sec document

DEF 14A 1 formdef14a04618_12042002.htm sec document

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14(a)-12

BIOSYNTECH, INC.
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(Name of Registrant as Specified in Charter)

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(Name of Person(s) filing Proxy Statement, if other than 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)(1) and 0-11.

(1) Title of each class 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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(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:

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(2) Form, Schedule or Registration Statement no.:

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(4) Date Filed:

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BIOSYNTECH, INC.
475 Boulevard Armand-Frappier
Laval, Quebec, Canada H7V 4B3
--------------

NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 4, 2002
--------------

To the Holders of Common Stock of BioSyntech, Inc. and
Holders of Exchangeable Preferred Stock of Bio Syntech Canada, Inc.:

We invite you to attend our annual meeting of stockholders on
December 4, 2002, at 3:00 p.m. eastern standard time, at the Montreal Marriott
Chateau Champlain, 1 Place du Canada, Montreal, Quebec, Canada
(Tel:1-800-200-5909). At the annual meeting, you will hear an update on our
operations, have a chance to meet some of our directors and executives and act
on the following matters:

1. To elect two Class II directors to our board of directors to
serve for a three-year term;

2. To approve an amendment to our employee stock option incentive
plan to increase the total number of shares of our common stock
available for issuance under such option plan from 3,900,000
shares to 5,000,000 shares;

3. To ratify the appointment by the Board of Directors of KPMG LLP
as our independent auditors for the fiscal year ending March
31, 2003; and

4. To consider and act upon such other business as may properly
come before the annual meeting and any adjournment thereof.

This booklet includes this formal notice of the annual meeting and
the proxy statement. The proxy statement tells you more about the agenda and
procedures for the annual meeting. It also describes how our board of directors
operates and gives personal information about our director nominees.

Stockholders of record at the close of business on October 31, 2002
will be entitled to vote at the annual meeting. In addition, holders of record
of shares of exchangeable preferred stock of Bio Syntech Canada, Inc. as of the
close of business on October 31, 2002 have voting rights in that number of
shares of our common stock equal in number to the number of shares of such
exchangeable preferred stock held. Even if you only own a few shares, we want
your shares to be represented at the annual meeting. I urge you to complete,
sign, date, and return your proxy card, if you hold shares of our common stock,
or your voting instruction card, if you hold shares of exchangeable preferred
stock, promptly in the enclosed envelope.

We have also provided you with the exact place and time of the
annual meeting if you wish to attend in person.

Dr. Amine Selmani
President, Chief Executive Officer and Secretary
November 5, 2002
Laval, Quebec

BIOSYNTECH, INC.
475 Boulevard Armand-Frappier
Laval, Quebec, Canada H7V 4B3
(450) 686-2437

PROXY STATEMENT
--------------------------------

GENERAL INFORMATION

This proxy statement contains information related to the annual
meeting of stockholders of BioSyntech, Inc. to be held on Wednesday, December 4,
2002, at 3:00 p.m. eastern standard time, at the Montreal Marriott Chateau
Champlain, 1 Place du Canada, Montreal, Quebec, Canada, and any adjournment
thereof. This proxy statement was first mailed to our stockholders and holders
of exchangeable preferred stock on approximately November 8, 2002.

ABOUT THE ANNUAL MEETING

WHAT IS THE PURPOSE OF THE ANNUAL MEETING?

At the annual meeting, stockholders will hear an update on our
operations, have a chance to meet some of our directors and executives and will
act on the following matters:

1) To elect two Class II directors to our board of directors to
serve for a three-year term;

2) To approve an amendment to our employee stock option incentive
plan to increase the total number of shares of our common stock
available for issuance under such option plan from 3,900,000
shares to 5,000,000 shares;

3) To ratify the appointment by the Board of Directors of KPMG LLP
as our independent auditors for the fiscal year ending March
31, 2003; and

4) To consider and act upon such other business as may properly
come before the annual meeting and any adjournment thereof.

WHO MAY VOTE

Stockholders of BioSyntech, Inc., as recorded in our stock register
on October 31, 2002, may vote at the annual meeting. As of that date, we had
29,222,250 shares of common stock outstanding, which includes 7,768,332 shares
reserved for the exchange of the Class A Exchangeable Preferred Stock of Bio
Syntech Canada Inc. We have only one class of voting shares. All shares in this
class have equal voting rights of one vote per share. Holders of record of
shares of exchangeable preferred stock of Bio Syntech Canada Inc. as of October
31, 2002, have voting rights in the number of shares of our common stock held in
trust equal to the number of shares of such exchangeable preferred stock held by
them. References to "stockholders" in this proxy statement include holders of
exchangeable preferred stock, unless the context otherwise requires. References
to "proxy card" in this proxy statement should be interchanged with "voting
instruction card" if you hold shares of exchangeable preferred stock, unless the
context otherwise requires.

-1-

HOW TO VOTE

You may vote in person at the annual meeting or by proxy. We
recommend that you vote by proxy even if you plan to attend the annual meeting.
You can always change your vote at the annual meeting.

Our board of directors is asking for your proxy. Giving your proxy
means that you authorize us, or the trustee if you hold shares of exchangeable
preferred stock, to vote your shares at the annual meeting in the manner you
direct. You may vote for all, some, or none of our director nominees. You may
also vote for or against the other proposals or abstain from voting.

If you sign and return the enclosed proxy card but do not specify
how to vote, we will vote your shares in favor of all our director nominees, the
approval of the increase of shares reserved for issuance under our Stock Option
Incentive Plan and the ratification of the appointment by our board of directors
of KPMG LLP as our independent auditors.

You may receive more than one proxy card depending on how you hold
your shares. If you hold shares through someone else, such as a broker, you may
get materials from it asking how you want to vote. The latest proxy card
received from you will determine how your shares will be voted.

REVOKING A PROXY

The execution of a proxy or sending voting instructions to the
trustee, as the case may be, will in no way affect your right to attend the
annual meeting and to vote in person. Any proxy or voting instructions to the
trustee executed and returned by you may be revoked by you at any time
thereafter if you give written notice of revocation to our Secretary at the
address shown above prior to the vote to be taken at the annual meeting, or by
your execution of a subsequent proxy or voting instruction to the trustee that
is presented at the annual meeting or if you attend the annual meeting and vote
by ballot, except as to any matter or matters upon which a vote shall have been
cast under the authority conferred by such proxy or voting instruction to the
trustee prior to such revocation.

QUORUM

The holders of a majority of the outstanding shares of our common
stock, whether present in person or represented by proxy, will constitute a
quorum for each of the matters identified in the notice of this year's annual
meeting, as well as for any other matters that may come before the annual
meeting.

VOTES NEEDED

Broker "non-votes" and the shares as to which a stockholder abstains
from voting are included for purposes of determining whether a quorum of shares
is present at a meeting. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner. Brokers that do not
receive instructions from the stockholders are entitled to vote on the election
of directors, the approval of the amendment to our employee stock option
incentive plan and the ratification of the auditors.

A plurality of the votes cast is required for the election of our
Class II directors. In tabulating the vote on the election of directors,
abstentions and broker "non-votes" will be disregarded and will have no effect
on the outcome of such vote.

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The affirmative vote of a majority of the votes cast is required to
approve the adoption of the increase of shares reserved for issuance under our
Stock Option Incentive Plan and the proposal to ratify the appointment by our
board of directors of KPMG LLP as our independent auditors. In tabulating the
votes on such proposals to approve the adoption of the increase of shares
reserved for issuance under our Stock Option Incentive Plan and ratify the
appointment of KPMG LLP, abstentions and broker non-votes are not considered
shares entitled to vote on the applicable proposals and are not included in
determining whether such proposals are approved.

ATTENDING IN PERSON

Only our stockholders and their proxy holders, holders of
exchangeable preferred stock and their trustee, and our invited guests may
attend the annual meeting. If you wish to attend the annual meeting in person
but you hold your shares through someone else, such as a broker, you must bring
proof of your ownership and an identification with a photo to the annual
meeting. For example, you could bring an account statement showing that you
owned our shares as of October 31, 2002 as acceptable proof of ownership.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains information as of October 31, 2002
regarding the beneficial ownership of shares of our common stock by our current
directors and executive officers as defined in Item 402(a)(2) of Regulation S-B
and those persons or entities who, to our knowledge, beneficially own more than
5% of our common stock. For the purposes of calculating beneficial ownership,
the shares of common stock beneficially owned by Messrs. Selmani, Savard,
Beaudry, Alary, Ranger, Leduc, Cloutier, Gupta, Buschmann, DesRosiers and Shive
and by Ms. Lefebvre and Ms. Duval include shares of our common stock issuable
upon the exercise of stock options exercisable within sixty days after October
31, 2002. The address of all of our officers and directors and owners of more
than 5% of our common stock is 475 Boulevard Armand-Frappier, Laval, Quebec,
Canada H7V 4B3, unless otherwise specified.

Shares of Common Percentage of Common
Name and Address of Stock Beneficially Stock Beneficially
Beneficial Owner Owned Owned
------------------------ ------------------ --------------------

9083-1496 Quebec Inc. 7,640,000 26.2%

Amine Selmani 9,182,500 30.8%

Serge Savard 289,800 *
1010 rue De la Gauchetiere
West, Suite 600
Montreal, Quebec, Canada
H3B 2N2

Denis N. Beaudry 100,000 *
3744 Jean Brillant, Suite
6332, Montreal, Quebec,
Canada H3T 1P1

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Shares of Common Percentage of Common
Name and Address of Stock Beneficially Stock Beneficially
Beneficial Owner Owned Owned
------------------------ ------------------ --------------------

Pierre Alary 100,000 *
1101 Parent Street, Saint-
Bruno, Quebec, Canada J3V 6E6

Monique Lefebvre 60,000 *

Pierre Ranger 200,000 *
2655 boul. Daniel Johnson,
Laval, Quebec, Canada H7P 5Y2

Claude Leduc 0 -

Gilles Cloutier 0 -

Ajay Gupta 200,000 *

Michael Buschmann 500,000 1.7%

Eric DesRosiers 50,000 *

Matthew Shive 41,300 *

Lucie Duval 70,000 *

All Officers and Directors 10,793,600 34.9%
as a group (11 persons)

The percentages shown with an '*' mean that the director or
executive officer owns less than 1.0% of the outstanding shares of our common
stock. The information shown above also includes rights to acquire shares of our
common stock through the exchange of exchangeable preferred stock.

Dr. Selmani has voting and dispositive power with respect to the
7,640,000 shares of exchangeable preferred stock owned by 9083-1496 Quebec Inc.
Dr. Selmani also may be deemed the beneficial owner of 412,500 shares of our
common stock issuable upon exercise of his options. Monique Jarry, spouse of Dr.
Selmani, holds 885,000 shares of our common stock and options to purchase
200,000 shares of our common stock, which are also included in the beneficial
ownership of Dr. Selmani reported above.

Denis N. Beaudry is the representative of Polyvalor, Inc.
("Polyvalor") on our board of directors. The shares reflected in the table above
do not include 1,072,000 shares of our common stock beneficially owned by
Polyvalor, Inc. as to which Mr. Beaudry disclaims beneficial ownership. See
"Certain Relationships and Related Transactions" for a description of the
agreements under which Polyvalor is entitled to designate a member to our board
of directors.

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Dr. Michael Buschmann holds 290,000 shares of our common stock and
may be deemed the beneficial owner 80,000 shares of our common stock issuable
upon the exercise of his options. Caroline Hoemann, spouse of Dr. Buschmann,
holds 100,000 shares of our common stock and options to purchase 30,000 shares
of our common stock, which are also included in the beneficial ownership of Dr.
Buschmann reported above.

All the shares of our common stock beneficially owned by Messrs.
Alary and Beaudry, Drs. Ranger, Gupta, and DesRosiers and Ms. Duval are options
to purchase shares of our common stock. The beneficial ownership of shares of
our common stock of Mr. Savard, Ms. Lefebvre and Dr. Shive include options to
purchase 150,000, 50,000 and 40,000, respectively, shares of our common stock.

Disclosure of Equity Compensation Plan Information (as of March 31, 2002)

----------------------------------------------------------------------------------------------------------------
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining available for
exercise of outstanding future issuance under equity
outstanding options, options, warrants compensation plans
warrants and rights and rights (excluding securities
(a) reflected in column (a))
----------------------------------------------------------------------------------------------------------------
Equity compensation 3,152,000 (1) 1.73 2,248,000
plans approved by
security holders(1)

Equity compensation _ _ _
plans not approved by
security holders

Total 3,152,000 (1) 1.73 2,248,000

---------------------

(1) Includes options to purchase an additional 200,000 shares of common
stock that have been committed to a third party vendor of the Company and are
subject to the approval of our Board of Directors.

-5-

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our amended and restated certificate of incorporation
provides for the classification of our board of directors into three classes.
The current term of the Class II directors will expire at this year's annual
meeting and when their successors are duly elected and qualified. One of our
director nominees currently serves as a Class II director. Jean-Yves Bourgeois,
a former Class II director resigned on August 22, 2002 and was replaced by
Monique Lefebvre. Dr. Pierre Ranger, a current Class II director, has elected
not to be nominated for reelection this year. In addition, Pierre Alary, a Class
I director resigned as of November 1, 2002 and was replaced by Claude LeDuc.
There was no disagreement between our board of directors and any of Messrs.
Bourgeois or Alary or Dr. Ranger.

Management has no reason to believe that any of its director
nominees will be unable or unwilling to serve as a director, if elected. Should
any nominee not be a candidate at the time of this year's annual meeting (a
situation which we do not anticipate to happen), proxies may be voted in favor
of the remaining nominees and may be also voted for a substitute nominee
selected by our board of directors.

Unless authority is specifically withheld, proxies will be voted for
the election of the nominees named below, to serve as Class II directors for a
term of office to expire at the annual meeting of stockholders in 2005 and until
their successors have been duly elected and qualified. The Class I and Class III
directors will continue to serve for the remainder of their respective terms,
with the Class III directors having a term that will expire at the 2003 annual
meeting of stockholders and the Class I directors having a term that will expire
at the 2004 annual meeting of stockholders.

The following table lists our nominees as directors. There are no
family relationships among the directors, director nominees and our executive
officers.

Nominee Proposed Class Age
------- -------------- ---

Monique Lefebvre Class II 55

Gilles Cloutier PhD Class II 58

MONIQUE LEFEBVRE, 55 - Ms. Lefebvre has been a director of
BioSyntech since August 2002. Ms. Lefebvre is currently working as a private
consultant. She serves on the boards of several publicly-traded Canadian
corporations: Groupe Transcontinental G.T.C. Ltee, a printing and communication
company, Cognicase, an implementer of business solutions that leverage
information technologies, Theratechnologies, a biopharmaceutical company, ART
Advanced Research Technologies Inc., a medical imagery company, and Desjardins
Securite Financiere, a life-insurance and financial services company. From
January 2001 to January 2002, Ms. Lefebvre served as President of the Montreal
Transition Committee, a committee entrusted to set-up a new administrative
structure for the City of Montreal (Canada). From 1998 to 2001, Monique Lefebvre
was Vice-President, Quebec and Atlantic Canada, for Ericsson Canada Inc., a
manufacturer of telecommunications equipment. From 1996 to 1998, Ms. Lefebvre
was President of Quebecor Multimedia Inc., a company providing Internet based
services and electronic commerce solutions to Quebecor Printing customers.

GILLES CLOUTIER, PhD, 58 - Dr. Cloutier has over 30 years of
experience in the pharmaceutical industry, including five years with Contract
Research Organizations providing strategic support to the biotechnology and

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pharmaceutical industry. His experience includes US, Canada, and European drug
development in all phases from IND to NDA filings, both in strategic planning
and the execution of the work needed for successful approval of several
investigational agents. Since April 2001, Dr. Cloutier has been the Chairman of
the Board of Directors and Chief Business Officer of MoliChem Medicines, a
biotechnology company. From 2000 to 2002, Dr. Cloutier was President and Chief
Executive Officer of Northern Therapeutics Inc., a biotechnology company. Dr.
Cloutier was Founder of United Therapeutics Corporation, a biotechnology
company, and from April 1997 to 2002, he served as its Executive Vice President
and Director. Dr. Cloutier is also the founder of Cato Pharma Canada Inc., a
pharmaceutical research and development organization. Dr. Cloutier has also been
working with major pharmaceutical companies such as Quintiles Inc., Burroughs
Wellcome, Abbott Laboratories and Sandoz Canada. Dr. Cloutier has a PhD in
pharmacology, a M.Sc in biochemical pharmacology and a B.Sc. in Pharmacy. Since
1976, Dr. Cloutier has held various university and board appointments in the
pharmaceutical field. Dr. Cloutier is the author of over 30 medical
publications.

Class II directors must be elected by a plurality of the votes cast,
in person or by proxy, at this year's annual meeting.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ELECTION OF EACH OF ITS DIRECTOR NOMINEES.

INFORMATION REGARDING OTHER DIRECTORS

AMINE SELMANI, PhD, 45 - CLASS III DIRECTOR - Dr. Selmani has served
as our President and Secretary since February 2000, as our Chief Executive
Officer from February 2000 to September 2000 and from January 2001 to the
present, as our Chairman of the Board from February 2000 until August 2002 and
Chairman of the Board, and President and Chief Executive Officer of Bio Syntech
Canada and its predecessor corporation since its inception in November 1997.
Prior to founding the predecessor corporation of Bio Syntech Canada in May 1995,
Dr. Selmani had eight years of teaching experience at the Chemical Engineering
Department and Biomedical Institute of Ecole Polytechnique as an Associate
Professor from 1992 to 1997 and as an Assistant Professor from 1989 to 1992. Dr.
Selmani received his Bachelor of Science and Master of Science Degrees in
Physical Chemistry in 1979 and 1981, respectively, from the University of
Bordeaux, France. He also obtained his Doctoral and Post Doctoral Degrees in
Materials Science from the University of Montreal in 1985 and Dalhousy
University in 1988, respectively.

SERGE SAVARD, 55 - CLASS I DIRECTOR - Mr. Savard has been a director
since August 2001 and has been our Chairman of the Board since August 2002.
Since 1993, Mr. Savard has been a partner with Thibault, Messier, Savard, a real
estate investment firm. Prior to 1993, Mr. Savard served in various capacities
with the Montreal Canadiens Hockey Club, including as Vice President and General
Manager. Mr. Savard is deeply involved in several aspects of amateur sports and
is associated with several philanthropic organizations.

DENIS N. BEAUDRY, 59 - CLASS III DIRECTOR - Mr. Beaudry has been a
director of BioSyntech since February 2000. Mr. Beaudry is the founding
President and general manager of Gestion Univalor ("Univalor"), Montreal,
Quebec, Canada, a limited partnership formed by Universite de Montreal and its
affiliated schools and hospitals for the purpose of commercializing the
intellectual property of the researchers from these institutions. Univalor's
role consists of enhancing the value of research results for commercial use by

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means of start-up of high-tech companies in which Univalor holds a participation
or interest. From 1984 to 1998, he has occupied the position of director of the
Centre de Developpement Technologique of the Ecole Polytechnique whose sphere of
activities includes technology transfer, licensing of technology and software,
joint creation with private industry of laboratories and research centers,
strategic alliances, research partnerships, industrial chairs and the emergence
of high technology enterprises. Mr. Beaudry was President of the Quebec
Association of University Research Directors in 1992, and is at present a member
of the Board of Directors of Odotech Inc., COESI Inc., LTRIM Technologies,
Phostech Lithium Inc. and Cardianove Inc.

CLAUDE LeDUC, 46 - CLASS I DIRECTOR - Since December 2000, Mr. Leduc
has been employed by Genzyme Biosurgery, a company offering biosurgery services,
as Director for International Markets. Mr. LeDuc has full marketing and
management responsibility for supporting and managing the BioOrthopaedics
distribution partners in all global assigned regions, as well as providing
franchise support to the worldwide country managers. Mr. LeDuc joined the
Genzyme International Group in Cambridge, Ma., following his highly successful
position as National Director for Canada, and his nine year career at Biomatrix
Inc., a Biomaterial Medical applications company, where he was responsible with
various marketing, sales and business development roles in Canada and Europe.
Mr. LeDuc started his health industry career 17 years ago with Syntex
Laboratories, a multinational pharmaceutical company, winning a National
Performance Award in sales within his first two years. Mr. LeDuc then progressed
to the Biotechnology sector in 1991 with Serono Laboratories as a regional
marketing and sales manager and then to Biomatrix, Inc.

PIERRE RANGER, MD, 46 - CLASS II DIRECTOR - Dr. Ranger has been a
director of BioSyntech since February 2000. Since 1991, Dr. Ranger has been a
teaching professor in the orthopedic residents program at the CMDP Sacred Heart
Hospital of Montreal. Dr. Ranger received his Doctoral of Medicine Degree from
the University of Montreal in 1979 and Diploma of Sports Medicine in 1996.

Denis Beaudry is the nominee of Polyvalor, Inc. ("Polyvalor").
Polyvalor has the right to appoint one nominee to the Board of Directors under
the Assignment Agreement (as hereinafter defined). There are no family
relationships among directors and executive officers.

MEETINGS AND COMMITTEES

Our board of directors held three formal meetings during the fiscal
year ended March 31, 2002 and, from time to time, our board of directors also
acted by unanimous written consent. Except for Messrs. Beaudry and Savard, all
our current directors attended all the meetings of the board of directors. Our
board has an audit committee and a compensation committee. We do not have a
standing nominating committee. The customary functions of such committee are
performed by the entire board of directors.

The compensation committee administers our employee stock option
incentive plan and makes recommendations concerning salaries and incentive
compensation for executive officers, employees and consultants. For the fiscal
year ended March 31, 2002, the compensation committee was composed of Mr.
Bourgeois (Chairman), Mr. Alary and Dr. Ranger.

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AUDIT COMMITTEE REPORT

The audit committee reviews our financial statements and accounting
policies, resolves potential conflicts of interest, receives and reviews the
recommendations of our independent auditors and confers with our independent
auditors with respect to the training and supervision of internal accounting
personnel and the adequacy of internal accounting controls. For the fiscal year
ended March 31, 2002, the members of our audit committee were Mr. Alary
(Chairman), Dr. Selmani and Mr. Bourgeois.

The audit committee held four meetings during the fiscal year ended
March 31, 2002. All its members were present for at least three meetings. The
members of the audit committee have reviewed and discussed our audited financial
statements with our management and have discussed matters required to be
discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
Section 380) with Ernst & Young LLP, our independent auditors for the fiscal
year ended March 31, 2002. The audit committee has received the written
disclosures and the letter from Ernst & Young LLP, as required by the
Independent Standards Board Standard No. 1, and have recommended that the
audited financial statements be included in our annual report for the fiscal
year ended March 31, 2002.

BOARD OF DIRECTORS COMPENSATION

We do not currently compensate directors for their service on the
board of directors. Our directors are reimbursed for their expenses incurred in
attending meetings of the board of directors. Under the terms of our employee
stock option incentive plan, directors are eligible for the grants of stock
options.

In November 2001, options to purchase 50,000 shares of our common
stock at an exercise price of USD $0.50 per share were granted to each of
Messrs. Beaudry, Alary, Bourgeois, and Savard and to Dr. Ranger and options to
purchase 362,500 shares of our common stock at an exercise price of USD $0.50
per share were granted to Dr Selmani. On August 22, 2002, options to purchase
100,000 shares of our common stock at an exercise price of USD $0.40 per share
were granted to Mr. Savard. On October 17, 2002, options to purchase 50,000
shares of our common stock at an exercise price of USD $0.40 per share were
granted to Ms. Lefebvre.

The board of directors will determine the remuneration of our
directors during the current and subsequent fiscal years.

MANAGEMENT

EXECUTIVE OFFICERS

Our other executive officers are as follows:

AJAY GUPTA PhD, 40 - Dr. Gupta has been our Executive
Vice-President, Therapeutics Delivery Division since May 2002. He also served as
our Chief Operating Officer from November 2000 to May 2002. From June 2000 to
May 2002, we employed Dr. Gupta as our Director for Business and Product
Development. From May 1999 to June 2000, Dr. Gupta worked for ITR Laboratories
Canada Inc., a company that conducts nonclinical toxicology studies, as
Director, Analytical/ADME/Pharmacy, being responsible for the overall
administration and scientific direction of the three departments. From January
1997 to May 1999, Dr. Gupta worked for Neurochem Inc., a biopharmaceutical

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company, as Director of Chemistry. He was responsible for the overall
administration and scientific direction of the chemistry department involved in
drug discovery and drug development in the areas of Alzheimer's, Type II
Diabetes, Epilepsy, Kidney failure and Congestive heart disease. From January
1994 to January 1997, Dr. Gupta worked for MDS Inc., a health and life sciences
company and formerly known as Phoenix International Life Sciences Inc., as
Manager, GMP Synthesis/Senior Research Chemist responsible for the overall
administration of GMP's synthesis department contract manufacturing and
evaluation of new technologies.

MICHAEL BUSCHMANN, PhD, 40 - Dr. Buschmann has been our Vice
President of Research and Development Division since May 2002. Since 1997, Dr.
Buschmann has been Professor of Chemical and Biomedical Engineering at Ecole
Polytechnique. He received a Ph.D. in Medical Engineering and Medical Physics
from the Division of Health Sciences and Technology at Harvard University and
the Massachusetts Institute of Technology in 1992, and completed postdoctoral
training at the University of Bern in Switzerland in 1994. Since 1994, Dr.
Buschmann has established a research program at Ecole Polytechnique in fields
dealing with cartilage and arthritis. In 1999, he received an infrastructure
grant from the Canadian Foundation for Innovation to construct a large number of
integrated multidisciplinary laboratories at Ecole Polytechnique and in 2001 he
was awarded a Canada Research Chair in Cartilage Tissue Engineering at Ecole
Polytechnique. Dr. Buschmann is co-director of the bioengineering theme within
the federally funded Canadian Arthritis Network of Centres of Excellence and has
a research program in cartilage physiology, function, pathology, diagnosis and
repair. He has received a number of teaching awards at Ecole Polytechnique and
several distinctions for innovation in research. Dr. Buschmann has published
over 100 referenced scientific articles and conference proceedings and has
authored three published patents in addition to three others that are under
review. Ecole Polytechnique licensed these patents to BioSyntech Inc. for
development into cartilage repair and cartilage diagnostic products.

ERIC DESROSIERS, PhD, 34 - Dr. DesRosiers has been our Vice
President of the Tissue Repair and Manufacturing Division since May 2002. He has
also served as our Director of Soft Tissue Regeneration from May 2000 to May
2002. From October 1994 to May 2000, Dr. DesRosiers headed the Research and
Development team at the National Research Council of Apotex Research Inc., a
Canadian pharmaceutical company, in researching various aspects of developing a
cell-based tissue engineered product for wound repair. In 1988 and 1989, Dr.
DesRosiers obtained bachelor degrees in Biology and Biochemistry from the
University of Ottawa. In 1991, he received M.Sc.A and, in 1995, Ph.D. degrees in
biomedical engineering from the University of Montreal / Ecole Polytechnique. He
is currently completing an executive MBA program at Universite du Quebec a
Montreal specializing in the management of Bio-Industries.

MATTHEW SHIVE, PhD, 30 - Dr. Shive has been our Vice President for
Biocompatibility and Regulatory Affairs Division since May 2002. Dr. Shive has
also been employed by us since October 2000, undertaking the task of
establishing and directing the department of Material Biocompatibility. In
October 2001, Dr. Shive became our Director of Product Development and
Regulatory Affairs. He now oversees in-house biocompatibility research of
materials, pre-clinical development activities for each product, and is
responsible for interactions with regulatory agencies. Prior to joining us in
October 2000, he worked as a research assistant at Cleveland Clinic Foundation
from April 1995 to January 1996. In May 1993, Dr. Shive received a Bachelors of
Science degree and in May 1998 he received his Masters of Science degree, both
from John Hopkins University. In August 2000, Dr. Shive received his Ph.D.
degree from Case Western Reserve University. All of Dr. Shive's degrees were in
Biomedical Engineering with a primary focus on materials science. Dr. Shive's
expertise lies in the interactions between implanted biomaterials and biological
systems, and he has published over 25 scientific articles and conference
proceedings in this area.

-10-

LUCIE DUVAL, 43 - Ms. Duval has been our controller since February
2000 and controller of Bio Syntech Canada and our predecessor corporation since
June 1999. From 1986 to 1996, Ms. Duval was a financial counselor for the City
of Montreal, Canada. Ms. Duval obtained a Bachelor of Business Administration in
Finance at Universite de Sherbrooke in 1981 and, in 1999 she received a
certificate in personal financial planning from Universite Laval in Quebec City.

EXECUTIVE COMPENSATION

COMPENSATION OF EXECUTIVES

The following table sets forth all compensation awarded to our Chief
Executive Officer. No other executive officers received annual compensation in
excess of USD $100,000 during the periods indicated.

SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term
(CDN$) Compensation (Awards):
------- ----------------------
Securities
Name and Position Fiscal Year Salary Bonus Underlying Options (#)
-----------------------------------------------------------------------------------------
Amine Selmani
President and Chief 2002 $185,000 $0 362,500
Executive Officer 2001 $185,000 $0 50,000
2000 $120,000 $0 -

OPTION GRANTS

Number of Percent of
Securities Total
Underlying Options
Options Granted to Exercise of
Name Granted Employees Base Price Expiration Date
-----------------------------------------------------------------------------------------

Amine Selmani 362,500 (1) 16.2% CDN$0.79 (1) (2)

-------------------

(1) Includes options to purchase 312,500 shares of our common stock,
$.001 par value granted to Dr. Selmani on November 29, 2001 by the
Board of Directors at an exercise price of CDN$0.79 per share to
replace expired options to purchase shares of exchangeable preferred
stock of Bio Syntech Canada which were exchangeable into shares of
our common stock at an exercise price of CDN$0.75. The closing price
of our common stock on November 29, 2001 as reported on the Over the
Counter Electronic Bulletin Board was USD$0.46 (or CDN$0.75).

(2) Options to purchase 50,000 shares of our common stock expire on July
11, 2005 and options to purchase 312,500 shares of our common stock
expire on Dec. 1, 2005

We have never granted any stock appreciation rights.

-11-

AGGREGATED FISCAL YEAR-END OPTION EXERCISES AND OPTION VALUES

Dr. Selmani did not exercise any options during the fiscal year
ended March 31, 2002. The following table sets forth certain information
regarding unexercised stock options held by Dr. Selmani as of March 31, 2002.

Number of Securities Underlying Value of Unexercised In-The-
Unexercised Options at Money Options at
March 31, 2002(#) March 31, 2002 (in USD)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------

Amine Selmani 412,500/0 0/0

The value of the unexercised in-the-money options is based on the
market value, as reported on the Over the Counter Electronic Bulletin Board, of
USD$0.35 per share of our common stock at March 31, 2002 and an exercise price
of USD$0.50 (CDN$0.79) per share of our common stock.

OTHER COMPENSATION PLANS

We have no pension plan or other compensation plans for its
executive officers or directors.

EMPLOYMENT AGREEMENTS

AJAY GUPTA, PhD - We entered into an employment agreement with an
indefinite term with Dr. Ajay Gupta dated as of November 2000. Dr. Gupta is
currently our Executive Vice President, Therapeutics Delivery Division, with
duties and responsibilities that are determined by our board of directors from
time to time. Dr. Gupta previously served as our Chief Operating Officer. Dr.
Gupta is entitled to an annual base salary of CDN$135,000, which is to be
reviewed annually, plus a bonus payment at the discretion of the compensation
committee. The Board of Directors also granted Dr. Gupta options to purchase
75,000 shares of Common Stock at an exercise price of USD$1.25 per share,
vesting in three equal installments on November 29, 2001, December 31, 2001 and
December 31, 2002. Dr. Gupta is subject to a confidentiality and
non-solicitation agreement during the term of his employment and for an
additional three-year period following the termination of his employment. Dr.
Gupta, or his estate, will be entitled to receive his full salary for a period
of three months if he is terminated without cause, death or disability. He will
not be entitled to receive any salary if he is terminated for cause.

AMINE SELMANI, PhD - We entered into an employment agreement with
Dr. Amine Selmani dated as of August 26, 2002. Dr. Selmani serves as Chief
Executive Officer with duties and responsibilities which are determined by our
board of directors from time to time. The agreement has a three-year term,
starting on June 13, 2002. Dr. Selmani is entitled to an annual base salary of
CDN$185,000, which is to be reviewed annually. Dr. Selmani is subject to a
confidentiality and non-solicitation agreement during the term of his employment
and for an additional three-year period following the termination of his
employment. Dr Selmani will be entitled to receive his full salary for a period
of 12 months if we terminate the agreement without cause and he will not be
entitled to receive any salary if he is terminated for cause.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers and directors, and persons who own more than ten percent
of our registered class of equity securities, to file reports of ownership on

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Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and
Exchange Commission ("SEC"). Such officers and directors and 10% stockholders
are also required by SEC rules to furnish us with copies of all Section 16(a)
forms they file.

Based solely on our review of the copies of such forms we received,
or written representations from certain reporting persons, we believe that
during the fiscal year ended March 31, 2002, except as provided in the next
sentence, there was compliance with the Form 3, Form 4 and Form 5 filing
requirements applicable to our officers, directors and 10% stockholders. Each of
Drs. Selmani and Gupta, Messrs. Beaudry and Savard and Ms. Duval filed their
respective Forms 5 on July 1, 2002, Dr. Ranger filed his Form 5 on July 22, 2002
and Mr. Alary filed his Form 5 on August 2, 2002, all to report options granted
to them during the fiscal year ended March 31, 2002.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agreement with Polyvalor

In October 1997, the predecessor company of BioSyntech, Bio Syntech
Ltd., entered into a technology assignment agreement, as amended in September
1999 and as amended and restated March 15, 2000 (the "Assignment Agreement"),
with Polyvalor Limited Partnership, a Canadian limited partnership, as
represented by its General Partner, Polyvalor. Polyvalor is an entity created by
Ecole Polytechnique de Montreal (the University of Montreal's engineering
faculty, "Ecole Polytechnique") for the purpose of commercializing the
technology in which Ecole Polytechnique has an interest. Through the Assignment
Agreement, we acquired from Polyvalor all rights related to certain patents and
know-how. In consideration of said assignment, we agreed to pay to Polyvalor a
royalty of 5% on all gross sales of all products and services sold by us, up to
a maximum cumulative amount of CDN$3,000,000. In connection with the Assignment
Agreement, Bio Syntech Canada, issued to Polyvalor 1,072,000 shares of its
exchangeable preferred stock and granted Polyvalor the right to nominate one
director to the Board of Directors. As a result of the transactions, the
exchangeable preferred stock is exchangeable on a share for share basis for
shares of Common Stock, and Polyvalor has the right to nominate one director to
our Board of Directors. On February 6, 2002, Polyvalor exchanged the 1,072,000
exchangeable preferred shares for 1,072,000 shares of Common Stock.

-13-

PROPOSAL NO. 2

APPROVAL OF INCREASE OF SHARES RESERVED FOR ISSUANCE
UNDER THE EMPLOYEE STOCK OPTION INCENTIVE PLAN

Our board of directors proposes that an amendment to our employee
stock option incentive plan to increase the authorized number of shares reserved
for issuance upon the exercise of options granted or to be granted under such
plan from 3,900,000 shares to 5,000,000 shares of common stock be approved.
Throughout this section, we will refer to our employee stock option incentive
plan as the "option plan."

The option plan is administered by the compensation committee of the
board of directors. The compensation committee may from time to time designate
individuals, as well as the amount, to whom options to purchase shares of common
stock may be granted. The total number of shares of common stock to be granted
to any one individual at any time may not exceed 5% of the total of the issued
and outstanding shares of our common stock. The option price per share of common
stock that is the subject of any option is fixed by the compensation committee
when such option is granted and cannot involve a discount to the market price at
the time the option is granted. The period during which an option is exercisable
may not exceed 10 years from the date of grant. In the event we encounter basic
changes in our organization and capitalization, including a reorganization,
merger or consolidation, or the purchase of shares pursuant to a tender offer
for shares of our common stock, in the discretion of the compensation committee,
each option may become fully and immediately exercisable.

The option plan may be amended, suspended, reinstated or terminated
by the board of directors; provided, however, that without approval of affected
optionees, no amendment may be made that adversely affects the benefits accruing
to optionees under the option plan.

Options granted under the option plan are not assignable or
transferable, except by will or the laws of intestate succession. Stock options
granted under the option plan may be exercised by the optionee (or the
optionee's legal representative) only while the optionee is employed by us, or
within 90 days after termination of employment due to a permanent disability, or
within one year after termination of employment due to retirement. The executor
or administrator of a deceased optionee's estate or the person or persons to
whom the deceased optionee's rights thereunder have passed by will or by the
laws of descent and distribution will be entitled to exercise the option within
one year after the decedent's death. Stock options expire immediately in the
event an optionee is terminated with cause. All of the aforementioned exercise
periods are subject to the further limitation that an option will not, in any
case, be exercisable beyond its stated expiration date.

A majority of our stockholders approved the option plan at the 2000
annual meeting. A majority of our stockholders approved an increase in the
number of shares available for issuance under the Plan from 2,500,000 to
3,900,000 at the 2001 annual meeting. The option plan enables us to remain
highly competitive and provide sufficient equity incentives to attract and
retain highly-qualified and experienced employees. The option plan allows our
board of directors to grant options to (i) our directors, officers and other
full-time salaried employees with managerial, professional or supervisory
responsibilities, and (ii) consultants and advisors who render us bona fide
services, in each case, if the compensation committee determines that such
officer, employee, consultant or advisor has the capacity to make a substantial
contribution to our success.

By unanimous written consent on October 18, 2002, our board of
directors voted to increase the authorized number of shares available for
issuance under the option plan from 3,900,000 to 5,000,000 shares of our common
stock, an increase of less than 4% of our outstanding shares of common stock.
The board of directors believes that approval of this amendment is in our best
interest because the availability of an adequate reserve of shares under the

-14-

option plan is an important factor in attracting, motivating and retaining
qualified officers and employees essential to our success and in aligning their
long-term interests with those of the stockholders.

As of October 31, 2002, stock options to purchase 3,400,000 shares
of common stock were outstanding, or 87% of the number of shares authorized to
be issued under the plan, at exercise prices ranging from USD$0.40 to USD$4.00
per share, vesting over a two-year or three-year period. As of October 31, 2002,
none of the options have been exercised. A delay in increasing the number of
shares available for the grant of options under the option plan may prevent us
from retaining or attracting highly-qualified and experienced employees. If the
amendment is approved, we will be authorized to issue options for a maximum of
5,000,000 shares of our common stock, less than 17% of the currently outstanding
shares of our common stock.

During the fiscal year ended March 31, 2002 and through the record
date for the annual meeting, options to purchase shares of common stock have
been granted pursuant to the option plan to (i) the chief executive officer,
(ii) all current executive officers as a group (iii) all employees, including
all current officers who are not executive officers, as a group, and (iv)
non-employee directors during the fiscal year ended March 31, 2002 and through
the record date as follows:

Number of Options Granted

Dr. Amine Selmani,
Chief Executive Officer 362,500
and President
Executive Group 500,000(1)
Non-Executive Officer Employee Group 702,500
Non-Executive Director Group 400,000

----------------------------------
(1) Consists of options granted to Drs. Gupta, Buschmann, DesRosiers,
Shive and to Ms. Duval.

The affirmative vote of a majority of the votes cast by holders of
our common stock is required to approve the increase.

REGISTRATION OF SHARES

We filed a registration statement on Form S-8 under the Securities
Act of 1933, as amended, with respect to the 2,500,000 shares of common stock
issuable pursuant to the option plan on April 3, 2001. We plan to file a new
registration statement under the Securities Act of 1933, as amended, with
respect to (i) the additional 1,400,000 shares of common stock issuable pursuant
to the option plan, which were approved at the 2001 annual meeting and (ii)
1,100,000 shares of common stock, if the proposed amendment to the option plan
is approved.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE INCREASE OF SHARES RESERVED FOR ISSUANCE UNDER
OUR EMPLOYEE STOCK OPTION INCENTIVE PLAN

-15-

PROPOSAL NO. 3

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

On October 7, 2002, we, by action of our Board of Directors,
terminated our relationship with Ernst & Young LLP ("Ernst & Young") the
independent auditors previously engaged to audit our financial statements,
effective with the date of completion of the review by Ernst & Young of the
financial statements for the period ended September 30, 2002. On October 18,
2002, our Board of Directors appointed KPMG LLP as our independent auditors for
the fiscal year ending March 31, 2003, subject to stockholder approval at this
annual meeting.

The audit reports of Ernst & Young on our financial statements
for the fiscal years ended March 31, 2002 and March 31, 2001 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles, except such report dated
May 24, 2002 was modified to include an explanatory paragraph for a going
concern uncertainty. In connection with the audits of our financial statements
for each of the two fiscal years ended March 31, 2002 and March 31, 2001, and in
the subsequent interim period through October 7, 2002, the date of termination,
we had no disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to the satisfaction of Ernst & Young would
have caused Ernst &Young to make reference to the matter in its report.

During the fiscal years ending March 31, 2002, March 31, 2001 and
the subsequent interim period through October 7, 2002, the date of termination,
and prior to such appointment, we did not consult with KPMG LLP regarding the
application of generally accepted accounting principles to a specific
transaction, either proposed or completed, or the type of audit opinion that
might be rendered on our financial statements.

While we are not required to do so, our board of directors is
submitting to stockholders for ratification the appointment of KPMG LLP as our
independent auditors in order to ascertain the stockholders' views. If the
stockholders do not ratify the appointment of KPMG LLP, our board of directors
will consider the appointment of other independent auditors.

Representatives of KPMG LLP are expected to be present at the annual
meeting and to be available to respond to appropriate questions. Such
representatives will have the opportunity to make a statement if they desire to
do so.

AUDIT FEES

Ernst & Young billed us and our subsidiaries an aggregate of CDN
$132,500 for the following professional services: audit of our annual
consolidated financial statements for the fiscal year ended March 31, 2002
included in our annual report on Form 10-KSB and review of our interim financial
statements included in our quarterly reports on Form 10-QSB for the periods
ended June 30, 2002 and September 30, 2002.

Ernst & Young billed us and our subsidiaries an aggregate of CDN
$23,375 for audit related services rendered during the fiscal year ended March
31, 2002 in connection with, among other things, the preparation of a
Registration Statement on Form SB-2 and Current Reports on Form 8-K.

-16-

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

Neither Ernst & Young LLP nor KPMG LLP rendered any professional
service related to financial information systems design and implementation
services for the fiscal year ended March 31, 2002 or the subsequent interim
period through October 7, 2002.

ALL OTHER FEES

Ernst & Young LLP billed us and our subsidiaries an aggregate of
CDN $20,900 for other services rendered during the fiscal year ended March 31,
2002 and the subsequent interim period through October 7, 2002.

----------------------------

The affirmative vote of a majority of the votes cast by holders of
our common stock is required to ratify the appointment of KPMG LLP as our
independent auditors for fiscal year ending March 31, 2003.

RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPOINTMENT OF KPMG LLP AS OUR
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2003

-17-

SOLICITATION STATEMENT

We will bear all expenses in connection with the solicitation of
proxies. In addition to the use of the mails, solicitations may be made by our
regular employees, by telephone, telegraph or personal contact, without
additional compensation. We will, upon their request, reimburse brokerage houses
and persons holding shares of common stock in the names of nominees for their
reasonable expenses in sending solicited material to their principals.

STOCKHOLDER PROPOSALS

Stockholder proposals made in accordance with Rule 14a-8 under the
Exchange Act and intended to be presented at our annual meeting of stockholders
in 2003 must be received by us at our principal office in Laval, Quebec, Canada
no later than July 11, 2003 for inclusion in the proxy statement for that annual
meeting.

In addition, our bylaws require that a stockholder give advance
notice to us of nominations for election to our board of directors and of other
matters that the stockholder wishes to present for action at an annual meeting
of stockholders (other than matters included in our proxy statement in
accordance with Rule 14a-8). Such stockholder's notice must be given in writing,
include the information required by our bylaws, and be delivered or mailed by
first class United States mail, postage prepaid, to our Secretary at our
principal offices. We must receive such notice not less than 45 days prior to
the date next year that corresponds to the date when we first mailed our proxy
materials for this year's annual meeting of stockholders. While we have not yet
set the date of our annual meeting of stockholders in 2003, if it were held on
December 4, 2003 (the date that corresponds to this year's annual meeting),
notice of a director nomination or stockholder proposal made otherwise than in
accordance with Rule 14a-8 would be required to be given to us no later than
September 24, 2003.

ANNUAL REPORT

We have sent, or are concurrently sending, all of our stockholders
of record as of October 31, 2002 a copy of our annual report for the fiscal year
ended March 31, 2002. Such annual report contains our certified consolidated
financial statements for the fiscal year ended March 31, 2002.

OTHER MATTERS

Our board of directors knows of no other business that will be
presented to the annual meeting. If any other business is properly brought
before the annual meeting, it is intended that proxies in the enclosed form will
be voted with respect to any such matters in accordance with the judgment of the
persons voting the proxies.

By order of the board of directors,

Amine Selmani
President, Chief Executive Officer and Secretary

November 5, 2002

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BIOSYNTECH, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

2002 ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 4, 2002

The undersigned hereby appoints Amine Selmani and Lucie Duval as the
undersigned's proxy, with full power of substitution, to vote all of the
undersigned's shares of Common Stock in BioSyntech, Inc. (the "Company"), at the
2002 Annual Meeting of Stockholders of the Company to be held on December 4,
2002, at 3:00 p.m. eastern standard time, at the Montreal Marriott Chateau
Champlain, 1 Place du Canada, Montreal, Quebec, Canada, or at any adjournment,
on the matters described in the Notice of 2002 Annual Meeting of Stockholders
and Proxy Statement and upon such other business as may properly come before
such annual meeting or any adjournments thereof, hereby revoking any proxies
heretofore given.

PROPOSAL 1 To elect Monique Lefebvre and Gilles Cloutier as Class II
directors of the Board of Directors for a term of three years:

Withhold Authority
For All To Vote For All
Nominees ___ Nominees ___

---------------------------------------------------

---------------------------------------------------
To withhold authority to vote for any individual
nominee, print name above.

PROPOSAL 2 To approve an amendment to the Company's Employee Stock Option
Incentive Plan to increase the total number of shares of Common
Stock available for issuance under such option plan from
3,900,000 shares to 5,000,000 shares:

FOR / / AGAINST / / ABSTAIN / /

PROPOSAL 3 To ratify the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending March 31, 2003:

FOR / / AGAINST / / ABSTAIN / /

DISCRETIONARY AUTHORITY:

In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the annual meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 2 AND PROPOSAL 3 AND FOR EACH OF THE DIRECTOR NOMINEES.

Dated: _______________________, 2002

----------------------------------
(Signature)

Please sign your name exactly as it appears hereon. When shares are held by
joint owners, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership or limited liability company, please sign in full
entity name by authorized person.