<PAGE> 1
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:
<TABLE>
<S> <C>
/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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Cytel 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 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CYTEL CORPORATION
3525 JOHN HOPKINS COURT
SAN DIEGO, CA 92121
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [SEPTEMBER __,] 1997
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Cytel
Corporation, a Delaware corporation (the "Company"), will be held on __________,
[September __,], 1997 at ____ _.m. at 3525 John Hopkins Court, San Diego,
California, for the following purposes:
1. To approve the issuance and sale of up to ____________ shares
of the Company's Series A Convertible Preferred Stock, and the issuance
of Common Stock upon conversion thereof, in a private financing on the
terms and subject to the conditions described in the Proxy Statement.
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the Company's authorized shares
of Common Stock and Preferred Stock.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on [August __,]
1997 as the record date for the determination of stockholders entitled to notice
of and to vote at this Special Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Deborah A. Schueren
Vice President, Finance, Chief Financial
Officer and Secretary
San Diego, California
[September __,] 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
CYTEL CORPORATION
3525 JOHN HOPKINS COURT
SAN DIEGO, CA 92121
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by the Board of Directors of Cytel
Corporation, a Delaware corporation (the "Company" or "Cytel"), for use at the
Special Meeting of Stockholders to be held on __________, [September __,] 1997
at ____ _.m. (the "Special Meeting"), or at any adjournment or postponement of
that meeting, for the purposes set forth herein and in the foregoing Notice of
Special Meeting. The Special Meeting will be held at the Company's headquarters,
3525 John Hopkins Court, San Diego, California, 92121. The Company intends to
mail this proxy statement and accompanying proxy card on or about [September
__,] 1997 to all stockholders entitled to vote at the Special Meeting.
SOLICITATION
The entire cost of solicitation of proxies, including expenses in
connection with preparing and mailing this Proxy Statement, the proxy and any
additional information furnished to the stockholders will be borne by the
Company. Copies of solicitation materials will be furnished to banks, brokerage
houses, nominees, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The Company may reimburse persons representing beneficial owners of Common Stock
for their costs in forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram and personal solicitation by directors, officers or other regular
employees of the Company or, at the Company's request, [name of proxy
solicitor]. No additional compensation will be paid to directors, officers or
other regular employees for such services, but [name of proxy solicitor] will be
paid its customary fees, estimated to be approximately $_______, if it renders
solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
[August __,] 1997 will be entitled to notice of and to vote at the Special
Meeting. At the close of business on [August __,] 1997, the Company had
outstanding and entitled to vote ______________ shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Special
Meeting. All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any stockholder giving a proxy pursuant to this solicitation has the
power to revoke it any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's
1.
<PAGE> 4
principal executive office, 3525 John Hopkins Court, San Diego, California,
92121, a written notice of revocation or a duly executed proxy bearing a later
date. It may also be revoked by attending the meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company by
December 31, 1997 in order to be included in the proxy statement and proxy
relating to that Annual Meeting.
PROPOSAL 1
APPROVAL OF ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK
IN CONNECTION WITH FINANCING TRANSACTION
BACKGROUND
The stockholders of the Company are being asked to approve the issuance
and sale of ____________ shares of Series A Convertible Preferred Stock (the
"Series A Preferred Stock") in a $10 million private placement (the
"Financing"), on the terms and conditions outlined below. Pursuant to the terms
of the Financing, the Company reserves the right to sell up to an additional
$___ million of Series A Preferred Stock, or an additional ___ shares. The
closing of the Financing, if approved by the stockholders pursuant to this
Proposal 1, is expected to occur as soon after the Special Meeting as
practicable (the "Closing Date").
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OF THE COMPANY. THE SECURITIES REFERRED TO IN
THIS PROXY STATEMENT HAVE NOT BEEN REGISTERED FOR SALE BY THE COMPANY UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SO OFFERED OR SOLD ABSENT SUCH REGISTRATION UNDER THE ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREOF.
The purchasers in the Financing will consist of a limited number of
accredited investors, and the sale of Series A Preferred Stock in the Financing
will be made in reliance on Regulation D promulgated under the Act, which offers
an exemption from the registration requirements under the Act.
The Financing will be placed pursuant to an agreement (the "Agreement")
with a placement agent (the "Placement Agent"). Neither the Company nor any of
its directors or officers has any relationship with the Placement Agent other
than the relationship whereby the Placement Agent has served as a financial
advisor to the Company on the Financing and other matters.
The Company will file a registration statement under the Act with
respect to the resale of the shares of Common Stock issuable upon conversion of
the Series A Preferred Stock within 90 days of the Closing Date.
STOCKHOLDER APPROVAL
The issuance by the Company of the Series A Preferred Stock is subject
to stockholder approval pursuant to the Rules of the National Association of
Securities Dealers, Inc. ("NASD") applicable to
2.
<PAGE> 5
companies whose securities are traded on the Nasdaq National Market. Rule
4460(i)(1)(D) of the NASD (the "20% Rule") requires companies that are listed on
the Nasdaq National Market to obtain stockholder approval prior to issuing
common stock (or shares convertible into common stock) in a private financing at
a price less than the market value of the common stock, where the amount of
common stock to be issued (or issuable upon conversion) is or will be greater
than 20% of the common stock or voting power of the Company outstanding prior to
the issuance.
The maximum number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock (assuming the maximum adjustment at the second
anniversary of the Closing Date as described below and no adjustment for
dilutive events) will be greater than 20% of the shares outstanding immediately
prior to the Financing. Because the Series A Preferred Stock and the shares of
Common Stock into which the Series A Preferred Stock is convertible (the
"Conversion Shares") are being issued without registration under the Act, and
the terms of the Series A Preferred Stock will effectively allow the holders of
the Series A Preferred Stock to obtain shares of Common Stock at a price below
the current market price, approval of the Company's stockholders is a condition
to the Financing. See "Terms of Series A Preferred Stock - Conversion Price;
Adjustments."
TERMS OF SERIES A PREFERRED STOCK
The proposed principal terms of the Financing, including the rights,
preferences and privileges of the Series A Preferred Stock, as currently
proposed are described below. The final terms of the Financing, including the
rights, preferences and privileges of the Series A Preferred Stock, will be
determined by negotiations between the Company and the investors participating
in the Financing and may differ from the terms described below.
Conversion Price; Adjustments. The shares of Series A Preferred Stock
will be offered at a purchase price of $_______ per share. Each share of Series
A Preferred Stock will be convertible, at the option of the holder, into shares
of Common Stock of the Company, initially on a one-for-one basis at a conversion
price initially equal to the purchase price per share (the "Conversion Price").
The Conversion Price will be subject to adjustment in certain events
including (i) any stock splits, subdivisions or combinations of the Company's
Common Stock or (ii) any payment, issuance or distribution by the Company to
holders of Common Stock of a stock dividend or assets (other than cash dividends
payable out of retained earnings). The Conversion Price also will be subject to
adjustment in the event that the Company issues Common Stock or Common Stock
equivalents convertible into Common Stock for consideration per share which is
less than the then-applicable Conversion Price (a "Dilutive Issuance"). If a
Dilutive Issuance occurs during the first 18 months following the Financing, the
Conversion Price will be adjusted on a "full ratchet" basis, meaning that the
Conversion Price will be reduced to the price per share of the shares issued in
the Dilutive Issuance. If a Dilutive Issuance occurs after 18 months after the
Financing, the Conversion Price will be adjusted on a "weighted average formula"
basis, meaning that the Conversion Price will be reduced to the weighted average
of the purchase price per share of the Common Stock outstanding or deemed to be
outstanding prior to the Dilutive Issuance and the per share price of the shares
issued in the Dilutive Issuance. The Conversion Price will not be adjusted for
issuance of Common Stock upon the exercise of options or the issuance of stock
options to employees, so long as such options are granted at fair market value
or for issuance of Common Stock under the Company's Employee Stock Purchase
Plan.
In addition, in the event that the fair market value of a share of
Common Stock (determined based on the trailing 10 trading day average closing
price) as of the second anniversary of the Closing
3.
<PAGE> 6
Date is less than $____, the Conversion Price will be adjusted so that the ratio
at which the Series A Preferred Stock is converted into Common Stock will
increase upward from _______. The maximum increase in the conversion ratio will
be to a conversion ratio of _____. At a conversion ratio of _____, _________
shares of Common Stock would be issuable upon conversion of the Series A
Preferred Stock, whereas at a conversion ratio of _____, __________ shares of
Common Stock would be issuable upon conversion of the Series A Preferred Stock.
In the event the fair market value of the Common Stock as of the second
anniversary of the Closing Date is greater than or equal to $______, no
adjustment to the Conversion Price of the Series A Preferred Stock will be made.
Mandatory Conversion. The Series A Preferred Stock will be automatically
convertible, at the Conversion Price then in effect, on the earlier to occur of
(i) the completion by the Company of a public offering in which the gross
proceeds to the Company are greater than or equal to $____ million or (ii) the
date on which, any time after September 30, 1997, the last reported sale price
of the Company's Common Stock on the Nasdaq National Market averages $_______
for 20 consecutive trading days (prior to any adjustments for stock splits,
dividends and the like) and where the average daily trading volume is at least
________ shares during such 20-day period; or (iii) upon the written consent of
the holders of a majority of the Series A Preferred Stock then outstanding.
Liquidation Preference. In the event of any liquidation or winding up of
the Company, the holders of the Series A Preferred Stock will be entitled to
receive, prior and in preference to the holders of Common Stock the greater of
(i) the then applicable Conversion Price, plus any cumulative but unpaid
dividends or (ii) the purchase price plus any cumulative but unpaid dividends.
Thereafter, the remaining assets shall be distributed ratably to the holders of
the Common Stock. A merger of the Company in which the Company is not the
surviving entity or a sale of all or substantially all of the Company's assets
may be deemed to be a liquidation or winding up for purposes of this liquidation
preference.
Dividends. In the event any cash dividends are declared on Common Stock,
the Board of Directors of the Company will also be required to declare a cash
dividend on the Series A Preferred Stock in an amount equal to the common
equivalent per share dividend declared on the Common Stock.
Voting Rights. The holders of Series A Preferred Stock shall have one
vote for each common-equivalent share and shall vote with holders of shares of
Common Stock (as a single voting group) on all matters brought before the
stockholders, except as otherwise required by law. Delaware General Corporation
Law provides for a separate class vote in the event of an amendment to the
Certificate of Incorporation adversely affecting a specific class of shares.
Restrictive Covenants. As long as ____% or more of the shares of Series
A Preferred Stock sold in the Financing is outstanding, the Company may not,
without the approval of holders representing a majority in interest of the
Series A Preferred Stock, take certain actions, including, without limitation:
authorizing or issuing any class or series of equity security having equal or
superior rights as to payment upon liquidation, dissolution or winding up;
amending its Certificate of Incorporation or By-laws in any way which would
adversely affect the rights and preferences of the holders of the Series A
Preferred Stock as a class; sell or lease 30% or more of the assets of the
Company, except in the ordinary course of business (excluding any transaction
involving the Company's vaccine business); redeem or repurchase outstanding
stock; enter into any agreement that would restrict the Company's ability to
perform under its agreement with the purchasers of Series A Preferred Stock (the
"Stock Purchase Agreement"); provide additional funding to the Company's vaccine
business beyond an initial commitment of $___ million from March 31, 1997; and
issuing additional securities to employees and officers of the
4.
<PAGE> 7
Company, except securities issuable upon the exercise of outstanding options and
warrants or issuable upon the exercise of options granted in the future at fair
market value.
Restricted Securities; Registration Rights. The shares of Series A
Preferred Stock and the shares of Common Stock into which the Series A Preferred
Stock is convertible will not be registered under the Securities Act of 1934, as
amended (the "Securities Act") or any other applicable securities laws and will
be deemed to be "restricted securities" under the Securities Act. The Series A
Preferred Stock will not be transferable. The Common Stock into which the Series
A Preferred Stock is convertible may only be sold, assigned, transferred or
otherwise disposed of if subsequently registered or an exemption from
registration is available.
The Company has agreed to prepare and file with the Securities and
Exchange Commission, within 90 days of the Closing Date, a registration
statement registering the resale of the shares of Common Stock into which the
Series A Preferred Stock is convertible. Following expiration of the 90-day
period, for each full month that the Company has not filed such registration
statement, the Conversion Price will be reduced by __%. The Company has also
agreed to use its reasonable best efforts to maintain the effectiveness of the
registration statement until the earlier of (i) the second anniversary of the
Financing or (ii) the date on which all such shares have been sold pursuant
thereto or may be sold in a given three-month period under Rule 144 promulgated
under the Act. The holders of Series A Preferred Stock will be entitled to have
the shares of Common Stock issued upon conversion of Series A Preferred Stock
included in each registration statement filed on behalf of the Company or other
stockholders, subject to certain limitations.
COMPANY'S CAPITAL NEEDS; CONSEQUENCES OF NON-APPROVAL
Obtaining additional funds is critical to the Company's ability to
continue operations through 1998. In April 1997, the Company announced the
restructuring of its operations to be accomplished through the contribution of
its vaccine program and related assets to a new company which would be managed
and financed separately from Cytel. Cytel will focus on building its
carbohydrate manufacturing business with the goal of generating additional near
term revenue and will focus on developing its therapeutic products targeting
acute and chronic inflammatory diseases.
Because of the restrictions of the 20% Rule, the Company may not raise
funds through the sale of equity securities without stockholder approval unless
(i) the transaction results in an issuance or potential issuance of a number of
shares of Common Stock which is less than 20% of the total number of shares of
Common Stock currently outstanding, (ii) securities are sold at current market
price, or (iii) the securities are sold in a public offering. The Financing
could raise up to $___ million, compared to a maximum of $___ million which
could be raised without stockholder approval. Based on current market
conditions, management and the Board of Directors believe that a sale of the
Company's securities in the public markets at the current market price of the
Common Stock would not likely be achievable. A public offering would involve
substantial delay and significant expense, and might be unsuccessful given
current conditions in the market for public company issuances. Therefore, the
Board of Directors believes that the Company's best option is to complete the
Financing on the terms outlined in this Proposal 1.
In the event that stockholder approval is not obtained for the
Financing, the Board of Directors may, in consideration of its fiduciary duties,
determine to proceed with the Financing or another financing on similar terms if
the Board of Directors deems such action to be in the Company's best
5.
<PAGE> 8
interests. In such case, the Company may no longer qualify for inclusion on the
Nasdaq National Market.
USE OF PROCEEDS
The Company currently intends to use the proceeds of the Financing to
fund the continuing development of carbohydrate manufacturing technology and the
research and development and commercialization of pharmaceutical and
carbohydrate products and for other general corporate purposes, including
research and development activities.
Pursuant to the Agreement, the Company has agreed to (i) pay the
Placement Agent a cash commission of __% of the gross proceeds received from the
sale of Series A Preferred Stock to institutional investors and __% of the gross
proceeds received from the sale of Series A Preferred Stock to individuals;
provided that, for up to $_________ received from the Company's existing
stockholders, such percentage fee shall be equal to __%; (ii) pay the reasonable
out-of-pocket expenses of the Placement Agent and fees and expenses of the
Placement Agent's counsel in connection with the Financing not to exceed
$________; and (iii) issue to the Placement Agent a warrant to purchase
_________ shares of the Company's Common Stock (subject to adjustment to a
maximum of ________ shares of the Company's Common Stock), exercisable until the
fifth anniversary of the Closing Date at an exercise price of $_____ per share;
provided that at least $____ must be raised in the Financing prior to the
issuance of such warrant. The Company has also agreed to indemnify the Placement
Agent against certain securities-law-related liabilities in connection with the
offering of the Series A Preferred Stock.
Certain accredited investors that are affiliated with directors of the
Company and certain directors of the Company may participate in the Financing.
BOARD RECOMMENDATION
Although the issuance of shares of Series A Preferred Stock in the
proposed Financing will have a dilutive effect on the Company's current
stockholders, the Board of Directors believes that stockholder approval of the
financing is in the best interest of the Company because the Company's ability
to raise additional financing absent stockholder approval is severely limited
and could be very costly to the Company. Accordingly, the Board of Directors
strongly recommends the approval of the Financing.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the meeting will be
required to approve the Financing.
In the event that stockholder approval is not obtained for the
Financing, the Board of Directors may, in consideration of its fiduciary duties,
determine to proceed with the Financing or another financing on similar terms if
the Board of Directors deems such action to be in the Company's best interests.
In such case, the Company may no longer qualify for inclusion on the Nasdaq
National Market.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 1
6.
<PAGE> 9
PROPOSAL 2
APPROVAL OF THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION, AS AMENDED
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Amended and Restated Certificate of Incorporation (i)
to increase the authorized number of shares of Common Stock from 50,000,000
shares to ________ shares, and (ii) to increase the authorized number of shares
of Preferred Stock from 10,000,000 shares to __________ shares.
The additional Common Stock to be authorized by adoption of the
amendment would have rights identical to the currently outstanding Common Stock
of the Company, and the additional Preferred Stock to be authorized by adoption
of the amendment would have rights, preferences and privileges designated by the
Board of Directors of the Company from time to time pursuant to the Company's
Amended and Restated Certificate of Incorporation. Adoption of the proposed
amendment and issuance of the Common Stock would not affect the rights of the
holders of currently outstanding Common Stock of the Company, except for effects
incidental to increasing the number of shares of the Company's Common Stock
outstanding. However, the additional Preferred Stock authorized under the
amendment may be issued by the Board of Directors from time to time in one or
more series, with rights, preferences, privileges and restrictions designated by
the Board without any further vote or action by the stockholders. The issuance
of such Preferred Stock could adversely affect the voting power of holders of
Common Stock and the likelihood that such holders will receive dividend payments
and payments upon liquidation. If the amendment is adopted, it will become
effective upon filing of a Certificate of Amendment of the Company's Amended and
Restated Certificate of Incorporation (the "Certificate of Amendment") with the
Secretary of State of the State of Delaware.
As of July 31, 1997, there are 25,138,654 shares of Common Stock
outstanding and no shares of Preferred Stock outstanding. Upon the Closing of
the Financing, there will be up to ______________ shares of Series A Preferred
Stock outstanding. In addition, the Board has reserved 6,400,000 shares of
Common Stock for issuance upon exercise of options and rights granted under the
Company's stock option plans, 500,000 shares for issuance under the Company's
Employee Stock Purchase Plan and has reserved up to __________ shares of Common
Stock for issuance upon conversion of the Series A Preferred Stock.
There are currently a sufficient number of authorized shares of
Preferred Stock and Common Stock under the Amended and Restated Certificate of
Incorporation to complete the Financing. Although at present the Board of
Directors has no plans to issue the additional shares of Common Stock or the
additional shares of Preferred Stock that would be authorized under the
amendment, it desires to have such shares available to provide additional
flexibility to use its capital stock for business and financial purposes in the
future. The additional shares may be used, without further stockholder approval,
for various purposes including, without limitation, raising capital,
establishing strategic relationships with other companies and expanding the
Company's business or product lines through the acquisition of other businesses
or products, or providing equity incentives to employees, officers or directors.
The additional shares of Common Stock and Preferred Stock that would
become available for issuance if the proposal were adopted could also be used by
the Company to oppose a hostile takeover attempt or delay or prevent changes in
control of management of the Company. For example, without further stockholder
approval, the Board could strategically sell shares of Common Stock or Preferred
Stock in a private transaction to purchasers who would oppose a takeover or
favor the current Board.
7.
<PAGE> 10
Although this proposal to increase the authorized Common Stock and the Preferred
Stock has been prompted by business and financial considerations and not by the
threat of any hostile takeover attempt (nor is the Board currently aware of any
such attempts directed at the Company), nevertheless, stockholders should be
aware that approval of this proposal could facilitate future efforts by the
Company to deter or prevent changes in control of the Company.
The Company's audited consolidated financial statements, management's
discussion and analysis of financial condition and results of operations, and
certain supplementary financial information are incorporated by reference to
pages 26 through 30 and F1 through F19 of the Company's 1996 Annual Report on
Form 10-K.
The affirmative vote of the holders of a majority of the shares of the
Common Stock will be required to approve this amendment to the Company's Amended
and Restated Certificate of Incorporation. As a result, abstentions and broker
nonvotes will have the same effect as negative votes.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2
8.
<PAGE> 11
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of Common Stock of the Company as of July 31, 1997 by (i) each
director and nominee; (ii) the Company's Chief Executive Officer and its other
three most highly compensated executive officers at December 31, 1996 who are
currently employed by the Company; (iii) all executive officers and directors as
a group; and (iv) each person or entity known by the Company to be a beneficial
owner of more than 5% of its Common Stock:
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP (1)
-------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- ---------- ----------
<S> <C> <C>
Wisconsin Board of Investments
121 East Wilson Street
Madison, WI 53702 ........................... 2,425,000 9.6%
Sandoz Holding Ltd.
CH-4002 Basel SWITZERLAND ................... 2,166,700 8.6%
International Biotechnology Trust PLC
Five Arrows House, St. Swithin's Lane,
London, ENGLAND ............................. 1,650,000 6.6%
Sumitomo Pharmaceuticals Co., Ltd.
I-98 Kasugade Naka 3-chome, Konohana-ku,
Osaka 554, JAPAN ............................ 1,408,450 5.6%
Howard E. Greene, Jr. (2)(4) .................. 646,605 2.6%
James C. Paulson (3)(4) ....................... 361,473 1.4%
Virgil Thompson (4) ........................... 279,935 1.1%
David L. Anderson (4)(5) ...................... 234,135 *
Robert W. Chesnut(4) .......................... 175,798 *
Robert L. Roe (4) ............................. 133,476 *
William T. Comer (4) .......................... 33,894 *
David L. Mahoney (4) .......................... 6,146 *
Nicole Vitullo (4) ............................ 742 *
All executive officers and directors
as a group (11 persons) (6) ................. 1,938,757 7.5%
========== ==========
</TABLE>
- ------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and on any Schedules 13D or 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, each stockholder named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned. Applicable percentage ownership is based on
25,138,654 shares of Common Stock outstanding on July 31, 1997, adjusted
as required by rules promulgated by the SEC.
9.
<PAGE> 12
(2) Includes 625,379 shares held in trust for the benefit of Mr. Greene's
family and 16,000 shares held in trust for the benefit of Mr. Greene's
children. Mr. Greene is a trustee of both trusts. Mr. Greene acting as
trustee has voting and investment power with respect to such shares and
may be deemed to be the beneficial owner of such shares.
(3) Includes 31,500 shares held in trust for the benefit of Dr. Paulson's
three minor children.
(4) Includes shares which certain executive officers and directors of the
Company have the right to acquire within 60 days after the date of this
table pursuant to outstanding options, as follows: Howard E. Greene,
5,226 shares; James C. Paulson, 208,460 shares; Virgil Thompson, 174,196
shares; David L. Anderson, 5,226 shares; Robert W. Chesnut, 126,878
shares; Robert L. Roe, 132,786 shares; William T. Comer, 27,494 shares;
David L. Mahoney, 6,146 shares; Nicole Vitullo, 742 shares; and all
executive officers and directors as a group, 751,767 shares.
(5) Includes 10,000 shares held by Anvest, L.P. of which Mr. Anderson is the
general partner. Also includes 137,461 shares held of record by Sutter
Hill Ventures. Mr. Anderson is a general partner of the general partner
of Sutter Hill Ventures and shares voting and investment power with
respect to these shares. Mr. Anderson disclaims beneficial ownership of
shares held by Anvest, L.P. and Sutter Hill Ventures except to his
proportionate partnership interest therein.
(6) Includes shares described in notes (2) through (5) above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference: the Company's Annual
Report on form 10-K for the year ended December 31, 1996; and Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997.
Certain financial information from the Form 10-K and management's
discussion and analysis of this information has been included in the Annual
Report to Stockholders which has previously been mailed to stockholders.
All documents filed by the Company pursuant to sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934, as amended, after the mailing
date of this proxy statement and prior to [September __,], 1997, the date of the
Special Meeting, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents. Any statement
contained in this proxy statement or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any subsequently-filed document which also is or is deemed to be
incorporated by reference herein modifies or superseded such statement. Any such
statement so modified or superseded shall not be deemed, as modified or
superseded, to constitute a part of this Proxy Statement.
10.
<PAGE> 13
OTHER MATTERS
The Board of Directors know of no other business to be presented at the
meeting, but if other matters do properly come before the meeting, it is
intended that the persons named in the proxy will vote in respect thereof in
accordance with their best judgment.
By Order of the Board of Directors
Deborah A. Schueren
Vice President, Finance, Chief Financial
Officer and Secretary
[September __,] 1997
11.
<PAGE> 14
CYTEL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON __________
The undersigned hereby appoints Virgil Thompson and Deborah A. Schueren
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Cytel Corporation which
the undersigned may be entitled to vote at the Special Meeting of Stockholders
of Cytel Corporation to be held at 3525 John Hopkins Court, San Diego,
California on __________, ____________ at ______, (local time, and at any and
all postponements, continuations and adjournments thereof, with all powers that
the undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE FOR
PROPOSALS 1 AND 2, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE
THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
PROPOSAL 1: To approve the issuance and sale of up to ____________
shares of the Company's Series A Convertible Preferred Stock,
and the issuance of Common Stock upon conversion thereof, in a
private financing on the terms and subject to the conditions
described in the Proxy Statement.
|_| FOR |_| AGAINST |_| ABSTAIN
PROPOSAL 2: To approve an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the
Company's authorized shares of Common Stock and Preferred
Stock.
|_| FOR |_| AGAINST |_| ABSTAIN
(Continued and to be signed on other side)
<PAGE> 15
DATED ____________________________ ___________________________________
___________________________________
SIGNATURE(S)
Please sign exactly as your name
appears hereon. If the stock is
registered in the names of two or
more persons, each should sign.
Executors, administrators, trustees,
guardians and attorneys-in-fact
should add their titles. If signer
is a corporation, please give full
corporate name and have a duly
authorized officer sign, stating
title. If signer is a partnership,
please sign in partnership name by
authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
