidates, a number of votes equal to the number of directors to be elected multiplied by the number of Common Shares owned. Shareholders may not cumulate votes unless at least one shareholder gives notice of his or her intention to cumulate votes at the Meeting. The enclosed proxy confers discretionary authority to cumulate votes. Any shareholder giving a proxy has the power to revoke that proxy at any time before it is voted. A proxy may be revoked by filing with the Secretary of the Company either a written 1 revocation or a duly executed proxy bearing a date subsequent to the date of the proxy being revoked, or by voting in person at the meeting. Any shareholder may attend the Meeting and vote in person, whether or not such shareholder has previously submitted a proxy, but attendance at the Meeting will not revoke a proxy unless the shareholder votes in person. The Company will bear all of the costs of the solicitation of proxies for use at the Meeting. In addition to the use of the mails, proxies may be solicited by a personal interview, telephone and telegram by directors, officers and employees of the Company, who will undertake such activities without additional compensation. Banks, brokerage houses and other institutions, nominees or fiduciaries will be requested to forward the proxy materials to the beneficial owners of the Common Shares held of record by such persons and entities and will be reimbursed for their reasonable expense incurred in connection with forwarding such material. This Proxy Statement and the accompanying form of proxy are first being sent or given to the Company's shareholders on or about April 23, 1997. ELECTION OF DIRECTORS At the Meeting, seven directors will be elected to hold office for a one-year term until the 1997 Annual Meeting of Shareholders, and until their successors have been duly elected and qualified. All of the nominees named below are incumbent directors. Since the last Annual Meeting of Shareholders, Lawrence Cohen retired from the Board of Directors. The Board would like to extend its thanks to Mr. Cohen for his years of dedicated, hard work. Jeffrey B. Nickel has been appointed to the Board of Directors to fill the vacancy created by the retirement of Mr. Cohen. Dr. Nickel has served as a product development and marketing consultant to the Company for more than two years and will bring to the Board nearly 25 years of experience in the pharmaceutical industry. It is the intention of the persons named in the enclosed proxy, unless such proxy specifies otherwise, to vote the shares represented by such proxy FOR the election of the nominees listed below. In the unlikely event that any nominee should be unable to serve as a director, proxies may be voted in favor of a substitute nominee designated by the Board of Directors. Directors and Nominees Paul Segall, Ph.D., 54, is Chairman, President and Chief Executive Officer of BioTime and has served as a director of the Company since 1990. He was a research scientist for Cryomedical Sciences, Inc. ("CMSI") and a member of its Board of Directors from 1987 to December 1990, serving as Director of Research and Vice President of Research for CMSI, from 2 April 1988 until 1989. Dr. Segall received a Ph.D. in Physiology from the University of California at Berkeley in 1977. Ronald S. Barkin, 51, has been Executive Vice President of BioTime since April 1997, and has been a director of the Company since 1990. Mr. Barkin is an attorney who has practiced civil and corporate law and has been a negotiator for over 25 years and is an active member of the California Bar. Mr. Barkin has most recently concluded negotiatinos with Abbott Laboratories on behalf of BioTime. Mr. Barkin received a Juris Doctorate from Boalt Hall, University of California at Berkeley in 1970. Victoria Bellport, 31, is Chief Financial Officer and Executive Vice President of BioTime and has been a director of the Company since 1990. Ms. Bellport received a B.A. in Biochemistry from the University of California at Berkeley in 1988. Hal Sternberg, Ph.D., 43, is Vice President of Research of BioTime and has been a director of the Company since 1990. He was a research scientist for CMSI from 1987 to December 1990, serving as Vice President of Biochemistry for CMSI from November 1987 to 1989. Dr. Sternberg was a visiting scientist and research Associate at the University of California at Berkeley from 1985-1988, where he supervised a team of researchers studying Alzheimer's Disease. Dr. Sternberg received his Ph.D. from the University of Maryland in Biochemistry in 1982. Harold Waitz, Ph.D., 54, is Vice President of Engineering of BioTime and has been a director of the Company since 1990. He was a research scientist for CMSI from 1987 to December 1990, serving as Vice President of Technology for CMSI from November 1987 to 1989. From 1986-1988, Dr. Waitz served as Vice President of Research at the Winters Institute, a non-profit biomedical research institution, at which Dr. Waitz studied arteriosclerosis in primates. He received his Ph.D. in Biophysics and Medical Physics from the University of California at Berkeley in 1983. Judith Segall, 42, has been Vice President of Technology and Secretary of BioTime since 1990 and was a director of the Company from 1990 through 1994, and from 1995 through the present date. She performed services on a contract basis as a biochemist for CMSI during 1989, until the formation of BioTime. Ms. Segall received a B.S. in Nutrition and Clinical Dietetics from the University of California at Berkeley in 1989. Jeffrey B. Nickel, Ph.D., 53, is President of Nickel Consulting through which he has served as a consultant to companies in the pharmaceutical and biotechnology industries since 1990. Prior to starting his consulting business, Dr. Nickel served in a number of management positions for Syntex Corporation and Merck & Company. Dr. Nickel received his Ph.D. in Organic Chemistry from Rutgers University in 1970. 3 Executive Officers Paul Segall, Ronald S. Barkin, Victoria Bellport, Hal Sternberg, Harold Waitz and Judith Segall are the only executive officers of BioTime. There are no family relationships among the directors or officers of the Company, except that Paul Segall and Judith Segall are husband and wife. Directors' Meetings, Compensation and Committees of the Board The Board of Directors does not have a standing Audit Committee, Compensation Committee, or Nominating Committee. Nominees to the Board of Directors are selected by the entire Board. The Board of Directors has a Stock Option Committee that administers the Company's 1992 Stock Option Plan and makes grants of options to key employees, consultants, scientific advisory board members and independent contractors of the Company, but not to officers or directors of the Company. The members of the Stock Option Committee are Paul Segall, Ronald S. Barkin, and Victoria Bellport. The Stock Option Committee was formed during September 1992. During the fiscal year ended June 30, 1996, the Board of Directors met three times. No director attended fewer than 75% of the meetings of the Board or any committee on which they served. Directors of the Company who are not employees receive an annual fee of $20,000. Directors of the Company and members of committees of the Board of Directors who are employees of the Company are not compensated for serving as directors or attending meetings of the Board or committees of the Board. Directors are entitled to reimbursements for their out-of-pocket expenses incurred in attending meetings of the Board or committees of the Board. Directors who are employees of the Company are also entitled to receive compensation in such capacity. Executive Compensation None of the Company's executive officers received compensation from the Company in excess of $100,000 during the fiscal year ended June 30, 1996. The Company has entered into a new five-year employment agreement (the "Employment Agreement") with Paul Segall, the President and Chief Executive Officer of the Company. The Employment Agreement will expire on December 31, 2000 but may terminate prior to the end of the term if Dr. Segall (1) dies, (2) leaves the Company, (3) becomes disabled for a period of 90 days in any 150 day period, or (4) is discharged by the Board of Directors for failure to carry out the reasonable policies of the Board, persistent absenteeism, or a material breach of a covenant. Under his Employment 4 Agreement, Dr. Segall is presently receiving an annual salary of $85,000. Dr. Segall will receive a one-time cash bonus of $25,000 if the Company receives at least $1,000,000 of equity financing from a pharmaceutical company. Dr. Segall will be entitled to seek a modification of his Employment Agreement before the expiration of the five year term if the market value of the Company's outstanding capital stock exceeds $75,000,000. In the event of Dr. Segall's death during the term of his Employment Agreement, the Company will pay his estate his salary for a period of six month or until December 31, 2000, whichever first occurs. In the event that Dr. Segall's employment terminates, voluntarily or involuntarily, after a change in control of the Company through an acquisition of voting stock, an acquisition of the Company's assets, or a merger or consolidation of the Company with another corporation or entity, Dr. Segall will be entitled to severance compensation equal to the greater of (a) 2.99 times his average annual compensation for the preceding five years and (b) the balance of his base salary for the unexpired portion of the term of his Employment Agreement. The Board of Directors has also approved employment agreements that contain the same or similar change of control severance benefits for the other executive officers of the Company. Dr. Segall has also executed an Intellectual Property Agreement which provides that the Company is the owner of all inventions developed by Dr. Segall during the course of his employment. The following table summarizes certain information concerning the compensation paid to Dr. Segall during the last three fiscal years. SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Name ------------------- Compensation and Principal ------------- Position Year Salary($) Bonus Stock Options - --------------- ---- --------- ----- ------------- Paul Segall 1996 $76,041 Chief Executive 1995 $67,500 Officer 1994 $63,796 $25,000
5 Stock Option Plan During 1992, the Company adopted the 1992 Stock Option Plan and granted to Paul Segall options to purchase 21,000 Common Shares at $9.22 per share. The options granted to Dr. Segall will expire five years after the date of grant, and will become exercisable in three equal annual installments. No options were granted to any of the Company's executive officers during the last fiscal year. The following table provides information with respect to Dr. Segall concerning the exercise of options during the last fiscal year and unexercised options held as of June 30, 1996. Aggregated Options Exercised in Last Fiscal Year, and Fiscal Year-End Option Values
Number of Number of Value of Unexercised Shares Unexercised Options at In-the-Money Options at Acquired Value June 30, 1996 June 30, 1996(1) on Realized --------------------------- --------------------------- Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable - ---- ---------- ----- ----------- ------------- ----------- ------------- Paul Segall 0 -- 21,000 0 $239,610 0 (1) Based on the average of the high and low bid prices of a Common Share ($20.63) as reported on the Nasdaq Small Cap Market System on such date.
Certain Relationships and Related Transactions During the twelve months ended June 30, 1996, $19,940 in fees for consulting services was paid to Ronald S. Barkin, and $36,000 in fees for consulting services was paid to Dr. Jeffrey B. Nickel, members of the Board of Directors. 6 PRINCIPAL SHAREHOLDERS The following table sets forth information as of April 7, 1997 concerning beneficial ownership of Common Shares by each shareholder known by the Company to be the beneficial owner of 5% or more of the Company's Common Shares, and the Company's executive officers and directors. Information concerning certain beneficial owners of more than 5% of the Common Shares is based upon information disclosed by such owners in their reports on Schedule 13D. Number of Percent of Shares Total --------- ---------- Alfred D. Kingsley (1) 362,750 11.1% Gary K. Duberstein Greenbelt Corp. Greenway Partners, L.P. Greenhouse Partners, L.P. 277 Park Avenue, 27th Floor New York, New York 10017 WisdomTree Associates, L.P. (2) 259,200 8.1 WisdomTree Capital Management, Inc. 1633 Broadway, 38th Floor New York, New York 10019 WisdomTree Offshore, Ltd. (2) Zephyr House, 5th Floor P.O. Box 1561 Mary Street Grand Cayman, Cayman Islands British West Indies Paul and Judith Segall (3) 236,638 7.3 Harold D. Waitz (4) 167,069 5.2 Hal Sternberg (5) 158,379 4.9 Victoria Bellport 65,389 2.0 Ronald S. Barkin (6) 63,337 2.0 Jeffrey B. Nickel -- -- 7 All officers and directors as a group (7 persons)(7) 690,812 20.9 - --------------------------- (1) Includes 250,000 Common Shares issuable upon the exercise of certain warrants owned beneficially by Greenbelt Corp. Mr. Kingsley and Mr. Duberstein may be deemed to beneficially own the warrant shares that Greenbelt Corp. beneficially owns. Includes 27,500 Common Shares owned by Greenway Partners, L.P. Greenhouse Partners, L.P. is the general partner of Greenway Partners, L.P. and Mr. Kingsley and Mr. Duberstein are the general partners of Greenhouse Partners, L.P. Greenhouse Partners, L.P., Mr. Kingsley and Mr. Duberstein may be deemed to beneficially own the Common Shares that Greenway Partners, L.P. beneficially owns. Includes 81,950 Common Shares owned solely by Mr. Kingsley, as to which Mr. Duberstein disclaims beneficial ownership. Includes 3,300 Common Shares owned solely by Mr. Duberstein, as to which Mr. Kingsley disclaims beneficial ownership. (2) Includes 229,200 Common Shares owned by WisdomTree Associates, L.P. and 30,000 Common Shares owned by WisdomTree Offshore, Ltd. WisdomTree Capital Management, Inc. is the general partner of WisdomTree Associates, L.P. and is the investment manager of WisdomTree Offshore, Ltd. (3) Includes 151,559 shares held of record by Paul Segall and 64,179 shares held of record by Judith Segall. Includes 21,000 Common Shares issuable upon the exercise of certain options. (4) Includes 21,000 Common Shares issuable upon the exercise of certain options. (5) Includes 21,000 Common Shares issuable upon the exercise of certain options. (6) Includes 45,000 Common Shares issuable upon the exercise of certain options. (7) Includes 108,000 Common Shares issuable upon the exercise of certain options. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's directors and executive officers and persons who own more than ten percent (10%) of a registered class of the Company's equity securities to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Shares and other equity securities of the Company. Officers, directors and greater than ten percent beneficial owners are required by SEC regulation to furnish the Company with copies of all reports they file under Section 16(a). To the Company's knowledge, based solely on its review of the copies of such reports furnished 8 to the Company and written representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with during the fiscal year ended June 30, 1996. AMENDMENT OF THE 1992 STOCK OPTION PLAN The Board of Directors proposes and recommends that the shareholders approve an amendment to the Company's 1992 Stock Option Plan (the "Plan") which will make an additional 200,000 Common Shares available for issuance upon the exercise of options that may be granted under the Plan. The Plan currently makes available a total of 400,000 Common Shares for which options may be granted. As of April 7, 1997, the Company had granted options to purchase 348,000 of the Common Shares available under the Plan, of which 103,000 have been exercised and 245,000 remain outstanding. The Board of Directors has no present plan or commitment to grant any additional options to the present executive officers of the Company, but the Board strongly believes that the Company's ability to attract and retain the services of new employees and consultants depends in great measure upon its ability to provide the kind of incentives that are derived from the ownership of stock options. The Board believes that unless the proposed amendment to the Plan is approved by the shareholders, the Company will be placed at a serious competitive disadvantage in attracting capable employees and consultants at a critical time in its development. At April 7, 1997, the total market value of the 297,000 Common Shares reserved for issuance under the Plan was approximately $9,207,000, based upon the last sale price on such date on the Nasdaq Small Cap Market. That total market value would increase to approximately $15,407,000 as of April 7, 1997 if the shareholders approve the proposed amendment reserving an additional 200,000 Common Shares. The Plan is administered by the Board of Directors which determines which officers, directors, employees, consultants, scientific advisory board members and independent contractors of the Company are to be granted options, the number of shares subject to the options granted, the exercise price of the options, and certain other terms and conditions of the options. The Stock Option Committee (the "Committee") of the Board may grant options under the Plan to eligible persons other than officers and directors of the Company. The options exercise price may be payable in cash or in Common Shares having a fair market value equal to the exercise price, or in a combination of cash and Common Shares. No options may be granted under the Plan more than ten years after the date the Plan was adopted by the Board of Directors, and no options granted under the Plan may be exercised after the expiration of ten years from the date of grant. Options granted under the Plan may be either "incentive stock options" within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified stock 9 options. Incentive stock options may be granted only to employees of the Company or its subsidiaries. The exercise price of incentive stock options granted under the Plan must be equal to the fair market of the Company's Common Shares on the date the option is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of stock of the Company, the exercise price of any incentive stock option must be at least 110% of the fair market value of the Common Shares on the grant date, and the term of the option may be no longer than five years. The aggregate fair market value of the Common Shares (determined as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an optionee in any calendar year may not exceed $100,000. Options granted under the Plan are nontransferable (except by will or the laws of descent and distribution) and may vest in annual installments or upon the occurrence of certain events. Incentive stock options may be exercised only during employment or within three months after termination of such employment, subject to certain exceptions in the event of the death or disability of the optionee. The number of Common Shares covered by the Plan, and the number of Common Shares and exercise price per share of each outstanding option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding Common Shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of issued and outstanding Common Shares effected without receipt of consideration by the Company. In the event of the dissolution or liquidation of the Company, or in the event of a reorganization, merger or consolidation of the Company as a result of which the Common Shares are changed into or exchanged for cash or property or securities not of the Company's issue, or upon a sale of substantially all the property of the Company to, or the acquisition of stock representing more than eighty percent 80% of the voting power of the stock of the Company then outstanding by, another corporation or person, the Plan and all options granted under the Plan shall terminate, unless provision can be made in writing in connection with such transaction for either the continuance of the Plan and/or for the assumption of options granted under the Plan, or the substitution for such options by options covering the stock of a successor corporation, or a parent or a subsidiary of a successor corporation, with appropriate adjustments as to the number and kind of shares and prices. The approval of the amendment of the Plan requires the affirmative vote of the holders of a majority of the Common Shares present and voting at the Meeting. The Board of Directors Recommends A Vote "FOR" the Approval of the Amendment to the Plan 10 Federal Income Tax Consequence of Participation in the Plan The following discussion summarizes certain federal income tax consequences of participation in the Plan. Although the Company believes the following statements are correct based on existing provisions of the Code and the regulations thereunder, the Code or regulations may be amended from time to time, and future judicial interpretations may effect the veracity of the discussion. Under Section 422(a) of the Code, the grant and exercise of an incentive stock option pursuant to the Plan is entitled to the benefits of Section 421(a) of the Code. Under Section 421(a), an optionee will not be required to recognize income at the time the option is granted or at the time the option is exercised. If the applicable holding periods described below are met, when the shares of stock received upon exercise of an incentive stock option are sold or otherwise disposed of in a taxable transaction, the option holder will recognize compensation income (taxed as ordinary income), for the taxable year in which disposition occurs, in an amount equal to the excess of the fair market value of the Common Shares at the time of such disposition over the amount paid for the shares. The Company will not be entitled to any business expense deduction with respect to the grant or exercise of an incentive stock option, except in connection with a disqualifying disposition as discussed below. No portion of the amount received by the optionee upon the sale of Common Shares acquired through the exercise of an incentive stock option will be subject to withholding for federal income taxes, or be subject to FICA or state disability taxes, except in connection with a disqualifying disposition. In order for a participant to receive the favorable tax treatment provided in Section 421(a) of the Code, Section 422 requires that the participant make no disposition of the option shares within two years from the date the option was granted, nor within one year from the date such option was exercised and the shares were transferred to the participant. In addition, the participant must, with certain exceptions for death or disability, be an employee of the Company (or of a parent or subsidiary of the Company, as defined in Section 424(e) and (f) of the Code, or a corporation, or parent or subsidiary thereof, issuing or assuming the option in a merger or other corporate reorganization transaction to which Section 424(a) of the Code applies) at all times within the period beginning on the date of the grant of the option and ending on a date within three months before the date of exercise. In the event of the death of the participant, the holding periods will not apply to a disposition of the option or option shares by the participant's estate or by persons receiving the option or shares under the participant's will or by intestate succession. If a participant disposes of stock acquired pursuant to the exercise of an incentive stock option before the expiration of the holding period requirements set forth above, the participant will realize, at the time of the disposition, ordinary income to the extent the fair market value of the Common Shares on the date the shares were purchased exceeded the purchase price. The difference between the fair market value of the Common Shares on the date the shares were purchased and the amount realized on disposition is treated as long-term or short-term capital gain or loss, depending on the participant's holding period of the Common Shares. The amount treated as ordinary income may be subject to the income tax withholding requirements of the Code and FICA withholding requirements. The participant 11 will be required to reimburse the Company, either directly or through payroll deduction, for all withholding taxes that the Company is required to pay on behalf of the participant. At the time of the disposition, the Company will be allowed a corresponding business expense deduction under Section 162 of the Code to the extent of the amount of the participant's ordinary income. The Company may adopt procedures to assist it in identifying such deductions, and may require a participant to notify the Company of his or her intention to dispose of any such shares. The Plan also permits the Company to grant options that do not qualify as incentive stock options. These "non-qualified" stock options may be granted to employees or non-employees, such as members of the Company's scientific advisory board and other persons performing consulting or professional services for the Company. A Plan participant who receives a non-qualified option will not be taxed at the time of receipt of the option, provided that the option does not have an ascertainable value, but the participant will be taxed at the time the option is exercised. The amount of taxable income that will be earned upon exercise of a non-qualified option will be the difference between the fair market value of the Common Shares on the date of the exercise and the exercise price of the option. The Company will be allowed a business expense deduction to the extent of the amount of the participant's taxable income recognized upon the exercise of a non-qualified option. Because the option holder is subject to tax immediately upon exercise of the option, there are no applicable holding periods for the stock. The option holder's tax basis in the Common Shares purchased through the exercise of a non-qualified option will be equal to the exercise price paid for the stock plus the amount of taxable gain recognized upon the exercise of the option. The option holder may be subject to additional tax on sale of the stock if the price realized exceeds his or her tax basis. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and is not qualified under Code Section 401(a). Options Previously Granted Under the Plan The following table shows certain information concerning options previously granted under the Plan to (i) the Company's Chief Executive Officer, (ii) all current executive officers, as a group, (iii) all current directors who are not executive officers, as a group, (iv) each nominee for election as a director, (v) each other person who received 5% or more of the options, and (vi) all employees, including all current officers who are not executive officers, as a group: Number of Options Granted Paul E. Segall 21,000 Hal Sternberg 21,000 Harold Waitz 21,000 Judith Segall 0 Victoria Bellport 0 Ronald S. Barkin 45,000 12 Jeffrey B. Nickel 5,000 All current executive officers, as a group 78,000 All current directors who are not executive officers, as a group 5,000 Ronald Leonardi(1) 30,000 Michael Powanda(1) 30,000 All employees, including all current officers who are not executive officers, as a group 17,000 - --------------------------- (1) Dr. Leonardi and Dr. Powanda are consultants who provide advice and assistance to the Company in regulatory (FDA) affairs and product development matters. AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED NUMBER OF COMMON SHARES The Board of Directors has approved an amendment to the Company's Articles of Incorporation to increase the number of authorized Common Shares from 5,000,000 shares to 25,000,000. The purpose of this amendment is to give the Company the flexibility to raise additional capital through the issuance of additional shares, and to obtain and maintain the services of consultants by issuing warrants to purchase Common Shares. Common Shares could also be issued in connection with the acquisition of another business or business assets or technology. There are presently 3,203,193 Common Shares issued and outstanding. An additional 340,000 Common Shares are reserved for issuance under outstanding warrants, and 297,000 Common Shares are reserved for issuance under the Plan. If the proposed amendment to the Plan is approved by the shareholders, an additional 200,000 Common Shares will be reserved for issuance under the Plan. Accordingly, only 1,159,807 authorized Common Shares would be available to the Company. Although the Company has no present agreement, arrangement or commitment to issue or sell any Common Shares for cash or in connection with the acquisition of any business, assets or technology, the Board of Directors believes that it is in the best interest of the Company and its shareholders to have a sufficient number of authorized but unissued shares available for issuance in the future for such purposes or other opportunities that may come along. Although the Company recently raised approximately $5,600,000 through a subscription rights offering, additional capital will be required in the future for the Company to complete its plans to develop and market its products. It is likely that the sale of Common Shares will be the principal means by which the Company would raise additional capital until such time as it is able to generate earnings sufficient to finance its operations. The approval of the amendment of the Company's Articles of Incorporation requires the affirmative vote of the holders of a majority of the issued and outstanding Common Shares. The Board of Directors Recommends A Vote "FOR" the Approval of the Amendment to the Articles of Incorporation 13 RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS The Board of Directors proposes and recommends that the shareholders ratify the selection of the firm of Deloitte & Touche LLP to serve as independent accountants of the Company for the fiscal year ending June 30, 1997. Deloitte & Touche LLP has served as the Company's independent accountants since 1991. Unless otherwise directed by the shareholders, proxies will be voted FOR approval of the selection of Deloitte & Touche LLP to audit the Company's consolidated financial statements. A representative of Deloitte & Touche LLP will attend the Meeting, and will have an opportunity to make a statement if he or she so desires and may respond to appropriate questions from shareholders. The Board of Directors Recommends a Vote "FOR" Ratification of the Selection of Deloitte & Touche LLP as the Company's Independent Accountants PROPOSALS OF SHAREHOLDERS Shareholders of the Company who intend to present a proposal for action at the 1997 Annual Meeting of Shareholders of the Company must notify the Company's management of such intention by notice received at the Company's principal executive offices not later than January 23, 1998 for such proposal to be included in the Company's proxy statement and form of proxy relating to such meeting. ANNUAL REPORT The Company's Annual Report for the fiscal year ended June 30, 1996 is being mailed to shareholders with this Proxy Statement. The Annual Report is not to be regarded as proxy soliciting material. A copy of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended June 30, 1996, without exhibits, may be obtained by a shareholder without charge, upon written request to the Secretary of the Company. By Order of the Board of Directors, Paul Segall, Ph.D. President and Chief Executive Officer April 23, 1997 14 APPENDIX PROXY FOR BIOTIME, INC. ANNUAL MEETING OF SHAREHOLDERS May 23, 1997 This Proxy is Solicited by the Board of Directors The undersigned appoints Paul E. Segall and Ronald S. Barkin, and each of them, with full power of substitution, as the undersigned's lawful agent and proxy to attend the Annual Meeting of Shareholders of BioTime, Inc. on May 23, 1997 and any adjournment thereof and to represent and vote all BioTime, Inc. Common Shares standing in the name of the undersigned upon the books of the corporation. DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS NUMBERED 1, 2, 3 AND 4 1) ELECTION OF [] FOR all nominees listed [] WITHHOLD AUTHORITY DIRECTORS below (except as marked to vote for all to the contrary below) nominees listed below RONALD S. BARKIN; VICTORIA BELLPORT; JUDITH SEGALL; JEFFREY B. NICKEL; PAUL SEGALL; HAL STERNBERG; HAROLD WAITZ ** To withhold authority to vote for any individual nominee, draw a line through that person's name** FOR AGAINST ABSTAIN 2) APPROVAL OF AMENDMENT OF 1992 STOCK OPTION PLAN [ ] [ ] [ ] 3) APPROVAL OF AMENDMENT OF ARTICLES [ ] [ ] [ ] OF INCORPORATION 4) RATIFYING APPOINTMENT OF INDEPENDENT [ ] [ ] [ ] ACCOUNTANTS The persons named as proxy may also vote on such other business as may properly come before the Meeting or any adjournment thereof. [ ] WISH TO ATTEND AND VOTE SHARES AT MEETING Please sign exactly as your shares are registered. _______________________ __________________ Persons signing as a corporate Signature Date officer or in a fiduciary capacity should indicate their _______________________ __________________ title or capacity. Signature if Held Jointly Date 15 -----END PRIVACY-ENHANCED MESSAGE-----