<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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
CYTOTHERAPEUTICS, 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)(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
CYTOTHERAPEUTICS, INC.
2 RICHMOND SQUARE
PROVIDENCE, RI 02906
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
Notice is hereby given that the Annual Meeting of Stockholders of
CytoTherapeutics, Inc. (the Company) will be held on May 6, 1997, at 1:00 p.m.
at Four Richmond Square, Providence, Rhode Island 02906 for the following
purposes:
1. To elect three Class III directors to serve until the 2000 Annual
Meeting of Stockholders.
2. To approve an increase by 100,000 in the number of shares of common
stock reserved for issuance pursuant to the Company's Employee Stock Purchase
Plan.
3. To transact any and all other business that may properly come before
the meeting.
Stockholders of record at the close of business on March 10, 1997 are
entitled to notice of and to vote at the meeting.
Whether or not you plan to attend the Annual Meeting, please sign and date
the enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
FREDERIC A. EUSTIS, III Secretary
March 28, 1997
<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF
CYTOTHERAPEUTICS, INC.
The enclosed form of proxy is solicited on behalf of the Board of Directors
of CytoTherapeutics, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on May 6, 1997, at 1:00 p.m. at Four Richmond Square,
Providence, Rhode Island 02906. The cost of solicitation of proxies by letter
will be borne by the Company. Directors, officers and employees of the Company
may also solicit proxies by telephone, telecopy or in person. The Company will
reimburse banks, brokerage firms, and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of shares.
Only stockholders of record at the close of business on March 10, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
There were 16,485,840 shares of the Company's Common Stock, $.01 par value (the
"Common Stock") outstanding on such date, each of which is entitled to one vote.
Shares represented by proxies in the form enclosed, if properly executed
and returned and not revoked, will be voted as specified, but where no
specification is made, the shares will be voted for the election as directors of
the nominees named below, for the proposed increase in the number of shares
reserved for issuance under the Company's Employee Stock Purchase Plan, and in
the discretion of the named proxies, as to any other matter that may come before
the meeting. Any such proxy may be revoked by a stockholder at any time prior to
the voting of the proxy by a written revocation received by the Secretary of the
Company, by properly executing and delivering a later dated proxy, or by
attending the meeting, requesting return of the proxy and voting in person.
The Annual Report to Stockholders for the Company's fiscal year ended
December 31, 1996, and this proxy statement were first mailed to stockholders on
or about March 28, 1997.
QUORUM, REQUIRED VOTES, AND METHOD OF TABULATION
Consistent with state law and under the Company's by-laws, a majority of
the shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed by
the Company to act as election inspectors for the meeting.
The three nominees for election as directors at the Annual Meeting who
receive the greatest number of votes properly cast for the election of directors
shall be elected as Class III directors of the Company.
The election inspectors will count shares represented by proxies that
withhold authority to vote for a nominee for election as a director or that
reflect abstentions and "broker non-votes" (i.e., shares represented at the
meeting held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither abstentions nor
broker non-votes have any effect on the outcome of voting on the matter.
<PAGE> 4
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at eight. The
Company's Certificate of Incorporation and by-laws provide for the
classification of the Board of Directors into three classes, as nearly equal in
number as possible, with the term of office of one class expiring each year.
Unless otherwise instructed, the enclosed proxy will be voted to elect the
nominees named below, all of whom are now Class III directors, as Class III
directors for a term of three years expiring at the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualified. It is
expected that the nominees will be able to serve, but if they are unable to
serve, the proxies reserve discretion to vote for a substitute nominee(s). The
nominees for election as Class III directors, and the incumbent Class I and II
directors are as follows:
NOMINEES FOR ELECTION FOR CLASS III DIRECTORS -- TERMS EXPIRE 2000
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------------------------------------- ---- ----------
<S> <C> <C>
Patrick Aebischer, M.D., Ph.D. ........................... 42 Director
Peter K. Simon............................................ 51 Director
Richard J. Ramsden........................................ 59 Director
</TABLE>
Patrick Aebischer, M.D., Ph.D., a founding scientist of the Company, was
elected to the Board of Directors of the Company effective February 1, 1996. Dr.
Aebischer is the Chairman of the Board of Modex Therapeutiques S.A., a
subsidiary of the Company. Dr. Aebischer is the Director of the Gene Therapy
Center at the Centre Hospitalier Universitaire Vaudois (CHUV) in Switzerland and
has been Professor of Surgery and Medical Director of the Surgical Research
Division at the CHUV since 1992. From 1988 to 1992, Dr. Aebischer was Associate
Professor of Medical Research and Chairman of the Department of Artificial
Organs and Biomaterials at Brown University. Dr. Aebischer is also Professor of
Biomaterials (Research) at Brown and Professor at the Swiss Polytechnical
School.
Peter Simon, a director since May 1996, held a number of senior executive
positions from 1985 to 1995 at Roche Holding Ltd., most recently as Head,
Pharmaceutical Operations. At Roche Holdings, the holding company for Hoffman La
Roche, an international Pharmaceutical Company located in Basel, Switzerland,
Mr. Simon led the creation of Roche Bioscience, a new unit formed following
Roche's acquisition of Syntex. In addition, he was responsible for supporting
the launch of Genentech's products in Europe following Roche's acquisition of a
majority ownership position in Genentech. Mr. Simon currently serves as an
advisor to and Board member of Modex Therapeutiques S.A., a subsidiary of the
Company, and as the Chairman of the Board of Impetus, AG (Basel, Switzerland).
Richard J. Ramsden, a director since 1994, is a private investor; he
previously served as President and CEO of Kinship Capital Corporation, a private
investment enterprise from 1983 to 1994. Mr. Ramsden has been a director of
numerous companies including Chairman of the Board of the College Construction
Loan Insurance Association from 1987 to 1995 and a director of Dryvit Systems,
Inc. from 1990 to 1995.
INCUMBENT CLASS II DIRECTORS -- TERMS EXPIRE 1999
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------------------------------------- ---- ----------
<S> <C> <C>
Edwin C. Cadman, M.D. .................................... 51 Director
Donald R. Conklin......................................... 60 Director
</TABLE>
2
<PAGE> 5
Edwin C. Cadman, M.D., was elected to the Board of Directors of the Company
in August 1992. Dr. Cadman is Senior Vice President of Medical Affairs and Chief
of Staff at Yale-New Haven Hospital. In addition, he is Professor of Medicine at
the Yale University School of Medicine. Dr. Cadman served as Ensign Professor
and Chairman of the Department of Internal Medicine at the Yale University
School of Medicine and as Chief of Medical Services at the Yale-New Haven
Hospital from 1987 until 1994. Dr. Cadman is also a director of SciClone
Pharmaceuticals, Inc.
Donald R. Conklin was elected to the Board of Directors of the Company in
June 1993. From 1959 to 1996, Mr. Conklin held various positions with
Schering-Plough Corporation. From September 1994 until September 1996 Mr.
Conklin was President of Schering-Plough Health Care Products. From 1986 until
September 1996, Mr. Conklin served as President of Schering-Plough's
pharmaceutical division and, through 1986, was Executive Vice President of
Schering-Plough Corporation. Mr. Conklin, now retired, is also a director of
Vertex Pharmaceuticals, Inc., a biotechnology company, and BioTransplant, Inc.,
a biotechnology company.
INCUMBENT CLASS I DIRECTORS -- TERMS EXPIRE 1998
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- --------------------------------------------
<S> <C> <C>
Seth A. Rudnick, M.D. ........... 49 Chairman, Chief Executive Officer and
Director
Mark J. Levin.................... 47 Director
Sandra Nusinoff Lehrman, M.D. ... 49 President, Chief Operating Officer and
Director
</TABLE>
Seth A. Rudnick, M.D. has served as Chairman of the Board since 1993 and as
Chief Executive Officer and a director of the Company since February 1991. Dr.
Rudnick was also President of the Company from 1991 until 1993 and was President
from 1994 until July 1996. From 1988 to February 1991, Dr. Rudnick was employed
by R.W. Johnson Pharmaceutical Research Institute, a division of Johnson &
Johnson, a healthcare company. From 1989 to February 1991, Dr. Rudnick held the
position of Senior Vice President, Biotechnology Research and Development. Dr.
Rudnick is also a trustee of The Leukemia Society of America and a member of the
Board of Directors of Modex Therapeutiques S.A.
Mark J. Levin, a founder of the Company, has served as a director since the
Company's inception. From inception until January 1990 and from May 1990 until
February 1991, Mr. Levin served as the Company's President and acting Chief
Executive Officer. From November 1991 until March 1992, he served as Chief
Executive Officer of Tularik, Inc., a biotechnology company. From August 1991
until August 1993, Mr. Levin was Chief Executive Officer and a director of
Focal, Inc., a biomedical company. Mr. Levin is currently the Chairman of the
Board and Chief Executive Officer of Millennium Pharmaceuticals, Inc., a
biotechnology company. Mr. Levin is on the Board of Directors for Focal, Inc.,
and Tularik, Inc.
Sandra Nusinoff Lehrman, M.D. has served as President and Chief Operating
Officer of the Company since July 1996. Previously, Dr. Nusinoff Lehrman held
several positions within Burroughs Wellcome's Infectious Diseases and
Immunology, Antimicrobial Therapy and Virology Units from 1983-1993, including
Vice President, Infectious Diseases, Immunology and Biotechnology from 1993 to
1994. From 1994 to 1995, Dr. Lehrman was International Director of Biotechnology
at Wellcome plc and Vice President and General Manager of Burroughs Wellcome
Manufacturing Inc. Dr. Lehrman is a coinventor of AZT, the first approved drug
in the reverse transcriptase inhibitor class for the treatment of HIV. Most
recently, Dr. Lehrman was extensively involved in the start up of Triangle
Pharmaceuticals, Durham, North Carolina, a company focused on developing
therapies for life-threatening viral diseases and cancer. At Triangle, Dr.
Lehrman held the position of Vice President of Drug Development. Dr. Lehrman is
also a member of the Board of Directors of Modex Therapeutiques S.A.
3
<PAGE> 6
The Board of Directors held seven meetings during the fiscal year ended
December 31, 1996. The Company's Compensation and Stock Option Committee (the
"Compensation Committee") was composed of Messrs. Conklin, Levin, and Ramsden
and Mr. Grant Heidrich, III, a former director, until Mr. Heidrich's resignation
effective March 8, 1996. Mr. Simon joined the Compensation Committee when
elected to the Board in May 1996. The Compensation Committee held five meetings
during the fiscal year ended December 31, 1996. The Compensation Committee is
currently composed of Messrs. Conklin, Levin, Ramsden and Simon. The
Compensation Committee makes recommendations concerning salaries in general,
determines executive compensation and approves incentive compensation for
Company employees and consultants. During the fiscal year ended December 31,
1996, the Company's Audit Committee was composed of Messrs. Conklin and Ramsden
and Dr. Cadman and held two meetings. The Audit Committee is currently composed
of Messrs. Conklin and Ramsden and Dr. Cadman. The Audit Committee reviews the
results and scope of the audit and other services provided by the Company's
independent auditors. The Company has no nominating committee. During 1996, all
of the directors attended at least 75% of the meetings of the Board of Directors
and of all committees on which they served.
Non-employee directors are entitled to receive $1,000 for each Board
meeting attended ($500 for each telephonic meeting) and $500 for each Committee
meeting. Each director (except Dr. Cadman) who is not an employee of the Company
and who serves on the Company's Compensation Committee has received an option to
purchase 5,000 shares of Common Stock exercisable at the fair market value of
the Common Stock at the time of grant. Upon such a director's re-election as a
director, he or she is normally entitled to receive an option to purchase an
additional 5,000 shares of Common Stock at the fair market value of the Common
Stock at the time of re-election. In addition, such directors, for so long as
they are Compensation Committee members or eligible to serve as committee
members will receive an annual grant of an option to purchase 1,000 shares of
Common Stock which will become exercisable one year after the date of grant.
Directors are reimbursed for their expenses in attending Board of Directors and
committee meetings. Under a plan approved by the stockholders, but not yet
implemented, each director not receiving consulting compensation from the
Company will have the option to be paid, in lieu of the cash payable for his or
her service as a director, in shares of Common Stock having a fair market value
(as of the date of meeting) equal to the amount of such retainer. Shares of
Common Stock issued to directors in lieu of cash payments for Board service
shall be nonforfeitable, and a director shall have all of the rights of a
stockholder of the Company with respect to such Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS ELECTION OF THE THREE
NOMINEES DESCRIBED ABOVE
4
<PAGE> 7
EXECUTIVE OFFICERS
The executive officers of the Company who are not also directors of the
Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- ---- --------------------------------------------------
<S> <C> <C>
E. Edward Baetge, Ph.D............. 40 Vice President, Research
Frederic A. Eustis, III............ 47 Vice President, General Counsel and Secretary,
Acting Chief Financial Officer and Treasurer
</TABLE>
E. Edward Baetge, Ph.D., joined the Company in May 1992 as Director of
Neuroscience and was elected Vice President, Research in May 1996. Previously,
he served as Senior Research Scientist leading the Molecular and Cellular
Neurobiology group at Bristol Myers Squibb. Dr. Baetge received his B.A. degree
in Biology from the University of California at San Diego in 1978 and his Ph.D.
in Molecular Neurobiology from Cornell University in 1983.
Frederic A. Eustis, III joined the Company as General Counsel in September
1992 and became Vice President, General Counsel and Secretary in February 1993.
Mr. Eustis became temporary Acting Chief Financial Officer and Treasurer
effective February 10, 1997. Prior to joining the Company, Mr. Eustis was with
Biogen, Inc., a biotechnology company, from 1981 to 1992, serving as Vice
President-General Counsel and Secretary from 1985 until 1992.
5
<PAGE> 8
SHARE OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 10, 1997 by (i) each person
known by the Company to be the beneficial owner of more than 5% of the Company's
outstanding Common Stock, (ii) each director and nominee for director, (iii)
each executive officer named in the Executive Compensation Table and (iv) all
executive officers and directors of the Company as a group. Except as otherwise
indicated, the Company believes that the beneficial owners of the Common Stock
listed below, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable, and that there are no other affiliations among
the stockholders listed in the table.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY OF CLASS
NAME OF BENEFICIAL OWNER OWNED* BENEFICIALLY OWNED*
- ---------------------------------------------------------------- ------------ -------------------
<S> <C> <C>
Merrill Lynch & Co., Inc........................................ 2,898,760(1) 17.1%
World Financial Center North Tower 250 Vesey Street New York,
New York 10281
Genentech, Inc.................................................. 1,163,599 7.1%
460 Point San Bruno Boulevard South San Francisco, CA 94080
Scudder, Stevens & Clark, Inc................................... 921,000(2) 5.6%
Two International Place Boston, MA 02110
Ardsley Advisory Partners....................................... 833,000(3) 5.1%
646 Steamboat Road Greenwich, CT 06830
Patrick Aebischer, M.D., Ph.D................................... 62,960(4) **
Edwin C. Cadman, M.D............................................ 25,000(5) **
Donald R. Conklin............................................... 3,750(6) **
Sandra Nusinoff Lehrman, M.D.................................... 0 **
Mark J. Levin................................................... 116,866(7) **
Richard J. Ramsden.............................................. 16,700(8) **
Peter Simon..................................................... 0 **
Seth A. Rudnick, M.D............................................ 220,880(9) 1.3%
E. Edward Baetge, Ph.D.......................................... 83,815(10) **
Frederic A. Eustis, III......................................... 125,164(11) **
Daniel E. Geffken............................................... 61,335(12) **
John S. Swen.................................................... 34,408(13) **
All directors and executive officers as a group (12 persons).... 750,878(14) 4.4%
</TABLE>
- ---------------
* All numbers are based on information obtained by questionnaire or filings
on Forms 13D or 13G received by the Company.
** Less than one percent.
(1) Includes 434,500 shares of Common Stock issuable upon the exercise of an
outstanding warrant. Such shares are held by certain investment companies
for which Merrill Lynch Asset Management, L.P. ("MLAM") acts as investment
advisor. Such investment companies (together with MLAM, Merrill Lynch Co.,
Inc. and certain affiliates) may be considered to be beneficial owners of
such shares. MLAM has shared voting power and dispositive power as to
2,464,260 of such shares.
6
<PAGE> 9
(2) Scudder shares voting power as to 462,900 of such shares.
(3) Such shares were acquired by Ardsley Advisory Partners for certain of its
investment advisory clients. Ardsley Advisory Partners shares the power to
vote and dispose of such shares for which it is the investment advisor.
(4) Includes 38,958 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997; includes 24,002 shares of company
common stock issuable upon exchange of the shares of Modex Therapeutiques
S.A. held by Dr. Aebischer.
(5) Represents shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(6) Represents shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(7) Includes 6,250 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(8) Includes 2,500 shares over which Mr. Ramsden exercises investment power and
as to which he disclaims beneficial ownership; includes shares owned by a
trust for the benefit of his mother-in-law as to which he disclaims
beneficial ownership and shares owned by a trust for the benefit of his
wife as to which he disclaims beneficial ownership. Includes 2,500 shares
issuable upon exercise of stock options exercisable within 60 days after
March 10, 1997.
(9) Includes 214,928 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997; includes 2,000 shares owned by Dr.
Rudnick's wife as to which he disclaims beneficial ownership.
(10) Includes 78,477 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(11) Includes 104,269 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(12) Includes 49,853 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(13) Includes 25,864 shares issuable upon exercise of stock options exercisable
within 60 days after March 10, 1997.
(14) Includes 680,385 shares exercisable upon the exercise of options
exercisable within 60 days after March 10, 1997.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company to
its Chief Executive Officer, the four other most highly compensated executive
officers serving as of December 31, 1996 and one former executive officer, each
of whom earned more than $100,000 for the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
ANNUAL
COMPENSATION AWARDS
---------------------------------------- -------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS($) COMPENSATION($) AWARDS($) OPTIONS(#)
- --------------------------------- ---- -------- -------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Seth A. Rudnick, M.D............. 1996 $281,192 25,046(1) 16,556(2) 0 40,000
Chief Executive Officer 1995 275,000 55,000(1) 7,953(2) 61,250(3) 55,000
1994 77,096 50,000(1) 0 0 40,000
Sandra Nusinoff Lehrman, M.D..... 1996 97,529(4) 50,000 0 0 200,000
Chief Operating Officer
E. Edward Baetge, Ph.D........... 1996 168,330 12,600(1) 3,019(2) 6,375(3) 35,000
Vice President, Research
Frederic A. Eustis, III.......... 1996 165,384 16,500(1) 12,075(2) 0 35,000
Vice President, General 1995 151,500 24,000(1) 7,152(5) 49,000(3) 45,000
Counsel 1994 140,000 11,341(6) 6,704(2) 0
Daniel E. Geffken(7)............. 1996 153,300 11,475(1) 12,519(2) 0 35,000
Vice President, Chief 1995 139,249 21,263(1) 7,888(2) 77,000(3) 30,000
Financial Officer 1994 135,000 0 0 0 0
John S. Swen(8).................. 1996 160,013 0 12,075(2) 0 0
Vice President, Development 1995 134,150 22,500(1) 5,019(2) 49,000(3) 53,000
and Licensing
</TABLE>
- ---------------
(1) Represents bonus earned in indicated year and paid in the following year.
(2) Represents amounts payable in income tax in respect of a stock award.
(3) Represents fair value of restricted stock award (without regard to vesting
restrictions); stock vested 25% on date of grant and 1/48 each month
beginning 13 months after date of grant.
(4) Represents compensation for part of the year.
(5) Includes $1,352 of relocation expense reimbursement and $5,800 of
reimbursement for income tax in respect of awarded restricted stock.
(6) Represents fair market value of unrestricted Common Stock award.
(7) Mr. Geffken resigned as an executive officer on February 10, 1997.
(8) Mr. Swen resigned as an executive officer on November 30, 1996.
8
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in 1996 to the
named executive officers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SECURITIES OF TOTAL POTENTIAL REALIZABLE VALUE AT
UNDERLYING OPTIONS ASSUMED ANNUAL GROWTH RATES
OPTIONS GRANTED TO OF STOCK PRICE APPRECIATION
GRANTED EMPLOYEES EXERCISE FOR OPTION TERM(3)
(# OF IN FISCAL PRICE EXPIRATION -----------------------------
NAME SHARES) YEAR(1) ($/SHARE)(2) DATE 0%($) 5%($) 10%($)
- -------------------------------- --------- ---------- ------------ ---------- ----- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Seth A. Rudnick, M.D. .......... 40,000 4.92% 9.125 12/18/06 0 $229,547 $ 581,716
Sandra Nusinoff Lehrman,
M.D. ......................... 175,000 21.53% 8.625 7/22/06 0 949,238 2,405,555
25,000 3.08% 9.125 12/18/06 0 143,467 363,573
Edward Baetge, Ph.D. ........... 10,000 1.23% 13.750 5/14/06 0 86,473 219,140
25,000 3.08% 9.125 12/18/06 0 143,467 363,573
Frederic A. Eustis, III......... 35,000 4.31% 9.125 12/18/06 0 200,853 509,002
Daniel E. Geffken............... 35,000 4.31% 9.125 12/18/06 0 200,853 509,002
</TABLE>
- ---------------
(1) The Company granted options covering 812,660 shares of Common Stock to
employees in fiscal 1996.
(2) The exercise price may be paid by delivery of already-owned shares and tax
withholding obligations related to exercise may be paid by offset of the
underlying shares, subject to certain conditions. Options become exercisable
as to 1/4 of the shares covered after one year from the date of grant and as
to 1/48 of such shares per month thereafter and have a term of 10 years.
(3) As suggested by the Commission's rules on executive compensation disclosure,
the Company has presented option values based on arbitrary growth rates. The
Company does not necessarily agree that the information presented properly
values the options described.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
The following table provides information about option exercises in 1996 by
the named executive officers and the value of such officers' unexercised options
at December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Seth A. Rudnick, M.D. ........ 24,400 $430,262 203,262 8,438 $ 1,111,569 $ 6,667
Sandra Nusinoff Lehrman,
M.D......................... 0 0 0 200,000 0 65,625
E. Edward Baetge, Ph.D. ...... 8,000 99,000 72,853 54,897 127,274 29,038
Frederic A. Eustis, III....... 0 0 96,655 63,335 221,222 38,153
Daniel E. Geffken............. 10,000 106,250 47,708 67,292 20,313 4,688
John S. Swen.................. 6,500 77,938 25,864 0 49,452 0
</TABLE>
- ---------------
(1) The closing price of the Company's Common Stock on December 31, 1996, on the
NASDAQ National Market System was $9.00. The numbers shown reflect the value
of options accumulated over all years of employment.
9
<PAGE> 12
EMPLOYMENT AND SEVERANCE AGREEMENTS
Under the terms of an employment agreement dated January 6, 1991, Dr.
Rudnick is entitled to receive $185,000 annually as a base salary and a minimum
"bonus" of $2,083 per month, which amounts are subject to annual review by the
Compensation and Stock Option Committee. Pursuant to the employment agreement,
the Company granted Dr. Rudnick an option to purchase 150,000 shares of the
Company's Common Stock at $0.42 per share, vesting over a four-year period, and
reimbursed Dr. Rudnick for $80,776 of expenses associated with his relocation to
the Providence, Rhode Island area. Dr. Rudnick's employment is terminable by the
Company or Dr. Rudnick at any time, with or without cause. In the event the
Company terminates Dr. Rudnick's employment without cause or Dr. Rudnick
terminates such employment with good reason, Dr. Rudnick is entitled to receive
his then current salary and monthly bonus and health insurance benefits until
the earlier of twelve months after his employment terminates or the date he
secures a new position. Severance payments are subject to limitations as a
function of the value of certain stock options and stock owned by Dr. Rudnick.
Under the terms of an employment agreement dated July 2, 1996, Dr. Lehrman
is entitled to receive a salary of $230,000 per year, subject to adjustment by
the Board of Directors, and a one-time sign-on bonus of $50,000. Pursuant to the
employment agreement, the Company granted to Dr. Lehrman options to purchase
175,000 shares of the Company's Common Stock at $8.625 per share, vesting over
four years. Dr. Lehrman's employment is terminable by the Company or Dr. Lehrman
at any time, with or without cause. In the event the Company terminates Dr.
Lehrman's employment without cause or Dr. Lehrman terminates such employment
with good reason, Dr. Lehrman is entitled to receive her then current salary
until the earlier of up to nine months after her employment terminates or the
date she secures a new position. Severance payments are subject to limitations
as a function of the value of certain stock options and stock owned by Dr.
Lehrman.
In the event the Company terminates Mr. Eustis or Dr. Baetge's employment
without cause or Mr. Eustis or Dr. Baetge terminates such employment with good
reason, Mr. Eustis or Dr. Baetge, as the case may be, is entitled to receive his
then current salary until the earlier of up to nine months after such
termination or the date he secures a new position.
In the case of certain nonfault terminations of employment with the
Company, officers are entitled to severance equal to a percentage of annual base
pay; the exact percentage is adjusted for length of service with the Company. In
addition, in certain cases of change of control of the Company, severance
payable to senior officers is increased to an amount equal to annual salary
reduced by the amount of certain stock and option gains.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934 that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the Performance Graph
on page 14 shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The Company applies a consistent philosophy to compensation for all
employees, including executive officers. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations of
the Company's shareholders.
10
<PAGE> 13
COMPENSATION PHILOSOPHY FOR EXECUTIVE OFFICERS
The goals of the compensation program are to reward individual and team
performance and to encourage future performance by aligning compensation with
business objectives and performance and to enable the Company to attract, retain
and reward executive officers who contribute to the long-term success of the
Company. The Company's compensation program for executive officers is based on
four principles:
- The Company pays competitively.
The Company is committed to a compensation program that helps attract and
retain the best people in the industry. To ensure that its compensation is
competitive, the Company regularly compares its compensation levels with
those companies it considers comparable and sets its compensation
parameters based on this review.
- The Company compensates its executive officers for performance.
Executive officers are rewarded based upon both corporate performance and
individual performance. Corporate performance is evaluated by reviewing
the extent to which strategic and business plan goals are met. Individual
performance is evaluated by reviewing organizational and management
development progress against set objectives and the degree to which
teamwork and Company values are fostered by the individual's actions.
In early stage biopharmaceutical companies, performance is best judged by
success in achievement of scientific and technical milestones, product
development progress (including progress toward and through clinical
trials), strategic human resources development, capitalization and
financing goals, and commercialization goals. These are the bases
presently used by the Committee.
- The Company strives for fairness in the administration of pay.
The Company strives to achieve a balance of the compensation paid to a
particular individual and the compensation paid to other executive
officers both inside the Company and at comparable companies.
- The Company believes that all employees, including executive officers,
should understand and constructively participate in the performance
evaluation process.
The process of assessing performance is as follows:
1. At the beginning of the performance cycle, the evaluating manager (who
in the case of executive officers is the Chief Executive Officer) in
conjunction with the employee sets objectives and key goals for the
employee based upon Company goals previously established by senior
management.
2. The evaluating manager gives the employee ongoing feedback on
performance against agreed upon goals.
3. At the end of the performance cycle, the employee submits a summary of
the employee's accomplishments against key goals and the manager
reviews and evaluates this summary.
4. The evaluating manager compares the evaluation results to the results
of peers within the Company.
5. The Chief Executive Officer and the Human Resources Director review
results of all evaluations except that of the Chief Executive Officer.
These evaluations are subsequently discussed between the evaluating
manager and the employee in reaching an agreed upon result.
6. For executive officers, the results of the performance evaluation are
discussed with the Committee which reviews these results and approves
(subject to their review) recommendations for compensation made by the
Chief Executive Officer.
11
<PAGE> 14
7. The comparative result of the performance evaluation is the basis for
decisions on cash compensation and, where appropriate, stock options or
other long-term incentive compensation.
In the case of the Chief Executive Officer, the Committee is the
evaluating manager.
COMPENSATION VEHICLES
The Company uses a simple total compensation program consisting of cash and
equity-based compensation. Having a compensation program that allows the Company
to successfully attract and retain executive officers, permits it to enhance
shareholder value, motivate technological innovation and foster teamwork. The
vehicles used are:
Cash-Based Compensation
Salary -- The Company sets base salaries for executive officers by
reviewing the aggregate of base salary and bonus for individuals in competitive
positions in the market and adjusting such aggregate to reflect individual
performance.
Annual Cash Bonus -- Executive officers and the CEO are eligible to receive
an annual cash bonus upon the attainment of predetermined corporate objectives.
These objectives are approved at the beginning of the year by the Committee, and
progress against them reviewed at year end to determine the appropriate bonus
payment. At full achievement of objectives, the CEO is targeted to receive a
bonus of 20% of his annual base salary and the other executive officers to
receive 15%. The amount actually paid in any one year may be more or less than
the targeted bonus based on over or under achievement of objectives. For 1996,
the Committee determined that the executive officers, including the CEO, be
awarded bonuses ranging from 45% and 70% of their targeted bonus amounts, based
on the achievement of objectives, with particular consideration of the
establishment of Modex to pursue extensions of CytoTherapeutics' technology, the
closing of three major agreements with Genentech to license in Genentech's
growth factors for ALS, Parkinson's and Huntington's disease, the commencement
of the second ALS trial in Lausanne and further progress against the pain
program objectives.
Equity-Based Compensation
Stock Option Program -- The purpose of the Company's stock option program
is to provide additional incentives to executive officers to work to maximize
shareholder value. The Company believes strongly in the use of stock options
because they align employee interests directly with shareholder value. The
option program also utilizes vesting periods to encourage executive officers to
continue in the employ of the Company and to encourage long-term increases in
Company stock value. The Company grants stock options to all employees and
anticipates it may use stock options as a bonus vehicle in the future. A program
of cash awards for excellence in performance and attainment of goals is in
place.
Although provided for under the Company incentive plans, the Company
presently does not use stock appreciation rights as a compensation vehicle.
EVALUATION OF 1996 PERFORMANCE OF EXECUTIVE OFFICERS
The Committee compares the base salaries of executive officers against the
current competitive pay practices of comparable biotechnology companies by
reviewing data in the Radford Biotechnology Compensation and Benefits Survey
(and other biotechnology survey data, both formal and informal, as it becomes
available). Through these means, the Committee determined that an adjustment of
5.1% to the salary base for most executive officers was warranted, and would
maintain competitive positioning, targeting the 90th percentile for these
positions within the industry.
12
<PAGE> 15
To recognize the progress made by the Company toward its goals of obtaining
a second major corporate partner and licensing in rights to growth factors for
its three major programs, expanding the Company's technology base, establishing
a Swiss subsidiary to pursue extensions of its technology, further progress
against the Astra Pain Program objectives and progress towards a
second-generation pain product, the Committee reviewed recommendations made by
Dr. Rudnick for cash bonuses and stock option awards for each of the executive
officers and approved these recommendations. The Committee chose these reward
mechanisms as vehicles based on the perceived value of the individual
achievements and its understanding of comparable economic practices of other
companies. The stock option awards, because they vest over four years, further
align the interests of the Company's executive officers and shareholders in
general.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In evaluating the base salary compensation of Dr. Rudnick, the Committee
determined that Dr. Rudnick's total compensation package was appropriately
targeted at the 90th percentile of industry average for this position in similar
size companies, at the comparable stage of technology development. The Committee
also awarded Dr. Rudnick a bonus of $25,046 to recognize Dr. Rudnick's
significant accomplishment of the goals set for Dr. Rudnick, which included
continuing to make progress against the Company's scientific objectives,
obtaining license rights to certain to further strengthen CytoTherapeutics'
technology base, advancing its science and raising equity capital. These
achievements, as well as specific achievements of the Company, such as the start
of U.S. clinical trials and strengthening the Company's financial resources,
have positioned the Company to further increase shareholder value. Thus, the
Committee also granted Dr. Rudnick a stock option grant of 40,000 shares to
reward these efforts, and further incent continued contributions to the
long-term growth and viability of the Company.
COMPENSATION AND STOCK OPTION
COMMITTEE
Donald R. Conklin
Mark J. Levin
Richard J. Ramsden
Peter K. Simon
13
<PAGE> 16
PERFORMANCE GRAPH
NOTE: THE STOCK PRICE PERFORMANCE SHOWN ON THE GRAPH BELOW IS NOT
NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CYTOTHERAPEUTICS, INC.,
THE AMEX BIOTECHNOLOGY STOCK INDEX AND THE S&P 500 INDEX
FOR THE PERIOD SINCE CYTOTHERAPEUTICS' INITIAL PUBLIC OFFERING
The graph below compares the relative cumulative total returns to the
Company's shareholders with the cumulative total returns of the Amex
Biotechnology Stock Index and the S&P 500 Index since the initial public
offering of the Company's common stock.(1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P (REINVESTED AMEX BIOTECH
(FISCAL YEAR COVERED) CTI DIV) STOCK INDEX
<S> <C> <C> <C>
MAR '92 100 100 100
JUNE '92 74.36 101.90 81.49
DEC '92 79.49 110.41 94.41
JUNE '93 76.92 115.79 64.41
DEC '93 125.64 121.53 64.07
JUNE '94 57.00 115.75 44.27
DEC '94 46.15 119.66 45.41
JUNE '95 70.51 141.93 49.77
DEC '95 175.64 160.48 74.88
JUNE '96 114.10 174.72 77.85
DEC '96 92.31 192.99 80.00
</TABLE>
(1) Based on the closing price of CytoTherapeutics' stock on the first day of
trading on NASDAQ National Market System.
14
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors served on the Compensation and Stock
Option Committee in 1996: Messrs. Conklin, Levin, Heidrich, Ramsden and Simon.
In 1989, 1990 and 1991 Mr. Levin was an executive officer of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Cadman, a member of the Board of Directors, was retained in August of
1992 to serve as a consultant to the Company. Pursuant to his Consulting
Agreement, Dr. Cadman receives $1,000 per day of consulting performed (totaling
$12,000 for 1996) and has been granted an option to purchase 20,000 shares of
the Common Stock at $6.50 per share, the fair market value of the Company's
Common Stock at the time the option was granted.
Dr. Aebischer, a founding scientist of the Company, serves as a member of
the Board of Directors and is party to a Research and Commercialization
Agreement providing for sponsorship by the Company of research by Dr. Aebischer
in return for certain rights in the results thereunder. The Company has granted
Dr. Aebischer stock options covering an aggregate of 80,000 shares at an average
weighted exercise price of $4.63 per share in addition to a restricted stock
grant covering 5,000 shares.
During 1996, Dr. Aebischer was one of four scientific founders of Modex
Therapeutiques S.A. ("Modex"). Dr. Aebischer was paid 18,260 SF (approximately
$14,580) by the Company for his services in connection with the formation of
Modex. Dr. Aebischer, the three other scientific founders, the Company and an
investment fund managed by a Swiss investment bank formed Modex by investing a
total of SFr 140,000 (approximately $177,000) to acquire 14,000 shares of Modex
Common Stock at SFr 10 (approximately $8.33) per share. Of such 14,000 shares,
the Company acquired 6,500 shares, the fund 500 shares and the scientific
founders 7,000 shares, of which Dr. Aebischer acquired 1,826 shares. After
giving effect to certain additional investments by the Company and the fund, the
Company currently owns 10,000 shares (or 50%) of Modex Common Stock, the
founding scientists 7,000 shares (or 35%) (of which Dr. Aebischer owns 1,852
shares or 9.26%) and the fund 3,000 shares (or 15%).
As a condition to making such additional investments in Modex, the Company
entered into an Option Agreement with Dr. Aebischer and the other three
scientific founders, providing the Company and each scientific founder with the
right to exchange any or all of each scientific founders' shares in Modex at any
time for shares of the Company's Common Stock at a conversion ratio of 13.145
shares of the Company's Common Stock for each share of Modex Common Stock
(subject to the normal adjustments for stock splits, stock dividends, and the
like); on conversion of all of his 1,826 shares of Modex Common Stock, Dr.
Aebischer would receive 24,002 shares of the Company's Common Stock. In
addition, under the Option Agreement, the Company has the right to acquire from
Dr. Aebischer and the other founding scientists 1,522 shares of the Common Stock
of Modex initially acquires by them at the time Modex was founded at SFr 10 per
share, if at any time prior to July 1998, any such scientific founder (including
Dr. Aebischer) is terminated as a consultant for Modex for cause or resigns as
such a consultant without good reason.
Under the terms of the Company's Cross License Agreement with Modex, Modex
has the right to receive up to 300,000 shares of the Company's Common Stock (the
"Milestone Shares") on the achievement of certain scientific milestones. Modex
expects to use such Milestone Shares to provide incentive compensation to its
key employees and consultants. Under the terms of his consulting agreement with
Modex, Dr. Aebischer received cash compensation at the rate of SFr 12,000
(approximately $8200) per year for 1996 (amounting to an aggregate of SFr 3000
during 1996) and has the right to receive from Modex up to 54,780 shares of such
Milestone Shares upon the achievement of the specified scientific milestones.
15
<PAGE> 18
Dr. Aebischer is the principal investigator under Research and
Commercialization Agreements between the Company and CHUV (the "CTI-CHUV
Agreement") and Modex and CHUV (the "Modex-CHUV Agreement"). The Company and
Modex provided research funding under the CTI-CHUV and Modex-CHUV Agreements
during 1996 in the total respective amounts of $871,980 and SFr 90,000
(approximately $67,000).
PROPOSAL NUMBER 2
APPROVAL OF INCREASE IN SHARES ISSUABLE UNDER
EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The CytoTherapeutics, Inc. 1992 Employee Stock Purchase Plan (the "Plan")
was adopted by the Board of Directors and the Stockholders in February 1992 to
provide a method by which eligible employees of the Company may use voluntary,
systematic payroll deductions to purchase shares of the Common Stock of
CytoTherapeutics (the "Stock") and thereby acquire an interest in the future of
the Company. 100,000 shares of Stock have been reserved for sale pursuant to the
exercise of options granted under the Plan to employees of the Company who meet
the eligibility requirements of the Plan. As of December 31, 1996, employees
have purchased 78,567 shares of stock under the Plan, leaving 21,433 shares of
stock for future purchases under the Plan. The closing price of the Stock on
March 10, 1997 as reported by the NASDAQ National Market System was $8.625 per
share.
The Board of Directors has voted, subject to the approval of the
stockholders, to increase the aggregate number of shares of Stock that may be
purchased under the Plan from 100,000 to 200,000 in order to ensure that a
sufficient number of shares of Stock are available to be issued in the future.
OPERATION OF THE PLAN
All employees with at least six months of continuous service, other than
employees owning 5% or more of the combined voting power of all classes of stock
of the Company, are eligible to participate. Purchases will occur at the end of
option periods, each of six months' duration. The exercise price of options
granted under the plan is 85% of the lesser of (i) the value of the Stock at the
beginning of an option period and (ii) the value of the Stock at the end of the
option period. Participants may elect under the Plan, prior to each option
period, to have from 2% to 10% of their pay withheld and applied to the purchase
of shares at the end of the option period. However, the Plan imposes a maximum
of $10,000 on the amount that may be withheld from any participant in any option
period.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE PLAN
Participants do not realize taxable income at the grant of options under
the Plan or at the time Stock is purchased under the Plan.
If no disposition of Stock purchased under the Plan is made by the
participant within two years from the date of grant of the option or within one
year of the purchase date, (a) upon sales of such stock, 15% of the fair market
value of the Stock at the date of the grant of the options (or, if less, the
amount realized on the sale of such Stock in excess of the purchase price) is
taxed to the participant as ordinary income with any additional gain taxed as a
long-term capital gain and any loss sustained is treated as a long-term capital
loss and (b) no deduction is allowed to the Company for Federal income tax
purposes.
If the participant dies at any time while owning shares purchased under the
Plan, (a) 15% of the fair market value of the Stock at the date of grant of the
options (or, if less, the fair market value of such shares on
16
<PAGE> 19
the date of death in excess of the purchase price) is taxed to the participant
as ordinary income in the year of death and (b) no deduction is allowed to the
Company for Federal income tax purposes.
If shares of Stock purchased under the Plan are disposed of prior to the
expiration of the two-year and one-year holding periods described above, then
(a) the participant realizes ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market of the shares on the date
of purchase (or, if less, the amount realized on the sale of such shares) over
the purchase price thereof, and (b) the Company is entitled to deduct any such
amount. Any further gain realized is taxed as a short-term or long-term capital
gain and will not result in any deduction by the Company.
VOTE REQUIRED
To approve the amendment to the Plan, the vote of the holders of a majority
of the shares present or represented and entitled to vote on the proposal at the
meeting is required. An abstention will have the effect of a vote against the
proposal, while a broker non-vote (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners and
(ii) the broker or nominee does not have the discretionary authority to vote on
a particular matter) will have no effect on the outcome.
If, prior to the Annual Meeting, it appears that Proposal Number 2 will not
be approved, the persons named as proxies may propose one or more adjournments
of the Annual Meeting to permit further solicitation of proxies in favor of such
Proposal. If Proposal Number 2 is voted on but is not approved at the Annual
Meeting and a motion is made to reconsider such Proposal, the persons named as
proxies may vote in favor of such reconsideration and to adjourn the Annual
Meeting to permit further solicitation of proxies in favor of such Proposal. Any
such reconsideration and/or adjournment will require the affirmative vote of a
majority of the shares voted in person or by proxy. The persons named as proxies
will vote in favor of such reconsideration and/or adjournment those proxies
which they are entitled so to vote in the event that said persons believe that
further solicitation of proxies will result in approval of such Proposal. They
will vote against any such reconsideration and/or adjournment those proxies
required to be voted against reconsideration and/or adjournment.
NEW PLAN BENEFITS
Set forth in the table below is the number of shares of Common Stock
acquired under the Plan during 1996 by (i) each of the named executive officers
and (ii) all current executive officers as a group and (iii) all employees,
including all current officers who are not executive officers, as a group.
Directors are not entitled to participate in the Plan.
<TABLE>
<CAPTION>
NAME DOLLAR VALUE SHARES PURCHASED
- --------------------------------------------------------------- ------------ ----------------
<S> <C> <C>
Seth A. Rudnick, M.D........................................... $ 0 0
Sandra Nusinoff Lehrman, M.D................................... 0 0
E. Edward Baetge, Ph.D......................................... 15,096.95 1,765
Frederic A. Eustis, III........................................ 18,932.41 2,209
Daniel E. Geffken.............................................. 0 0
John S. Swen................................................... 4,198.46 444
Executive Officers as a group.................................. 34,029.36 3,974
Non-Executive Officer Employee Group........................... 140,854.12 16,692
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE INCREASE IN SHARES
AVAILABLE FOR ISSUANCE PURSUANT TO THE EMPLOYEE STOCK PURCHASE PLAN.
17
<PAGE> 20
OTHER INFORMATION
ACCOUNTING MATTERS
The Board of Directors has selected the independent accounting firm of
Ernst & Young LLP to audit the accounts of the Company for the year ending
December 31, 1997.
A representative of Ernst & Young LLP who audited the accounts of the
Company for the year ended December 31, 1996, is expected to be present at the
Annual Meeting of Stockholders and will be afforded the opportunity to make a
statement if he or she desires to do so and will be available to reply to
appropriate stockholder inquiries.
STOCKHOLDER PROPOSALS
Proposals of Stockholders submitted for consideration at the next Annual
Meeting of Stockholders must be received by the Company (attention: Secretary)
no later than December 16, 1997.
FORM 10-K
The Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available upon request by writing to the Company at Two
Richmond Square, Providence, Rhode Island 02906, Attn: Investor Relations.
OTHER BUSINESS
The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
By Order of the Board of Directors
FREDERIC A. EUSTIS, III
Secretary
March 28, 1997
18
<PAGE> 21
4090-PS-97
<PAGE> 22
CYTOTHERAPEUTICS, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 6, 1997
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned hereby appoints Seth A. Rudnick, M.D., Sandra Nusinoff
Lehrman, M.D. and Frederic A. Eustis, III, or any of them with power of
X substitution to each, proxies to vote at the Annual Meeting of
Stockholders of CytoTherapeutics, Inc. to be held on May 6, 1997 at the
Y offices of CytoTherapeutics, Inc., 4 Richmond Square, Providence, Rhode
Island at 1:00 p.m., local time, or at any adjournments thereof, all of
the shares of Common Stock, par value $.01 per share of CytoTherapeutics,
Inc. that the undersigned would be entitled to vote if personally present.
The undersigned instructs such proxies or their substitutes to act on the
following matters as specified by the undersigned, and to vote in such
manner as they may determine on any other matters that may properly come
before the meeting.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE SIDE
<PAGE> 23
<TABLE>
<S> <C>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO CONTRARY
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED BELOW. FOR AMENDMENT OF THE 1992
EMPLOYEE STOCK PURCHASE PLAN AND IN THE DISCRETION OF THE NAMED PROXIES AS TO ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING.
1. Election of Directors.
The undersigned hereby GRANTS authority to elect the following FOR AGAINST ABSTAIN
nominees as Class III directors: Patrick Aebrischer, M.D., Ph.D., 2. Approval of an increase in the number [ ] [ ] [ ]
Peter K. Simon and Richard J. Ramaden. of shares reserved for issuance under
FOR WITHHELD the 1992 Employee Stock Purchase
[ ] [ ] Plan. The undersigned hereby
GRANTS authority to approve the
[ ] ______________________________________ Amendment to the Plan described in
For all nominees except as noted above the Proxy Statement.
3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
meeting.
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS CARD. ALL
JOINT OWNERS SHOULD SIGN. WHEN SIGNING AS AN EXECUTOR,
ADMINISTRATOR, ATTORNEY, OR GUARDIAN OR AS CUSTODIAN FOR A
A MINOR, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME AND INDICATE THE SIGNER'S
TITLE. IF A PARTNER, SIGN IN THE PARTNERSHIP NAME.
Signature: _______________________________ Date: ________________ Signature: _______________________________ Date: ________________
</TABLE>
