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:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
American Biogenetic Sciences, 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 the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
June 18, 1997
--------------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
of American Biogenetic Sciences, Inc., a Delaware corporation (the "Company"),
will be held at Boston University, 595 Commonwealth Avenue, Boston,
Massachusetts, on Wednesday, June 18, 1997 at 4:00 p.m., Eastern Daylight
Savings Time. The following matters are to be presented for consideration at the
meeting:
1. The election of seven directors to serve until the next
annual meeting of stockholders and until their respective successors
are elected and qualified;
2. A proposal to ratify the selection of Arthur Andersen
LLP as the Company's independent auditors for the year ending
December 31, 1997; and
3. The transaction of such other business as may properly
come before the meeting or any adjournments or postponements thereof.
The close of business on April 21, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the meeting and any adjournments or postponements thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting at the Boston offices of the Company, 801 Albany
Street, Boston, Massachusetts.
By Order of the Board of Directors,
Timothy J. Roach
Secretary
May 15, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NEEDED IF MAILED IN THE
UNITED STATES.
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement is furnished to the holders of Class A Common
Stock ("Class A Common Stock") and to the sole holder of Class B Common Stock
("Class B Common Stock") of American Biogenetic Sciences, Inc. (the "Company")
in connection with the solicitation by the Board of Directors of the Company of
proxies in the accompanying form ("Proxy" or "Proxies") to be used at the 1997
Annual Meeting of Stockholders of the Company (the "Meeting") to be held on
Wednesday, June 18, 1997, at 4:00 p.m., Eastern Daylight Savings Time, at Boston
University, 595 Commonwealth Avenue, Boston, Massachusetts, and at any
adjournments and postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. It is anticipated that this Proxy
Statement and the Proxies will be mailed to stockholders on or about May 15,
1997. The cost of preparing, assembling and mailing the Notice of Annual
Meeting, this Proxy Statement and Proxies is to be borne by the Company. The
Company will also reimburse brokers who are holders of record of Class A Common
Stock for their expenses in forwarding Proxies and Proxy soliciting materials to
the beneficial owners of such shares. In addition to the use of the mails,
Proxies may be solicited without extra compensation by directors, officers and
employees of the Company by telephone, telecopy, telegraph or personal
interview. Proxies properly executed and received in time for the Meeting will
be voted. A stockholder who signs and returns a Proxy has the power to revoke it
at any time before it is exercised by giving written notice of revocation to the
Company, Attention: Secretary, by a duly executed proxy of later date, or by
voting in person at the Meeting.
The close of business on April 21, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting. There were outstanding, as of the close of business on that
date, 17,962,995 shares of Class A Common Stock and 1,475,500 shares of Class B
Common Stock. A majority of the total of such outstanding shares of Class A
Common Stock and Class B Common Stock, represented in person or by Proxy at the
Meeting, is required to constitute a quorum for the transaction of business at
the Meeting. Holders of Class A Common Stock have one vote for each share
thereof held of record and the holder of Class B Common Stock has ten votes for
each share thereof held of record. The Class A Common Stock and Class B Common
Stock will vote as one class on all matters proposed herein to be submitted to
stockholders at the Meeting. Proxies submitted which contain abstentions or
broker nonvotes will be deemed present at the Meeting in determining the
presence of a quorum. Shares subject to abstentions with respect to any matter
are considered shares entitled to, and voted, with respect to that matter.
Shares subject to broker nonvotes with respect to any matter are not considered
as shares entitled to vote with respect to that matter. Therefore, abstentions
will in effect be deemed negative votes on each proposal, but broker nonvotes
will not affect the results of any of the matters proposed herein to be
submitted to stockholders at the Meeting.
Unless otherwise specified, all Proxies received will be voted for
the election of all nominees named herein to serve as directors and to ratify
the selection of Arthur Andersen LLP as the Company's independent auditors. The
Board of Directors does not intend to bring before the Meeting any matter other
than those specifically described above and knows of no matters other than the
foregoing to come before the Meeting. If any other matters or motions come
before the Meeting, it is the intention of the persons named in the accompanying
Proxy to vote such Proxy in accordance with their judgment on such matters or
motions, including any matters dealing with the conduct of the Meeting.
<PAGE>
SECURITY HOLDINGS OF CERTAIN
STOCKHOLDERS, MANAGEMENT AND NOMINEES
The following table sets forth information at April 21, 1997 with
respect to the beneficial ownership of Class A Common Stock and Class B Common
Stock by (i) each person known by the Company to beneficially own more than 5%
of the outstanding shares of Class A Common Stock and/or Class B Common Stock,
(ii) each director of the Company (each of whom is expected to be a nominee for
election as director at the Meeting), (iii) each executive officer named in the
Summary Compensation Table under the caption "Executive Compensation" below and
(iv) all executive officers and directors of the Company as a group. Each share
of Class A Common Stock is entitled to one vote per share while each share of
Class B Common Stock is entitled to ten votes per share. The Company understands
that, except as noted below, each beneficial owner has sole voting and
investment power with respect to all shares attributable to such owner.
<TABLE>
<CAPTION>
Class A Common Stock(1) Class B Common Stock
Percent Percent
Beneficial Owner No. Shares of Class No. Shares of Class
- ----------------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C>
Alfred J. Roach (2) 3,284,250(2) 15.9% 1,475,500 100%
Paul E. Gargan 191,000(3) 1.1% --- ---
Ellena M. Byrne 185,000(3)(4) 1.0% --- ---
Timothy J. Roach 570,000(3) 3.1% --- ---
Gustav V. R. Born 5,000(3) * --- ---
Joseph C. Hogan 40,000(3) * --- ---
William G. Sharwell 45,000(3) * --- ---
All executive officers
and directors as a group
(9 persons, including
the foregoing) 4,516,750(5) 20.8% 1,475,500 100%
</TABLE>
- ----------------------------
(1) Asterisk indicates less than one percent. Shares of Class A Common Stock
subject to issuance upon the conversion of Class B Common Stock into Class
A Common Stock and upon the exercise of options that were exercisable on,
or become exercisable within 60 days after, April 21, 1997 are considered
owned by the holder thereof and outstanding for purposes of computing the
percentage of outstanding Class A Common Stock that would be owned by such
person, but (except for the computation of beneficial ownership by all
executive officers and directors as a group) are not considered
outstanding for purposes of computing the percentage of outstanding Class
A Common Stock owned by any other person.
(2) The address of Mr. Roach is Route 2 - Kennedy Avenue, Guaynabo, Puerto
Rico 00657. Beneficial ownership of Class A Common Stock includes
1,475,000 shares of Class A Common Stock issuable upon the conversion of
the same number of shares of Class B Common Stock on a share for share
basis and 1,160,000 shares of Class A Common Stock subject to outstanding
options.
(Footnotes continued on next page)
-2-
<PAGE>
(3) Includes shares of Class A Common Stock subject to options as follows: Dr.
Paul E. Gargan, 171,000 (including 7,000 subject to options held by his
wife); Ellena M. Byrne, 150,000 (including 2,500 subject to options held
by her husband); Timothy J. Roach, 570,000; Gustav V.R. Born, 5,000;
Joseph C. Hogan, 30,000; and William G. Sharwell, 35,000.
(4) Includes 10,000 shares owned by Ms. Byrne's son. The inclusion of these
amounts should not be construed as an admission that Ms. Byrne is the
beneficial owner of these shares.
(5) Includes 1,475,500 shares of Class A Common Stock issuable upon the
conversion of the same number of shares of Class B Common Stock and
2,298,500 shares of Class A Common Stock subject to outstanding options.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's By-Laws provide that the number of members of the Board
of Directors shall be not less than three or more than nine, the exact number to
be fixed by resolution of the Board of Directors. The Board of Directors
presently consists of seven members. Each of the nominees, other than Gustav
V.R. Born (who was elected as a director by the Board in January 1997), has been
previously elected by stockholders of the Company.
Unless authority to do so is withheld, Proxies will be voted at the
Meeting for the election of each of the nominees named below to serve as
directors of the Company until the next annual meeting of stockholders and until
their respective successors are elected and qualified. In the event that any of
the nominees should become unavailable or unable to serve for any reason, the
holders of Proxies have discretionary authority to vote for one or more
alternate nominees designated by the Board of Directors. The Company believes
that all of the nominees are available to serve as directors.
BACKGROUND OF NOMINEES
Alfred J. Roach, 81, has been Chairman of the Board of Directors of
the Company since its organization in September 1983 and, from September 1983
until October 1988, also served as President of the Company. Mr. Roach has
served as Chairman of the Board and/or President of TII Industries, Inc.
("TII"), a corporation engaged in manufacturing and marketing telecommunications
products, and its predecessor since its founding in 1964. Mr. Roach devotes a
majority of his time to the business of the Company.
Paul E. Gargan, Ph.D., 40, has served the Company in various
capacities since 1984. He has been President and a director of the Company since
January 1994 and Chief Scientific Officer since June 1996 and was Senior Vice
President - Director of Research and Development of the Company from March 1993
until January 1994. From November 1991 until March 1993, Dr. Gargan served as
Vice President - Cardiovascular Products Development and, from 1984 until
November 1991, Dr. Gargan served as Associate Director of Cardiovascular
Research.
Ellena M. Byrne, 46, has been Executive Vice President and a director
of the Company since March 1995. From January 1986 until December 1991, Ms.
Byrne served as Vice President-Administration of the Company and, from December
1991 until March 1995, Ms. Byrne served in various capacities with the Company,
including Director of Operations for Europe and Asia.
Timothy J. Roach, 50, has been Treasurer, Secretary and a director of
the Company since September 1983. He has also been affiliated with TII since
1974, serving as its President since July 1980, Chief Operating Officer since
May 1987, Vice Chairman of the Board since October 1993, Chief Executive Officer
since January 1995 and a director since January 1978. Mr. Roach devotes such
time as is necessary to the business of the Company to discharge his duties as
Treasurer, Secretary and a director. Timothy J. Roach is the son of Alfred J.
Roach.
-3-
<PAGE>
Gustav Victor Rudolf Born, M.D., D.Phil., F.R.S., 75, has been a
director of the Company since January 1997. Since 1988, Dr. Born has been
Research Director of The William Harvey Research Institute at St. Bartholomew's
Hospital Medical College, London, England and Emeritus Professor of Pharmacology
in the University of London. Among Dr. Born's distinctions, appointments and
activities are: Fellowship and Royal Medal of the Royal Society; and Foundation
President of the British Society for Thrombosis and Haemostasis.
Joseph C. Hogan, Ph.D., 74, has been a director of the Company since
December 1983. Dr. Hogan served as Dean of the College of Engineering of the
University of Notre Dame from 1967 to 1981, following which he performed various
services for the University of Notre Dame until 1985, where he remains Dean
Emeritus. From 1985 until his retirement in 1987, Dr. Hogan was Director of
Engineering Research and Resource Development at Georgia Tech. Dr. Hogan is a
director of TII.
William G. Sharwell, D.C.S., 76, has been a director of the Company
since October 1986. Dr. Sharwell was President of Pace University in New York
from 1984 until his retirement in 1990. He was Senior Vice President of American
Telephone & Telegraph Company between 1976 and 1984, and previously served as
Executive Vice President of Operations of New York Telephone Company. Dr.
Sharwell serves as an independent general partner of Equitable Capital Partners,
L.P. and Equitable Capital Partners (Retirement Fund), L.P., registered
investment companies under the Investment Company Act of 1940. He also serves on
the Board of Directors of TII and US Life Corporation.
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 31, 1996, the Board of Directors held
two meetings and acted by unanimous written consent on six occasions following
informal discussions. During 1996, each director attended all of the meetings of
the Board of Directors and committees of the Board on which such director served
that were held during the period such person served as a director.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit and Compensation Committee, but
does not have a nominating committee.
The Audit Committee, which consists of Messrs. Hogan and Sharwell,
held two meetings during 1996. It is authorized to examine and consider matters
related to the audit of the Company's accounts, the financial affairs and
accounts of the Company, the scope of the independent auditors' engagement and
their compensation, the effect on the Company's financial statements of any
proposed changes in generally accepted accounting principles, disagreements, if
any, between the Company's independent auditors and management, and matters of
concern to the independent auditors resulting from the audit, including the
results of the independent auditors' review of internal accounting controls.
This committee is also authorized to nominate independent auditors, subject to
approval by the Board of Directors. The Audit Committee held two meetings during
1996.
The Compensation Committee is authorized to consider and recommend to
the Board of Directors the salaries, bonuses and other compensation arrangements
with respect to the executive officers of the Company. This Committee is also
empowered to grant all options under, and administer, the Company's stock option
plans. The Compensation Committee is further empowered to examine, administer
and make recommendations to the full Board with respect to other employee
benefit plans and arrangements of the Company. The Compensation Committee
presently consists of Messrs. Joseph C. Hogan and William G. Sharwell. The
Compensation Committee held one meeting during 1996, and acted by unanimous
written consent on eight occasions following informal discussions.
-4-
<PAGE>
REMUNERATION OF DIRECTORS
Directors receive no compensation for service on the Board. Each
director serving on the Audit Committee receives a fee of $600 for each meeting
of the committee attended by that director in person and not telephonically. All
directors are reimbursed for travel expenses incurred in attending Board and
committee meetings.
The Company's 1993 Non-Employee Director Stock Option Plan, approved
by stockholders at the Company's 1993 Annual Meeting of Stockholders, provides
for the automatic grant of an option to purchase 10,000 shares of the Class A
Common Stock to each non-employee director holding office immediately after each
annual meeting of stockholders. The exercise price for each option is equal to
the fair market value of the Class A Common Stock on the date of grant. All
options have a term of five years and are exercisable, on a cumulative basis, at
the rate of one quarter of the number of shares subject to the option in each
year commencing one year after the date of the grant.
See "Executive Compensation" for information concerning the
compensation of Mr. Alfred J. Roach and Dr. Paul E. Gargan for their services as
executive officers of the Company. The Company is also a party to an employment
agreement dated October 1, 1996 with Ms. Ellena M. Byrne, pursuant to which Ms.
Byrne is serving as Executive Vice President of the Company. The Employment
Agreement provides for a term extending, subject to certain terms and
conditions, until September 30, 2001 and an annual salary of U.S. $18,200 and
(pound)50,000 Irish Pounds (U.S. $78,800 at March 31, 1997). Dr. Born serves as
a consultant to the Company for which he receives compensation at the rate of
$12,000 per annum.
REQUIRED VOTE
A plurality of the votes cast at the Meeting by the holders of Class
A Common Stock and Class B Common Stock voting together as one class, with Class
A Common Stock having one vote per share and Class B Common Stock having ten
votes per share, will be required for the election of directors. The Board of
Directors recommends that stockholders vote FOR each of Alfred J. Roach, Paul E.
Gargan, Ellena M. Byrne, Timothy J. Roach, Gustav V.R. Born, Joseph C. Hogan and
William G. Sharwell to serve as directors of the Company.
EXECUTIVE OFFICERS
The only executive officers of the Company, in addition to Alfred J.
Roach, Paul E. Gargan, Timothy J. Roach and Ellena M. Byrne (whose backgrounds
are described under the caption "Election of Directors - Background of Nominees"
above), are:
Stephen H. Ip, Ph.D., 50, has been Executive Vice President and Chief
Operating Officer of the Company since January 1997. Prior to joining the
Company, Dr. Ip served as Vice President, Corporate and Business Development at
Paracelsian, Inc., a public company engaged in clinical and pre-clinical
development of drugs and supplements for the treatment of AIDS and cancer, from
1996. From 1990 through 1995, Dr. Ip served as President, Chief Operating
Officer and director of CytoMed, Inc., a biopharmaceutical company engaged in
the research and development of synthetic chemical drugs and recombinant
proteins for the treatment of acute and chronic diseases. From 1984 through 1989
he was Vice President and a scientific co-founder of T Cell Sciences, Inc., a
biotechnology company.
-5-
<PAGE>
Joseph P. Laurino, Ph.D., 39, has been Senior Vice President-Research
and Development of the Company since February 1997. Prior to joining the
Company, Dr. Laurino served as Director of Clinical Chemistry and Assistant
Professor of Pathology in the Department of Pathology and Laboratory Medicine at
Memorial Hospital of Rhode Island, Brown University, from 1990 to February 1996.
Dr. Laurino was also Senior Scientist for Roche Diagnostic Systems, Inc., a
multi-national diagnostic company, from 1988 to 1990, and a Research and
Development Scientist at Technicon Instruments Corporation (now Bayer
Corporation), a multi-national diagnostic company from 1987 to 1988.
James H. McLinden, Ph.D., 46, has been Vice President - Molecular
Biology of the Company since November 1991. Prior thereto (and since joining the
Company in January 1987), Dr. McLinden served as Director of Molecular Biology
of the Company.
Josef C. Schoell, 47, joined the Company in July 1992 as its
Controller and was elected Vice President-Finance and Chief Financial Officer of
the Company in July 1995. For more than four years prior to joining the Company,
Mr. Schoell served as a private consultant specializing in computerized
accounting systems and networks. Prior thereto, Mr. Schoell served in various
capacities, most recently Assistant Controller, with J.P. Stevens & Co., Inc., a
textile manufacturing company. Mr. Schoell is a Certified Public Accountant in
the State of New York.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation of the Company's chief executive officer and its
President, the only executive officers of the Company whose annual cash
compensation for 1996 exceeded $100,000, for services in all capacities to the
Company during 1994, 1995 and 1996:
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
NAME AND ---------------- ------------
PRINCIPAL POSITION YEAR SALARY OPTIONS
- ------------------ ---- ------ -------
Alfred J. Roach, Chairman 1996 $250,000 --
of the Board and Chief 1995 $250,000 135,000
Executive Officer 1994 $250,000 --
Paul E. Gargan, President 1996 $162,000 --
1995 $150,000 31,500
1994 $148,000 50,000
-6-
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
No options were granted during 1996 to either of the executive
officers named in the Summary Compensation Table. The following table contains
information concerning options exercised during 1996, and the number of shares
of Class A Common Stock underlying unexercised options held at December 31,
1996, by the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT OPTIONS HELD AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)
SHARES ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($)(1) UNEXERCISABLE) UNEXERCISABLE)(2)
---- --------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Alfred J. Roach 300,000 $127,500 1,126,250/33,750 $ 216,422/$72,141
Paul E. Gargan (3) -- -- 143,625/32,875 $ 85,570/$18,211
</TABLE>
- --------------
(1) The closing price of the Company's Class A Common Stock on The Nasdaq
Stock Market's National Market on the date of exercise of the option less
the exercise price of the option.
(2) The closing price of the Company's Class A Common Stock The Nasdaq Stock
Market's National Market on December 31, 1996 less the exercise price of
each option.
(3) Excludes options held by Dr. Gargan's wife.
EMPLOYMENT AGREEMENTs
The Company is a party to an employment agreement dated May 10, 1996
with Dr. Paul E. Gargan, President of the Company, which provides for a term
extending, subject to certain terms and conditions, until June 30, 1998. Dr.
Gargan's annual salary was increased from $150,000 to $175,000 effective July 1,
1996
REPORT OF COMPENSATION COMMITTEE CONCERNING EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, consisting of
Messrs. Joseph C. Hogan and William G. Sharwell, "non-employee" directors,
within the meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, and "outside directors",
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"), is authorized to consider and recommend to the Board
of Directors salaries, bonuses and other compensation arrangements for executive
officers and to grant all options under, and administer, the Company's employee
stock option plans.
The Compensation Committee believes that the Company, as a
development stage company, should create compensation packages to attract and
retain executives who can bring the experience and skills to the Company
necessary for the development of the Company and its products. To date, this has
been accomplished by utilizing salary as the base compensation and stock options
to promote long-term incentives. As the Company grows, other forms of annual and
long-term compensation arrangements may be developed to provide appropriate
incentives and to reward specific accomplishments.
-7-
<PAGE>
In determining base salaries, the Compensation Committee examines,
among other factors, the executive's performance, degree of responsibility and
experience, as well as general employment conditions and economic factors. No
specific weights are assigned to any of the factors employed by the Compensation
Committee. In 1996, the salaries of certain executive officers were increased,
using subjective standards, to recognize their performance.
The Compensation Committee also makes use of stock options to provide
long-term incentive compensation to many of the Company's employees, including
executive officers, enabling them to benefit, along with all stockholders, if
the market price for Class A Common Stock rises. The Compensation Committee
believes that the use of stock options ties employee interests to those of the
Company's stockholders through stock ownership and potential stock ownership,
while also providing the Company with a means of compensating employees using a
method which enables the Company to conserve its available cash for operations
and product development. To assure the long-term nature of the incentive,
options granted have generally not become exercisable during the first year
after grant and thereafter have become exercisable over a period of two to four
years. Decisions of the Compensation Committee as to option grants are based, in
large measure, upon a review of such factors as the executive's level of
responsibility, other compensation, accomplishments and goals, and when the last
option was granted to such executive, as well as recommendations and evaluations
of the executive's performance and prospective contributions by the Company's
Chief Executive. Determinations have been made subjectively without giving
weight to specific factors.
Chief Executive Officer Compensation. The salary of Alfred J. Roach,
the Company's Chief Executive Officer has remained unchanged for the past four
years, although he was granted options to purchase shares of the Company's Class
A Common Stock during 1995 under the Company's 1986 Stock Option Plan in
recognition of his efforts on behalf of the Company. No options were granted to
Mr. Roach in 1996.
Certain Tax Legislation. Section 162(m) precludes a public company
from taking a federal income tax deduction for annual compensation in excess of
$1,000,000 paid to its chief executive officer or any of its four other most
highly compensated executive officers. Certain "performance based compensation"
is excluded from the deduction limitation. Any compensation resulting from the
exercise of stock options granted by the Company should be eligible for
exclusion. Any compensation resulting from the exercise of stock options granted
by the Company should be eligible for exclusion since all options were either
granted prior to the adoption of Section 162(m) or under a plan approved by the
Company's stockholders which was designed to conform to regulations for
determining whether options are deemed "performance based compensation." The
Committee believes that the limitations on compensation deductibility under
Section 162(m) will have no effect on the Company in the foreseeable future, and
intends to take such action as may be necessary, including obtaining stockholder
approval where required, in order for compensation not to be subject to the
limitation on deductibility imposed by Section 162(m) of the Code.
Respectfully submitted,
Joseph C. Hogan
William G. Sharwell
-8-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative return to stockholders of
Class A Common Stock from January 1, 1992 (the first point shown in the
following graph) through December 31, 1996 with the Nasdaq Market Index and the
Dow Jones Industry Group BTC - Biotechnology Index for the same period. The
comparison assumes $100 was invested on December 31, 1991 in Class A Common
Stock and in each of the comparison groups, and assumes reinvestment of
dividends (the Company paid no dividends during the periods):
[GRAPH HERE]
At December 31, 1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------
American Biogenetic Sciences 100 71 63 19 35 52
Peer Group Index 100 84 79 71 121 125
NASDAQ Market Index 100 101 121 127 165 205
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Class A Common Stock, to file initial reports of ownership, and
reports of changes of ownership, of the Company's equity securities with the
Securities and Exchange Commission and furnish copies of those reports to the
Company. Based solely on a review of copies of the reports furnished to the
Company, or written representation that no reports were required, the Company
believes that all reports required to be filed by such persons with respect to
the Company's year ended December 31, 1996 were timely filed, except that Ms.
Byrne failed to timely file one report covering the receipt of a gift of Common
Stock by her minor child.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 17, 1997, Mr. Alfred J. Roach purchased 100,000 shares of
the Company's Class B Common Stock for $343,750, or $3.4375 per share, the
closing bid price of the Company's Class A Common Stock (into which the
Company's Class B Common Stock is convertible on a share-for-share basis) on The
Nasdaq Stock Market's National Market on that date.
-9-
<PAGE>
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP
as the independent auditors of the Company for the year ending December 31,
1997. Arthur Andersen LLP has acted for the Company in such capacity since 1987.
The Board proposes that the stockholders ratify such selection at the Meeting.
Representatives of Arthur Andersen LLP are expected to be present at
the Meeting and will be afforded an opportunity to make a statement if they so
desire and to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of a majority of the shares of Class A Common
Stock and Class B Common Stock present, in person or by proxy, at the Meeting
and entitled to vote on this proposal, voting together as one class, with Class
A Common Stock having one vote per share and Class B Common Stock having ten
votes per share, will be required to adopt this proposal. The Board of Directors
recommends that stockholders vote FOR approval of this proposal.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals which may be
proper subjects for inclusion in the proxy statement and form of proxy relating
to that meeting. In order to be considered, such proposals must be submitted in
writing on a timely basis. Stockholder proposals intended to be included in the
Company's proxy statement and form of proxy relating to the Company's next
Annual Meeting of Stockholders must be received at 1375 Akron Street, Copiague,
New York 11726, by January 15, 1998. Any such proposals, as well as any
questions relating thereto, should be directed to the Secretary of the Company.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, which has been filed with the Securities and Exchange
Commission, is also available, without charge, to stockholders who are
interested in more detailed information about the Company. Requests for a copy
of that report should be addressed to Timothy J. Roach, Treasurer, at 1375 Akron
Street, Copiague, New York 11726.
By Order of the Board of Directors,
Timothy J. Roach
Secretary
May 15, 1997
-10-
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned,
JAMES R. GROVER, JR., TIMOTHY J. ROACH and LEONARD W. SUROFF, or any one or more
of them, with full power of substitution, to vote all shares of the capital
stock of American Biogenetic Sciences, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on Wednesday, June 18, 1997, at 4:00 P.M., Eastern Daylight
Savings Time, at Boston University, 595 Commonwealth Avenue, Boston,
Massachusetts, and at any adjournments or postponements thereof, receipt of
Notice of which meeting and the Proxy Statement accompanying the same being
hereby acknowledged by the undersigned, upon the matters described in the Notice
of Meeting and Proxy Statement and upon such other business as may properly come
before the meeting and any adjournments or postponements thereof, hereby
revoking any proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE BELOW AND ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATIONS
ARE MADE, THE PROXIES WILL BE VOTED FOR EACH LISTED NOMINEE TO SERVE AS A
DIRECTOR AND FOR PROPOSAL 2.
A VOTE FOR EACH NOMINEE AND FOR PROPOSAL 2 IS RECOMMENDED BY THE
BOARD OF DIRECTORS.
1. Election of Directors (check one box only)
[_] FOR EACH NOMINEE LISTED BELOW [_] WITHHOLD AUTHORITY
(except as marked to the contrary below): to vote for all
nominees listed below
ALFRED J. ROACH, PAUL E. GARGAN, ELLENA M. BRYNE, TIMOTHY J. ROACH,
GUSTAV V. R. BORN, JOSEPH C. HOGAN and WILLIAM G. SHARWELL
(Instruction: To withhold authority to vote for any nominee, circle that
nominee's name in the above list)
(continued and to be signed on reverse side)
<PAGE>
2. To ratify the selection of Arthur Andersen LLP as independent auditors for
the Company.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated:_______________________, 1997
___________________________________
(SIGNATURE OF STOCKHOLDER)
___________________________________
(SIGNATURE OF STOCKHOLDER)
NOTE: PLEASE SIGN YOUR NAME OR
NAMES EXACTLY AS SET FORTH HEREON.
FOR JOINTLY OWNED SHARES, EACH
OWNER SHOULD SIGN. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE
INDICATE THE CAPACITY IN WHICH YOU
ARE ACTING. PROXIES EXECUTED BY
CORPORATIONS SHOULD BE SIGNED BY A
DULY AUTHORIZED OFFICER AND SHOULD
BEAR THE CORPORATE SEAL.
PLEASE DATE AND SIGN THIS PROXY AND MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
