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 ss.240.14a-12
BioTime, Inc.
---------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------
5) Total fee paid:
---------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------
3) Filing Party:
---------------------------------
4) Date Filed:
---------------------------------
[GRAPHIC OMITTED]
BIOTIME, INC.
935 Pardee Street, Berkeley, CA 94710
November 3, 2003
Dear Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of
Shareholders of BioTime, Inc. which will be held on Friday, December 5, 2003 at
10:00 a.m. at the DoubleTree Hotel & Executive Meeting Center, Berkeley Marina,
200 Marina Boulevard, Berkeley, 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.
/s/ Hal Sternbuerg
Hal Sternberg, Ph.D.
Vice President and Member of the
Office of the President
[GRAPHIC OMITTED]
BIOTIME, INC.
935 Pardee Street, Berkeley, CA 94710
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 5, 2003
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Shareholders of
BioTime, Inc. (the "Company") will be held at the DoubleTree Hotel & Executive
Meeting Center, Berkeley Marina, 200 Marina Boulevard, Berkeley, California, on
December 5, 2003 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 ratify the appointment of BDO Seidman, LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2003; and
3. 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 October 28, 2003
as the record date for determining shareholders entitled to receive notice of
and to vote at the Annual Meeting or any postponement or adjournment of the
meeting.
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,
/s/ Judith Segall
Judith Segall
Vice President and Secretary
Berkeley, California
November 3, 2003
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on December 5, 2003
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 2003 Annual Meeting of Shareholders of the Company (the "Meeting") to be
held at 10:00 a.m. on Friday, December 5, 2003 at the DoubleTree Hotel &
Executive Meeting Center, Berkeley Marina, Berkeley, 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 (1) each nominee
for election as director, and (2) approval of the appointment of BDO Seidman,
LLP as independent auditors for the Company for the fiscal year ending December
31, 2003.
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 October 28, 2003
are entitled to notice of and to vote at the Meeting. On that date, there were
13,654,949 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 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 November 3, 2003.
ELECTION OF DIRECTORS
At the Meeting, seven directors will be elected to hold office for a
one-year term until the 2004 Annual Meeting of Shareholders, and until their
successors have been duly elected and qualified. All of the nominees named
below are incumbent directors.
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
The names and ages of the directors of the Company are as follows:
Hal Sternberg, Ph.D., 50, is the Vice President of Research and a Member
of the Office of the President, and has been a director of the Company since
1990. 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., 61, is the Vice President of Engineering and
Regulatory Affairs and a member of the Office of the President, and has been a
director of the Company since 1990. He received his Ph.D. in Biophysics and
Medical Physics from the University of California at Berkeley in 1983.
Judith Segall, 50, is the Vice President of Operations and Secretary and a
member of the Office of the President, and has been a director of the Company
from 1990 through 1994, and from 1995 through the present date. 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., 60, joined the Board of Directors of the Company
during March 1997. Dr. Nickel is the 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.
Milton H. Dresner, 78, joined the Board of Directors of the Company during
February 1998. Mr. Dresner is a private investor and principal of Milton
Dresner Investments. From 1950 until 2000 Mr. Dresner was the Co-Chairman of
the Highland Companies, a diversified organization that was engaged in the
development and ownership of residential and industrial real estate. Mr.
Dresner serves as a director of Avatar Holdings, Inc., a real estate
development company.
2
Katherine Gordon, Ph.D., 49, joined the Board of Directors of the Company
during June 2001. Dr. Gordon is head of corporate development for NovaNeuron, a
molecular neurobiology company. Prior to joining NovaNeuron in 2003, Dr. Gordon
was Senior Vice President of MitoKor, a company discovering novel therapeutics
that act by modulating the activity of mitochondria. Dr. Gordon founded
neuroscience company Apollo BioPharmaceutics in 1992 and ran the company as
Chief Executive Officer until its acquisition by MitoKor, Inc. in 2001. Prior
to founding Apollo BioPharmaceutics, Dr. Gordon was Associate Director at
Genzyme Corporation. Dr. Gordon obtained her Ph.D. from Wesleyan University in
1982 and was a post-doctoral fellow at Yale University.
Michael D. West, Ph.D., 50, joined the Board of Directors of the Company
during October 2002. Dr. West is the President and Chief Executive Officer of
Advanced Cell Technology, Inc. of Worcester, Massachusetts, a company focused
on the medical applications of nuclear transfer (cloning) and embryonic stem
cell technologies. Dr. West founded Geron Corporation, in 1990 where he served
on the board of directors and in a number of executive positions, including as
Vice President of New Technologies from 1993 to 1998, and as a director from
inception to 1998. Geron Corporation is engaged in the research and development
of diagnostic and therapeutic products for the treatment of cancer and
degenerative diseases. Dr. West organized and managed the collaboration that
led to the discovery of human embryonic stem and human embryonic germ cells. He
received his Ph.D. from Baylor College of Medicine in 1989 concentrating on the
biology of cellular aging.
Executive Officers
Hal Sternberg, Harold Waitz, Judith Segall and Steven Seinberg are the
only executive officers of BioTime. Following the death of Dr. Paul Segall,
BioTime's Chairman and Chief Executive Officer in June 2003, the Board of
Directors appointed Hal Sternberg, Harold Waitz, and Judith Segall to serve as
members of the Office of the President. The members of the Office of the
President collectively exercise the powers of the Chief Executive Officer.
Steven A. Seinberg, J.D., 37, became Chief Financial Officer and Treasurer
during August 2001. Prior to assuming these positions, Mr. Seinberg worked for
over five years as BioTime's Director of Financial and Legal Research, a
position that involved, among other duties, contract modifications and
management of the Company's intellectual property portfolio. Mr. Seinberg
received a J.D. from Hastings College of the Law in San Francisco in 1994.
There are no family relationships among the directors or officers of the
Company.
Directors' Meetings, Compensation and Committees of the Board
The Board of Directors has an Audit Committee, the members of which are
Jeffrey Nickel, Milton Dresner, and Katherine Gordon. The purpose of the Audit
Committee is to recommend the engagement of the corporation's independent
auditors and to review their performance, the plan, scope and results of the
audit, and the fees paid to the corporation's independent auditors. The Audit
Committee also will review the Company's accounting and financial reporting
procedures and controls and all transactions between the Company and its
officers, directors, and shareholders who beneficially own 5% or more of the
Common Shares.
The Company does not have a standing 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 2002 Stock Option Plan and makes grants of options to key employees,
consultants, scientific
3
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 Milton H. Dresner, Jeffrey B. Nickel, and Hal Sternberg. The Stock Option
Committee was formed during September 1992.
During the fiscal year ended December 31, 2002, the Board of Directors met
seven times. No director attended fewer than 75% of the meetings of the Board
or any committee on which they served.
Directors did not receive cash fees during 2002. Instead, directors of the
Company who are not employees received options to purchase 20,000 Common Shares
exercisable at $3.00 per share, which was the closing price for BioTime stock
on the American Stock Exchange on the last day of March 2002. Of the 20,000
options granted, 12,500 were fully vested and exercisable upon grant and the
remaining 7,500 options vested and became exercisable in nine equal monthly
installments based on continued service on the Board of Directors. Mr. West,
who became a director during October 2002, received 3,332 options, as a pro
rata share of the 20,000 options granted to other directors, and an additional
option to purchase 15,000 Common Shares at $1.00 per share, which was the
closing price on the AMEX on the date of grant. 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.
Audit Committee Report
The Audit Committee is composed of three independent directors in
accordance with Section 121(A) of the American Stock Exchange listing
standards. The Audit Committee operates under a written charter adopted by the
Board of Directors. A copy of the Audit Committee Charter is available from the
Company upon request.
The purpose of the Audit Committee is to select the Company's independent
auditors and to review their performance, and to review and approve the plan,
scope and results of the audit, and the fees paid to the Company's independent
auditors. The Audit Committee also reviews the Company's accounting and
financial reporting procedures and controls and all transactions between the
Company and its officers, directors, and shareholders who beneficially own 5%
or more of the Common Shares.
The independent public accountants are responsible for performing an
independent audit of the Company's consolidated financial statements and
issuing an opinion on the conformity of those audited financial statements with
generally accepted accounting principles.
During the last year, the Audit Committee met four times and held
discussions with management and representatives of BDO Seidman, LLP, the
Company's independent auditors. The Audit Committee reviewed and discussed with
Company management and representatives of BDO Seidman the audited financial
statements contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002. The Audit Committee also discussed with the auditors
the matters required to be discussed by Statement on Auditing Standards No. 61
(Communications with Audit Committees). BDO Seidman submitted to the Audit
Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). Based on the reviews and discussions
4
referred to above, the members of the Audit Committee unanimously approved the
inclusion of the audited financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002, filed with the Securities and
Exchange Commission.
The Audit Committee also meets on a quarterly basis with the Company's
auditors to review and discuss the Company's financial statements for the
quarter and the adequacy of the Company's internal financial and reporting
controls.
The Audit Committee: Jeffrey B. Nickel, Milton H. Dresner, and Katherine
Gordon.
Board of Directors Report on Executive Compensation
The Board of Directors does not have a standing Compensation Committee.
Instead, the Board of Directors as a whole and the Audit Committee approves all
executive compensation. The executive officers of the Company who serve on the
Board of Directors do not vote on matters pertaining to their own personal
compensation. Paul Segall and Judith Segall did not vote on matters pertaining
to each other's compensation.
The compensation policies implemented by the Board of Directors have been
influenced by the need to attract and retain executives with the scientific and
management expertise to conduct the Company's product development program in a
highly competitive industry dominated by larger, more highly capitalized
companies. Executive compensation is also influenced by the cost of living in
the San Francisco Bay Area. These factors have been balanced against the
Company's financial position and capital resources. Executive compensation may
be composed of three major components: (i) base salary; (ii) annual variable
performance awards payable in cash and tied to the Company's attainment of
corporate objectives and the officer's achievement of personal goals; and (iii)
long-term stock-based incentive awards (stock options) designed to strengthen
the mutuality of interests between the executive officers and the Company's
shareholders.
An annual bonus may be earned by each executive officer based upon the
achievement of personal and Company performance goals. Because the Company is
in the development stage, the use of performance milestones based upon profit
levels and return on equity as the basis for such incentive compensation has
not been considered appropriate. Instead, the incentive awards have been tied
to the achievement of personal and corporate performance targets. The Company
performance goals vary from year to year according to the stage of the
Company's operations. Important milestones that have been considered by the
Board of Directors in determining incentive bonuses have been (i) procurement
of additional capital, (ii) licensing Company products, (iii) completing
specified research and development goals, and (iv) achievement of certain
organizational goals. Personal goals are related to the functional
responsibility of each executive officer. The Board of Directors as a whole
determines whether or not each Company performance goal has been achieved.
During the fiscal year ended December 31, 2002, the Board of Directors did not
award any cash bonuses to the executive officers.
During 2001, the Company implemented a salary reduction program to reduce
costs. All of the current executive officers participated in the program during
2002. The Board of Directors has approved a continuation of those reduced
salaries until the Board of Director determines that the Company is in a
financial position to commit to other compensation arrangements commensurate
with each officer's experience and past performance and prevailing compensation
rates in the San Francisco Bay area.
The Board of Directors: Hal Sternberg, Harold Waitz, Judith Segall,
Jeffrey B. Nickel, Milton H. Dresner, Katherine Gordon, and Michael D. West.
5
Executive Compensation
The Company had five-year employment agreements with Paul Segall, Chairman
and Chief Executive Officer; Judith Segall, Vice President of Operations and
Corporate Secretary; Hal Sternberg, Vice President of Research; and Harold
Waitz, Vice President of Engineering and Regulatory Affairs that expired on
December 31, 2000 and were renewed for a one-year term that ended on December
31, 2001. The executive officers were entitled to receive annual salaries of
$163,000 for the year ended December 31, 2001, but in July 2001 they agreed to
participate in the Company's voluntary salary reduction program. Under these
voluntary salary reductions, Dr. Segall received a salary of $3,000 per month
and Drs. Sternberg and Waitz and Judith Segall each received a salary of $6,000
per month. Commencing in July 2003, Judith Segall began receiving a salary of
$9,000 per month.
Each executive officer has also executed an Intellectual Property
Agreement which provides that the Company is the owner of all inventions
developed by the executive officer during the course of his or her employment.
The following table summarizes certain information concerning the
compensation paid during the past three fiscal years to the Chief Executive
Officer, each of the current members of the Office of the President, and the
Chief Financial Officer who was the only executive officer who earned more than
$100,000 in 2002.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------------- ------------------------
Salary($)
Name and Principal Position Year Ended (Shares) Bonus Stock Options
--------------------------------------- ------------------- ----------- ------- --------------
Paul Segall December 31, 2002 $ 36,000 125,000
Chairman and Chief Executive Officer December 31, 2001 $101,792
December 31, 2000 $163,000
Hal Sternberg December 31, 2002 $ 72,000 90,000
Vice President of Research December 31, 2001 $115,292
Member, Office of the President December 31, 2000 $163,000
Harold Waitz December 31, 2002 $ 72,000 80,000
Vice President of Engineering December 31, 2001 $125,083
Member, Office of the President December 31, 2000 $163,000
Judith Segall December 31, 2002 $ 72,000 80,000
Vice President of Operations, December 31, 2001 $115,292
Corporate Secretary, December 31, 2000 $163,000
Member, Office of the President
Steven A. Seinberg* December 31, 2002 $108,395 20,000
Chief Financial Officer and Treasurer December 31, 2001 $ 74,250 15,000
------------
* Mr. Seinberg became Chief Financial Officer and Treasurer during August 2001.
6
Stock Options
The following table certain information concerning stock options held by
the Company's Chief Executive Officer, each member of the Office of the
President, and the Chief Financial Officer as of December 31, 2002.
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 December 31, 2002 December 31, 2002
on Realized ------------------------------- ------------------------------
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------- ---------- ---------- ------------- --------------- ------------- --------------
Paul Segall -- -- 41,666 83,334 -- --
Judith Segall -- -- 26,666 53,334 -- --
Hal Sternberg -- -- 30,000 60,000 -- --
Harold Waitz -- -- 26,666 53,334 -- --
Steven A. Seinberg -- -- 27,666 13,334 -- --
Certain Relationships and Related Transactions
During September 1995, the Company entered into an agreement for financial
advisory services with Greenbelt Corp. ("Greenbelt"), a corporation controlled
by Alfred D. Kingsley and Gary K. Duberstein, who are also shareholders of the
Company. Under this agreement the Company issued to the financial advisor
warrants to purchase 311,276 Common Shares at a price of $1.93 per share, and
the Company agreed to issue additional warrants to purchase up to an additional
622,549 Common Shares at a price equal to the greater of (a) 150% of the
average market price of the Common Shares during the three months prior to
issuance and (b) $2 per share. The additional warrants were issued in equal
quarterly installments over a two year period, beginning October 15, 1995.
The number of shares and exercise prices shown have been adjusted for the
Company's subscription rights distributions during January 1997 and February
1999 and the payment of a stock dividend during October 1997. Greenbelt has
purchased 544,730 Common Shares by exercising some of those warrants at prices
ranging from $1.93 to $2.35 per share. The other warrants have expired
unexercised.
During April 1998, the Company entered into a new financial advisory
services agreement with Greenbelt. The new agreement provided for an initial
payment of $90,000 followed by an advisory fee of $15,000 per month paid
quarterly. The Company agreed to reimburse Greenbelt for all reasonable
out-of-pocket expenses incurred in connection with its engagement as financial
advisor, and to indemnify Greenbelt and its officers, affiliates, employees,
agents, assignees, and controlling person from any liabilities arising out of
or in connection with actions taken on BioTime's behalf under the agreement.
The agreement has been renewed each year and will expire on March 31, 2004. As
compensation, the Company issued Greenbelt 30,000 Common Shares for the twelve
months ended March 31, 2001 and 40,000 Common Shares for the twelve months
ended March 31, 2002, and paid Greenbelt $60,000 in cash and issued Greenbelt
100,000 Common Shares for the twelve months ending March 31, 2003. For the
twelve months ending March 31, 2004, the Company has agreed to pay Greenbelt
$90,000 in cash and to issue Greenbelt 80,000 Common Shares.
7
During March 2001, the Company entered into a Line of Credit Agreement
with Alfred D. Kingsley under which Mr. Kingsley agreed to lend the Company
$1,000,000. In consideration of Mr. Kingsley's agreement to provide that line
of credit, the Company issued to him a warrant to purchase 50,000 Common Shares
at an exercise price of $8.31 per share. The warrant will expire in five years.
The exercise price and number of Common Shares for which the warrant may be
exercised are subject to adjustment to prevent dilution in the event of a stock
split, combination, stock dividend, reclassification of shares, sale of assets,
merger or similar transaction.
During August 2001, the Company received loans of $3,350,000 through the
sale of debentures to a group of private investors, including Mr. Kingsley, who
purchased $1,500,000 of debentures, and Milton Dresner, a director of the
Company. Mr. Kingsley's investment included the conversion of the $1,000,000
principal balance of the line of credit that he had previously provided.
Interest on the debentures is payable at an annual rate of 10% and is
payable semiannually. The principal amount of the debentures will be due and
payable on August 1, 2004. BioTime may prepay the debentures, in whole or in
part, at any time without premium or penalty. Under the terms of the
debentures, BioTime has agreed that commencing October 1, 2001 it will restrict
its quarterly cash payments for operating expenses to not more than $450,000
(excluding interest payable on the debentures) plus the amount of cash revenues
(excluding interest and dividends) it collects for the quarter. To the extent
BioTime's expenditures during any quarter are less than $450,000 over its
revenues, it may expend the difference in one or more subsequent quarters. That
restriction will expire when BioTime obtains at least $5,000,000 in cash
through sales of equity securities or pays off the debenture indebtedness in
full. For this purpose, cash revenues will include royalties, license fees, and
other proceeds from the sale or licensing of its products and technology, but
will not include interest, dividends, and any monies borrowed or the proceeds
from the issue or sale of any debt or equity securities. BioTime has also
agreed not to declare or pay any cash dividends on its capital stock or to
redeem or repurchase any shares of its capital stock, until it has paid off the
debenture indebtedness in full.
Investors who purchased the debentures also received warrants to purchase
a total of 515,383 Common Shares at an exercise price of $6.50 per share. The
warrants will expire if not exercised by August 1, 2004. The Company has the
right to call the warrants for redemption at a redemption price of $0.01 per
share if the closing price of the Company's Common Shares on the American Stock
Exchange equals or exceeds 150% of the exercise price for fifteen (15)
consecutive trading days and the shares issuable upon the exercise of the
warrants have been registered for sale under the Securities Act of 1933, as
amended (the "Act").
During April 2003, holders of $2,750,000 principal amount of the
debentures, including Mr. Kingsley, granted BioTime a "pay in kind" right
allowing (but not requiring) BioTime to make interest payments in Common Shares
instead of cash for the interest payments due during August 2003 and February
2004 (the "PIK Right"). BioTime retained the right to pay the interest due in
cash. The Company elected to pay the debenture interest due in August 2003 in
cash rather than in stock.
Each debenture holder who agreed to grant BioTime the PIK Right received a
three-year warrant entitling the holder to purchase BioTime Common Shares for
$1.50 per share. The number of shares covered by the warrants is the amount of
debenture interest due in August 2003 and February 2004 divided by the $1.50
exercise price. Warrants to purchase a total of 223,331 Common Shares were
issued.
8
The warrants will expire in three years and will not be exercisable
thereafter. The warrants will be redeemable by BioTime at $0.05 per warrant
share if the closing price of the Common Shares on the American Stock Exchange
exceeds 200% of the exercise price for 20 consecutive trading days.
If BioTime actually elects to pay interest in stock instead of cash, the
common shares issued on the interest payment date will be valued at the lower
of (a) $1.20 or (b) 80% of the average closing price of BioTime Common Shares
on the AMEX for the 10 trading days prior to the interest payment date, but not
less than $0.80 per share.
BioTime granted registration rights for the warrants and shares on
substantially the same terms as the registration rights covering the warrants
issued when the debentures were originally sold. All prices and share amounts
will be adjusted for any stock splits, reverse splits, recapitalization, or
similar changes to the Common Shares.
Alfred Kingsley has agreed with BioTime that if BioTime exercises the PIK
right he will provide BioTime with the cash required to pay the interest due on
any debentures held by persons who did not grant BioTime the PIK Right. In
consideration of his agreement to do so, BioTime issued to Mr. Kingsley a
warrant for 39,999 additional Common Shares, which is the amount of warrants
that would have been issued had those debenture holders agreed to grant the PIK
Right. When Mr. Kingsley provides BioTime with the cash to pay the interest
due, he will receive the number of shares that the debenture holders would have
received had they accepted stock in lieu of cash interest payments.
During March 2002, the Company entered into a new Credit Agreement with
Alfred D. Kingsley for a $300,000 line of credit. In consideration of Mr.
Kingsley's agreement to provide that line of credit, the Company issued to him
a warrant to purchase 30,000 Common Shares at an exercise price of $4.00 per
share. The warrant will expire in five years. The exercise price and number of
Common Shares for which the warrant may be exercised are subject to adjustment
to prevent dilution in the event of a stock split, combination, stock dividend,
reclassification of shares, sale of assets, merger, or similar transaction.
During August 2002, Mr. Kingsley purchased 89,285 Common Shares, and
Jeffrey Nickel purchased 10,000 Common Shares, from the Company at the same
price and on the same terms as shares sold to other investors in a private
placement.
The Company has registered for sale under the Act, the warrants and Common
Shares described above, including Common Shares that may be issued upon the
exercise of the warrants or in installments under the financial advisory
agreement, other than the shares issuable under the current financial advisory
agreement which may be registered at a later date. The Company also included in
the registration 300,000 Common Shares that Mr. Kingsley acquired during
December 2000 from certain BioTime officers and directors. The Company pays the
expenses of registration, but will not be obligated to pay any underwriting
discounts or commissions that may be incurred by Greenbelt, Mr. Kingsley, Mr.
Dresner, or Mr. Nickel in connection with any sale of the warrants or Common
Shares.
On July 3, 2002 Paul Segall and Harold Waitz each sold 200,000 Common
Shares to Mr. Kingsley at a price of $2.00 per share to eliminate margin
indebtedness. Also on July 3, 2002, Mr. Kingsley made unsecured loans in the
amounts of $220,000 to Dr. Segall and $252,000 to Dr. Waitz.
9
Comparison of Shareholder Return
The graph depicted below reflects a comparison of the cumulative total
return (change in stock price plus reinvestment of dividends) of the Company's
Common Shares with the cumulative total returns of the Nasdaq Stock Market
Index and the BioCentury 100 Stock Index. The BioCentury 100 Stock Index
includes many companies in an early stage of development that have a market
capitalization similar to BioTime's. The graph covers the period from July 1,
1997, the first day of the Company's fifth preceding fiscal year, through the
fiscal year ended December 31, 2002.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
The graph assumes that $100 was invested on July 1, 1997 in the Company's
Common Shares and in each index and that all dividends were reinvested. No cash
dividends have been declared on the Company's Common Shares.
6/30/97 6/30/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
----------- --------- ---------- ---------- ---------- ---------- ---------
BioTime, Inc. 100.00 56.88 158.11 80.76 68.25 41.86 14.11
BioCentury 100 Index 100.00 91.05 102.70 203.37 282.07 200.69 100.89
NASDAQ Market Index 100.00 133.30 164.56 297.59 188.42 145.44 101.76
10
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of November 3, 2003
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 or Schedule 13G.
Number of Percent of
Shares Total
----------- -----------
Alfred D. Kingsley (1)
Gary K. Duberstein
Greenbelt Corp.
Greenway Partners, L.P.
Greenhouse Partners, L.P.
110 E. 59th Street, Suite 3203
New York, New York 10022 ............ 3,255,582 23.0%
Judith Segall (2) .................... 508,742 3.7%
Hal Sternberg (3) .................... 304,907 2.2%
Harold D. Waitz (4) .................. 204,166 1.5%
Steven A. Seinberg (5) ............... 41,000 *
Jeffrey B. Nickel (6) ................ 80,000 *
Milton H. Dresner (7) ................ 110,998 *
Katherine Gordon (8) ................. 55,000 *
Michael D. West (9) .................. 38,332 *
All officers and directors
as a group (8 persons) (10) ......... 1,343,145 9.4%
------------
* Less than 1%
(1) Includes 814,460 Common Shares owned by Greenbelt Corp., 90,750 Common
Shares owned by Greenway Partners, L.P., 1,888,709 Common Shares owned
solely by Alfred D. Kingsley, 450,768 Common Shares issuable upon the
exercise of certain warrants owned solely by Mr. Kingsley, and 10,895
Common Shares owned solely by Gary K. Duberstein. Alfred D. Kingsley and
Gary K. Duberstein control Greenbelt Corp. and may be deemed to
beneficially own the warrants and shares that Greenbelt Corp. beneficially
owns. 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 shares
that Greenway Partners, L.P. owns. Mr. Duberstein disclaims beneficial
ownership of the shares and warrants owned solely by Mr. Kingsley, and Mr.
Kingsley disclaims beneficial ownership of the shares owned solely by Mr.
Duberstein.
(2) Includes 143,245 shares held of record by Judith Segall as Administrator
of the Estate of Paul Segall, 202,163 shares held of record by Judith
Segall, 83,334 shares that may be acquired by the estate of Paul Segall
upon the exercise of certain stock options, and 80,000 shares that may be
acquired by Judith Segall upon the exercise of certain stock options that
are currently exercisable or become exercisable within 60 days.
(3) Includes 90,000 shares issuable upon the exercise of certain options that
are currently exercisable or become exercisable within 60 days.
(4) Includes 2,100 shares held for the benefit of Dr. Waitz's minor children
and 80,000 shares that may be acquired by Dr. Waitz upon the exercise of
certain stock options that are currently exercisable or become exercisable
within 60 days.
11
(5) Includes 41,000 shares issuable upon the exercise of certain options that
are currently exercisable or become exercisable within 60 days.
(6) Includes 70,000 shares issuable upon the exercise of certain options that
are currently exercisable or become exercisable within 60 days.
(7) Includes 70,000 shares issuable upon the exercise of certain stock options
that are currently exercisable or become exercisable within 60 days, and
15,384 shares issuable upon the exercise of certain warrants.
(8) Includes 55,000 shares issuable upon the exercise of certain options that
are currently exercisable or become exercisable within 60 days.
(9) Includes 38,332 shares issuable upon the exercise of certain options that
are currently exercisable or become exercisable within 60 days.
(10) Includes 607,666 shares issuable upon the exercise of certain options and
warrants.
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 to the Company, 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 December 31, 2002.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected BDO Seidman, LLP as the Company's
auditors. The Board of Directors proposes and recommends that the shareholders
ratify the selection of the firm of BDO Seidman to serve as independent
auditors of the Company for the fiscal year ending December 31, 2003. BDO
Seidman has served as the Company's independent auditors since January 2003.
Unless otherwise directed by the shareholders, proxies will be voted FOR
approval of the selection of BDO Seidman to audit the Company's consolidated
financial statements. A representative of BDO Seidman 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
BDO Seidman, LLP as the Company's Independent Auditors
12
On January 14, 2003, the Company dismissed Deloitte & Touche LLP as the
Company's independent auditors and retained BDO Seidman as their new
independent auditors to audit the Company's financial statements. The dismissal
of Deloitte & Touche and the engagement of BDO Seidman was approved by the
Audit Committee and the Company's Board of Directors. Prior to engaging BDO
Seidman, the Company did not consult with them regarding the application of
accounting principles to any specified transaction, either completed or
proposed, or with respect to the kind of opinion that might be rendered on the
Company's financial statements, or with respect to any matter described below.
During the years ended December 31, 2001 and 2000, Deloitte & Touche's
reports on the financial statements of the Company did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. However, these reports
contained an explanatory paragraph as it relates to the Company being in the
development stage.
During the Company's two most recent fiscal years and the subsequent
period up to January 14, 2003 there were no disagreements between the Company
and Deloitte & Touche on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which if not
resolved to the satisfaction of Deloitte & Touche would have caused them to
make a reference to the subject matter of the disagreement in connection with
their report. In addition, during the Company's two most recent fiscal years
and the subsequent period up to January 14, 2003, Deloitte & Touche did not
advise the Company that (a) the Company's internal controls necessary for it to
develop reliable financial statements do not exist, or that (b) the information
had come to their attention that led them to no longer be able to rely on
management's representations or that made them unwilling to be associated with
the financial statements prepared by management, or that (c) there was a need
to expand the scope of the audit, or that information had come to their
attention during that time period that if further investigated may (i) have
materially impacted the fairness or reliability of either a previously issued
audit report or the underlying financial statements, or the financial
statements issued or to be issued covering the fiscal periods subsequent to the
date of the most recent financial statements covered by an audit report, or
(ii) caused them to be unwilling to rely on management's representations or be
associated with the Company's financial statements, or that (d) information had
come to their attention that they concluded materially impacts the fairness or
reliability of either (i) a previously issued audit report or the underlying
financial statements, or (ii) the financial statements issued or to be issued
covering the fiscal periods subsequent to the date of the most recent financial
statements covered by an audit report. However, as part of the review of the
Company's financial statements as of and for the three month period ended
September 30, 2002, Deloitte & Touche communicated to the Company's Audit
Committee their recommendation that the Company take certain steps to
strengthen its accounting and reporting functions, including improvement of the
capabilities of its accounting personnel, investigation into the possible
replacement or updating of its accounting software, adoption of more frequent
internal reviews and reconciliations of financial information, and improvement
of the Company's budgeting process. Management of the Company concurred with
the recommendation of Deloitte & Touche.
Audit Fees. BDO Seidman billed the Company $105,668 for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2002. Prior to January 14, 2003, Deloitte & Touche served as the Company's
auditors. Deloitte & Touche billed the Company $41,000 and $110,619 for the
fiscal years ended December 31, 2002 and December 31,
13
2001, respectively, for professional services rendered for the audit of the
Company's annual financial statements, and for review of the financial
statements included in the Company's Forms 10-Q.
Audit Related Fees. BDO Seidman did not provide any assurance and related
services to the Company that are reasonably related to the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2002. Prior to January 14, 2003, Deloitte & Touche served as the Company's
auditors. Deloitte & Touche billed the Company $57,200 and $15,451 during the
fiscal years ended December 31, 2002 and December 31, 2001, respectively, for
such services.
Tax Fees. BDO Seidman and Deloitte & Touche did not provide any tax
compliance services, tax advice, or tax planning services to the Company during
the fiscal year ended December 31, 2002.
Other Fees. BDO Seidman and Deloitte & Touche did not provide any services
to the Company during the fiscal years ended December 31, 2002 and December 31,
2001, other than those included in the preceding three categories.
Under practices and procedures adopted by the Audit Committee, the prior
approval of the Audit Committee is required for the engagement of the Company's
auditors to perform any non-audit services for the Company. Other than
diminimis services incidental to audit services, non-audit services shall
generally be limited to tax services such as advice and planning and financial
due diligence services. All fees for such non-audit services must be approved
by the Audit Committee, except to the extent otherwise permitted by applicable
SEC regulations. These practices and procedures were adopted in response to new
regulations promulgated by the SEC to assure auditor independence and were not
were not in effect when the non-audit services described above were performed
by the Company's independent auditors. However, Deloitte & Touche had provided
the Audit Committee with a fee schedule setting forth the fees that would be
charged for non-audit services and the Audit Committee considered matters
affecting the independence of the independent auditors and approved the fees
paid to Deloitte & Touche.
PROPOSALS OF SHAREHOLDERS
Shareholders of the Company who intend to present a proposal for action at
the 2004 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 August 7, 2004 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 on Form 10-K/A-1 filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 2002, 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,
/s/ Hal Sternberg
Hal Sternberg, Ph.D.
Vice President and Member
Office of the President
November 3, 2003
14
HOW TO ATTEND THE ANNUAL MEETING
If you are a "shareholder of record" (meaning that you have a stock
certificate registered in your own name), your name will appear on the
Company's shareholder list. You will be admitted to the Meeting upon showing
your proxy card, driver's license, or other identification.
If you are a "street name" shareholder (meaning that your shares are held
in an account at a broker- dealer firm) your name will not appear on the
Company's shareholder list. If you plan to attend the Meeting, you should ask
your broker for a "legal proxy." You will be admitted to the Meeting by showing
your legal proxy. You probably received a proxy form from your broker along
with your proxy statement, but that form can only be used by your broker to
vote your shares, and it is not a "legal proxy" that will permit you to vote
your shares directly at the Meeting. If you cannot obtain a legal proxy in
time, you will be admitted to the Meeting if you bring a copy of your most
recent brokerage account statement showing that you own BioTime stock. However,
if you do not obtain a legal proxy, you can only vote your shares by returning
to your broker, before the Meeting, the proxy form that accompanied your proxy
statement.
15
PROXY FOR
BIOTIME, INC.
ANNUAL MEETING OF SHAREHOLDERS
December 5, 2003
This Proxy is Solicited by the Board of Directors
The undersigned appoints Judith Segall and Hal Sternberg, 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 December 5, 2003
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.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF SHAREHOLDERS OF
BIOTIME, INC.
December 5, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS NUMBERED 1 AND 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
--------------------------------------------------------------------------------
1. Election of Directors: NOMINEES:
[ ] FOR ALL NOMINEES O MILTON H. DRESNER
O KATHERINE GORDON
[ ] WITHHOLD AUTHORITY O JEFFREY B. NICKEL
FOR ALL NOMINEES O JUDITH SEGALL
O HAL STERNBERG
[ ] FOR ALL EXCEPT O HAROLD WAITZ
(See instructions below) O MICHAEL D. WEST
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here:
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note [ ]
that changes to the registered name(s) on the account may not be
submitted via this method.
--------------------------------------------------------------------------------
2. RATIFYING APPOINTMENT OF INDEPENDENT AUDITORS. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 [ ]
Signature of Shareholder Date:
------------------------------------------- -------
Signature of Shareholder Date:
------------------------------------------- -------
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.