<PAGE>
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the Appropriate Box:
[x] Preliminary Proxy Statement
[_] Confidential, for use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CURAGEN CORPORATION
-------------------
(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 14-a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Logo goes here
--------------
555 LONG WHARF DRIVE, 11TH FLOOR
NEW HAVEN, CONNECTICUT 06511
April , 2000
Dear Shareholder,
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of CuraGen Corporation to be held at 10:00 a.m. on Tuesday, May 23, 2000 at the
New Haven Omni Hotel at Yale University, 155 Temple Street, New Haven,
Connecticut.
At the Annual Meeting, you will be asked to elect the Class II Director of
the Company to serve for a three-year term of office. CuraGen will also seek
Shareholder approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Voting Common
Stock. The Board of Directors recommends the approval of this proposal. Such
other business will be transacted as may properly come before the Annual
Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged to promptly mark, sign, date and return
the enclosed proxy card in the postage-prepaid envelope enclosed for that
purpose. This will ensure your proper representation at the Annual Meeting.
Sincerely,
/s/ Jonathan M. Rothberg, Ph.D.
-------------------------------
Chief Executive Officer, President and
Chairman of the Board
New Haven, Connecticut
April , 2000
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
CURAGEN CORPORATION
555 LONG WHARF DRIVE, 11th FLOOR
NEW HAVEN, CONNECTICUT 06511
(203) 401-3330
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 23, 2000
To the Shareholders of CuraGen Corporation:
The Annual Meeting of Shareholders of CuraGen Corporation, a Delaware
corporation ("CuraGen" or the "Company"), will be held at 10:00 a.m. on Tuesday,
May 23, 2000 at the New Haven Omni Hotel at Yale University, 155 Temple Street,
New Haven, Connecticut, for the following purposes:
1. To elect the Class II Director, to serve for a three-year term of
office or until his successor is elected.
2. To consider and act upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Voting Common Stock from 50,000,000 shares to 250,000,000 shares.
3. To transact such other business as may properly come before the
meeting and any adjournments thereof.
These items of business are more fully described in the Proxy Statement
accompanying this notice. Only Shareholders of record at the close of business
on March 31, 2000 are entitled to notice of, and to vote at, the Annual Meeting.
All Shareholders are invited to attend the Annual Meeting in person. Whether
you plan to attend the Annual Meeting or not, it is important that your shares
are represented. Therefore, you are urged to promptly mark, sign, date and
return the enclosed proxy card in the postage-prepaid envelope enclosed for that
purpose. Any Shareholder attending the Annual Meeting may vote in person even
if the Shareholder has returned a proxy.
By Order of the Board of Directors
/s/ Elizabeth A. Whayland
-------------------------
Director, Financial Management
and Secretary
New Haven, Connecticut
April , 2000
<PAGE>
CURAGEN CORPORATION
555 LONG WHARF DRIVE, 11th FLOOR
NEW HAVEN, CONNECTICUT 06511
(203) 401-3330
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CuraGen Corporation ("CuraGen" or the "Company"), a
Delaware corporation, of proxies, in the accompanying form, to be used at the
Annual Meeting of Shareholders to be held at 10:00 a.m. on Tuesday, May 23, 2000
at the New Haven Omni Hotel at Yale University, 155 Temple Street, New Haven,
Connecticut, and any adjournments thereof (the "Meeting").
Where the Shareholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the nominee for Class II Director named herein, and FOR the proposal
to approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company's voting common stock,
par value $0.01 per share ("Voting Common Stock") from 50,000,000 shares to
250,000,000 shares. Any proxy given pursuant to this solicitation may be
revoked by the person giving it at any time before its use by delivering to the
Company a written notice of revocation or a duly executed proxy bearing a later
date. Any Shareholder who has executed a proxy but is present at the Meeting,
and who wishes to vote in person, may do so by revoking his or her proxy as
described in the preceding sentence. Shares represented by valid proxies in the
form enclosed, received in time for use at the Meeting and not revoked at or
prior to the Meeting, will be voted at the Meeting. Attendance at the Meeting
will not by itself constitute the revocation of a proxy.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares Voting Common Stock, is necessary to constitute a quorum at
the Meeting. The election of the Class II Director will be determined by a
plurality of the votes cast. The proposal to amend the Company's Certificate of
Incorporation requires the affirmative vote of a majority of the outstanding
shares of Voting Common Stock entitled to vote at the Meeting. Abstentions are
counted for purposes of determining the presence or absence of a quorum at the
Meeting. For purposes of the proposal to amend the Company's Certificate of
Incorporation, abstentions are counted as votes against the proposal.
The close of business on March 31, 2000 has been fixed as the record date
for determining the Shareholders entitled to notice of, and to vote at, the
Meeting. As of the close of business on March 31, 2000, the Company had
35,894,016 shares of Voting Common Stock outstanding and entitled to vote.
Holders of Voting Common Stock are entitled to one vote per share on all matters
to be voted on by Shareholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Voting Common Stock for their expenses in
forwarding proxy material to such beneficial owners. Solicitation of proxies by
mail may be supplemented by telephone, telegram, telex and personal solicitation
by the Directors, officers or employees of the Company. No additional
compensation will be paid for such solicitation. In addition, the Company may
request banks, brokers, and other custodians, nominees and fiduciaries to
solicit customers of theirs who have shares of the Company registered in the
name of the nominee. The Company will reimburse any such persons for their
reasonable out-of-pocket expenses.
This Proxy Statement and the accompanying proxy card are being mailed on or
about April __, 2000 to all Shareholders entitled to notice of and to vote at
the Meeting.
The Annual Report to Shareholders for the fiscal year ended December 31,
1999 is being mailed to the Shareholders with this Proxy Statement, but does not
constitute a part hereof.
The Company effected a two-for-one stock split on March 31, 2000. All of
the information presented in this Proxy Statement is on a post-split basis,
except where specifically indicated otherwise.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Voting Common Stock as of February 29, 2000, by (i) each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding shares of Voting Common Stock, (ii) each Director of the Company,
(iii) each executive officer named in the Summary Compensation Table on page 10
hereof and (iv) all Directors and executive officers of the Company as a group.
Except as otherwise indicated, the persons or entities listed below have sole
voting and investment power with respect to all shares owned by them.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percentage of Shares
Name and Address** Owned Beneficially Owned (1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jonathan M. Rothberg, Ph.D. (3) ............................................. 7,172,734 20.7%
c/o CuraGen Corporation
555 Long Wharf Drive, 11th Floor
New Haven, CT 06511
Quantum Industrial Partners LDC (4) ......................................... 4,235,564 12.0%
Kaya Flamboyan
Willemstad, Curacao
Netherlands Antilles
Pequot Capital Management, Inc. (5) ......................................... 3,879,800 11.2%
500 Nyala Farm Road
Westport, CT 06880
Genentech, Inc. (6) ......................................................... 3,439,170 9.4%
460 Point San Bruno Blvd.
South San Francisco, CA 94080
Pioneer Hi-Bred International, Inc. (7) ..................................... 2,000,000 5.8%
700 Capital Square
400 Locust Street
Des Moines, IA 50309
Henry M. Rothberg (8) ....................................................... 1,988,092 5.7%
c/o Law Offices of Marshal D. Gibson, P.C.
152 Temple Street
New Haven, CT 06510
Lillian R. Rothberg (9) ..................................................... 1,987,792 5.7%
c/o Law Offices of Marshal D. Gibson, P.C.
152 Temple Street
New Haven, CT 06510
David M. Wurzer (10) ........................................................ 156,000 *
Christopher K. McLeod......................................................... 0 *
Peter A. Fuller, Ph.D. (11) ................................................ 90,000 *
Michael P. McKenna, Ph.D. (12) .............................................. 84,000 *
Richard H. Booth (13) ....................................................... 113,130 *
Vincent T. DeVita, Jr., M.D. (14) ........................................... 65,000 *
Robert E. Patricelli (15) ................................................... 301,900 *
Randy Thurman (16) .......................................................... 13,332 *
All Directors and executive officers as a group (11 persons) (17)........... 8,097,096 23.0%
* Represents beneficial ownership of less than 1% of the Company's outstanding shares of Voting Common Stock.
** Addresses are given for beneficial owners of more than 5% of the outstanding Voting Common Stock only.
</TABLE>
(1) Shares of Voting Common Stock that an individual or group has the right to
acquire within 60 days of February 29, 2000, pursuant to the exercise of
options or warrants or pursuant to stock purchase agreements are deemed to
be outstanding for the purpose of computing the percentage ownership of
such individual or group, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person shown in
the table.
(2) Percentage of ownership is based on 34,544,864 shares of Voting Common
Stock issued and outstanding on February 29, 2000.
(3) Includes (i) 2,000,000 shares of Voting Common Stock held by a limited
partnership of which Dr. Rothberg is the sole general partner and of which
the sole limited partner is a trust in which Dr. Rothberg is the primary
beneficiary, (ii) 60,000 shares of Voting Common Stock subject to
currently exercisable options, (iii) 5,400 shares of Voting Common Stock
held jointly by Dr. Rothberg and his brother, (iv) 400 shares of Voting
Common Stock owned by Dr. Rothberg's wife and (v) 6,600 shares of Voting
Common Stock subject to currently exercisable options held by Dr.
Rothberg's wife.
2
<PAGE>
(4) Includes 682,594 shares of Voting Common Stock subject to currently
exercisable warrants. The sole general partner of Quantum Industrial
Partners LDC (''QIP'') is QIH Management Investor, L.P., the sole general
partner of which is QIH Management, Inc. (''QIH Management''). Mr. George
Soros is the sole shareholder of QIH Management, and has entered into an
agreement dated as of January 1, 1997 with Soros Fund Management LLC
(''SFM LLC'') pursuant to which Mr. Soros has, among other things, agreed
to use his best efforts to cause QIH Management to act at the direction of
SFM LLC. Mr. Soros is also the Chairman of SFM LLC, and in such capacity
may be deemed to have voting and dispositive power over securities held
for the account of QIP. Mr. Stanley F. Druckenmiller, as Lead Portfolio
Manager of SFM LLC, may also be deemed to have voting and dispositive
power over securities held for the account of QIP. This information is
based solely on a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 1999.
(5) This information is based solely on a Schedule 13G filed with the
Securities and Exchange Commission on February 11, 2000.
(6) This information is based solely on a Schedule 13G filed with the
Securities and Exchange Commission on October 28, 1999 and includes
1,955,272 shares of Non-Voting Common Stock, which may be converted into
Voting Common Stock.
(7) This information is based solely on a Schedule 13G filed with the
Securities and Exchange Commission on February 16, 1999.
(8) Consists of (i) 79,100 shares of Voting Common Stock held by Mr. Rothberg,
(ii) 20,000 shares of Voting Common Stock owned jointly by Mr. Rothberg
and his wife, (iii) 1,268,260 shares of Voting Common Stock held by Grand
Hemroc Limited Partnership, and (iv) 620,732 shares of Voting Common Stock
subject to currently exercisable warrants held by Grand Hemroc Limited
Partnership. Mr. Rothberg and his wife serve as co-general partners of
Grand Hemroc Limited Partnership and is based on a Schedule 13G filed with
the Securities and Exchange Commission on February 14, 2000.
(9) Consists of (i) 78,800 shares of Voting Common Stock held by Mrs.
Rothberg, (ii) 20,000 shares of Voting Common Stock owned jointly by Mrs.
Rothberg and her husband, (iii) 1,268,260 shares of Voting Common Stock
held by Grand Hemroc Limited Partnership, and (iv) 620,732 shares of
Voting Common Stock subject to currently exercisable warrants held by
Grand Hemroc Limited Partnership. Mrs. Rothberg and her husband serve as
co-general partners of Grand Hemroc Limited Partnership.
(10) Consists of 156,000 shares of Voting Common Stock subject to currently
exercisable options.
(11) Consists of 90,000 shares of Voting Common Stock subject to currently
exercisable options.
(12) Consists of 84,000 shares of Voting Common Stock subject to currently
exercisable options.
(13) Consists of 10,000 shares of Voting Common Stock subject to currently
exercisable warrants, 65,000 shares of Voting Common Stock subject to
currently exercisable options and 38,130 shares of Voting Common Stock
held by Mr. Booth's wife.
(14) Consists of 65,000 shares of Voting Common Stock subject to currently
exercisable options.
(15) Includes 65,000 shares of Voting Common Stock subject to currently
exercisable options.
(16) Consists of 13,332 shares of Voting Common Stock subject to currently
exercisable options.
(17) Includes 83,000 shares of Voting Common Stock subject to currently
exercisable options and 18,000 shares of Voting Common Stock held by
Elizabeth A. Whayland. See also footnotes 3 and 10 through 16 above.
MANAGEMENT
Proposal 1
ELECTION OF DIRECTOR
The Company's By-Laws provide for the Company's business to be managed by
or under the direction of the Board of Directors. Under the Company's By-Laws,
the number of Directors is fixed from time to time by the Board of Directors.
The Board of Directors currently consists of five members, classified into three
classes as follows: Vincent T. DeVita, Jr., M.D. serves in a class with a term
ending at the upcoming meeting (the "Class II Director"); Jonathan M. Rothberg,
Ph.D. and Richard H. Booth serve in a class with a term ending in 2001 (the
"Class III Directors"); and Robert E. Patricelli and Randy Thurman serve in a
class with a term which expires in 2002 (the "Class I Directors"). At each
annual meeting of Shareholders, Directors are elected for a term of three years
to succeed those Directors whose terms are expiring.
Pursuant to the Company's By-Laws, on January 18, 2000 the Board of
Directors voted (i) to set the size of the Board of Directors at five and (ii)
to nominate Vincent T. DeVita, Jr., M.D for election at the Meeting, for a term
of three years to serve until the 2003 annual meeting of Shareholders, and until
his respective successor has been elected and qualified. The Class III
Directors (Jonathan M. Rothberg, Ph.D. and Richard H. Booth) and the Class I
Directors (Robert E. Patricelli and Randy Thurman) will serve until the annual
meetings of Shareholders to be held in 2001 and 2002, respectively, and until
their respective successors have been elected and qualified.
3
<PAGE>
Shares represented by all proxies received by the Board of Directors and
not marked as withholding authority to vote for the nominated Class II Director
will be voted FOR the election of the Class II Director nominee, unless the
nominee is unable or unwilling to serve. The Board of Directors knows of no
reason why the nominee would be unable or unwilling to serve as a Director, but
if such should be the case, proxies may be voted for the election of some other
person as the Board of Directors may recommend in his place, or for fixing the
number of Directors at a lesser number. The affirmative vote of a plurality of
the shares present, in person or by proxy, and entitled to vote on the election
of Directors is required to elect the nominee to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. DEVITA AS A CLASS II
DIRECTOR, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A SHAREHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
Executive Officers and Directors
The following table sets forth as to the present Directors (including the
nominee for election at the Meeting) and each executive officer: (i) name, (ii)
age, (iii) present positions with the Company, (iv) the Class of each Director
and (v) committee memberships as of February 29, 2000:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Jonathan M. Rothberg, Ph.D. (3) ...................... 36 Chief Executive Officer, President and Chairman of the Board
David M. Wurzer ...................................... 41 Executive Vice-President, Treasurer and Chief Financial Officer
Christopher K. McLeod.................................. 44 Executive Vice-President
Elizabeth A. Whayland ................................ 39 Director, Financial Management and Secretary
Peter A. Fuller, Ph.D. ............................... 45 Senior Vice-President, Business Development
Peter T. Lomedico, Ph.D................................ 51 Vice-President, Discovery Research
Michael P. McKenna, Ph.D. ............................ 38 Vice-President, Operations
Richard H. Booth (3)(4)(5)............................. 52 Director
Vincent T. DeVita, Jr., M.D. * (2)(5) ................ 64 Director
Robert E. Patricelli (1)(4)(5) ....................... 60 Director
Randy Thurman (1)(4) .................................. 50 Director
</TABLE>
* Nominee for Director
(1) Class I Director
(2) Class II Director
(3) Class III Director
(4) Member of the Compensation Committee
(5) Member of the Audit Committee
In January 2000, James L. Vincent, who served on the Board of Directors for two
years, voluntarily resigned. Randy Thurman was elected to the Board of
Directors to replace Mr. Vincent in February 2000.
Jonathan M. Rothberg, Ph.D. has served as Chief Executive Officer, President
and Chairman of the Board of Directors of the Company since its formation in
1991. Dr. Rothberg received his B.S. in Chemical Engineering from Carnegie
Mellon University and his M.S., M. Phil. and Ph.D. in Biology from Yale
University.
David M. Wurzer has served as Executive Vice-President, Treasurer and Chief
Financial Officer of the Company since September 1997. From January 1991 to
September 1997, Mr. Wurzer served as Senior Vice President and Chief Financial
Officer of, and in other senior managerial positions for, Value Health, Inc., a
managed health care provider. Mr. Wurzer received his B.B.A. from the University
of Notre Dame.
4
<PAGE>
Christopher K. McLeod has served as Executive Vice-President of the Company
since November 1999. From January 1997 to May 1999, he served as Chief Executive
Officer of Havas International (formerly Cendant Software). From 1986 to October
1998, he served as Vice Chairman of Cendant Corporation and as a Director from
1995 to October 1998. Mr. McLeod received his B.S. from Yale University and his
M.S. from the Massachusetts Institute of Technology.
Elizabeth A. Whayland has served as Director, Financial Management of the
Company since November 1994 and as Secretary of the Company since September
1997. From 1982 to November 1994, Ms. Whayland served as a Senior Manager and in
other staff and management positions with Deloitte & Touche. Ms. Whayland
received her B.A. from Grove City College and her M.S.T. from the University of
Hartford.
Peter A. Fuller, Ph.D. has served as Senior Vice-President, Business
Development of the Company since July 1999. From October 1997 to July 1999, he
served as Vice President, Business Development. From 1983 to October 1997, Dr.
Fuller served as Director, Technology Identification & Assessment, Director,
Technology Access, Director, Technology Acquisition Group and Soybean Research
Station Manager for Pioneer Hi-Bred International, Inc., a leading supplier of
agricultural genetics. Dr. Fuller received his B.S. from California State
University and his M.S. and Ph.D. from the University of Nebraska.
Peter T. Lomedico, Ph.D. has served as Vice-President, Discovery Research of
the Company since October 1999. From 1996 to October 1999, he served as Vice
President, Human Genetics at Genome Therapeutics. From 1994 to 1995, he served
as Research Director and co-founder of Morphogenesis, Inc. From 1980 to 1993, he
served in various positions at Hoffmann-LaRoche, Inc. Dr. Lomedico received his
B.S. from Villanova University and his Ph.D. from the University of Texas.
Michael P. McKenna, Ph.D. has served as Vice-President, Operations of the
Company since August 1998. From 1997 to August 1998, he served as Director,
Genomics Facility and since September 1994 has served in several scientific and
management positions. He served as Graduate Scholar at the Institute for
Molecular Biologicals at Bayer Pharmaceutical Division (previously Miles
Pharmaceuticals) from 1992 to 1994. Dr. McKenna received his B.S. in Molecular
Biology and German from Carnegie-Mellon University and his Ph.D. in Biology from
Yale University.
Richard H. Booth has been a Director of the Company since October 1997.
Currently, he serves as President and Chief Executive Officer of HSB Group,
Inc., a NYSE listed insurance and engineering services company, a position he
has held since January 2000. He also serves as Chairman of the Board of
Directors of HSB Group, Inc., a position he has held since March 2000. He served
from 1994 through 1996 as Executive Vice President and as a Director since 1998
of Phoenix Home Life Mutual Insurance Company. Prior to joining Phoenix Home
Life Mutual Company, Mr. Booth served as President, Chief Operating Officer and
as a Director of The Travelers Corporation, a diversified financial services
company. Mr. Booth received his B.S. and his M.S.P.A. from the University of
Hartford.
Vincent T. DeVita, Jr, M.D. has been a Director of the Company since September
1995. Currently, he serves as a Director of Imclone Systems, Inc. and is
Director of the Yale University Comprehensive Cancer Center, a position he has
held since July 1993. From September 1988 to July 1993, Dr. DeVita served as
Physician-in-Chief of the Memorial Sloane-Kettering Cancer Center. From July
1980 to August 1988, he served as Director of the National Cancer Institute. Dr.
DeVita received his B.S. from the College of William and Mary and his M.D. from
the George Washington University School of Medicine.
Robert E. Patricelli has been a Director of the Company since October 1997.
Currently, he serves as the Chairman and Chief Executive Officer of Women's
Health USA, Inc., a women's health services company, a position he has held
since August 1997. He also currently serves as a Director of Northeast
Utilities, Inc. and Hartford Life, Inc. From May 1987 to August 1997, he served
as Chairman, President and Chief Executive Officer of Value Health, Inc. Mr.
Patricelli received his B.A. from Wesleyan University and his J.D. from Harvard
Law School.
5
<PAGE>
Randy Thurman has been a Director of the Company since February 2000.
Currently, he serves as Chairman and CEO of Strategic Reserves International, a
company that provides strategic direction to emerging health care technology
companies, a position he has held since 1996. From 1993 to 1996, Mr. Thurman
served as Chairman and CEO of Corning Life Sciences. From 1984 to 1993 he served
as President and CEO of Rhone-Poulenc Rorer Pharmaceuticals. Mr. Thurman
received his B.A. from Virginia Polytechnic Institute and his M.A. from Webster
University.
Committees of the Board of Directors
The Board of Directors established a Compensation Committee and an Audit
Committee in October 1997. The Audit Committee, of which Dr. DeVita and Messrs.
Booth and Patricelli are members, oversees the engagement of the Company's
independent accountants, reviews the annual financial statements and the scope
of annual audits and considers matters relating to accounting policy and
internal controls. The Compensation Committee, of which Messrs. Booth,
Patricelli and Thurman are members, reviews, approves, and makes recommendations
to the Board of Directors concerning the Company's compensation policies,
practices and procedures for its executive officers. The Compensation Committee
also administers the Company's 1997 Employee, Director and Consultant Stock Plan
and the 1993 Stock Option and Incentive Award Plan. The Board of Directors has
no standing nominating committee.
The Board of Directors met four times in 1999 and acted by unanimous
written consent once. During 1999, the Audit and Compensation committees met
once, and five times, respectively. All Directors attended 100% of the total
number of meetings of the Board of Directors and its committees on which they
served, with the exception of Dr. Vincent DeVita, who attended only 40% of the
total number of meetings of the Board of Directors and the Audit Committee.
Compensation of Directors
Non-employee Directors are reimbursed for travel costs and other out-of-
pocket expenses incurred in attending each Directors' meeting and committee
meeting. Effective January 1, 2000, non-employee Directors will receive
Directors' fees of $2,500 per meeting, and $1,000 per telephonic meeting, with
an annual combined limit of $15,000. Under the 1997 Stock Plan, each non-
employee Director, upon first being elected or appointed to the Board of
Directors, receives an option to purchase ____ shares of Voting Common Stock,
which will vest one-third immediately and one-third each on the first and second
anniversaries of the grant date. The 1997 Stock Plan also currently provides
for an annual grant of an immediately exercisable option to purchase ____ shares
of Voting Common Stock to each continuing non-employee Director following each
annual meeting of Shareholders. All automatic option grants to non-employee
Directors will have a term of ten years and an exercise price equal to the fair
market value of the Voting Common Stock on the date of grant. To date Dr. DeVita
and Messrs. Booth, Patricelli and Thurman have been granted options to purchase
65,000, 65,000, 65,000 and 40,000 shares of Voting Common Stock, respectively.
Compensation Committee Interlocks and Insider Participation
Messrs. Booth, Patricelli and Thurman, all non-employee Directors,
currently constitute the Company's Compensation Committee. No executive officer
of the Company serves as a member of the Board of Directors or compensation
committee of any entity that has one or more executive officers serving as a
member of the Company's Board of Directors or Compensation Committee.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers (together with the Chief Executive
Officer, the "Named Executive Officers") based on services rendered in all
capacities during the three fiscal years most recently ended.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- --------------
Securities All
Underlying Other
Name and Principal Position Year Salary Bonus Options(#) Compensation
- -------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
Jonathan M. Rothberg, Ph.D. 1999 $ 220,673 $100,000 - $4,808
Chief Executive Officer, President and 1998 $ 160,256 - 200,000 -
Chairman of the Board 1997 $ 125,000 - - -
David M. Wurzer 1999 $ 191,250 $125,000 - $7,075
Executive Vice-President, 1998 $ 160,256 - 140,000 -
Treasurer and Chief Financial Officer
Christopher K. McLeod 1999 $26,923 (1) $ 25,000 200,000 -
Executive Vice-President
Peter A. Fuller, Ph.D. 1999 $ 147,115 $ 25,000 - $8,000
Senior Vice-President, Business 1998 $ 120,897 $ 20,000 50,000 - (2)
Development
Michael P. McKenna, Ph.D. 1999 $ 127,609 $ 45,000 - $6,068
Vice-President, Operations
</TABLE>
(1) Mr. McLeod began his employment with the Company on November 1, 1999. His
annualized 1999 salary was $200,000.
(2) The Company made a loan facility available to Dr. Fuller in connection with
his 1998 performance. See "Related Transactions" on Page 15 hereof.
1999 Stock Option Grant Table
The following table sets forth information concerning stock options granted
in 1999 to the Named Executive Officers. The potential realizable values that
would exist for the respective options are based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date of grant over the
full term of the option.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------- Potential Realizable Value at
Assumed Annual Rates
Number of % of Total of Stock Price
Securities Options Appreciation
Underlying Granted to Exercise For Option Term (2)
Options Employees Price Expiration ----------------------------------
Name Granted in 1999 (1) ($/share) Date 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Christopher K. McLeod 200,000 (3) 18.26% $7.375(4) 9/15/09 $927,620 $2,350,770
</TABLE>
(1) The Company granted options to purchase 1,095,000 shares of Voting Common
Stock to employees in the year ended December 31, 1999.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming that the stock price on the date of grant
appreciates at the specified annual rates of appreciation, compounded
annually over the term of the options. These numbers are calculated based
on rules promulgated by the Securities and Exchange Commission. Actual
gains, if any, on stock option exercises and Voting Common Stock holdings
are dependent on the time of such exercise and the future performance of
the Company's Voting Common Stock.
(3) The options vest in equal installments on the first five anniversaries of
the date of grant and have a term of ten years.
7
<PAGE>
(4) The exercise price represents the fair market value of the Company's Voting
Common Stock on the date of grant, determined by the closing price on the
Nasdaq Stock Market.
Fiscal Year-End Option Values
The following table summarizes for the Named Executive Officers, unexercised
options held at December 31, 1999. The value of unexercised in-the-money options
at the fiscal year end is the difference between the exercise price and the fair
market value of the underlying stock on December 31, 1999, the last business day
of the fiscal year. The closing price of the Company's Voting Common Stock on
the Nasdaq Stock Market on that date was $34.875. No Named Executive Officer
exercised any stock options during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money
Fiscal Year End (#) Options at Fiscal Year End (1)
--------------------------------------------------------------------------------------
Name Exercisable (#) Unexercisable (#) Exercisable ($) Unexercisable ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jonathan M. Rothberg, Ph.D. 40,000 160,000 $1,201,350 $4,805,400
David M. Wurzer 148,000 192,000 $4,598,000 $5,942,000
Christopher K. McLeod - 200,000 - $5,500,000
Peter A. Fuller, Ph.D. 90,000 120,000 $2,805,000 $3,750,000
Michael P. McKenna, Ph.D. 74,000 76,000 $2,436,300 $2,339,200
</TABLE>
(1) These values have not been and may never be realized. Actual gains, if any,
on exercise will depend on the value of the Voting Common Stock on the date of
sale of any shares acquired upon exercise of the option.
Executive Compensation - Employment Agreements and Other Termination of
Employment Agreements
The Company entered into letter agreements with the following executive
officers: Mr. Wurzer and Dr. Fuller in July 1997 and August 1997, respectively.
The letter agreements do not specify a term of employment. Each letter provides
for a cash bonus, which the Board of Directors may, in its discretion, award
from time to time.
8
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors is currently composed
of Directors who are not current or former employees of the Company. The
Compensation Committee, which is comprised of Messrs. Booth, Patricelli and
Thurman, reviews, approves and makes recommendations to the Board of Directors
concerning the Company's executive compensation policies. In addition, the
Compensation Committee evaluates the performance of executive management and
provides direction for succession planning. The Compensation Committee also
administers the Company's 1997 Employee, Director and Consultant Stock Plan and
the 1993 Stock Option and Incentive Award Plan.
No executive officer of the Company will serve as a member of the Board of
Directors or Compensation Committee of any entity that has an executive officer
serving as a member of the Company's Board of Directors or Compensation
Committee. This report addresses the compensation policies for fiscal year 1999
as they affected Dr. Rothberg, in his capacity as Chief Executive Officer,
President and Chairman of the Board, and the other executive officers of the
Company.
General Compensation Philosophy
The Company's compensation policy for executive officers is designed to
achieve the following objectives:
. Motivate, reward and retain executives who strive to achieve Company
financial and non-financial performance objectives.
. Attract and retain qualified executives.
. Remunerate executives for their contribution to the realization of long-
term strategic goals.
. Align the interests of executives with the long-term interests of
stockholders through the opportunity to be awarded stock option grants,
thereby encouraging the achievement of solid results over an extended
period.
. Preserve the full deductibility of compensation for tax purposes.
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of (i)
base salary; (ii) annual incentive compensation, in the form of discretionary
cash bonuses which are based on achievement of predetermined objectives of the
Company; and (iii) long-term incentive compensation in the form of periodic
stock option grants.
The Compensation Committee performs annual reviews of executive
compensation to confirm the competitiveness of the overall executive
compensation packages as compared with organizations that compete with the
Company for prospective employees.
In considering compensation of the Company's executives, one of the factors
the Compensation Committee takes into account is the anticipated tax treatment
to the Company of various components of compensation. The Company does not
believe Section 162(m) of the Internal Revenue Code, which generally disallows a
tax deduction for certain compensation in excess of $1 million to any of the
executive officers appearing in the Summary Compensation Table above, will have
an effect on the Company. The Compensation Committee has considered the
requirements of Section 162(m) of the Code and its related regulations.
Base Salary and Benefits
The Compensation Committee utilized several management compensation surveys
of other biotechnology, pharmaceutical, and comparable companies to assist in
its evaluation and setting of executive compensation. The survey participants
were chosen based on the Company's ability to compete with those companies and
their similarity in size and stage of development. Within this group, the
Compensation Committee made comparisons to executives with similar levels of
experience who have a comparable level of responsibility and expected level of
contribution to the Company's performance. In setting base salaries, the
Compensation Committee also took into account the intense level of competition
among biotechnology companies to attract talented personnel who have outstanding
ability and potential, as well as individual
9
<PAGE>
experience and performance. Executive officers are also entitled to participate
in benefit plans generally available to employees.
Discretionary Cash Bonuses
The Compensation Committee believes that periodic discretionary cash
bonuses may be needed to retain and encourage a successful management team.
Executives who receive cash bonuses are chosen at the discretion of the
Committee. The amount of a discretionary cash bonus is determined by evaluating
a number of quantitative and qualitative factors, including CuraGen's historical
and recent financial performance in the principal area of responsibility of the
officer, the executive's progress toward non-financial goals within his area of
responsibility, individual performance, experience, level of responsibility, and
other contributions made to CuraGen.
Long-Term Incentive Compensation
Long-term incentive compensation, in the form of stock option grants,
allows the executive officers to share in any appreciation in the value of the
Company's Voting Common Stock. Option grants are made from time to time to
executives whose contributions have or will have a significant impact on the
Company's long-term performance. The Company believes that option grants (1)
align executive interests with stockholder interests by creating a direct link
between compensation and stockholder return; (2) give executives a significant,
long-term interest in the Company's success, and (3) help retain executive
talent in an extremely competitive market.
Stock option grants are based on various subjective factors primarily
relating to the responsibilities of the individual officers, and also to their
expected future contributions and prior option grants. The level of stock
options granted is based on the Committee's evaluation of an executive's ability
to impact future corporate results and is directly proportional to job
responsibility. The Company's determination of whether option grants are
appropriate is based upon individual performance measures established for each
individual executive. Options are not necessarily granted to each executive
during each year.
All awards are made at a level calculated to be competitive within the
biotechnology industry as well as a broader group of companies of comparable
size, maturity, and complexity.
Chief Executive Officer Compensation
Dr. Rothberg has served as Chief Executive Officer, President and Chairman
of the Board since the formation of the Company in 1991. In January 1999, at
the recommendation of the Compensation Committee, Dr. Rothberg's base salary was
increased from $175,000 to $225,000. In January 2000, Dr. Rothberg was awarded a
cash bonus of $100,000 and granted 200,000 stock options by the Board of
Directors, related to his 1999 performance. Dr. Rothberg's strategic
contributions during 1999 established CuraGen as a leading functional genomics
company with the long-term goal of developing proprietary bio-pharmaceutical
products. Highlights of Dr. Rothberg's 1999 contributions included the
completion of substantial capital raising and strategic efforts with Pequot
Capital Management, Abgenix, Hoffman-LaRoche, and COR Therapeutics; the Biogen
and Genentech loan conversions; several successful patent issuances; the filling
of two key executive management positions; and an exceptional increase in the
price of the Company's Voting Common Stock during 1999 (1,062%). Dr. Rothberg's
compensation continues to be lower than that of most of his counterparts in
comparable companies within the biotechnology industry, and of other CEO's at
comparable size companies outside the biotech industry. Dr. Rothberg has been
instrumental in managing the Company's tremendous growth while continuing to
formulate and implement the Company's long-term objectives. The Compensation
Committee believes Dr. Rothberg has managed the Company well in an extremely
fast-paced and competitive business climate. To date, Dr. Rothberg has not
entered into an employment agreement with the Company.
THE COMPENSATION COMMITTEE:
Richard H. Booth, Chairman
Robert E. Patricelli
Randy Thurman
10
<PAGE>
PERFORMANCE GRAPH
The following stock price performance graph compares total cumulative
stockholder return on the Company's Voting Common Stock during a period
commencing on March 18, 1998 (the date the Company's Voting Common Stock first
began trading) and ending on December 31, 1999 (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment and (B) the difference between the Company's
share price at the end and the beginning of the measurement period by (ii) the
share price at the beginning of the measurement period) to two indices: the
Nasdaq CRSP Total Return Index for the Nasdaq Stock Market, U.S. companies (the
"Nasdaq-US") and the Nasdaq CRSP Total Return Index for Biotechnology Stocks,
SIC (the "Nasdaq-Biotechnology"). The Nasdaq-US tracks the aggregate price
performance of all equity securities of U.S. companies traded on the Nasdaq
National Market (the "NNM") and the Nasdaq SmallCap Market (the "SmallCap
Market"). The Nasdaq-Biotechnology tracks the aggregate price performance of
equity securities of biotechnology companies traded on the NNM and the SmallCap
market. Although the total return for the Company's stock and for each index
assumes the reinvestment of dividends, dividends have never been declared on the
Company's Voting Common Stock, and is based on the returns of the component
companies weighted according to their capitalization as of the end of each
quarterly period. The Company's Voting Common Stock is traded on the NNM and is
a component of both the Nasdaq-US and the Nasdaq-Biotechnology.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/18/1998 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
CURAGEN CORPORATION 100 101 54 52 61 58 70 115 607
NASDAQ STOCK MARKET (U.S.) 100 103 106 96 124 139 152 155 224
NASDAQ BIOTECHNOLOGY 100 100 94 94 129 147 150 174 261
</TABLE>
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's Directors and officers, and persons who own more than ten percent of
the Company's Voting Common Stock ("Reporting Persons"), to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Reporting Persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
forms received by the Company and on written representations from certain
Reporting Persons, during the year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its Directors, officers and greater than ten
percent beneficial owners were met except for the following late filings: an
initial report of Christopher K. McLeod, Executive Vice-President, including a
grant of 200,000 shares of Voting Common Stock options; an initial report of
Peter T. Lomedico, Vice-President, Discovery Research; and a report of Elizabeth
A. Whayland, Director, Financial Management and Secretary, covering the exercise
of 600 shares of Voting Common Stock options.
RELATED TRANSACTIONS
The Company made a loan facility of up to $100,000 available to Dr. Fuller
in connection with his 1998 performance. The loan facility is available at an
interest rate of 8% and may be borrowed on and repaid at any time prior to
December 31, 2000, subject to certain collateral provisions. This note will be
forgiven if Dr. Fuller remains an employee through January 1, 2001. As of
December 31, 1999 and March 31, 2000, $30,000 was outstanding under this loan
facility.
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF VOTING COMMON STOCK
Proposal 2
The Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") authorizes the issuance of 50,000,000 shares of Voting Common
Stock. As of March 3, 2000, the Board of Directors of the Company unanimously
approved an amendment to the Certificate of Incorporation to increase the number
of authorized shares of Voting Common Stock from 50,000,000 to 250,000,000 and
to submit the proposed amendment to Shareholders at the Meeting.
Purpose and Effect of the Amendment
The general purpose and effect of the proposed amendment to the Company's
Certificate of Incorporation is to authorize 200,000,000 additional shares of
Voting Common Stock to create a sufficient reserve of shares of Voting Common
Stock for future needs of the Company. The Board of Directors believes it is
prudent to have the additional shares of Voting Common Stock available for
general corporate purposes, including, but not limited to: grants of stock
options, acquisitions, stock splits and equity financings.
The Company currently has 50,000,000 authorized shares of Voting Common
Stock. As of February 29, 2000, the Company had 34,544,864 shares issued and
outstanding and of the remaining 15,455,136 authorized but unissued shares, the
Company has reserved approximately 1,895,000 shares in connection with the
possible exercise of outstanding warrants, approximately 8,100,000 shares
pursuant to the Company's option plans, approximately 1,956,000 shares pursuant
to outstanding convertible Non-Voting Common Stock and approximately 2,350,000
shares pursuant to the possible conversion of the 6% Convertible Subordinated
Debentures due in 2007.
Except in connection with the aggregate of approximately 14,301,000 shares
reserved for warrants, options, convertible Non-Voting Common Stock, and
Convertible Subordinated Debentures as described above, the Company currently
has no plans or arrangements for the issuance of additional shares of Voting
Common Stock. However, opportunities for equity financings or acquisitions could
arise at any time. If the Board of Directors deems it in the best interest of
the Company and its Shareholders to issue additional shares of Voting Common
Stock in the future, the Board of Directors will generally not seek further
authorization by vote of the Shareholders, unless such authorization is
otherwise required by law. The proposed amendment would give the Board of
Directors the ability to act promptly when it determines that issuance of
additional shares is in the best interest of the Company.
12
<PAGE>
The increase in the number of authorized shares may have a dilutive effect
on existing Shareholders. The increase in the authorized number of shares could
also have an anti-takeover effect. If the Company's Board of Directors desired
to issue additional shares in the future, such issuance could dilute the voting
power of a person seeking control of the Company, thereby deferring or rendering
more difficult a merger, tender offer, proxy contest or an extraordinary
corporate transaction opposed by the Company.
Vote
The affirmative vote of a majority of the outstanding shares of Voting
Common Stock entitled to vote at the Meeting is required to approve the increase
in the number of authorized shares of Voting Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF VOTING COMMON STOCK FROM 50,000,000 TO 250,000,000, AND
PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
SHAREHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as Auditors for
the Company for the year ending December 31, 2000. Deloitte & Touche LLP have
been regularly engaged by the Company to audit the Company's annual financial
statements and for other purposes. Representatives from Deloitte & Touche LLP
are expected to be present at the Meeting, with the opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions from Shareholders.
SHAREHOLDER PROPOSALS
Under Rule 14a-8 promulgated under the Exchange Act, Shareholders of the
Company may present proper proposals for inclusion in the Company's proxy
statement and for consideration at the next annual meeting of Shareholders by
submitting their proposals to the Company in a timely manner. In order to be
considered for inclusion in the proxy statement distributed to Shareholders
prior to the annual meeting in the year 2001, a Shareholder proposal must be
received by the Company no later than December __, 2000 and must otherwise
comply with the requirements of Rule 14a-8. In order to be considered for
presentation at the annual meeting of Shareholders in the year 2001, although
not included in the proxy statement, a Shareholder proposal must comply with the
requirements of the Company's by-laws and be received by the Company no later
than March 23, 2001 and no earlier than February 21, 2001. Shareholder proposals
should be delivered in writing to Elizabeth A. Whayland, Secretary, CuraGen
Corporation, 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511. A
copy of the Company's by-laws may be obtained from the Company upon written
request to Ms. Whayland.
OTHER BUSINESS
The Board of Directors knows of no business, which will be presented for
consideration at the Meeting other than that stated above. If any other business
should come before the Meeting, votes may be cast pursuant to proxies in respect
to any such business in the best judgment of the person or persons acting under
the proxies.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999 (other than exhibits thereto) filed with the Securities and Exchange
Commission, which provides additional information about the Company, is
available to beneficial owners of the Voting Common Stock without charge upon
written request to the Investor Relations Department, CuraGen Corporation, 555
Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511.
13
