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 Section 240.14a-11(c) or Section 240.14a-12
U.S. BIOSCIENCE, INC.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
U.S. BIOSCIENCE, INC.
One Tower Bridge
100 Front Street
West Conshohocken, PA 19428
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, APRIL 24, 1997
----------------
The Annual Meeting of Stockholders (the "Meeting") of U.S. Bioscience, Inc.,
a Delaware corporation (the "Company"), will be held on Thursday, April 24,
1997, at 10:00 a.m. at The Philadelphia Marriott West, 111 Crawford Avenue,
West Conshohocken, Pennsylvania 19428, for the following purposes:
1. To elect nine directors to hold office until the Annual Meeting of the
Stockholders in 1998 and until their respective successors are duly elected
and qualified.
2. To consider a proposal to amend the U.S. Bioscience, Inc. 1992 Stock
Option Plan.
3. To transact such other business as may properly come before the
Meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on February 28, 1997
as the record date for the Meeting. Only stockholders of record at that time
are entitled to notice of and to vote at the Meeting and any adjournment or
postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Meeting.
A complete list of the stockholders entitled to vote at the Meeting will be
open to the examination of any stockholder, for any purpose germane to the
Meeting, during ordinary business hours, for a period of at least 10 days
prior to the Meeting, at the offices of the Company, One Tower Bridge, 100
Front Street, West Conshohocken, Pennsylvania 19428.
THE BOARD OF DIRECTORS URGES YOU TO DATE, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY. THE RETURN OF THE ENCLOSED PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE
IN PERSON IF YOU DO ATTEND THE MEETING.
By Order of the Board of Directors,
Martha E. Manning
Secretary
West Conshohocken, Pennsylvania
March 21, 1997
U.S. BIOSCIENCE, INC.
One Tower Bridge
100 Front Street
West Conshohocken, PA 19428
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PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1997
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GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of U.S. Bioscience, Inc., a Delaware
corporation (the "Company"), for use at the Company's Annual Meeting of
Stockholders (together with any and all adjournments and postponements, the
"Meeting") which is scheduled to be held at 10:00 a.m. (local Philadelphia
time), on Thursday, April 24, 1997 at The Philadelphia Marriott West, 111
Crawford Avenue, West Conshohocken, Pennsylvania 19428 for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy
Statement, the foregoing notice and the enclosed proxy card are being sent to
stockholders on or about March 21, 1997.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by telephone by
officers, directors and a small number of regular employees of the Company who
will not be specially compensated for such services. The Company has retained
the services of ChaseMellon Shareholder Services L.L.C. as the Company's proxy
solicitation agent for the Meeting, at a cost of approximately $4,000 plus
reasonable expenses, which will be borne by the Company. The Company also will
request banks, brokers and other custodians, nominees and fiduciaries to
solicit proxies from beneficial owners, where appropriate, and will reimburse
such persons for reasonable expenses incurred in that regard.
The Company's annual report to stockholders for the fiscal year ended
December 31, 1996, including financial statements, is being mailed to
stockholders with this Proxy Statement but does not constitute a part of this
Proxy Statement.
VOTING SECURITIES AND SECURITY OWNERSHIP
VOTING SECURITIES
At the close of business on February 28, 1997, the record date fixed for the
determination of stockholders entitled to notice of and to vote at the
Meeting, there were outstanding 22,916,680 shares of the Company's Common
Stock, par value $.01 per share ("Common Stock"), which have one vote per
share.
The Company presently has no other class of stock outstanding and entitled
to be voted at the Meeting. The presence at the Meeting, in person or by
proxy, of stockholders entitled to cast at least a majority of the votes which
all stockholders are entitled to cast will constitute a quorum for the
Meeting. A plurality of the votes cast is required for the election of
directors. The affirmative vote of a majority of the shares represented in
person or by proxy at the Meeting and entitled to vote on the subject matter
is required to approve the proposal to amend the U.S. Bioscience, Inc. 1992
Stock Option Plan (the "1992 Plan") and to take action with respect to any
other matter that may properly be brought before the Meeting. Stockholders do
not have cumulative voting rights in the election of directors or otherwise.
Shares cannot be voted at the Meeting unless the holder of record is present
in person or by proxy. The enclosed proxy card is a means by which a
stockholder may authorize the voting of his or her shares at the Meeting. The
shares of Common Stock represented by each properly executed proxy card will
be voted at the meeting in accordance with the stockholder's directions.
Stockholders are urged to specify their choices by marking the appropriate
boxes on the enclosed proxy card; if no choice has been specified, the shares
will be voted as recommended by the Board of Directors. The Board of Directors
knows of no matters other than the election of directors and proposal to amend
the 1992 Plan which are likely to come before the Meeting. However, if any
other matters are properly presented to the Meeting for action, the proxy
holders will vote the proxies (which confer discretionary authority to vote on
such matters) in accordance with their judgment.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
With regard to the election of directors, votes may be cast "FOR" or
"WITHHELD" from any or all of the nominees. Votes that are withheld will be
excluded entirely from the vote and will have no effect, other than for
purposes of determining the presence of a quorum. With regard to the proposal
to amend the 1992 Plan, votes may be cast "FOR" or "AGAINST" the proposal, or
the holder may abstain from voting on the matter. Abstentions will be
considered present and entitled to vote at the Meeting for purposes of
determining the presence of a quorum, but will not be counted as votes for a
given matter. Abstentions on the proposal to amend the 1992 Plan will have the
effect of votes against the proposal because it requires for passage the
affirmative vote of a majority of the shares present in person or represented
by proxy at the meeting and entitled to vote.
Brokers who hold shares in street name for customers have the authority
under the rules of the various stock exchanges to vote on certain matters when
they have not received instructions from beneficial owners. Where brokers vote
on some matters but cannot exercise discretionary authority on a matter for
beneficial owners who have not provided voting instructions (commonly known as
"broker non-votes"), those shares will be considered present and entitled to
vote for quorum purposes but will not be included in the vote totals for the
matter on which the broker could not vote. Any broker non-votes on the
proposal to amend the 1992 Plan would have no effect on the outcome of the
proposal because that proposal requires the affirmative vote of a majority of
the shares present in person or represented by proxy and entitled to vote, and
such broker non-votes will not be considered shares present and entitled to
vote with respect to such matter under applicable Delaware law.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, SIGN AND
RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. IF YOU PLAN TO ATTEND THE MEETING TO VOTE IN PERSON AND YOUR SHARES
ARE REGISTERED WITH THE COMPANY'S TRANSFER AGENT IN THE NAME OF A BROKER OR
BANK, YOU MUST SECURE A PROXY CARD FROM THE BROKER OR BANK ASSIGNING VOTING
RIGHTS TO YOU FOR YOUR SHARES.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The table below sets forth certain information, as of February 28, 1997
(except as otherwise provided in note 1 below), regarding the holdings of
Common Stock of (i) each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of the Company's
Common Stock, (ii) each Director of the Company, (iii) each nominee for
Director, (iv) the Company's Chief Executive Officer and each
2
of the Company's four other most highly compensated executive officers who
were serving as executive officers at the end of 1996 and (v) all directors
and executive officers as a group. Unless otherwise specified, the named
beneficial owner has sole voting and investment power. The information in the
table below was furnished by the persons listed, and constitutes beneficial
ownership as defined in regulations of the Securities and Exchange Commission.
Shares issuable pursuant to the exercise of stock options are included in the
table below if such options are currently exercisable or exercisable by April
30, 1997.
AMOUNT AND NATURE % OF
OF BENEFICIAL COMMON
NAME OF BENEFICIAL OWNER OWNERSHIP STOCK
------------------------ ----------------- ------
State of Wisconsin Investment Board(1)................ 2,000,750 8.7
Philip S. Schein, M.D. ............................... 658,175(2) 3.0
C. Boyd Clarke........................................ 3,000(3) *
Robert I. Kriebel..................................... 125,001(4) *
Paul Calabresi, M.D. ................................. 20,000(5) *
Robert L. Capizzi, M.D. .............................. 168,400(6) *
Douglas J. MacMaster, Jr. ............................ 15,000(7) *
Allen Misher, Ph.D. .................................. 21,980(8) *
Jonah Shacknai........................................ 25,100(9) *
Ellen V. Sigal, Ph.D. ................................ 0 *
Betsey Wright......................................... 15,100(10) *
Donald O. Brown....................................... 89,400(11) *
Wolfgang Oster, M.D. ................................. 6,000(12) *
Barbara J. Scheffler.................................. 129,610(13) *
All directors and executive officers as a group (14
persons)............................................. 1,328,816(14) 5.6
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(*) Less than 1% of class.
(1) The information with respect to the State of Wisconsin Investment Board
is presented in reliance on information contained in its Schedule 13G
reporting as of December 31, 1996, as filed with the Securities and
Exchange Commission. The address of the State of Wisconsin Investment
Board is: P.O. Box 7842, Madison WI 53707.
(2) Includes 275,000 shares issuable upon exercise of stock options held by
Dr. Schein. Also includes 362,861 shares owned directly and as joint
tenant with Dorothy Schein, Dr. Schein's wife, 200 shares held by
Mrs. Schein as custodian for their two children, and 20,114 shares held
by Mrs. Schein as co-trustee of two trusts for the benefit of their two
children. Dr. Schein disclaims beneficial ownership of all of these
shares not owned directly or as joint tenant.
(3) Represents shares owned directly by Margaret A. Clarke, Mr. Clarke's
wife.
(4) Represents shares issuable upon exercise of stock options held by Mr.
Kriebel.
(5) Represents shares issuable upon exercise of stock options held by Dr.
Calabresi.
(6) Includes 168,000 shares issuable upon exercise of stock options held by
Dr. Capizzi.
(7) Represents shares issuable upon exercise of stock options held by Mr.
MacMaster.
(8) Includes 15,000 shares issuable upon exercise of stock options held by
Dr. Misher.
(9) Includes 20,000 shares issuable upon exercise of stock options held by
Mr. Shacknai.
(10) Includes 15,000 shares issuable upon exercise of stock options held by
Ms. Wright.
(11) Includes 88,900 shares issuable upon exercise of stock options held by
Mr. Brown.
(12) Represents shares issuable upon exercise of stock options held by Dr.
Oster.
(13) Includes 107,260 shares issuable upon exercise of stock options held by
Ms. Scheffler.
(14) Includes 907,661 shares issuable upon exercise of stock options.
3
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the stockholders will elect nine directors to hold office
until the Annual Meeting of Stockholders in 1998 and until their respective
successors are duly elected and qualified. Unless contrary instructions are
given, the shares represented by a properly executed proxy will be voted "FOR"
the election of the following nominees: Paul Calabresi, M.D., Robert L.
Capizzi, M.D., C. Boyd Clarke, Robert I. Kriebel, Douglas J. MacMaster, Jr.,
Allen Misher, Ph.D., Philip S. Schein, M.D., Ellen V. Sigal, Ph.D. and Betsey
Wright. All of the nominees are presently members of the Board of Directors of
the Company. Mr. Shacknai, who has served on the Board since 1987, has
declined to stand for reelection at the Meeting due to the demands of his
other commitments.
The Board of Directors believes that all nominees will be able to serve as
directors; if this should not be the case, however, the proxies may be voted
for a substitute nominee designated by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES.
NOMINEES FOR ELECTION
DIRECTOR POSITIONS WITH
NAME AGE SINCE THE COMPANY
---- --- -------- --------------------------
Philip S. Schein, M.D. ................. 57 1987 Chief Executive Officer
and Chairman of the Board
of Directors
C. Boyd Clarke.......................... 48 1996 President, Chief Operating
Officer and Director
Robert I. Kriebel....................... 54 1991 Executive Vice President,
Chief Financial Officer
and Director
Paul Calabresi, M.D.(1)................. 66 1992 Director
Robert L. Capizzi, M.D. ................ 59 1992 Senior Scientific Adviser
and Director
Douglas J. MacMaster, Jr.(2)............ 66 1994 Director
Allen Misher, Ph.D.(1).................. 64 1988 Director
Ellen V. Sigal, Ph.D. .................. 53 1997 Director
Betsey Wright(1)........................ 53 1994 Director
- - --------
(1) Member of Executive Compensation Committee
(2) Member of Audit Committee
Dr. Schein has been the Chief Executive Officer and a Director of the
Company since its formation in May 1987 and Chairman since 1990. He was also
President of the Company from its formation until April 1992 and again from
May 1995 to September 1996. From April 1987 to May 1987 he was employed by
U.S. Healthcare, Inc., then a publicly-owned operator of health maintenance
organizations ("HMO's"), to commence the business undertaken by the Company.
From January 1987 to February 1987 Dr. Schein was a consultant in drug
development to Unimed, Inc., a pharmaceutical company, and Professor of
Medicine and Pharmacology at the University of Pennsylvania. Dr. Schein served
as Vice President of Worldwide Clinical Research and Development, Smith, Kline
& French Laboratories, the pharmaceutical division of SmithKline Beckman
Corporation, from October 1983 to December 1986. Dr. Schein was the Scientific
Director of the Vincent T. Lombardi Cancer Research Center at Georgetown
University School of Medicine in Washington, D.C. from July 1982 to October
1983, Chief of the Division of Medical Oncology from August 1974 to October
1983 and Professor in the Departments of Medicine and Pharmacology from August
1974 to October 1983. From July 1971 to August 1974 he was a senior
investigator at the National Cancer Institute and Head of the Clinical
Pharmacology Section. Dr. Schein is a former President of the American Society
of Clinical Oncology and a
4
former Chairman of the FDA Oncologic Drugs Advisory Committee, where he
received the Commissioner's Special Citation and the Wiley Medal for
outstanding service. In September 1994 Dr. Schein was appointed by President
Clinton to a six-year term on the National Cancer Advisory Board. He has
published more than 350 articles and texts relating to basic and clinical
research and drug development and is the recipient of numerous scientific and
medical awards and honors. He is a director of Oncor, Inc., a biotechnology-
based diagnostics company, and Medicis Pharmaceutical Corporation, a research
intensive pharmaceutical company focused on dermatology.
Mr. Clarke was elected to the Board of Directors in September 1996 when he
joined the Company as President and Chief Operating Officer. From 1977 until
he joined the Company, Mr. Clarke held various positions with Merck & Co. and
its affiliates, including Vice President, Strategy, Alliance Management and
Development of Merck Vaccines, from 1995 to 1996; President of Pasteur-Merieux
MSD, from 1993 to 1994; General Manager, Pasteur-Merieux--Merck Affairs of
Merck & Co., Inc., from 1992 to 1993; and Executive Director, Corporate
Planning of Merck & Co., Inc., from 1988 to 1992. In March, 1997, Mr. Clarke
was elected to the board of directors of OraVax, Inc., a biopharmaceutical
company engaged in the discovery and development of oral vaccines and
noninjected antibody products.
Mr. Kriebel joined the Company in April 1991 as Senior Vice President-
Finance and Administration and Treasurer, and has served as the chief
financial officer of the Company since that time. He was elected as a Director
in May 1991. In September 1996, Mr. Kriebel was promoted to the position of
Executive Vice President, Chief Financial Officer and Treasurer. Prior to
joining the Company, Mr. Kriebel held various positions with Rhone-Poulenc
Rorer Inc. (formerly Rorer Group Inc.) from 1974 until November 1990. From
1987 to November 1990 he was Vice President and Controller of Rorer Group
Inc.'s Armour Pharmaceutical Company subsidiary. In 1986, Mr. Kriebel was Vice
President-Investor Relations of Rorer Group Inc. and from 1979 to 1985 he was
Treasurer of Rorer Group Inc.
Dr. Calabresi has since 1993 been Chairman Emeritus and Professor of
Medicine, and from 1974 to 1993 was Chairman of the Department of Medicine, of
Brown University School of Medicine. He is a member of the Institute of
Medicine of the National Academy of Sciences, was the recipient in 1992 of the
Oscar B. Hunter Memorial Award in Therapeutics of the American Society for
Clinical Pharmacology and Therapeutics, and was the recipient in 1995 of the
American Cancer Society's St. George Medal. Dr. Calabresi was president of the
American Society of Clinical Oncology from 1969 to 1970, and Chairman of the
National Cancer Advisory Board from 1991 to 1994. He is the author or editor
of over 200 manuscripts and books relating to the pharmacology of anticancer
agents and the management of cancer patients.
Dr. Capizzi has been Magee Professor and Chairman of the Department of
Medicine of Jefferson Medical College and Senior Scientific Adviser to the
Company since March 1996. From September 1991 through February 1996, he was
Executive Vice President-Worldwide Research and Development of the Company.
From September 1982 until joining the Company, Dr. Capizzi was Charles L.
Spurr Professor, and Director of the Comprehensive Cancer Center, of Wake
Forest University, Chief of the Section on Hematology/Oncology, and Chairman
of the Piedmont Oncology Association at the Bowman Gray School of Medicine of
Wake Forest University, Winston-Salem, North Carolina. Dr. Capizzi is a former
member of the FDA Oncologic Drugs Advisory Committee and the Board of
Directors of the American Society of Clinical Oncology. He has published over
300 manuscripts and texts relating to clinical pharmacology and cancer
treatment.
Mr. MacMaster has been retired since 1991. For 30 years prior to his
retirement, Mr. MacMaster was employed by Merck & Co., as a Senior Vice
President from 1988 to 1991 and as President of its Merck, Sharpe & Dohme
Division from 1985 to 1988. He is a director of American Precision Industries,
Inc., a manufacturer of heat transfer and motion control equipment, Flamel
Technologies, S.A., a French pharmaceutical company, Martek Biosciences Corp.,
a research-intensive pharmaceutical company, Neose Technologies, Inc., a
biotechnology company engaged in the synthesis, discovery and development of
complex carbohydrates for nutritional and pharmaceutical uses, and OraVax,
Inc., a biopharmaceutical company engaged in the discovery and development of
oral vaccines and noninjected antibody products.
5
Dr. Misher was President of the Philadelphia College of Pharmacy and Science
from 1984 until his retirement on December 31, 1994, and since February 1995
has been President Emeritus. He was Senior Vice President of National Medical
Care, Inc. from 1982 to 1984, and President of SmithKline Medical Diagnostics,
a division of SmithKline Beckman Corporation, from 1978 to 1982. He is a
director of Cortech, Inc., a biopharmaceutical company engaged in drug
research and development, and OraVax, Inc., a biopharmaceutical company
engaged in the discovery and development of oral vaccines and noninjected
antibody products.
Dr. Sigal was elected to the Board of Directors in February 1997. She is the
president of Sigal Environmental, Inc., an environmental consulting company
which she founded in 1992 to advise developers on cost-effective,
environmentally safe materials and processes. She has over 18 years experience
in real estate development. Dr. Sigal is a presidential appointee to the
National Cancer Advisory Board and serves as Chair of the Budget and Planning
Committee of that board. She is also Chairperson of the Friends of Cancer
Research, Chairman of the Board of Overseers for the Duke Comprehensive Cancer
Center and Vice Chairman of the Advisory Board for George Washington
University Cancer Center.
Ms. Wright has since March 1996 been Senior Director, and from March 1993 to
March 1996 was Executive Vice President, of The Wexler Group, a government
relations and public affairs firm in Washington, DC. She specializes in policy
areas of healthcare, transportation and trade. From 1980 until March 1993, she
was associated in Arkansas with Governor Bill Clinton, as his chief of staff
for seven years, as manager of three re-election campaigns, as chair and
executive director of the Arkansas Democratic Party, as deputy chair of his
presidential campaign, and as a member of his transition staff.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee and an Executive Compensation Committee,
but does not have an Executive Committee or a Nominating Committee. The Audit
Committee, which held one meeting in 1996, consists of Mr. MacMaster and Mr.
Jonah Shacknai. The functions of the Audit Committee generally include
reviewing with the independent auditors the scope and results of their
engagement and reviewing the adequacy of the Company's system of internal
accounting controls.
The Executive Compensation Committee, which held four meetings in 1996,
consists of Drs. Calabresi and Misher and Ms. Wright. The Executive
Compensation Committee is responsible for establishing salaries, bonuses and
other compensation, and granting stock options, for the Company's officers.
The Board of Directors held six meetings in 1996. In 1996 each director
attended at least 75% of the combined number of meetings of the Board and of
the Committees on which such directors served.
COMPENSATION OF DIRECTORS
Until May 1995 the Company paid to each of its non-employee directors $1,000
for each day upon which the director attended a meeting of the Board of
Directors or a committee of the Board of Directors. At its meeting in May 1995
the Board of Directors discontinued the payment of fees on the foregoing basis
and instituted a $10,000 annual fee for each non-employee director. In
December 1996, the Board of Directors adopted the U.S. Bioscience, Inc. Non-
Employee Directors Stock Option Plan (the "Directors Plan"), whereby each non-
employee director may elect to receive options to purchase Common Stock in
lieu of the annual fees to which he or she would be entitled upon reelection.
The purchase price of each share of Common Stock subject to such an option is
equal to 30 percent of the fair market value (determined based on a ten-day
market average, as provided in the Directors Plan) of a share of Common Stock
on the date of grant, and the number of shares of Common Stock subject to the
option is equal to $10,000 divided by 70 percent of such fair market value.
Options granted under the Directors Plan are fully exercisable commencing six
months after the date of grant and terminate on the tenth anniversary of the
date of grant, subject to earlier termination by the Board in the event of a
liquidation or dissolution of the Company. Each of Drs. Calabresi and Misher,
Mr. MacMaster and Ms. Wright has elected to receive options under the
Directors Plan in lieu of the annual fees to which he or she will be entitled
upon reelection at the Meeting.
6
The Company's 1992 Stock Option Plan (the "1992 Plan") contains special
provisions with regard to those directors of the Company who are not employees
of the Company, which provisions are intended to permit no discretion with
regard to the timing of grants of stock options to such directors, the price
at which shares of Common Stock covered by such options may be purchased and
the number of shares of Common Stock covered by such options. These provisions
were included to enable the Plan to satisfy the conditions relating to
administration of employee stock option plans set forth in the predecessor to
Rule 16b-3 as now in effect ("Rule 16b-3") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Rule 16b-3 now provides (and the
predecessor rule provided) exemptions for officers and directors from the
"short-swing" profit provisions of Section 16(b) under the Exchange Act with
respect to, among other things, the grant of options under a stock option
plan. Pursuant to the terms of the1992 Plan, each non-employee director who
was a director when the 1992 Plan was adopted on April 15, 1992 received an
initial grant on November 16, 1993 and a similar grant every three years
thereafter. Each non-employee director who was first elected to the Board
after the adoption of the 1992 Plan received an initial grant upon first being
elected as a director and a similar grant every three years thereafter. Prior
to September 1996, each such grant was an option to purchase 15,000 shares of
Common Stock (adjusted to reflect the reverse stock split adopted by the
stockholders in April 1996), exercisable in three equal installments on the
three anniversary dates of the date of grant, at an exercise price equal to
the fair market value of the shares on the date of grant. In September 1996,
the Board of Directors amended the 1992 Plan in connection with a review of
compensation generally, and since then, all nondiscretionary grants to non-
employee directors under the 1992 Plan have been options to purchase 30,000
shares of Common Stock. All such options expire ten years from the date of
grant.
Mr. Shacknai and Dr. Capizzi also receive compensation from the Company in
their roles as consultants or advisors to the Company, as described below
under "Related Transactions."
PROPOSAL TO APPROVE AMENDMENT OF THE COMPANY'S 1992 STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the approval
of the stockholders, amendments to the U.S. Bioscience, Inc. 1992 Stock Option
Plan (1992 Plan) increasing the number of shares of Common Stock for which
options may be granted pursuant to the 1992 Plan from 1,750,000 shares of
Common Stock to 2,850,000 shares and increasing the maximum number of options
that any individual optionee may receive in any one year from options for
150,000 shares to options for 300,000 shares.
MATERIAL FEATURES OF THE 1992 PLAN
General. The 1992 Plan is, by its terms, intended to recognize the
contributions made to the Company by employees (including employees who are
directors) of the Company and certain consultants and advisors to the Company,
to provide such persons with additional incentive to devote themselves to the
future success of the Company and to improve the ability of the Company to
attract, retain and motivate individuals upon whom the Company's sustained
growth and financial success depend, by providing such persons with an
opportunity to acquire or increase their proprietary interest in the Company
through receipt of options to acquire the Company's Common Stock. In addition,
the Plan is intended as an additional incentive to certain directors who are
not employees of the Company to serve on the Board of Directors and to devote
themselves to the future success of the Company by providing them with an
opportunity to acquire or increase their proprietary interest in the Company
through the receipt of options to purchase Common Stock. Although all
employees, directors, consultants and advisors are eligible to receive options
under the 1992 Plan, since 1994 the Company generally has made option grants
under the 1992 Plan only to "officers" within the meaning of regulations
promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended ("Section 16 Officers") and to non-employee directors. Option grants
to employees who are not Section 16 Officers, as well as option grants to
consultants and advisors are made under the Company's Non-Executive Stock
Option Plan which was adopted in 1994.
7
Options granted under the 1992 Plan to employees may be "incentive stock
options" ("ISOs") within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"), or may be options not intended to be
ISOs ("non-qualified stock options"). Options granted to directors who are not
employees of the Company will be non-qualified stock options.
On February 25, 1997 there were remaining subject to the 1992 Plan only
48,404 shares of Common Stock which had not already been issued or reserved
for issuance upon the exercise of outstanding options granted under the 1992
Plan. On that date, the Executive Compensation Committee granted to the
Company's executive officers, as their annual option grants, options to
purchase 388,000 shares, subject to the adoption of an amendment increasing
the number of shares for which options may be granted under the 1992 Plan. On
February 27, 1997, the Company's Board of Directors adopted the 1992 Plan
amendment increasing the number of shares for which options may be granted
pursuant to the 1992 Plan by 1.1 million shares. All of the annual option
grants made to the Company's executive officer in February 1997 will be null
and void if, by February 26, 1998, the Company's stockholders do not approve
the 1992 Plan amendments which are the subject of this proposal.
The Company believes that the authority to issue additional options is
important to the continued growth and success of the Company. The Company has
found that the use of options has enabled it to retain talented and
experienced individuals at salary levels below that which would otherwise be
required if options were not offered as part of the compensation package.
Moreover, options constitute a particularly effective incentive to option
holders to endeavor to improve the Company's performance, since the economic
benefit of options depends upon the market value of the Company's Common
Stock.
Pursuant to amendments adopted in August 1993 to the Code, a publicly traded
corporation is not be able to deduct as an expense, for federal income tax
purposes, annual compensation in excess of $1 million paid to its "covered
employees" (generally, the chief executive officer and the four other highest
compensated executives determined as of the last day of the corporation's
taxable year). Qualified "performance-based" compensation is, however,
excluded from the compensation counted toward the $1 million limit. The income
attributable to the exercise of stock options granted pursuant to the 1992
Plan will constitute performance-based compensation under the Code amendments,
and will not be included in the compensation counted toward the $1 million
limit, so long as the exercise price for such options is the fair market value
at the date of grant or higher, the Executive Compensation Committee members
are "outside directors" (as that term is defined in applicable IRS
regulations), and the stockholders have approved a 1992 Plan provision which
limits the number of shares for which options may be granted to any one
employee during a specified time period. In May 1994 the stockholders approved
a limit of 300,000 on the number of shares for which options could be granted
to any optionee in any year. By reason of the 1-for-2 reverse split of the
Company's Common Stock in April 1996, the Company believes it was appropriate
to correspondingly adjust the 300,000 share limit down to 150,000. However, on
September 26, 1996, in connection with the adoption of guidelines designed to
bring the Company's option grants to executives more in line with those of
peer group companies, the Board of Directors, on the recommendation of the
Executive Compensation Committee, amended the 1992 Plan to increase the annual
share limit back up to 300,000, subject to stockholder approval. The amount of
300,000 shares was chosen arbitrarily as an amount which is comfortably above
any option grants that the Company foresees granting to any employee in one
year. Under the Company's current guidelines, grants in any one year in excess
of 100,000 shares generally would be made only in the initial employment year
of a newly hired executive.
On September 3, 1996 the Executive Compensation Committee of the Board
granted options to purchase 150,000 shares of Common Stock to C. Boyd Clarke
as part of his compensation package to become the Company's new President and
Chief Operating Officer. On December 11, 1996 the Executive Compensation
Committee granted an additional option to Mr. Clarke for 32,500 shares, which
option will be null and void if, by September 25, 1997 the Company's
stockholders do not approve the 1992 Plan amendments which are the subject of
this proposal.
8
The key provisions of the 1992 Plan are as follows:
1. Number of Shares. The aggregate maximum number of shares for which
options may be granted under the 1992 Plan is 1,750,000 shares of Common
Stock, subject to adjustment upon the occurrence of a stock dividend, stock
split, recapitalization or certain other capital adjustments. If the proposal
to approve amendment of the 1992 Plan is passed by the Company's stockholders,
such maximum will be increased to 2,850,000 shares of Common Stock.
2. Administration. The 1992 Plan may be administered by the Board of
Directors. However, with respect to "Principal Officers" (as defined below)
and/or with respect to persons who are not "Principal Officers" or non-
employee directors, the Board of Directors may appoint a committee or
committees to administer the Plan in its place. Such committee must be
composed of two or more directors (in the case of the committee administering
the 1992 Plan with respect to the Company's Principal Officers, the committee
members must be directors who are not employees of the Company). The 1992 Plan
as it pertains to the non-employee directors will be administered by the Board
of Directors. The 1992 Plan defines "Principal Officers" as including officers
holding the title of Chairman (if the Chairman is a payroll employee),
President, Executive Vice President, Senior Vice President, Vice President,
Treasurer and any other person who is an "officer" within the meaning of
regulations promulgated under Section 16 of the Securities Exchange Act of
1934, as amended.
3. Eligibility; Certain Limitations. Although all employees and non-employee
directors of the Company and consultants and advisors to the Company are
eligible to receive options under the 1992 Plan, since 1994 the Company
generally has made option grants under the 1992 Plan only to Section 16
Officers and non-employee directors, and the Company has no plans to change
that practice. Non-employee directors may receive options under the 1992 Plan
only pursuant to special provisions relating to such directors, as described
in paragraph 11 below. On March 14, 1997, approximately 150 employees and all
of the non-employee directors and consultants and advisors of the Company were
eligible, pursuant to the terms of the 1992 Plan, to receive options under the
1992 Plan. On that date, there were eight Section 16 Officers and seven non-
employee directors who, in accordance with the Company's current practice, are
considered eligible for grants under the 1992 Plan.
The 1992 Plan provides a limitation on ISOs, such that in no event may the
aggregate fair market value (determined at the time an ISO is granted) with
respect to which ISOs are exercisable for the first time by the optionee
during any calendar year exceed $100,000.
4. Term of 1992 Plan. No option from the initial 1,000,000 share
authorization may be granted under the 1992 Plan after April 14, 2002; no
option from the subsequent 750,000 share authorization may be granted under
the 1992 Plan after February 28, 2004; and no option from the proposed
additional 1,100,000 share authorization that is the subject of this proposal,
if approved by the Company's stockholders, may be granted under the 1992 Plan
after February 26, 2007.
5. Term of Option. Options granted under the 1992 Plan, other than options
granted to non-employee directors, generally terminate on the earliest of: (a)
the expiration of the term specified in the option document, which, with
respect to ISOs, may not exceed ten years from the date of grant; (b) the
expiration of three months from the date an option holder's employment or
service terminates for any reason other than disability, death or as set forth
in clauses (c) or (d) below; (c) the expiration of one year from the date an
option holder's employment or service terminates by reason of such option
holder's disability or death; (d) the date upon which a determination is duly
made that the option holder has breached such option holder's employment or
service contract with the Company, has been engaged in disloyalty to the
Company or has disclosed trade secrets or confidential information of the
Company; or (e) the date duly set to be an accelerated expiration date in the
event of a liquidation or dissolution of the Company. The Board or the
committee appointed by the Board, in its discretion, may provide for
additional limitations on the term of any option. Notwithstanding the
foregoing, the Board or such committee may extend the period during which an
option may be exercised to a date no later than the date of expiration of the
term specified in the option document.
6. Option Price. The option price for non-qualified options may be less
than, equal to, or greater than the fair market value of shares subject to the
option on the date that the option is granted and for ISOs will be at
9
least 100 per cent of the fair market value of the shares subject to the
option on the date that the option is granted. On March 14, 1997, the last
reported sale price of the Common Stock on the American Stock Exchange was
$13.25.
7. Special ISO Rules for Certain Stockholders. If an ISO is granted to an
employee who then owns, directly or by attribution under the Code, shares
possessing more than 10 percent of the total combined voting power of all
classes of shares of the Company, the term of the option will not exceed five
years and the option price will be at least 110 percent of fair market value
of the shares on the date that the option is granted.
8. Payment. An option holder may pay for shares by such mode of payment as
the Board or the committee appointed by the Board may approve, including
payment in whole or in part in shares of the Company's Common Stock, based on
the fair market value of such Common Stock at the time of payment.
9. Option Document; Restriction on Transferability. All options are
evidenced by a written option document containing provisions consistent with
the 1992 Plan and such other provisions as the Board or the committee
appointed by the Board deems appropriate. An ISO granted under the 1992 Plan
may not be transferred, except by will or by the laws of descent and
distribution. A non-qualified stock option under the 1992 Plan may not be
transferred, except as follows: (i) by will or by the laws of descent and
distribution; (ii) pursuant to the terms of a "qualified domestic relations
order" (as defined in the 1992 Plan); and (iii) if the terms of the non-
qualified stock option specifically so permit, a non-qualified stock option
may be transferred by the optionee by bona fide gift, with no consideration
for the transfer, to a lineal descendent, sibling, lineal descendent of a
sibling, in trust for the benefit of one or more family members or to a
partnership in which family members are the only partners. If the optionee
receiving such an option, or having an outstanding option amended to provide
for such transferability, is a Principal Officer, such option or option
amendment must be approved by the Compensation Committee.
10. Provisions Relating to a "Change of Control of the
Company." Notwithstanding any other provision of the 1992 Plan, in the event
of a "Change of Control of the Company" (as defined below), the date upon
which all options then outstanding under the 1992 Plan first become
exercisable will automatically accelerate to the effective date of the Change
in Control of the Company, except for options held by consultants and advisors
other than Scientific Advisory Board members.
A "Change in Control of the Company" will be deemed to have occurred if (i)
there has been a change in control of a nature that would be required to be
reported in response to Securities and Exchange Commission disclosure
requirements for proxy statements and Current Reports on Form 8-K relating to
changes in control; (ii) any person, entity or group (within the meaning of
certain provisions of the Exchange Act), other than any employee benefit plan
(or related trust) sponsored or maintained by the Company or any subsidiary of
the Company is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30 percent or more of the combined
voting power in the election of directors; or (iii) during any period of two
consecutive years, individuals who, at the beginning of such period,
constitute the Board of Directors cease for any reason to have authority to
cast at least a majority of the votes which all directors on the Board are
entitled to cast, unless the election or the nomination for election by the
Company's stockholders of each new director was approved by a vote of at least
two-thirds of the votes entitled to be cast by the directors then still in
office who were the directors at the beginning of the period.
11. Provisions Relating to Eligible Non-employee Directors. The 1992 Plan
provides that each non- employee director will receive an automatic stock
option grant upon first becoming a director and every three years thereafter
for as long as he or she continues to be a non-employee director. Pursuant to
the terms of the1992 Plan, each non-employee director who was a director when
the 1992 Plan was adopted on April 15, 1992 received an initial grant on
November 16, 1993, a similar grant on November 16, 1996 and will receive a
similar grant on the third anniversary of the next previous grant to such non-
employee director. Each non-employee director who was first elected to the
Board after the adoption of the 1992 Plan received an initial grant upon first
being elected as a director and has received and/or will receive a similar
grant on the third anniversary of the
10
next previous grant. Prior to September 1996, each such grant was an option to
purchase 15,000 shares of Common Stock (adjusted to reflect the reverse stock
split adopted by the stockholders in April 1996), exercisable in three equal
installments on the next three anniversary dates of the date of grant, at an
exercise price equal to the fair market value of the shares on the date of
grant. In September 1996, the Board of Directors amended the 1992 Plan in
connection with a review of compensation generally, and since then, all
nondiscretionary grants to non-employee directors under the 1992 Plan have
been options to purchase 30,000 shares of Common Stock. All such options
expire ten years from the date of grant.
Options granted to non-employee directors under the 1992 Plan terminate on
the earliest of: (i) the expiration of ten years from the date of grant; (b)
the expiration of three months from the date of the director's service as a
non-employee director terminates for any reason other than disability or
death; or (c) the expiration of one year from the date the director's service
as a non-employee director terminates by reason of such director's disability
or death.
12. Amendments to the Option Document and the 1992 Plan. Subject to the
provisions of the 1992 Plan, the Board or the committee appointed by the Board
may amend an option document, subject to the option holder's consent if the
amendment is not favorable to the option holder or has the effect of
converting an ISO to a non-qualified stock option, and is not being made
pursuant to provisions of the 1992 Plan relating to acceleration of the
expiration date in the event of liquidation or dissolution of the Company or a
Change of Control of the Company. The Board of Directors may amend the 1992
Plan from time to time in such manner as it may deem advisable. Nevertheless,
the Board of Directors may not, without obtaining stockholder approval within
twelve months before or after such action, change the class of individuals
eligible to receive an ISO or increase the maximum number of shares as to
which options may be granted under the 1992 Plan. In addition, provisions of
the 1992 Plan relating to non-employee directors that determine (i) which
directors will be granted options, (ii) the amount of shares subject to such
options, (iii) the option price of such options and (iv) the timing of grants
of options, may not be amended more than once every six months, other than to
comport with changes in the Code or the Employee Retirement Income Security
Act of 1974, as amended.
13. Tax Aspects of the Plan. The following discussion is intended to briefly
summarize the general principles of current federal income tax law applicable
to options granted under the 1992 Plan. A recipient of an ISO does not
recognize taxable income upon either the grant or exercise of the ISO. The
option holder recognizes long-term capital gain or loss upon the disposition
of the shares acquired as a result of exercising an ISO, provided the option
holder does not dispose of those shares within two years from the date the ISO
was granted or within one year after the shares were transferred to such
option holder. Currently, for regular federal income tax purposes, long-term
capital gain is taxed at a maximum rate of 28 percent, while ordinary income
may be subject to a maximum rate of 39.6 percent. If the option holder
satisfies both of the foregoing holding periods, then the Company is not
allowed a deduction by reason of the grant or exercise of an ISO.
As a general rule, if the option holder disposes of the shares before
satisfying both holding period requirements (a "disqualifying disposition"),
the gain recognized by the option holder on the disqualifying disposition is
taxed as ordinary income to the extent of the difference between the fair
market value of the shares on the date of exercise and the adjusted basis of
the shares, and the Company is entitled to a deduction in that amount. The
gain (if any) in excess of the amount recognized as ordinary income on a
disqualifying disposition is long-term or short-term capital gain, depending
on the length of time the option holder has held the shares prior to the
disposition.
The amount by which the fair market value of a share at the time of exercise
exceeds the option price will be included in the computation of such option
holder's "alternative minimum taxable income," generally in the year the
option holder exercises the ISO. If an option holder pays alternative minimum
tax with respect to the exercise of an ISO, then the amount of such tax paid
is allowed as a credit against regular tax liability in subsequent years. The
option holder's basis in the shares for purposes of the alternative minimum
tax is adjusted when income is included in alternative minimum taxable income.
11
A recipient of a non-qualified stock option does not recognize taxable
income at the time of grant, and the Company is not allowed a deduction by
reason of the grant. Such an option holder recognizes ordinary income in the
year in which the option holder exercises the non-qualified stock option, in
an amount equal to the excess of the fair market value of the shares received
upon exercise at the time of exercise of such options over the exercise price
of the option, and the Company is allowed a deduction in that amount. Upon
disposition of the shares subject to the option, an option holder recognizes
long-term or short-term capital gain or loss, depending upon the length of
time the shares were held prior to disposition, equal to the difference
between the amount realized on disposition and the option holder's basis in
the shares subject to the option (which basis ordinarily is the fair market
value of the shares subject to the option on the date the option was
exercised).
Set forth below is the number of shares underlying options granted, or to be
granted, in 1997 under the 1992 Plan to the persons indicated in the table
below out of the 1.1 million additional shares of Common Stock to be reserved
for issuance pursuant to the 1992 Plan if the proposed amendments to the Plan
are approved:
NEW 1992 PLAN BENEFITS
U.S. BIOSCIENCE, INC. 1992 STOCK OPTION PLAN
NAME AND POSITION NUMBER OF SHARES
----------------- ----------------
Philip S. Schein (Chairman and CEO)............................ 100,000
C. Boyd Clarke (President and COO)............................. 64,000
Robert I. Kriebel (Executive Vice President and CFO)........... 64,000
Donald O. Brown (Senior Vice President)........................ 40,000
Wolfgang Oster, M.D. (Senior Vice President)................... 40,000
Barbara J. Scheffler (Senior Vice President)................... 40,000
Executive officers as a group.................................. 388,000
Non-employee directors as a group.............................. 60,000(1)
Employees (other than executive officers) as a group........... 30,000(2)
- - --------
(1) Non-employee directors each receive, once every three years, options under
the 1992 Plan to purchase 30,000 shares of Common Stock. Such options are
granted automatically pursuant to the terms of the 1992 Plan, as described
in paragraph 11 above. Such a grant was made to Dr. Sigal upon her
election to the Board on February 27, 1997 and the next such grant of
options to a non-employee director will be made to Mr. MacMaster on April
12, 1997.
(2) Although all employees are eligible to receive options under the 1992
Plan, the Company intends to continue to make all option grants under the
1992 Plan only to Section 16 Officers and non-employee directors, and to
make option grants under the Company's Non-Executive Stock Option Plan to
employees other than executive officers, and to consultants and advisors.
There is currently only one Section 16 Officer who is not an executive
officer or a non-employee director.
VOTE REQUIRED FOR APPROVAL
The proposal to amend the 1992 Plan requires for its approval the
affirmative vote of a majority of the shares present in person or represented
by proxy at the meeting and entitled to vote. Any abstentions will have the
effect of votes against the proposal. Any broker non-votes will not have any
effect on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSAL TO AMEND THE 1992 PLAN.
12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned during each of the last three years to the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers:
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------- --------------------------------
AWARDS PAYOUTS
OTHER ------------------- ---------
ANNUAL RESTRICTED LONG-TERM ALL OTHER
COMPEN- STOCK INCENTIVE COMPEN-
SALARY BONUS SATION AWARD(S) OPTIONS PLAN(S) SATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (SHARES) ($) ($)
- - --------------------------- ---- ------- ------- ------- ---------- -------- --------- ---------
Philip S. Schein......... 1996 363,410 91,852 3,750(2) N/A 125,000 N/A 140,465
Chairman and 1995 346,610 121,313 0 N/A 325,000(4) N/A 109,572
Chief Executive Officer 1994 346,610 57,763 0 N/A 25,000 N/A 96,196
Robert I. Kriebel........ 1996 178,750 47,500 0 N/A 97,000 N/A 58,480
Executive Vice President
and 1995 168,000 58,800 0 N/A 156,250(4) N/A 51,100
Chief Financial Officer 1994 168,000 27,997 0 N/A 15,000 N/A 43,078
Donald O. Brown.......... 1996 166,460 42,000 0 N/A 25,000 N/A 49,976
Senior Vice President, 1995 160,000 48,000 0 N/A 283,000(4) N/A 39,749
Pharmaceutical
Operations 1994 160,000 26,664 0 N/A 33,000 N/A 36,271
Wolfgang Oster(1)........ 1996 200,760 53,250 19,809(3) N/A 50,000 N/A 29,739
Senior Vice President, 1995 -- -- -- N/A -- N/A --
Worldwide Research and 1994 -- -- -- N/A -- N/A --
Development
Barbara J. Scheffler..... 1996 170,080 43,000 0 N/A 25,000 N/A 55,204
Senior Vice President, 1995 162,000 56,700 0 N/A 142,750(4) N/A 48,078
Corporate and Scientific
Affairs 1994 144,690 26,997 0 N/A 34,500 N/A 37,645
- - --------
(1) Dr. Oster first became an executive officer on December 11, 1996 when he
was promoted to the position of Senior Vice President.
(2) Reflects Company paid financial planning consulting of $3,750.
(3) Reflects foreign service premium of $19,809.
(4) On February 21, 1995, the Company amended all outstanding employee stock
options with an exercise price greater than $4.875 per share, including
the options for employees described in the table above, to change the
exercise price to $4.875 per share, the closing market price of the
Company's Common Stock on February 21, 1995. Excluding repriced option
amounts, included in the 1995 amounts above, actual new options granted to
the named executives during 1995 were: Dr. Schein, 25,000 and Mr. Kriebel,
Mr. Brown and Ms. Scheffler, 15,000 each. All such amounts have been
adjusted to reflect the reverse stock split effected by the Company in
April 1996.
(5) Represents, as applicable to each individual, employer contributions to or
payments for life insurance, Executive Deferred Compensation Plan,
Employee Pension Plan and Employee Savings Plan--401(k), financial
planning consulting and foreign service premiums. For each above named
executive, the 1996 amounts are as follows: Dr. Schein: life insurance,
$6,324; deferred compensation, $113,998; pension, $16,976; and 401(k),
$3,167. Mr. Kriebel: life insurance, $2,654; deferred compensation,
$35,683; pension, $16,976; and 401(k), $3,167. Mr. Brown: life insurance,
$2,281; deferred compensation, $27,552; pension, $16,976; and 401(k),
$3,167. Dr. Oster: life insurance, $942; deferred compensation, $18,558;
and pension, $10,239. Ms. Scheffler: life insurance, $1,284; deferred
compensation, $33,777; pension, $16,976; and 401(k), $3,167.
13
Dr. Schein has an employment agreement terminable by the Company or Dr.
Schein upon notice, pursuant to which he will receive a minimum annual salary
of $366,610.
Mr. Clarke has an employment arrangement pursuant to which he will receive a
severance payment equal to the amount of his annual salary (exclusive of
bonus) in the event of involuntary termination for any reason other than
serious misconduct (which is defined for this purpose as fraud, embezzlement,
excessive unauthorized absences, or other serious acts of impropriety). If
such an involuntary termination occurs, the Company also has agreed that the
Company will continue to provide medical coverage for Mr. Clarke for one year
following such termination and that his then-outstanding stock options will
continue to vest and remain exercisable during such one-year period.
Dr. Oster has an employment arrangement pursuant to which the Company has
agreed to provide not less than six months notice prior to termination for any
reason other than serious misconduct (which is defined for this purpose as
fraud, embezzlement, excessive unauthorized absences, or other serious acts of
impropriety).
The Company has entered into agreements (the "Executive Severance
Agreements") with the Company's elected vice presidents and with all officers
holding higher office, pursuant to which the Company has agreed to provide
specified severance benefits to each such executive. Each of the Executive
Severance Agreements provides that if the executive's employment with the
Company is terminated by the Company for any reason other than the executive's
death, disability or for "cause" (as defined in the Executive Severance
Agreements to cover specified serious misconduct), or if the executive resigns
for "good reason" (as defined in the Executive Severance Agreements to cover a
downgrading of the executive by the Company or non-fulfillment by the Company
of certain contractual commitments to the executive), within three years
following a "change in control of the Company," the Company will make a lump
sum severance payment to the executive equal to the product determined by
multiplying the highest annual compensation paid or payable by the Company to
the executive with respect to each of the three calendar years ending with the
year in which the date of termination occurs, by the number of years
(including any fraction of a year) remaining in the three-year period
commencing with the date of change in control of the Company. The compensation
base on which such payment is calculated includes bonuses and deferred
compensation as well as salary. In addition, in lieu of any fringe benefits to
be paid to the executive with respect to the remainder of the aforesaid three-
year period, the executive will receive an additional lump sum equal to the
product of multiplying $20,000 (in the case of Dr. Schein $35,000, and in the
case of Mr. Clarke $30,000) by the number of years (including any fraction of
a year) remaining in the aforesaid three-year period, and a further payment
designed to compensate the executive for lost pension benefits by reason of
his or her termination of employment earlier than three years following the
change in control of the Company.
A "change in control of the Company" is deemed to have occurred if (i) there
has been a change in control of a nature that would be required to be reported
in response to Securities and Exchange Commission disclosure requirements for
proxy statements and Current Reports on Form 8-K relating to changes in
control; or (ii) any person, entity or group (within the meaning of certain
provisions of the Exchange Act), other than any employee benefit plan (or
related trust) sponsored or maintained by the Company or any subsidiary of the
Company, is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting
power in the election of directors; or during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board
cease for any reason to have authority to cast at least a majority of the
votes which all directors on the Board are entitled to cast, unless the
election, or the nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least two-thirds of the votes
entitled to be cast by the directors then still in office who were directors
at the beginning of the period.
The Executive Severance Agreements provide that payments required to be made
to an executive are to be reduced to the extent they would not be deductible
by the Company for federal income tax purposes due to the provisions of
Section 280G of the Internal Revenue Code, as determined by independent tax
counsel.
14
STOCK OPTION GRANTS IN 1996
The following table sets forth certain information with respect to
individual grants of new stock options in 1996 to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers:
NUMBER PERCENT
OF OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL ASSUMED ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE APPRECIATION FOR OPTION
OPTIONS/SARS GRANTED TO TERM (2)
GRANTED EMPLOYEES EXERCISE -----------------------------
IN FISCAL IN FISCAL OR BASE 5% 10%
YEAR (1) YEAR PRICE EXPIRATION -------------- --------------
NAME (#) (%) ($/SH) DATE ($) ($)
---- ------------ ------------ -------- ---------- -------------- --------------
Philip S. Schein........ 25,000 2.1% $12.75 02/20/06 200,460 508,005
100,000 8.4% $16.75 06/05/06 1,053,398 2,669,519
Robert I. Kriebel....... 15,000 1.3% $12.75 02/20/06 120,276 304,803
34,000 2.8% $13.25 09/26/06 283,317 717,981
48,000 4.0% $13.38 12/11/06 403,750 1,023,183
Donald O. Brown......... 15,000 1.3% $12.75 02/20/06 120,276 304,803
10,000 0.8% $13.25 09/26/06 83,329 211,171
Wolfgang Oster.......... 10,000 0.8% $12.75 02/20/06 80,184 203,202
10,000 0.8% $13.25 09/26/06 83,329 211,171
30,000 2.5% $13.38 12/11/06 252,344 639,489
Barbara J. Scheffler.... 15,000 1.3% $12.75 02/20/06 120,276 304,803
10,000 0.8% $13.25 09/26/06 83,329 211,171
- - --------
(1) The Company's stock option plans are administered with respect to senior
officers by the Executive Compensation Committee, made up entirely of
members of the Board of Directors who are not employees of the Company.
The Committee determines the number of options to be granted to each
senior officer and the terms of such options. All stock options granted to
the above named executives in 1996 are non-statutory options receiving no
special tax benefit, have an exercise price equal to the fair market value
on the date of grant, become exercisable at a rate of 20% or 25% per year
following the date of grant and have a term of 10 years.
(2) Potential realizable value is based on the assumption that the price of
the Company's common stock, as of the date of option grant, appreciates at
the annual rate shown (compounded annually) until the end of the 10-year
option term. These amounts are calculated based on requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future common stock price growth. If the
Company's stock price does not appreciate in value from the date of grant,
options granted in 1996 will have no value. Similarly, if the assumed
annual rates of stock price appreciation illustrated above are achieved,
total stockholder value will have increased by approximately $204,944,000
at the 5% assumed annual rate and approximately $519,368,000 at the 10%
assumed annual rate based upon the actual number of shares of common stock
outstanding as of December 31, 1996 and a stock price equal to the
weighted average stock price of all options granted in 1996 to the above
named executives. Under both assumed annual rates of stock price
appreciation illustrated above, potential value realized by the above
named executives represents less than 1.5% of the potential value
realizable by all stockholders.
15
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth a summary of options exercised during 1996
and presents the value of unexercised options as at December 31, 1996 held by
the Company's Chief Executive Officer and each of the Company's four other
most highly compensated executive officers:
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) (#) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
Philip S. Schein........ 0 0 255,000 195,000 1,976,250 542,500
Robert I. Kriebel....... 0 0 113,000 140,250 875,758 335,180
Donald O. Brown......... 7,500 103,525 68,100 70,900 527,775 355,725
Wolfgang Oster.......... 66,000 383,250 0 79,000 0 224,750
Barbara J. Scheffler.... 6,490 76,239 95,260 66,000 738,265 317,750
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(1) Total value of "in-the money" unexercised options is based upon a
calculation of the difference between the closing market value of the
Company's Common Stock on December 31, 1996 ($12.625 per share) and the
exercise price of the "in-the-money" options, multiplied by the number of
"in-the-money" option shares.
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee of U.S. Bioscience, Inc. (the
"Committee") is pleased to present its report on executive compensation. The
report describes the underlying philosophy and objectives of the Company's
executive compensation program, the various elements of the program, and the
basis for the 1996 compensation determinations made by the Committee with
respect to executive officers.
EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES
The fundamental philosophy of the Company is to ensure that executive
compensation is linked directly to continuous improvements in corporate
performance, the achievement by officers of corporate objectives which are
linked to the Company's annual strategic plan, and increases in long-term
shareholder value.
The compensation of the Company's top executives is established and reviewed
annually by the Committee, which is comprised entirely of non-employee
directors. The following guidelines have been adopted by the Committee in
making its compensation decisions:
. Providing a competitive total compensation package that enables the
Company to attract and retain key executives.
. Focusing executive behavior on fulfillment of both short and longer-term
business objectives and strategies.
. Emphasizing stockholders' interest by maintaining variable compensation
opportunities directly linked to corporate performance and stock
appreciation.
COMPENSATION PROGRAM ELEMENTS FOR 1996
The Company's executive compensation is comprised of three components, as
described below. Each component is intended to serve the Company's
compensation philosophy and guidelines.
Base salary: Base salary levels are established annually through a review of
the executives performance and experience, against industry comparisons
including pharmaceutical/biotechnology companies which are provided by an
outside consulting advisor (the "Competitive Group"). Salaries for the
Company's key executives are generally in the median range within this group
of companies, some of which are represented within the stock performance
graph.
16
Annual Incentive Compensation: The executive officers of the Company are
eligible to receive annual incentive payments. The objective of annual
incentive compensation is to deliver competitive levels (using the Competitive
Group) of total cash compensation (base salary and incentive award) when
annual financial and operational accomplishments are made. The specific areas
used to measure key executive performance are described below:
(1) Individual performance during the year;
(2) Progress made by the Company in product development, clinical
preparation and development of drugs for regulatory approval;
(3) The Company's preparation for the commercial launch of new products
and/or new indications for approved products, and general
organizational readiness; and
(4) Financial goals--keeping within budget guidelines.
Each of these factors is considered in evaluating the performance of the
Chief Executive Officer (CEO) and each executive officer. These performance
evaluations are reviewed by the Committee for final determination of incentive
awards.
The performance of the CEO is evaluated by the Committee based on individual
performance and the overall progress of the Company in the specific areas
described above viewed retrospectively by the Committee. Accomplishments
considered by the Committee in the overall judgment of the 1996 incentive
awards are described below:
. In 1996, the Company made significant progress in moving its compounds
through the regulatory process:
In the United States, the FDA granted the Company marketing clearance for
expanded labeling for Ethyol(R) (amifostine) to include use in patients
with non-small cell lung cancer for the reduction of cumulative renal
(kidney) damage associated with repeated administration of cisplatin-based
chemotherapy.
In Canada, the Company achieved regulatory approval for Ethyol for use as
a cytoprotective agent against the cumulative renal toxicities associated
with cisplatin and the hematological toxicities associated with
cyclophosphamide as well as platinum anticancer agents such as carboplatin
and cisplatin in patients with advanced solid tumors of non-germ cell
origin.
In Europe, the European Committee for Proprietary Medicinal Products
approved extended labeling for Ethyol by adding a claim for protection
from cumulative nephrotoxicity (kidney damage) of cisplatin and cisplatin-
containing regimens in patients with advanced solid tumors of non-germ
cell origin.
In Australia, Ethyol was cleared for marketing for use in cancer patients
to decrease the incidence of neutropenia-related fever and infection
induced by DNA-binding chemotherapeutic agents and to decrease the
incidence of acute and cumulative nephrotoxicity (kidney damage)
associated with platinum-based therapy, and for the provision of better
adherence to these types of chemotherapy regimens.
. Ethyol was launched in the United States in April 1996.
. The Company entered into a copromotion agreement for Hexalen(R)
(altretamine) and NeuTrexin(R) (trimetrexate glucuronate for injection)
in the United States with ALZA Corporation.
. The Company appointed C. Boyd Clarke as President and Chief Operating
Officer. He was also elected to the Board of Directors.
. The Company amended its European distribution agreement for Ethyol with
an affiliate of Schering-Plough Corporation.
. Additional licenses and distribution agreements were executed with
commercial organizations covering additional international markets.
17
. The Company received a Notice of Allowance from the United States Patent
and Trademark Office of a novel dosage form of room temperature stable
crystalline amifostine (Ethyol) suitable for parenteral administration,
for example by injection. The Company was granted this U.S. patent in
January 1997, and the FDA has cleared for marketing this crystalline
dosage form of Ethyol.
. The Company substantially reduced its net loss from the target budgeted
for 1996.
Target incentive compensation award levels for key executive officers are
slightly lower than industry standards as measured using the Competitive
Group. Incentives are, however, rational given the Company's stage of
development and relatively greater focus on longer-term (versus annual)
objectives. The incentive award target level for 1996 was 25% of base salary,
and actual incentive awards were based on performance in the areas described
above. The Committee set actual incentive awards for executive officers for
1996 at a maximum of 25% of base salary levels. The competitive position of
total cash compensation awarded to the Company's executives varies, but are
competitive in the median range for all positions.
Stock Option Programs: The Committee strongly believes that the interests of
stockholders are best served by linking executives' financial success with the
Company's stock performance. Therefore, the Company maintains a stock option
program pursuant to which the Committee grants stock options to executives
with an exercise price equal to the fair market value on the date of grant.
The target award for each executive position is based on historical practice
of the company and also takes into account competitive norms for awarding of
stock options. Whether an individual receives more or less than his or her
target grant is based on the result of an individual performance review which
measures such individual's overall job performance. In making stock option
awards, the Executive Compensation Committee does not consider prior grants or
the amount of stock options currently held by an executive officer before
granting the executive officer new awards.
As a young company, the Committee believes stock options are a particularly
important and useful compensation element in the Company's efforts to attract,
retain, motivate and reward key executives who have been successful in larger,
more established companies.
1996 COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS
The Committee met in February 1996 to set salary levels for 1996 for the
Company's executive officers, to award bonuses with respect to 1995 and to
grant annual stock option awards to the Company's executive officers. The
Committee met on two occasions in June 1996 to compare the total compensation
of the Company's executive officers with the compensation of executive
officers of companies in the Competitive Group. At the June meetings, the
Committee increased the annual stock option award to the CEO to bring that
portion of his compensation to the median level, using the Competitive Group.
In addition, the Committee increased the salary of one executive officer to
bring that portion of the officer's compensation to an appropriate level with
respect to the Competitive Group and the salaries of the employees who report
to such officer.
The Committee met with a compensation consultant in September 1996 to
analyze the total executive compensation for the five highest paid executive
officers of the Company, utilizing data for the Competitive Group as well as
available general industry information. This analysis revealed that the
Company's stock option guidelines for annual grants to executive officers
(other than the CEO whose annual award had been increased in June 1996) were
no longer comparable to the annual awards made to executive officers by
companies in the Competitive Group. As a result, the Committee recommended,
and the Board of Directors adopted, amendments to its stock option guidelines,
making the annual awards to executive officers comparable to their peers in
the Competitive Group. In addition, the Committee awarded supplemental stock
options to the executive officers (other than the CEO), bringing their
aggregate annual grants for 1996 up to the respective target levels of the new
guidelines.
The Committee also took action in August, September and December 1996 with
respect to the compensation of two new executive officers and of two executive
officers who were promoted during 1996.
18
In February 1997 the Executive Compensation Committee awarded Philip S.
Schein, M.D., the Company's CEO, a bonus with respect to 1996 of 25% of base
salary, the 1996 target level, and a stock option for 100,000 shares, the 1996
target level. These awards recognized Dr. Schein's significant role in the
Company's progress in 1996, as set forth above.
The Committee reviewed the performance of the other executive officers
against the same key elements that were considered significant in the
evaluation of the CEO. The executive officers were awarded bonuses of 25% of
base salary and stock options at target levels, which aggregated options for
388,000 shares.
At its February 1997 meeting, the Executive Compensation Committee
determined to increase most executive officer salaries for 1997 by an average
of 3.2%.
THE LEGISLATIVE CAP ON DEDUCTIBILITY OF PAY
The Internal Revenue Code imposes a $1 million dollar limit on the
deductibility of pay for executives. The Company's cash compensation level is
far below the limit. Therefore, this legislation will not impact current pay
levels.
The Company believes that the stock options granted to their executives are
exempt from the limitations of the regulation, because they are a form of
"qualified performance-based compensation."
The foregoing report has been furnished by the members of the Committee who
are listed below. No member of the Committee is a former or current officer or
employee of the Company.
February 27, 1997 Paul Calabresi, M.D., Chairman
Allen Misher, Ph.D.
Betsey Wright
19
STOCK PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return on its Common Stock for a five-year period (December 31, 1991 to
December 31, 1996) with the cumulative total stockholder return of the AMEX
Biotechnology Index and the AMEX Market Value Index. Assumes dividends, if
any, have been reinvested.
U.S. BIOSCIENCE, INC.
1997 PROXY
STOCK PERFORMANCE GRAPH DATA
US BIOSCIENCE AMEX BIOTECH INDEX AMEX MARKET VALUE IND
VALUE INDEX VALUE INDEX VALUE INDEX
9.5 12.18 51.25 22.60 373.84 94.63
12.375 15.87 50.01 22.05 378 95.68
19.5 25.00 73.39 32.36 308.11 77.99
78 100.00 226.78 100.00 395.05 100.00
22.25 28.53 170.64 75.24 399.23 101.06
16.75 21.47 115.78 51.05 477.15 120.78
7.125 9.13 82.06 36.18 433.66 109.77
9.5 12.18 133.27 58.77 548.23 138.77
12.625 16.19 144.3 63.63 583.28 147.65
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Drs. Calabresi and Misher
and Ms. Wright.
Dr. Schein serves as a Director of Medicis Pharmaceutical Corporation, and
also served as a member of its Stock Option and Executive Compensation
Committee until May 1996. Mr. Shacknai, who is a member of the U.S.
Bioscience, Inc. Board of Directors, is Chairman and Chief Executive Officer
of Medicis Pharmaceutical Corporation. Mr. Shacknai did not serve on the
Executive Compensation Committee of U.S. Bioscience, Inc. during 1996.
20
RELATED TRANSACTIONS
Robert L. Capizzi resigned as Executive Vice President-Worldwide Research
and Development effective March 4, 1996. Since then, Dr. Capizzi has served as
Senior Scientific Adviser, a part-time position which he will continue to hold
through May 31, 1997 at a salary at the annual rate of $203,280. On March 11,
1996 the Company granted to Dr. Capizzi an option to purchase 10,000 shares of
common stock at an exercise price of $13.875 per share, the fair market value
of the Company's common stock on that date (as adjusted to reflect the reverse
stock split effected in April 1996). The option will become exercisable as to
10,000 shares only at the time, if ever, of a submission by the Company to the
United States Food and Drug Administration ("FDA") of a supplemental new drug
application, on or before March 31, 2001, for Ethyol's use as a bone marrow
stimulation in myelodysplastic bone marrow syndrome, and as to an additional
10,000 shares only at such time, if ever, as the Company obtains, on or before
March 31, 2001, approval by the FDA of an Ethyol supplemental new drug
application for bone marrow stimulation indication in the setting of
chemotherapy induced myelosuppression, and provided that the Company receives,
if requested, assistance from Dr. Capizzi in obtaining such approval. The
option granted to Dr. Capizzi expires March 11, 2006.
For services as special FDA consultant to the Company, on December 16, 1992
Jonah Shacknai received a stock option to purchase an aggregate of 15,000
shares of the Company's Common Stock. By its terms, this option becomes
exercisable in increments of 5,000 shares at such time before December 17,
1997 as the Company obtains an FDA approval (if Mr. Shacknai, at the Company's
request, assisted the Company with respect to such approval) to market one of
its pharmaceutical products. The exercise price of these options is $22.00 per
share, the fair market value on the date of grant. Any of these options which
become exercisable will expire on December 16, 2002. On December 8, 1995, the
date on which Ethyol(R) was cleared for marketing by the FDA, Mr. Shacknai's
option to purchase 5,000 shares of the Company's Common Stock became
exercisable. All amounts with respect to this option have been adjusted to
reflect the reverse stock split effected in April 1996.
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP to serve
as independent auditors for the Company for the current fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Meeting
and will have the opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the directors and certain officers of the Company and persons who own more
than ten percent of the Company's Common Stock, to file with the Securities
and Exchange Commission initial statements of beneficial ownership and
statements of changes in beneficial ownership of Common Stock of the Company.
Such directors, officers and more than ten percent stockholders are required
by regulation to furnish the Company with copies of all Section 16(a)
statements they file.
To the Company's knowledge, based solely on a review of the copies of such
statements furnished to the Company and written representations of such
directors and officers that no other statements were required, all fiscal year
1996 Section 16(a) filing requirements applicable to its directors, officers
and more than ten percent stockholders were complied with.
21
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in 1998 must be received by the Company at its principal office
in West Conshohocken, Pennsylvania, no later than November 21, 1997 in order
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting. Stockholder proposals should be directed to
Martha E. Manning, Secretary, at the address of the Company set forth on the
first page of this proxy statement.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND
THE SCHEDULES THERETO BUT EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST
SHOULD BE DIRECTED TO ROBERT I. KRIEBEL, EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, AT THE ADDRESS OF THE COMPANY APPEARING ON THE FIRST PAGE
OF THIS PROXY STATEMENT.
By Order of the Board of Directors,
Martha E. Manning
Secretary
22
- - --------------------------------------------------------------------------------
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF U.S.
BIOSCIENCE, INC.
U.S. BIOSCIENCE, INC.
ONE TOWER BRIDGE, 100 FRONT STREET, WEST CONSHOHOCKEN, PA 19428
The undersigned, a stockholder of U.S. BIOSCIENCE, INC. hereby constitutes
and appoints PHILIP S. SCHEIN, ROBERT I. KRIEBEL and MARTHA E. MANNING, and
each of them acting individually, as the attorney and proxy of the
undersigned, with full power of substitution, for and in the name and stead of
the undersigned, to attend the Annual Meeting of Stockholders of the Company
to be held on April 24, 1997, at 10:00 a.m., at The Philadelphia Marriott
West, 111 Crawford Avenue, West Conshohocken, Pennsylvania, and any
adjournment or postponement thereof, and thereat to vote all shares of Common
Stock which the undersigned would be entitled to vote if personally present.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE ELECTION OF ALL NINE NOMINEES FOR DIRECTOR AND FOR THE PROPOSAL
TO AMEND THE COMPANY'S 1992 STOCK OPTION PLAN. THIS PROXY ALSO DELEGATES
DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
Please mark
[x] your votes
as this
1. NOMINEES FOR ELECTION AS DIRECTORS ARE:
Philip S. Schein, M.D., C. Boyd Clarke, Robert I. Kriebel, Paul Calabresi,
M.D., Robert L. Capizzi, M.D., Douglas J. MacMaster, Jr., Allen Misher,
Ph.D., Ellen V. Sigal, Ph.D. and Betsey Wright.
FOR WITHHELD
To vote FOR all To WITHHOLD
nominees check [_] AUTHORITY to [_]
this box vote for all
nominees check
this box
FOR AGAINST ABSTAIN
2. PROPOSAL TO AMEND THE
COMPANY'S 1992 STOCK [_] [_] [_]
OPTION PLAN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING.
To WITHHOLD AUTHORITY to vote for any individual nominee, so indicate on the
line below (your shares will be voted FOR the remaining nominees):
- - -----------------------------------------------
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEARS ON THIS PROXY. WHEN
SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE ADD YOUR TITLE AS SUCH. IF SIGNER IS A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY DULY AUTHORIZED OFFICER OR OFFICERS. WHERE STOCK IS ISSUED
IN THE NAME OF TWO OR MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN. THE
UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY
STATEMENT AND ANNUAL REPORT OF U.S. BIOSCIENCE, INC.
Signature(s) Date 1997
-------------------------------------------- ----,
Please sign, date and return in the enclosed postage-paid envelope.
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FOLD AND DETACH HERE