_______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
SCHEDULE 14A
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:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
AQUILA BIOPHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check 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:
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:
_______________________________________________________________________
AQUILA BIOPHARMACEUTICALS, INC.
________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
________________
To the Shareholders of
Aquila Biopharmaceuticals, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
Aquila Biopharmaceuticals, Inc. (the "Company") will be held on Tuesday,
May 20, 1997 at 3:00 p.m. at the offices of Brown, Rudnick, Freed & Gesmer,
One Financial Center, Boston, Massachusetts 02111, for the following
purposes:
1. To elect two Class I directors to the Board of Directors to
hold office until the annual meeting of shareholders in 1999;
2. To elect one Class II director to the Board of Directors to
hold office until the annual meeting of shareholders in 2000;
3. To approve the Company's 1996 Stock Award and Option Plan;
4. To approve the Company's 1996 Directors Stock Award and Option Plan;
5. To approve the Company's 1996 Employee Stock Purchase Plan; and
6. To transact such other business as may properly come before the
meeting or any adjournment of this meeting.
The Board of Directors has fixed the close of business on April 15, 1997
as the record date for the determination of shareholders entitled to notice
of and to vote at this annual meeting and at any adjournment thereof.
All shareholders are cordially invited to attend the meeting; however, to
assure your representation at the meeting you are urged to mark, sign, date,
and return the enclosed form of proxy as promptly as possible. Any share-
holder attending the meeting may vote in person even if he or she has
returned a proxy.
By Order of the Board of Directors
JANE V. HAWKES, Secretary
April 18, 1997
AQUILA BIOPHARMACEUTICALS, INC.
365 PLANTATION STREET
WORCESTER, MASSACHUSETTS 01605
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is being furnished to shareholders of the Company in
connection with the solicitation by the Company's board of directors (the
"Board of Directors" or "Board") of proxies for use at the annual meeting of
shareholders of the Company (the "Annual Meeting") to be held on Tuesday,
May 20, 1997 at 3:00 p.m. at the offices of Brown, Rudnick, Freed & Gesmer,
One Financial Center, Boston, Massachusetts 02111, and any adjournment
thereof. A copy of the Company's 1996 annual report on Form 10-K, including
financial statements, is being mailed concurrently with this proxy statement
to each shareholder entitled to vote at the meeting. This proxy statement
and accompanying proxy materials will be mailed beginning April 18, 1997 to
all shareholders entitled to vote at the meeting.
Voting and Proxies
The Board of Directors has fixed the close of business on April 15, 1997 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting. Accordingly, only holders of record of
shares of the Company's common stock at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. At the close of business on March 18, 1997, there were
5,000,000 shares of the Company's common stock outstanding.
Each holder of record of shares of the Company's common stock on the record
date is entitled to cast one vote per share, in person or by properly
executed proxy, on any matter that may properly come before the Annual
Meeting. The presence in person or by properly executed proxy of the holders
of a majority of the shares of the Company's common stock outstanding on the
record date is necessary to constitute a quorum at the Annual Meeting. The
affirmative vote of the holders of a plurality of the shares of the
Company's common stock present at the Annual Meeting in person or by
properly executed proxy is required to elect the nominees for directors. The
affirmative vote of the holders of a majority of the Company's common stock
present at the Annual Meeting in person or by properly executed proxy is
required to approve the Company's 1996 Stock Award and Option Plan. The
affirmative vote of the holders of a majority of the Company's common stock
present at the Annual Meeting in person or by properly executed proxy is
required to approve the Company's 1996 Directors Stock Award and Option
Plan. The affirmative vote of the holders of a majority of the Company's
common stock present at the Annual Meeting in person or by properly executed
proxy is required to approve the Company's 1996 Employee Stock Purchase
Plan. With respect to the required vote on any particular matter,
abstentions will be treated as votes cast or shares present and represented;
while votes withheld by nominee record holders who did not receive specific
instructions from the beneficial owners of such shares will not be treated
as votes cast or shares present or represented. The failure of a broker to
return a signed proxy card will result in the shares held of record by such
broker not being counted towards the determination of a quorum.
Proxy Voting and Revocation
All proxies received pursuant to this solicitation will be voted except as
to matters where authority to vote is specifically withheld. Where a choice
is specified as to the proposal, the proxies will be voted in accordance
with such specification. If no choice is specified, the persons named in the
proxies solicited by the Board of Directors intend to vote for the election
of the three nominees for directors and for Proposals 3, 4 and 5.
The Board of Directors does not know of any matters, other than the matters
described in this Proxy Statement, which are expected to be presented for
consideration at the Annual Meeting. If any other matters are properly
presented for consideration at the Annual Meeting, the persons named in the
accompanying proxy will have discretion to vote on such matters in
accordance with their best judgment.
Shareholders of the Company who execute proxies may revoke them by giving
written notice to the Secretary of the Company at any time before such
proxies are voted or by executing and delivering later-dated proxies.
Attendance at the Annual Meeting will not have the effect of revoking a
proxy unless the shareholder so attending so notifies the Secretary of the
Company in writing at any time prior to the voting of the proxy.
Solicitations
Proxies are being solicited by and on behalf of the Board of Directors. In
addition to solicitation by mail, directors, officers, and regular employees
of the Company (who will not be specifically compensated for such services)
may solicit proxies by telephone or otherwise. Arrangements will be made
with brokerage houses and other custodians, nominees, and fiduciaries to
forward proxies and proxy material to their principals, and the Company will
reimburse them for their expenses. In addition, the Company has retained
American Stock Transfer & Trust Company to assist in the solicitation of
proxies from its shareholders. For such service American Stock Transfer &
Trust Company will receive reimbursement of out of pocket costs and expenses
but will receive no consideration in addition to that received as transfer
agent.
Background
The Company is a successor for reporting purposes under the Securities
Exchange Act of 1934 (the "Exchange Act") to Cambridge Biotech Corporation
("CBC"). CBC filed for bankruptcy in July of 1994, and its Plan of
Reorganization ("Reorganization Plan") was approved by the United States
Bankruptcy Court on July 18, 1996. Under the Reorganization Plan, which was
consummated in October of 1996, holders of CBC common stock exchanged all of
their CBC shares for shares of the Company, and CBC's biopharmaceutical
business was transferred to the Company as the sole stockholder of CBC. The
Company then sold all of the outstanding shares of CBC (which had retained
its diagnostics business) to a third party.
The common stock of the Company was deemed registered under Rule 12g-3 of
the Exchange Act, and the Company's shares began trading on the NASDAQ
National Market System in October of 1996. Discussion contained herein of
the Board and its committees relates only to the Board of the Company and
not of CBC. In several instances, as noted, however, the Company's
disclosure includes matters occurring prior to the consummation of the
Reorganization Plan. For example, the compensation reported for each of the
named executive officers includes compensation earned during the time such
officers served as officers of CBC. The disclosure is structured in this
manner to provide context to the reporting on an annual basis. It should be
noted, however, that the Company is a separate and distinct entity from and
is no longer affiliated with CBC.
PROPOSALS 1 AND 2
ELECTION OF DIRECTORS
Under the Company's By-laws, the Board of Directors consists of such number
as the Board shall determine but not less than one. The Board has set the
number of Board members at five. The Board is classified into three classes,
as nearly equal in number as possible, whose terms of office expire at
different times in annual succession. If the three nominees are elected,
there will be two directors (Mr. Beaver and Dr. Dorrington) whose terms
expire at the annual meeting of the Company's shareholders in 1998, two
directors (Messrs. Nelson and Hillback) whose terms expire at the annual
meeting of the Company's shareholders in 1999, and one director (Dr.
Taunton-Rigby) whose term expires at the annual meeting of the Company's
shareholders in 2000. Commencing at the annual shareholders' meeting in
1998, the members of each class will be elected to serve a three year term
unless the membership of a class or classes is being reapportioned. It is
intended that the persons named on the proxy card as proxies will vote
shares of the Company's common stock so authorized for the election of Dr.
Taunton-Rigby and Messrs. Nelson and Hillback to the Board of Directors. The
Board of Directors expects that each of the nominees will be available for
election; but in the event that any of them should become unavailable, it is
intended that the proxy would be voted for a nominee or nominees who would
be designated by the Board of Directors, unless the Board reduces the number
of directors.
Messrs. Nelson and Hillback will each serve until the annual meeting of the
shareholders in 1999 and until their successors are elected and qualified;
and Dr. Taunton-Rigby will serve until the annual meeting of the
shareholders in 2000 and until her successor is elected and qualified. All
the nominees are currently directors of the Company, and all nominees have
agreed to serve as directors if elected at the meeting.
The Board of Directors recommends a vote FOR the election of the
nominees set forth below.
Biographical summaries of the nominees for directors of the
Company appear below.
Alison Taunton-Rigby
Alison Taunton-Rigby, Ph.D., 52, has been President and director since March
of 1996 and Chief Executive Officer since October 1996. Dr. Taunton-Rigby
was President and Chief Executive Officer and a member of the board of
directors of CBC from April 1995 until October of 1996. From 1993 to 1994,
she was President and Chief Executive Officer of Mitotix, Inc., a
biopharmaceutical company. Prior to joining Mitotix, Dr. Taunton-Rigby was
Senior Vice President, Biotherapeutics, of Genzyme Corporation, where she
had overall responsibility for Genzyme's biotherapeutics business. Dr.
Taunton-Rigby is a member of the board of directors of BIO, the national
biotechnology trade organization, where she is also Vice Chair of the
emerging companies section. She is also a member of the board of directors
and a past President of the Massachusetts Biotech Council, the trade
organization representing Massachusetts biotechnology companies. Dr.
Taunton-Rigby received her doctorate in chemistry from the University of
Bristol in England, and is a graduate of the Advanced Management Program of
the Harvard Business School. She is a director of the CML Group, a specialty
retailer, and of Synaptic Pharmaceutical Corporation. She is also a member
of the Bentley College Ethics Board.
Elliott D. Hillback, Jr.
Elliott D. Hillback, Jr., 52, has been a director of the Company since March
of 1996. Since July 1990, Mr. Hillback has served as Senior Vice President
of Genzyme Corporation and from July 1991 to September 1996 was President
and Chief Executive Officer of its majority owned subsidiary, IG
Laboratories, Inc. As Senior Vice President of Genzyme, he was responsible
for the formation in October 1990 of Neozyme Corporation, a research and
development company established to accelerate product development for
Genzyme. He is currently responsible for several corporate development
programs including those focused on gene based medicine. Prior to joining
Genzyme, Mr. Hillback held executive positions at Baxter International and
The BOC Group, Inc. as well as the positions of President and Chief
Executive Officer of Cellcor Therapies, Inc., a start-up biotechnology
company. Mr. Hillback is co-chair of the Ethics Committee of the industry
trade association, BIO, and is a member of the Council of Medical Genetics
Organizations. He serves as director of IntegraMed America, Inc., a company
engaged in managing clinical facilities which utilize its assisted
reproductive technology programs for infertile couples. He earned his B.A.
degree at Cornell University and an M.B.A. from Harvard Business School. He
is chairman of the Audit Committee and a member of the Compensation
Committee.
John M. Nelson
John M. Nelson, 65, has been a director of the Company since March of 1996.
Mr. Nelson served as director of CBC from January 1987 to October 1996.
Since 1991, Mr. Nelson has been Chairman of Wyman-Gordon Company, a
manufacturer of technically advanced forgings, investment castings and
composites principally for aircraft structures and jet engines. From 1991 to
May 1994, he also served as Chief Executive Officer. In 1995, Mr. Nelson was
elected Chairman of the board of The TJX Companies, Inc., a retailer of off-
price fashion goods. From 1988 until 1990 Mr. Nelson was Chairman, President
and Chief Executive Officer of Norton Company, a manufacturer of abrasives,
ceramics, plastics, and chemical process products. From 1979 to September
1990, he was a director of Norton. Prior to becoming Chief Executive Officer
of Norton, Mr. Nelson was President and Chief Operating Officer of Norton
from 1986 to 1988, and, for more than five years, was President and Chief
Executive Officer of its subsidiary, Norton Christianson, Inc. Mr. Nelson
holds a B.A. degree from Wesleyan University and an M.B.A. from Harvard
Business School. He is a director of Brown & Sharpe Manufacturing Company,
Stocker & Yale, Inc., The TJX Companies, Inc., and Commerce Holdings, Inc.
Mr. Nelson serves as Chairman of the Company's Compensation Committee.
Biographical summaries of the remaining directors of the Company whose terms
of office will continue after the Annual Meeting appear below.
Jeffrey T. Beaver
Jeffrey T. Beaver, 59, has been a director of the Company since March of
1996, and currently serves as the Chairman of the Board. Mr. Beaver served
as a director of CBC from January 1983 to October 1996, and as Chairman of
the board of directors from April 1995 to October 1996. From May 1994 to
April 1995, Mr. Beaver served as President and Chief Executive Officer of
CBC, and from May 1994 to March 1996, Mr. Beaver served as CBC's Treasurer.
Since October 1996, Mr. Beaver has been Senior Advisory Director of CoView
Capital, Inc. From January 1991 to May 1994, Mr. Beaver was an independent
consultant in the healthcare sector. From September 1986 to December 1990,
Mr. Beaver was Senior Vice President and Head of the Corporate Finance Group
of IBJ Schroder Bank and Trust Company. Prior to September 1986, Mr. Beaver
was a Managing Director of J. Henry Schroder Corporation (a subsidiary of
Schroder Venture Managers, Inc.) where he was engaged in providing corporate
financial advisory services. Mr. Beaver is a member of the Institute of
Chartered Financial Analysts. He received his B.A. degree from Princeton
University and his M.B.A. degree from New York University. Mr. Beaver is a
member of the Nominating Committee of the Company.
Keith J. Dorrington
Keith J. Dorrington, Ph.D., D.Sc., 57, has been a director of the Company
since October 1996. Since 1991, Dr. Dorrington has been associated with MDS
Health Ventures Capital Corp., the leading venture capital company for the
healthcare sector in Canada, serving as Senior Vice President, Science and
Technology since 1993. In this capacity Dr. Dorrington is responsible for
the scientific evaluation of all pharmaceutical/biotechnology proposals
received by MDS and in-depth technical review of selected proposals. Between
1988 and 1991 Dr. Dorrington was General Manager and a Director of Wellcome
Biotechnology Ltd. and, from 1982 to 1988, Vice President, Research and
Development at Connaught Laboratories Ltd. Prior to 1982 Dr. Dorrington was
Chairman of the Department of Biochemistry at the University of Toronto. He
holds directorships in six early stage companies in the MDS portfolio and is
a director of two of the Network Centres for Excellence. Dr. Dorrington
earned his B.Sc., Ph.D., and D.Sc from the University of Sheffield, U.K. He
is a member of the Audit Committee and Chairman of the Nominating Committee.
Security Ownership of Certain Beneficial Owners
and Management of the Company
The following table sets forth certain information as to the Company's
common stock owned by management of the Company as of March 1, 1997 based
upon information supplied by the Company's directors and executive officers.
All directors and executive officers have sole voting and sole investment
power in shares reported as beneficially owned by them, except as may be
noted. No person, except the State of Wisconsin Investment Board, is known
by the Company to own more than five percent (5%) of the outstanding shares
of the Company's common stock.
Amount and Nature of Percent of Class
Name of Beneficial Owner Beneficial Ownership
(1)
Alison Taunton-Rigby Ph.D. (2) 128,953 2.58%
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Jeffrey T. Beaver (3) 47,922 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Keith J. Dorrington Ph.D. (4) 2,500 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Elliott D. Hillback, Jr. (5) 2,500 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
John M. Nelson (6) 6,187 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Gerald A. Beltz, Ph.D. (7) 19,456 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Stephen J. DiPalma (8) 12,500 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Deborah B. Grabbe (9) 18,240 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Robert B. Kammer, M.D. (10) 22,866 *
Aquila Biopharmaceuticals, Inc.
365 Plantation Street
Worcester, MA 01605
Directors and Executive 261,124 5.22%
Officers as a Group (11)
State of Wisconsin Investment Board 414,074 8.28%
State of Wisconsin
121 E. Wilson Street
Madison, Wisconsin 53707 (12)
__________________________________________________________________________
* Less than 1%
(1) Share ownership includes shares of common stock issuable on
exercise of certain outstanding options as described in the
footnotes below.
(2) Includes 125,293 shares which Dr. Taunton-Rigby may acquire upon
the exercise of options.
(3) Includes 132 shares held as custodian for one daughter and 132
shares held as custodian for another daughter. Mr. Beaver
disclaims beneficial ownership of the shares held as custodian
for his daughters. Includes 37,181 shares which Mr. Beaver may
acquire upon the exercise of options.
(4) Includes 2,500 shares which Dr. Dorrington may acquire upon the
exercise of options.
(5) Includes 2,500 shares which Mr. Hillback may acquire upon the
exercise of options.
(6) Includes 2,500 shares which Mr. Nelson may acquire upon the
exercise of options.
(7) Includes 15,000 shares which Dr. Beltz may acquire upon the
exercise of options.
(8) Includes 12,500 shares which Mr. DiPalma may acquire upon the
exercise of options.
(9) Includes 15,000 shares which Ms. Grabbe may acquire upon the
exercise of options.
(10) Includes 15,000 shares which Dr. Kammer may acquire upon the
exercise of options.
(11) See Footnotes Numbers 1-10.
(12) Based solely upon information contained in Schedule 13G
filed with the Company.
Board of Directors
The Board of Directors meets on a regularly scheduled basis and holds
special meetings as required. The Board met three times during 1996.
The Board of Directors has assigned certain responsibilities to committees.
The Audit Committee was established by the Board of Directors in October of
1996. The members of the Audit Committee are Mr. Hillback (chairman) and Dr.
Dorrington. The Audit Committee held one meeting during 1996. The functions
of the Audit Committee include recommending to the full Board the
appointment of the independent public accountants for the Company, reviewing
the scope and results of the audits by the independent public accountants,
and reviewing internal reports on various aspects of the corporate
operations.
The Compensation Committee was also established by the Board of Directors in
October of 1996. The members of the Compensation Committee are Mr. Nelson
(chairman) and Mr. Hillback. The Compensation Committee held one meeting
during 1996 and reviewed the compensation of the Company's officers and
directors and is reviewing other forms of employee compensation.
The Nominating Committee was established by the Board of Directors in
October of 1996. The members of the Nominating Committee are Dr. Dorrington
(chairman) and Mr. Beaver. The Nominating Committee held no meetings during
1996. The functions of the Nominating Committee include reviewing possible
candidates for the Board of Directors and recommending nomination of
appropriate candidates by the Board.
Shareholders who wish to suggest qualified candidates for the Board of
Directors must do so in accordance with the provisions of the Company's By-
Laws by sending a notice to the Company's Secretary, together with certain
information with respect to such nominees, not less than 60 nor more than
150 days prior to the date of the Annual Meeting (unless less than 70 days
notice of the Annual Meeting is given in which case notice must be given not
later than the close of business on the tenth day following the earlier of
such public disclosure or notice of such meeting).
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information as to the annual and
long-term compensation for services to the Company for the last three
completed fiscal years of the Company's Chief Executive Officer and the
other four most highly compensated executive officers of the Company as of
December 31, 1996 (collectively the "Named Executive Officers"). The amounts
reported for 1996 reflect compensation paid by CBC (prior to and including
October 21, 1996) and the Company (after October 21, 1996). The amounts
reported for 1995 reflect compensation paid by CBC to the Named Executive
Officers. No compensation is reported for Drs. Beltz and Kammer and Ms.
Grabbe for 1994 as, although they were employed by CBC, they were not
executive officers during such period.
Summary Compensation Table
Long-Term
Annual Compensation Compensation All
Name and Awards Other
Principal Position Year Salary Bonus Other Restricted Securities Compen-
($) ($) Annual Stock Underlying sation(1)
Compen- Award(s) Options/ ($)
sation ($) SARS
($) (#)
Alison Taunton- 1996 $225,000 $103,750 -- -- 85,000 $4,895
Rigby
President/CEO 1995 161,827 38,340(2) -- -- 104,043(3) 3,076
& Director 1994 -- -- -- -- -- --
Gerald A. Beltz 1996 144,708 40,000 31,373(4) -- 60,000 762
Vice President of 1995 118,885 6,017(2) -- -- -- 514
Research & 1994 -- -- -- -- -- --
Development
Stephen J. DiPalma 1996 100,000(5) 20,000 -- -- 50,000 209
Vice President, 1995 -- -- -- -- -- --
Chief Financial 1994 -- -- -- -- -- --
Officer
& Treasurer
Deborah B. Grabbe 1996 132,040 33,000 25,081(6) -- 60,000 689
Vice President of 1995 118,500 5,765(2) -- -- -- 512
Manufacturing 1994 -- -- -- -- -- --
Operations
Robert B. Kammer 1996 152,354 30,000 63,158(7) -- 60,000 2073
Vice President of 1995 178,614 6,945(2) 55,110(8) -- -- 772
Medical Affairs 1994 -- -- -- -- -- --
__________________________________
(1) The amount shown for each of the Named Executive Officers represents
payments by the Company of term life insurance.
(2) Bonus for 1995 paid on consummation of Reorganization Plan in the Company's
common stock (fair market value of common stock at time of payment).
(3) Options to purchase Company's common stock, converted from options to
purchase CBC common stock based upon an exchange ratio of 7.569 shares of CBC
stock for one share of the Company's common stock.
(4) Represents an incentive stock award in the amount of $29,700 and compensa-
tion deferred pursuant to a salary reduction program, both of which were con-
tingent upon CBC emerging from bankruptcy and were paid in the Company's
common stock on consummation of the Reorganization Plan.
(5) Mr. DiPalma joined the Company on March 1, 1996.
(6) Represents an incentive stock award in the amount of $22,770 and compensa-
tion deferred pursuant to a salary reduction program, both of which were con-
tingent upon CBC emerging from bankruptcy and were paid in the Company's
common stock on consummation of the Reorganization Plan.
(7) Represents an incentive stock award in the amount of $57,920 and compensa-
tion deferred pursuant to a salary reduction program, both of which were con-
tingent upon CBC emerging from bankruptcy and were paid in the Company's
common stock on consummation of the Reorganization Plan.
(8) Tax reimbursements in the amount of $19,510 and relocation allowance in
the amount of $35,600.
Option/SAR Grants in Last Fiscal Year
Individual Grants Potential
Realizable
Value at
Name Number of Percent of Exercise Expiration Assumed
Securities Total of Base Date Annual Rates
Underlying Options/ Price of Stock Price
Option/SARs SARs ($/Sh.) Appreciation
Granted Granted to for Option
(#) Employees Term
in Fiscal 5%($) 10%($)
Year
Alison Taunton-Rigby $85,000* 16.61% $4.50 10/28/2006 $240,975 $608,175
Gerald A. Beltz 60,000* 11.72% 4.50 10/28/2006 170,100 429,300
Stephen J. DiPalma 50,000* 9.77% 4.50 10/28/2006 141,750 357,750
Deborah B. Grabbe 60,000* 11.72% 4.50 10/28/2006 170,100 429,300
Robert B. Kammer 60,000* 11.72% 4.50 10/28/2006 170,100 429,300
_______________________
*Stock option exercisable with respect to 25% of the shares on October 28,
1996, 25% of the shares on October 28, 1997, 25% on the shares on October 28,
1998, and 25% of the shares on October 28, 1999.
Fiscal Year End Option/SAR Value Table
The following chart shows the number and value of unexercised options held
by each of the Named Executive Officers at the end of the Company's last
fiscal year. The value shown for each option is equal to the difference
between the exercise price of the option and the fair market value of the
underlying stock at fiscal year end. The Company has never awarded any stock
appreciation rights to any of its employees, and thus none are outstanding.
None of the Named Executive Officers exercised any options during the
Company's last fiscal year.
Aggregated Option/SAR Exercises In
Last Fiscal Year And FY-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
Name (#) ($)
Exercisable/Unexercisable Exercisable/Unexercisable
Alison Taunton-Rigby 125,293/63,750 $224,484/24,225
Gerald A. Beltz 15,000/45,000 5,700/17,100
Stephen J. DiPalma 12,500/37,500 4,750/14,250
Deborah B. Grabbe 15,000/45,000 5,700/17,100
Robert B. Kammer 15,000/45,000 5,700/17,100
The Company has entered into employment contracts with several of its
officers as described below.
Dr. Taunton-Rigby entered into an employment agreement dated April 6, 1995
with CBC, which has been assumed by the Company, which provides for an
annual base salary of $225,000, subject to increase from time to time at the
discretion of the Company. The term of the contract automatically extends
for an additional year on each anniversary date unless the Company gives a
notice of termination 90 days prior to the relevant anniversary date. If Dr.
Taunton-Rigby's employment is terminated within six months of a "change of
control," she is entitled to a payment equal to two times her base salary as
in effect prior to the change of control. If Dr. Taunton-Rigby's employment
is terminated due to a default by the Company or by the Company without
cause, she is entitled to an amount equal to one year's (six months in the
case of a termination on an anniversary date pursuant to 90 days' notice)
base salary.
Dr. Beltz entered into an employment agreement with CBC dated August 21,
1995, which has been assumed by the Company, which provides for an initial
annual salary of $140,000, subject to review on an annual basis. Dr. Beltz's
employment under the agreement may be terminated any time after August 21,
1997 by either party without liability upon 180 days prior written notice.
Mr. DiPalma entered into an employment agreement with CBC dated March 1,
1996, which has been assumed by the Company, which provides for an initial
annual salary of $125,000, subject to review on an annual basis. Mr.
DiPalma's employment under the agreement may be terminated any time after
March 1, 1998 by either party without liability upon 180 days prior written
notice.
Ms. Grabbe entered into an employment agreement with CBC dated August 21,
1995, which has been assumed by the Company, which provides for an initial
annual salary of $130,000, subject to review on an annual basis. Ms.
Grabbe's employment under the agreement may be terminated at any time after
August 21, 1997 by either party without liability upon 180 days prior
written notice.
Dr. Kammer entered into an employment agreement with CBC dated August 21,
1995, which has been assumed by the Company, which provides for an initial
annual salary of $150,000, subject to review on an annual basis. Dr.
Kammer's employment under the agreement may be terminated at any time after
August 21, 1997 by either party without liability upon 180 days prior
written notice.
Performance Graph
The following graph shows a comparison over a five-year period ending
at the end of the Company's last fiscal year of the cumulative total return
to the Company's shareholders with the cumulative total return of the
Standard & Poor's 500 Composite Index, the NASDAQ Total Return Index and the
NASDAQ Pharmaceutical Index and assumes an investment of $100 on December
31, 1991. The Company has selected the NASDAQ Total Return Index to replace
the Standard & Poor's 500 Composite Index (included in graph for comparison
purposes) as the Company is listed on the NASDAQ National Market System.
1991 1992 1993 1994 1995 1996
S&P 500 Composite Index $100.00 $107.7 $118.2 $119.8 $164.8 $203.2
NASDAQ Total Return Index 100.00 116.4 133.6 130.6 184.7 227.2
NASDAQ Pharmaceuticals Index 100.00 83.2 74.2 55.8 102.1 102.4
Cambridge Biotech 100.00 73.1 25.6 13.5 13.5 15.4
Corporation/Aquila
Biopharmaceuticals, Inc.(9)
___________________
(9) The graph represents the history of CBC until October 1996, and the Company
thereafter.
Board Compensation Committee Report on Executive Compensation
Overall Policy
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to shareholders by tying a
significant portion of executive compensation to the Company's success in
meeting specified annual performance goals. The overall objectives of this
strategy are to provide competitive salaries necessary to attract and retain
the highest quality talent, to reward performances that accomplish Company
goals and priorities, and to provide incentives that link the executive
officers' opportunities for financial reward with that of the shareholders.
Decisions on compensation of the Company's executives generally are made by
the Compensation Committee of the Board of Directors. The Compensation
Committee is responsible for setting and administering the policies that
govern executive compensation and the compensation of the Company's
executive officers.
Generally, the three principal components of the compensation program are
base salary, bonuses, and equity-based incentives (typically stock options),
although awards are not necessarily granted in all three categories every
year. In addition, the Compensation Committee takes into account the full
compensation package provided by the Company to the individual, including
savings plans, severance plans, insurance, and benefits generally available
to all employees of the Company.
This report addresses the Company's compensation policies for 1996 as they
affected the chief executive officer and the four other executive officers.
Although the Compensation Committee has taken an active role in compensation
decisions for 1997, its role in 1996 compensation was limited to determining
bonuses for such executive officers; as base compensation was dictated by
contracts between each executive officer and CBC, which contracts were
assumed by the Company.
Salary Administration
Salaries are reviewed annually, and any adjustments are determined by
evaluating the performance of the Company and of each executive officer,
including any change in the executive's responsibilities. The ranges of
appropriate base salaries are determined by analysis of salary data on
positions of comparable responsibility within the biotechnology industry, as
reported in the annual Biotechnology Compensation Survey Report by Radford
Associates/Alexander & Alexander Consulting Group. Exceptional performances
are generally compensated with performance-related bonuses and stock options
rather than raising base salaries, reflecting the Compensation Committee's
increasing emphasis on tying pay to performance criteria.
Bonus Program
Executives are eligible to receive bonuses based on the overall performance
of the Company and based on outstanding individual achievement. All bonus
payments are made in the discretion of the Compensation Committee. The
Compensation Committee awarded bonuses to each of the executive officers,
other than Dr. Taunton-Rigby, totaling in the aggregate $123,000, based upon
a review of the performance of each such officer taking into account Dr.
Taunton-Rigby's evaluation of the performance of such officers, all of whom
report to her.
Stock Option Program
The Compensation Committee believes that long-term incentive awards such as
stock options link the executive's opportunity for financial reward with
that of the shareholders, in that the value of an executive's stock options
increases as the value of the shareholders' shares increases.
Under the Company's 1996 Stock Award and Option Plan, the Company may grant
stock options, discounted stock options, restricted stock, deferred stock,
and stock appreciation rights to any or all of the Company's employees,
officers, and advisors and/or consultants. The Board granted options for
230,000 shares of the Company's common stock in the aggregate to the
executive officers, other than Dr. Taunton-Rigby.
Compensation of the Chief Executive Officer
Dr. Taunton-Rigby's 1996 base compensation is pursuant to an employment
contract negotiated with CBC in 1995 and approved by the United States
Bankruptcy Court. The Company assumed the obligations of CBC under the
contract pursuant to the Reorganization Plan. The Compensation Committee
granted Dr. Taunton-Rigby a bonus in the amount of $78,750, consistent with
the parameters previously adopted by the board of directors of CBC. The
Compensation Committee also awarded Dr. Taunton-Rigby an additional bonus of
$25,000 for her leadership in the consummation of the Reorganization Plan.
In October of 1996, shortly after the consummation of the Reorganization
Plan, the Company granted options to all of its employees in recognition of
their contribution to the successful commencement of the Company's
operations and to provide the Company's continuing employees with a
proprietary interest in the Company's future. One of the awards made at this
time was a grant to Dr. Taunton-Rigby of an option to purchase 85,000 shares
of the Company's common stock.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
John M. Nelson, Chairman
Elliott D. Hillback, Jr.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than ten percent of the
registered class of the Company's equity securities (collectively,
"Reporting Person") to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of
common stock of the Company. Each Reporting Person is required by SEC
regulation to furnish the Company with copies of such Section 16(a) reports.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports are required during the fiscal year ended December 31, 1996, no
Reporting Person has failed to file on a timely basis any report required by
Section 16(a) of the Exchange Act.
Compensation of Directors
Each director who is not an employee of the Company receives fees of $2,000
($2,500 for the chairman of the Board) for each Board meeting attended in
person by such director; $1,000 for each standing committee meeting, held on
a day other than a day on which a meeting of the Board is held, attended by
such director in person; and $500 for each Board and committee meeting
attended by telephone provided such committee meeting is not held on the
same day as a Board meeting. Under provisions of the Company's 1996
Directors Stock Award and Option Plan providing for formula grants, each
non-employee director was awarded an option to purchase 10,000 shares of the
Company's common stock as of the effective date of the plan; one-fourth of
which vested immediately and one-fourth of which vests at each succeeding
anniversary date. On the first trading day of July of each year, each non-
employee director will be awarded an option to purchase up to 2,500 shares
of the Company's common stock.
PROPOSAL 3
APPROVAL OF 1996 STOCK AWARD AND OPTION PLAN
The Company adopted the 1996 Stock Award and Option Plan (the "Option Plan")
in October of 1996 to provide the Company's employees, officers, directors
(if declared eligible), consultants and advisors with additional incentives
for performance furthering the interest and success of the Company.
Administration and Eligibility
The Option Plan is administered by the Compensation Committee of the Board
of Directors. Under the Option Plan, the Company may grant stock options,
discounted stock options, restricted stock, deferred stock and stock
appreciation rights (collectively "Award(s)"). There is an initial
authorization and reservation of 2,000,000 shares of the Company's common
stock, $.01 par value, available for Awards. All employees, (currently
approximately 60 people), officers (currently five people) or directors of,
or consultants or advisors to, the Company are eligible to receive options
under the Option Plan. Directors are eligible to participate in the Option
Plan only if particularly declared eligible by the Board or the Compensation
Committee. However, only employees of the Company are eligible to receive
incentive stock options.
Terms
The Compensation Committee, based on recommendations of management, selects
the recipient of the Award and determines the number of shares subject to
each Award and the terms of each Award.
Payment of the option exercise price may be made in cash, shares of the
Company's common stock or a combination of both.
Amendment and Termination
The Board of Directors may at any time, and from time to time, modify or
amend the Option Plan in any respect, except that if at any time the
approval of the stockholders of the Company is required under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision with respect to incentive stock options, or under Rule 16b-3 under
the Exchange Act, the Board of Directors may not effect such modification or
amendment without such approval. The Option Plan will remain in full force
and effect until terminated by the Board.
Federal Income Tax Consequences
Under the Option Plan, the Company may grant non-qualified options,
incentive stock options ("ISOs"), as that term is used in Section 422 of the
Code, and discounted options.
With respect to a non-qualified stock option awarded under the Option
Plan: (i) no income is realized by the participant at the time the option is
granted; (ii) generally, upon exercise of the option, the participant
realizes ordinary income in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares on
the date of exercise, and the Company will be entitled to a tax deduction in
the same amount; and (iii) at disposition, any appreciation or depreciation,
after the date of exercise, is treated either as short-term or long-term
capital gain or loss, depending upon the length of time that the participant
has held the shares.
With respect to an ISO, no taxable income is realized by the
participant upon the grant or exercise of an ISO. If common stock is issued
to a participant pursuant to the exercise of an ISO, and if no disqualifying
disposition of the shares is made by the participant within two years of the
date of grant or within one year after the transfer of the shares to the
participant, then: (i) upon the sale of the shares, any amount realized in
excess of the option price will be taxed to the participant as a long-term
capital gain, and any loss sustained will be a long-term loss; and (ii) no
deduction will be allowed to the Company for Federal income tax purposes.
The exercise of an ISO will give rise to an item of tax preference equal in
amount to the excess of the fair market value of the stock on the date of
exercise over the option price which may result in an alternative minimum
tax liability for the participant unless the participant makes a
disqualifying disposition of the shares received upon exercise. To the
extent the aggregate fair market value of stock with respect to which ISOs
held by a participant are exercisable for the first time during any calender
year exceeds $100,000, such ISOs shall be treated as non-qualified stock
options.
If common stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of the holding periods described above, then
generally: (i) the participant will realize ordinary income in the year of
disposition in an amount equal to the excess, if any, of the fair market
value of the shares at exercise (or, if less, the amount realized on the
disposition of the shares) over the option price paid for such shares, and
(ii) the Company will be entitled to deduct any such recognized amount. Any
further gain or loss realized by the participant will be taxed as short-term
or long-term capital gain or loss, as the case may be, and will not entitle
the Company to any further deduction.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the
participant's employment, the option will generally be taxed as a non-
qualified stock option.
Discounted options awarded under the Option Plan would generally be
treated in the same manner for tax purposes as non-qualified options.
Options Received by Executive Officers in 1996
Alison Taunton-Rigby Ph.D. 85,000*
President, Chief Executive Officer and Director
Gerald A. Beltz 60,000*
Vice President of Research and Development
Stephen J. DiPalma 50,000*
Chief Financial Officer and Treasurer
Deborah B. Grabbe 60,000*
Vice President of Manufacturing Operations
Robert B. Kammer 60,000*
Vice President of Medical Affairs
Executive Officers as a Group 315,000*
* Stock option exercisable with respect to 25% of the shares on October 28,
1996, 25% of the shares on October 28, 1997, 25% of the shares on October
28, 1998, and 25% of the shares on October 28, 1999.
The Board of Directors recommends a vote FOR the approval
of the Option Plan.
PROPOSAL 4
APPROVAL OF 1996 DIRECTORS STOCK AWARD AND OPTION PLAN
The Company adopted the 1996 Directors Stock Award and Option Plan (the
"Directors' Option Plan") in October of 1996 to provide the Company's
directors with additional incentives for performance furthering the interest
and success of the Company.
Administration and Eligibility
The Directors' Option Plan is administered by the Compensation Committee of
the Board of Directors. Under the Directors' Option Plan, the Company may
grant stock options, discounted stock options, restricted stock, deferred
stock and stock appreciation rights (collectively "Award(s)"). There is an
initial authorization and reservation of 200,000 shares of the Company's
common stock, $.01 par value, available for Awards. All directors of the
Company are eligible to receive options under the Directors' Option Plan.
However, only employees of the Company are eligible to receive incentive
stock options and only non-employee directors are eligible to receive the so
called "formula grants" described below.
Terms
a. Formula Grants
Under the terms of the Directors' Option Plan, each director who is
not an employee of the Company was initially granted an option to
purchase 10,000 shares of the Company's common stock; one-fourth of
which vested immediately and one-fourth of which vests at each
succeeding anniversary date. In addition, on the first trading day of
each July, commencing July of 1997, each non-employee director shall
be granted options with respect to up to 2,500 shares of the
Company's common stock.
b. General
Except as set forth above, the Compensation Committee selects the
recipient of the Award and determines the number of shares subject to
each Award and the terms of each Award.
Payment of the option exercise price may be made in cash, shares of
the Company's common stock or a combination of both.
Amendment and Termination
The Board of Directors may at any time, and from time to time, modify or
amend the Directors' Option Plan in any respect, except that if at any time
the approval of the stockholders of the Company is required under Section
422 of the Code, or any successor provision with respect to incentive stock
options, or under Rule 16b-3 under the Exchange Act, the Board of Directors
may not effect such modification or amendment without such approval. The
Directors' Option Plan will remain in full force and effect until terminated
by the Board.
Federal Income Tax Consequences
Under the Directors' Option Plan, the Company may grant non-qualified
options, ISOs and discounted options.
With respect to a non-qualified stock option awarded under the
Directors' Option Plan: (i) no income is realized by the participant at the
time the option is granted; (ii) generally, upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of
the shares on the date of exercise, and the Company will be entitled to a
tax deduction in the same amount; and (iii) at disposition, any appreciation
or depreciation, after the date of exercise, is treated either as short-term
or long-term capital gain or loss, depending upon the length of time that
the participant has held the shares.
With respect to an ISO, no taxable income is realized by the
participant upon the grant or exercise of an ISO. If common stock is issued
to a participant pursuant to the exercise of an ISO, and if no disqualifying
disposition of the shares is made by the participant within two years of the
date of grant or within one year after the transfer of the shares to the
participant, then: (i) upon the sale of the shares, any amount realized in
excess of the option price will be taxed to the participant as a long-term
capital gain, and any loss sustained will be a long-term loss; and (ii) no
deduction will be allowed to the Company for Federal income tax purposes.
The exercise of an ISO will give rise to an item of tax preference equal in
amount to the excess of the fair market value of the stock on the date of
exercise over the option price which may result in an alternative minimum
tax liability for the participant unless the participant makes a
disqualifying disposition of the shares received upon exercise. To the
extent the aggregate fair market value of stock with respect to which ISOs
held by a participant are exercisable for the first time during any calender
year exceeds $100,000, such ISOs shall be treated as non-qualified stock
options.
If common stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of the holding periods described above, then
generally: (i) the participant will realize ordinary income in the year of
disposition in an amount equal to the excess, if any, of the fair market
value of the shares at exercise (or, if less, the amount realized on the
disposition of the shares) over the option price paid for such shares, and
(ii) the Company will be entitled to deduct any such recognized amount. Any
further gain or loss realized by the participant will be taxed as short-term
or long-term capital gain or loss, as the case may be, and will not entitle
the Company to any further deduction.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the
participant's employment, the option will generally be taxed as a non-
qualified stock option.
Discounted options awarded under the Directors' Option Plan, would
generally be treated in the same manner for tax purposes as non-qualified
options.
The Board of Directors recommends a vote For the approval of the Directors'
Option Plan.
PROPOSAL 5
APPROVAL OF 1996 EMPLOYEE STOCK PURCHASE PLAN
The Company adopted the 1996 Employee Stock Purchase Plan (the "Purchase
Plan") in October of 1996 to provide the Company's employees with incentives
for performance furthering the interest and success of the Company and an
opportunity to obtain a proprietary interest in the Company through
ownership of its common stock.
Administration and Eligibility
The Purchase Plan is administered by the Compensation Committee of the
Board of Directors. There is an initial authorization and reservation of
200,000 shares of the Company's common stock, $.01 par value, available for
shares issued under the Purchase Plan. Any employee of the Company who,
immediately after the grant of an option under the Purchase Plan, would own
less than five percent of the Company's common stock and whose customary
employment is more than twenty hours per week and more than five months in
any calendar year is eligible to participate in the Purchase Plan.
Terms
The Company's Board of Directors determines whether an offer is to be
made under the Purchase Plan and, if an offer is to be made, selects a date
for the offering, which must occur during the first fifteen days of January,
and/or the first fifteen days of July in any year, and determines the number
of shares to be offered. Pursuant to such offering, each eligible employee
is offered an option to purchase shares at a price equal to 85% of the fair
market value of the Company's common stock at the date of the offering. An
eligible employee may elect to purchase that number of whole shares which
can be purchased at the applicable price by investing such percentage of his
base salary as is chosen by the eligible employee not to exceed 10%, subject
to a pro rata reduction to insure that options are not granted for a number
of shares which would exceed the aggregate number initially offered by the
Board of Directors. The employee pays for his shares by payroll deductions.
As of the end of the six-month purchase period, the Committee determines an
"alternative offering price," which is 85% of the fair market value of the
Company's common stock on that date. The employee's actual purchase price
for the shares is the lower of the initial offering price and the
alternative offering price. Each employee's option is deemed to have been
exercised as of the end of the six-month purchase period, and the employee
receives the number of shares equal to the number obtained by dividing the
amount accumulated in his account by the lower of the initial offering price
or the alternative offering price rounded down to the nearest whole share,
subject to a pro rata reduction to ensure that the aggregate number of
shares purchased does not exceed the aggregate number initially offered by
the Board of Directors. The number of shares covered by the option, however,
shall in no event be more than twice the number of shares calculated by
dividing (i) the amount accumulated in the account by (ii) the fair market
value of the common stock on the date of the offering. No eligible employee
may be granted an option to purchase shares which would permit his total
rights to purchase shares of the Company's stock under all employee stock
purchase plans of the Company and its subsidiaries to accrue at a rate which
exceeds $25,000 of fair market value of such stock per year.
Amendment and Termination
The Board of Directors may at any time, and from time to time, modify or
amend the Purchase Plan in any respect, except that if at any time the
approval of the stockholders of the Company is required under Section 423 of
the Code or any successor provision, the Board of Directors may not effect
such modification or amendment without such approval. The Purchase Plan will
remain in full force and effect until terminated by the Board or until there
are no more shares available under the Purchase Plan for purchase.
Federal Income Tax Consequences
It is intended that the rights to purchase shares to be granted by the
Company under the Purchase Plan will constitute options issued pursuant to
an "employee stock purchase plan" within the meaning of said Section 423.
The Purchase Plan is not qualified under Section 401(a) of the Code.
If shares are issued to an employee upon his exercise of the option
granted under the Purchase Plan, and if no disposition of such shares is
made by him within two years of the grant of such option, nor within one
year after the transfer to him of such shares: (i) no income will be
realized by the employee at the time of transfer of the shares to him, and
(ii) when he sells such shares (or dies without having transferred the
shares), ordinary income will be realized to the extent of the lesser of:
(A) the excess of the fair market value of the shares on the date the right
was granted over the option price, or (B) the excess of the fair market
value of the shares at the time of disposition over the amount paid under
the option. Any further gain will be treated for tax purposes as long-term
capital gain, provided the employee holds the shares for more than one year
after the last day of the purchase period applicable to such shares.
No deduction will be allowed to the Company for Federal income tax
purposes in connection with the granting or exercise of any right to
purchase under the Purchase Plan if there is no disposition of the shares
within either the two year or the one year periods referred to above. If
there is a disposition of shares within either of those periods, the
employee will realize ordinary income in the year of disposition in an
amount equal to the difference between the purchase price per share and the
fair market value of the shares at the time of exercise of the right to
purchase, and the Company will be entitled to a deduction in the same
amount. Any difference between the amount realized by an employee upon such
a disposition and the fair market value of the shares at the time of the
exercise of the right will be a short-term capital gain or loss, as the case
may be. The Company is entitled to a deduction for the costs of
administering the Purchase Plan.
The Board of Directors recommends a vote FOR the approval of the Purchase
Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Coopers & Lybrand L.L.P., independent certified
public accountants, as auditors of the Company for fiscal year ending
December 31, 1996. Coopers & Lybrand L.L.P. served as auditors during 1995.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting to be available to respond to appropriate questions and
to have the opportunity to make a statement if such representative desires
to do so.
SHAREHOLDER PROPOSALS
In order for any proposal that a shareholder intends to present at the next
annual meeting of shareholders to be eligible for inclusion in the Company's
proxy material for that meeting, it must be received by the Secretary of the
Company at the Company's offices in Worcester, Massachusetts by December 22,
1997.
Date: April 18, 1997
By order of the Board of Directors
JANE V. HAWKES, Secretary
APPENDIX A
PROXY AQUILA BIOPHARMACEUTICALS, INC. PROXY
This Proxy is Solicited on behalf of the Board of Directors
for Annual Meeting of Shareholders May 20, 1997.
The undersigned shareholder of AQUILA BIOPHARMACEUTICALS,
INC., revoking all previous proxies, hereby constitutes and
appoints ALISON TAUNTON-RIGBY and JANE V. HAWKES, or any one of
them, attorneys and proxies of the undersigned, with full power of
substitution for and in the name of the undersigned to vote all
shares of stock of the corporation which the undersigned may be
entitled to vote at the annual meeting of the shareholders of the
Corporation to be held at the offices of Brown, Rudnick, Freed &
Gesmer, One Financial Center, Boston, Massachusetts 02111, on
Tuesday, May 20, 1997 at 3:00 p.m. or any adjournment thereof,
with all powers which the undersigned would possess if personally
present.
The proxies appointed hereby are instructed to vote in the
manner indicated on the reverse side on the following matters, as
set forth in the notice of meeting and in the Proxy statement
dated April 18, 1997, receipt of which is hereby acknowledged.
This proxy when properly executed will be voted in accordance
with the specifications indicated by the undersigned shareholder.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please date, sign and mail your proxy card back as soon as
possible!
Annual Meeting of Shareholders
AQUILA BIOPHARMACEUTICALS, INC.
May 20, 1997
A __X___ Please mark your votes as in this example.
Where no specification is made, this proxy will be voted FOR the
Election of Directors and FOR the proposals listed under items two
and three below, in accordance with the recommendation of the
Board of Directors.
1. and 2. Election of Directors
Nominees:
Class I directors to hold office until the annual meeting of
shareholders in 1999.
Messrs. Hillback and Nelson
Class II director to hold office until the annual meeting of
shareholders in 2000.
Dr. Alison Taunton-Rigby
___ FOR all nominees ___ WITHHOLD from all nominees
For, except vote withheld from the following nominee(s):
_______________________________________________________
3. To consider and act upon a proposal to approve the 1996 Stock
Award and Option Plan as set forth in the Proxy Statement.
___ FOR ___ AGAINST ___ ABSTAIN
4. To consider and act upon a proposal to approve the 1996
Directors Stock Award and Option Plan as set forth in the
Proxy Statement.
___ FOR ___ AGAINST ___ ABSTAIN
5. To consider and act upon a proposal to approve the 1996
Employee Stock Purchase Plan.
___ FOR ___ AGAINST ___ ABSTAIN
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING _____
__________________________ MARK HERE FOR ADDRESS CHANGE _____
AND NOTE AT LEFT
__________________________
__________________________
Signature________________________________________Date______________
Signature________________________________________Date______________
NOTE: Please sign exactly as name appears hereon. When shares
are held by joint tenants, 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, please sign in partnership name by authorized person.
