PROXY STATEMENT
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TEXAS BIOTECHNOLOGY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------------------
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TEXAS BIOTECHNOLOGY CORPORATION
7000 FANNIN, 20TH FLOOR
HOUSTON, TEXAS 77030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 16, 2003
-------------------------
You are cordially invited to attend the annual meeting of the
stockholders of Texas Biotechnology Corporation, which will be held at 9:00 a.m.
(Houston time) on May 16, 2003 at The InterContinental Hotel, 2222 West Loop
South, Houston, Texas 77027. At the meeting we will:
1. elect ten directors;
2. consider and act on a proposal to amend the Amended and Restated
1999 Stock Incentive Plan;
3. consider and act on a proposal to amend the Amended and Restated
1995 Non-Employee Director Stock Option Plan;
4. consider and act on a proposal to amend our certificate of
incorporation to change our corporate name to Encysive
Pharmaceuticals Inc.; and
5. consider and act on such other business as may properly come
before the meeting or any adjournment of the meeting.
If you were a stockholder at the close of business on April 2, 2003, you
are entitled to notice of and to vote at the meeting. A stockholders' list will
be available at our offices, 7000 Fannin, 20th Floor, Houston, Texas 77030, for
a period of ten days prior to the meeting, or any adjournment of the meeting.
Your vote is important. Whether or not you expect to attend the meeting,
please sign and date the enclosed proxy card and return it to us promptly. A
stamped envelope has been provided for your convenience. The prompt return of
proxies will ensure a quorum and save us the expense of further solicitation.
By Order of the Board of Directors,
/s/ STEPHEN L. MUELLER
------------------------------------------
STEPHEN L. MUELLER,
Vice President, Finance and Administration,
Secretary and Treasurer
April 14, 2003
TEXAS BIOTECHNOLOGY CORPORATION
7000 FANNIN, 20TH FLOOR
HOUSTON, TEXAS 77030
PROXY STATEMENT
Our board of directors is soliciting proxies for the annual meeting of
our stockholders to be held in Houston, Texas on May 16, 2003, and at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying notice. This proxy statement and the accompanying proxy card are
first being mailed to stockholders on or about April 14, 2003. Because many
stockholders are unable to attend the meeting, the board of directors solicits
proxies to ensure that each stockholder has an opportunity to vote on all
matters scheduled to come before the meeting. Stockholders are urged to read
carefully the material in this proxy statement.
QUESTIONS AND ANSWERS
Q: Who can attend and vote at the meeting?
A: You can attend and vote at the meeting if you were a stockholder at the
close of business on the record date, April 2, 2003. On that date, there
were 44,245,644 shares of common stock outstanding and entitled to vote
at the meeting.
Q: What am I voting on?
A: You are voting on:
- The election of directors;
- The approval of an amendment to the Amended and Restated 1999
Stock Incentive Plan;
- The approval of an amendment to the Amended and Restated 1995
Non-Employee Director Stock Option Plan; and
- The approval of an amendment to our certificate of incorporation
to change our corporate name to Encysive Pharmaceuticals Inc.
Q: How do I cast my vote?
A: Whether you hold shares in your name or through a broker, bank or other
nominee, you may vote without attending the meeting. You may vote by
granting a proxy or, for shares held through a broker, bank or other
nominee, by submitting voting instructions to that nominee. Instructions
for voting by mail are on your proxy card. For shares held through a
broker, bank or other nominee, you will receive instructions from your
broker, bank or
other nominee describing how to vote your shares. If you provide
specific voting instructions, your shares will be voted as you have
instructed. If you hold shares in your name, and you sign and return a
proxy card without giving specific voting instructions, your shares will
be voted as recommended by our board of directors on all matters. If you
hold your shares through a broker, bank or other nominee and you do not
instruct them how to vote, your broker may have authority to vote your
shares. However, the New York Stock Exchange has proposed new
regulations that would prohibit brokers or other nominees that are NYSE
member organizations from voting in favor of proposals relating to
equity compensation plans unless they receive specific instructions from
the beneficial owner of the shares to vote in that manner. This new rule
may become effective before the meeting, in which case, for shares held
through a broker or other nominee who is an NYSE member organization,
your shares will only be voted in favor of Proposals 2 and 3 if you have
provided specific voting instructions to your broker or other nominee to
vote your shares in favor of that proposal.
Q: How does the board recommend I vote on the proposals?
A: The board recommends you vote "FOR" each of the nominees to the board of
directors, "FOR" the amendment to the Amended and Restated 1999 Stock
Incentive Plan, "FOR" the amendment to the Amended and Restated 1995
Non-Employee Director Stock Option Plan and "FOR" the amendment to our
certificate of incorporation.
Q: Can I revoke my proxy?
A: Yes. You can revoke your proxy at any time before it is exercised by:
- submitting a properly signed proxy card with a more recent date;
- giving written notice of your revocation before the meeting to
our Secretary, Mr. Mueller, at our offices, 7000 Fannin, 20th
Floor, Houston, Texas 77030; or
- attending the meeting and voting your shares in person.
Q: Who will count the vote?
A: A representative of our transfer agent, The Bank of New York, will act
as the inspector of the election and will count the vote.
Q: What is a "quorum?"
A: A quorum is the presence at the meeting, in person or by proxy, of the
holders of a majority of the outstanding shares as of the record date.
There must be a quorum for the
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meeting to be held. If you submit a valid proxy card or attend the
meeting, your shares will be counted to determine whether there is a
quorum. Abstentions and broker non-votes will be counted toward the
quorum. "Broker non-votes" occur when nominees (such as banks and
brokers) that hold shares on behalf of beneficial owners do not receive
voting instructions from the beneficial owners before the meeting and do
not have discretionary voting authority to vote those shares under the
rules of The Nasdaq Stock Market, Inc.
Q: What vote is required to approve each item?
A: Election of Directors
The nominees for election as directors at the annual meeting who receive
the greatest number of votes cast by the stockholders, a plurality, will
be elected as directors. In the election of directors, you may vote
"FOR" all nominees, "AGAINST" all nominees or withhold your vote for any
one or more of the nominees. Broker non-votes and abstentions will not
affect the outcome of the election of directors.
Amendments to 1999 Plan and 1995 Director Plan
The approval of the amendment to the Amended and Restated 1999 Stock
Incentive Plan, commonly referred to as the 1999 Plan, and the amendment
to the Amended and Restated 1995 Non-Employee Director Stock Option
plan, commonly referred to as the 1995 director plan, require the
affirmative vote of a majority of the shares entitled to vote and
present in person or by proxy at the meeting. For the approval of the
amendment to the 1999 plan and the amendment to the 1995 director plan,
you may vote "FOR" or "AGAINST" or abstain from voting. Abstentions have
the effect of a vote against the amendments to the 1999 plan and the
1995 director plan. Broker non-votes will not affect the outcome of any
vote on the amendments to the 1999 plan and the 1995 director plan.
Amendment to Certificate of Incorporation
The approval of the amendment to our certificate of incorporation
requires the affirmative vote of a majority of the outstanding shares.
Abstentions and broker non-votes have the effect of a vote against the
amendment to our certificate of incorporation.
3
Q: What shares are included on my proxy card?
A: Your proxy card represents all shares registered to your account in the
same social security number and address.
Q: What does it mean if I get more than one proxy card?
A: Your shares are probably registered in more than one account. You should
vote each proxy card you receive. We encourage you to consolidate all
your accounts by registering them in the same name, social security
number and address.
Q: How many votes can I cast?
A: On all matters you are entitled to one vote per share of common stock.
Q: When are stockholder proposals due for the 2004 Annual Meeting of
Stockholders?
A: If you want to present a proposal from the floor at the 2004 Annual
Meeting, you must give us written notice of your proposal no sooner than
March 2, 2004 and no later than March 27, 2004. If instead of presenting
your proposal at the meeting you want your proposal to be considered for
inclusion in next year's proxy statement, you must submit the proposal
in writing to the Secretary so that it is received at the above address
by December 16, 2003. Your notice should be sent to the Secretary, Texas
Biotechnology Corporation, 7000 Fannin, 20th Floor, Houston, Texas
77030.
Q: Where can I find the voting results of the meeting?
A: The preliminary voting results will be announced at the meeting. The
final results will be published in our quarterly report on Form 10-Q for
the second quarter of fiscal 2003.
4
TABLE OF CONTENTS
PAGE
ELECTION OF DIRECTORS........................................................................6
Nominees.............................................................................6
Vote Required for Election...........................................................9
Director Compensation and Board Committees...........................................9
APPROVAL OF THE AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN AMENDMENT....................12
Participation in the 1999 Plan......................................................12
Vote Required for Approval..........................................................13
APPROVAL OF THE AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AMENDMENT.14
Participation in the 1995 Director Plan.............................................15
Vote Required for Approval..........................................................15
AMENDMENT OF CERTIFICATE OF INCORPORATION...................................................16
Vote Required for Approval..........................................................16
OTHER INFORMATION...........................................................................17
Principal Stockholders..............................................................17
Executive Officers..................................................................18
Executive Compensation..............................................................19
Compensation and Corporate Governance Committee Report On Executive Compensation....22
Audit Committee Report..............................................................24
Performance Graph...................................................................26
Executive Agreements................................................................27
Auditors............................................................................28
Section 16(a) Beneficial Ownership Reporting Compliance.............................29
Stockholder Proposal Information....................................................29
Other Matters.......................................................................30
A copy of the Annual Report, which includes the Form 10-K of Texas
Biotechnology Corporation for the fiscal year ended December 31, 2002,
is being mailed with this proxy statement. You may receive an additional
copy of the Form 10-K, our Quarterly Reports on Form 10-Q and other
information at no charge upon request directed to: Stephen L. Mueller,
Secretary, Texas Biotechnology Corporation, 7000 Fannin, 20th Floor,
Houston, Texas 77030.
5
PROPOSAL 1
ELECTION OF DIRECTORS
At the annual meeting, ten directors are to be elected. Each director is
to hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. The persons designated as proxies on the
accompanying proxy card intend, unless authority is withheld, to vote for the
election of the nominees named below to the board of directors. All of the
nominees have been elected previously as directors by our stockholders. If any
nominee should become unavailable for election, the proxy may be voted for a
substitute nominee selected by the persons named in the proxy or the board of
directors may be reduced accordingly; however, we are not aware of any
circumstances likely to render any nominee unavailable.
NOMINEES
Certain information regarding the nominees is set forth below:
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- -----
John M. Pietruski (1)(2) 70 Chairman of the Board of Directors 1990
President, Chief Executive Officer
Bruce D. Given, M.D. (1) 48 and Director 2002
Richard A. F. Dixon, Ph.D. Senior Vice President, Research,
(1) 49 Chief Scientific Officer and Director 1990
James T. Willerson, M.D. Chairman of the Scientific Advisory
(1)(3) 63 Board and Director 1990
Ron J. Anderson, M.D. (2) 56 Director 1997
Frank C. Carlucci (2) 72 Director 1990
Robert J. Cruikshank (3) 72 Director 1993
Suzanne Oparil, M.D. (3) 62 Director 1999
William R. Ringo, Jr. (3) 57 Director 2001
James A. Thomson, Ph.D. (2) 57 Director 1994
------------------------
(1) Member of the Executive Committee of the board of directors
(2) Member of the Compensation and Corporate Governance Committee of
the board of directors
(3) Member of the Audit Committee of the board of directors
John M. Pietruski has served as our Chairman of the board of directors
since May 1990. Mr. Pietruski has served as President of Dansara Company, a
private investment consulting firm, since 1988. He served as Chairman of the
board of directors and Chief Executive Officer of Sterling Drug Inc., a
pharmaceutical company, from 1985 to 1988 and as President and Chief Operating
Officer from 1983 to 1985. Mr. Pietruski currently serves as a director of
Hershey Foods Corporation, Lincoln National Corporation, First Energy
Corporation and PDI, Inc. Mr. Pietruski received a B.S. degree with honors in
business administration from Rutgers University, where he graduated Phi Beta
Kappa.
Bruce D. Given, M.D. has served as our President and Chief Executive
Officer and as a member of the board of directors since March 2002. Dr. Given
joined us after serving as President, International of Ortho-Clinical
Diagnostics of Johnson & Johnson from May 2000 to March 2002. He was also
General Manager of Transfusion Medicine Worldwide of Ortho-
6
Clinical Diagnostics from November 1999 to May 2000. Dr. Given served as Group
Vice President, head of Worldwide Clinical and Regulatory Affairs of Biosense
Webster, an affiliate of Johnson & Johnson from July 1998 to November 1999. He
was also Group Vice President, head of U.S. Marketing & Sales, Research &
Development for Janssen Pharmaceutica from April 1995 to July 1998. He has held
various executive and senior management positions with Sandoz Pharma Ltd.,
Sandoz Research Institute and Schering-Plough Corporation. Dr. Given received a
B.S. from Colorado State University, an M.D. with honors from the University of
Chicago and was a Clinical Fellow at Harvard Medical School.
Richard A.F. Dixon, Ph.D. has served as our Senior Vice President,
Research and Chief Scientific Officer since March 2000, and as a member of the
board of directors since July 1990. Dr. Dixon served as our Vice President,
Research from December 1992 to March 2000 and as Scientific Director and
Director of Molecular Biology from July 1990 to December 1992. Dr. Dixon joined
us after serving as a Director and Head of Molecular Biology at Merck Sharp &
Dohme Research Laboratories, a division of Merck & Co. from 1988 to July 1990.
In addition, Dr. Dixon serves as a Professor of the Department of Internal
Medicine at The University of Texas Medical School at Houston. Dr. Dixon is the
author or co-author of more than 100 scientific papers and has invented twelve
patented therapeutic technologies. He received a B.S. degree from Texas A & M
University, graduating cum laude, and received a Ph.D. in virology from the
Baylor College of Medicine.
James T. Willerson, M.D. has served as Chairman of our scientific
advisory board since January 1990 and has been a member of the board of
directors since May 1990. Dr. Willerson was appointed in March 2001 to serve as
President of The University of Texas - Houston Health Science Center and is also
a professor at this institution. He served as the Chairman of the Department of
Internal Medicine at The University of Texas Medical School at Houston from 1989
to 2001. In 1995, he was appointed Medical Director of the Texas Heart
Institute, Houston, Texas. He was Chief of Cardiology of Parkland Memorial
Hospital in Dallas, Texas from 1975 to 1989, director and principal investigator
of The University of Texas Southwestern Medical School Ischemic Heart Disease,
Specialized Center of Research, in Dallas from 1975 to 1989, director of the
cardiology division at The University of Texas Southwestern Medical School from
1977 to 1989, and professor of medicine and professor of radiology from 1979 to
1989. He also served as co-director of the Bugher Molecular Biology and
Cardiology Research Center at The University of Texas Health Science Center in
Dallas from 1986 to 1989. Dr. Willerson has published nearly 700 manuscripts and
has been editor or co-editor of 18 textbooks. He was selected for membership in
the Institute of Medicine of the National Academy of Science in 1998 and named
"Distinguished Scientist" of the American College of Cardiology for 2000. In
1961, Dr. Willerson received a B.A. from The University of Texas at Austin,
graduating Phi Beta Kappa. In 1965, he received an M.D. from the Baylor College
of Medicine, graduating as a member of Alpha Omega Alpha. Dr. Willerson's
medical and cardiology training was undertaken at the Massachusetts General
Hospital, Boston, Massachusetts.
Ron J. Anderson, M.D. has served as a member of the board of directors
since December 1997. He has been President and Chief Executive Officer of
Parkland Health & Hospital System since 1982. Parkland is the general public
hospital for Dallas County, Texas and the primary teaching hospital for The
University of Texas Southwestern Medical Center at Dallas. He previously served
as Parkland's Medical Director for Ambulatory Care and Emergency Services.
7
He served concurrently as head of the Division of Ambulatory Care, which became
the Division of General Internal Medicine under his guidance in the Department
of Internal Medicine at Southwestern. Dr. Anderson has remained on the faculty
of the Medical School as Professor of Internal Medicine. Dr. Anderson is also a
director of Parkland Foundation and Texans Care for Children. He is the Chief
Executive Officer and serves on the Board of Directors of Parkland Community
Health Plan and is an advisory board member of Texas Health Choice. Dr. Anderson
is also the Chairman of the Texas Hospital Association, a member of the board of
directors of the National Association of Public Hospitals and National Public
Health and Hospital Institute. In 1997, he was elected to the Institute of
Medicine of the National Academy of Sciences. He has authored and co-authored
more than 200 articles on medicine, ethics, and health policy. Dr. Anderson
received his medical degree from the University of Oklahoma and his pharmacy
degree from Southwestern Oklahoma State University where he was selected as a
Distinguished Alumni in 1987.
Frank C. Carlucci has served as a member of the board of directors since
May 1990. He has been principally employed as Chairman Emeritus and a Partner in
The Carlyle Group, a Washington, D. C. based merchant bank since 1989. Mr.
Carlucci served as Secretary of Defense from 1987-1989 and as President Reagan's
National Security Advisor in 1987. Prior to returning to Government service, Mr.
Carlucci was Chairman and Chief Executive Officer of Sears World Trade, a
business he joined in 1983. His government service included positions as Deputy
Secretary of Defense (1980-82), Deputy Director of Central Intelligence
(1978-80), Ambassador to Portugal (1975-78), Under Secretary of Health Education
and Welfare (1973-75), Deputy Director of OMB (1970-72), and Director of the
Office of Economic Opportunity (1969). Mr. Carlucci was a Foreign Service
Officer from 1956 to 1980. Mr. Carlucci is the Chairman of the Neurogen
Corporation board of directors and is also a director of SunResorts, Ltd., N.V.
and United Defense, L.P. Mr. Carlucci graduated from Princeton University and
also attended Harvard Business School.
Robert J. Cruikshank has served as a member of the board of directors
since May 1993. Mr. Cruikshank was a senior partner at Deloitte & Touche LLP
from 1989 until retiring in March 1993. Mr. Cruikshank was a partner, office
managing partner and member of the board of directors of the predecessor firms
to Deloitte & Touche LLP in Houston from 1968 until 1989. He is a trustee of the
Ray C. Fish Foundation and Texas Medical Center. He also serves as a director of
CenterPoint Energy Inc., MAXXAM Incorporated, Kaiser Aluminum Corporation,
Weingarten Realty Investors and as an advisory board member of Compass Bank of
Houston. Mr. Cruikshank is a past Chairman of the American Heart Association, is
active at the affiliate levels and is a past Regent of the University of Texas
System. Mr. Cruikshank received a B.A. in economics and accounting from Rice
University and completed the Advanced Management Program at Harvard University.
Suzanne Oparil, M.D. has served as a member of the board of directors
since May 1999. She has been a professor of medicine since 1981, Director of
Vascular Biology and Hypertension since 1985, and professor of physiology and
biophysics since 1993, in the Division of Cardiovascular Disease at The
University of Alabama at Birmingham. She has served as President of the American
Federation of Clinical Research. Dr. Oparil is also a member of the American
Society of Clinical Investigation, the Association of American Physicians, and
of the Institute of Medicine of the National Academy of Sciences. In addition,
she has held advisory
8
positions with the National Institutes of Health, including membership on a
number of task forces, advisory committees and peer review committees. Dr.
Oparil was a past President of the American Heart Association and is an active
volunteer at both the national and affiliate levels. She was a recipient of the
University of Alabama President's Achievement Award. Dr. Oparil has an extensive
bibliography in clinical cardiology and hypertension, including over 350 journal
articles, books and book chapters. Dr. Oparil received her medical degree from
Columbia University, College of Physicians and Surgeons in 1965.
William R. Ringo, Jr. has served as a member of the board of directors
since October 2001. Since March 2001, he has been a privately employed health
care consultant. Mr. Ringo joined Eli Lilly and Company in 1973 and served in
various capacities for Eli Lilly, including President of Oncology and Critical
Care products from June 1999 until his retirement in February 2001, President of
Internal Medicine products from January 1998 until June 1999, and President of
its Infectious Diseases business unit from September 1995 until January 1998.
Mr. Ringo is also a director of Praecis Pharmaceuticals, Inc., LaJolla
Pharmaceutical Company, and Intermune, Inc. and is a founding member of Barnard
Life Sciences Healthcare Consulting. He is past Chairman of Community Health
Network, Indianapolis. Mr. Ringo received a B.S. degree in management and an
M.B.A. degree from the University of Dayton.
James A. Thomson, Ph.D. has served as a member of the board of directors
since May 1994. He has been President and Chief Executive Officer of the RAND
Corporation since 1989 and has served the institution in a variety of roles
beginning in 1981. The RAND Corporation is a non-profit institution that seeks
to improve public policy through research analysis in such areas as national
defense, education and health. He also serves as a director of AK Steel Holding
Co. From 1977 until 1981, he served on the National Security Council, at the
White House. From 1974 until 1977, Dr. Thomson served as an operations research
analyst in the Office of the Secretary of Defense, the Pentagon. Dr. Thomson is
the author of numerous scholarly articles and reports on defense and scientific
subjects. Dr. Thomson graduated from the University of New Hampshire in 1967 and
received an M.S. and Ph.D. in Physics from Purdue University.
VOTE REQUIRED FOR ELECTION
The ten nominees for election as directors at the annual meeting who
receive the greatest number of votes cast for election by the stockholders will
be elected as our directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE TO OUR BOARD
OF DIRECTORS.
DIRECTOR COMPENSATION AND BOARD COMMITTEES
During 2002, the board of directors held six meetings. All directors
attended at least 75% of the total meetings of the board and the committees on
which they serve.
Director Compensation. During the year ended December 31, 2002, each
non-employee director received a retainer of $2,000 per quarter, fees of $1,000
for each meeting of the board of directors attended in person and $150 for each
meeting conducted by telephone. Non-employee directors received a fee of $200
for each committee meeting attended in person and a fee of $100 for each
committee meeting conducted by telephone. Dr. Willerson, however, has declined
all
9
retainer or meeting fees. In addition, directors are reimbursed for expenses
incurred in attending meetings of the board and its committees. Non-employee
directors may elect to receive part or all of the quarterly retainer and fees in
common stock. Each non-employee director also receives options to purchase
15,000 shares of common stock on their initial election to the board and options
to purchase 7,500 shares of common stock on each subsequent election to the
board.
Executive Committee. The executive committee did not meet during 2002.
The current members of the executive committee are Bruce D. Given (Chair),
Richard A.F. Dixon, James T. Willerson and John M. Pietruski. During 2002, David
B. McWilliams also served on the executive committee, and, in March 2002, in
connection with Mr. McWilliams' retirement, Bruce D. Given was appointed to the
executive committee. The executive committee may act on behalf of the board on
all matters permitted by Delaware corporate law except as limited by our
Certificate of Incorporation and Bylaws. All actions taken by the executive
committee must be reported at the board's next meeting.
Audit Committee. During the year ended December 31, 2002, the members of
the audit committee were Robert J. Cruikshank (Chair), James T. Willerson,
William R. Ringo, and Suzanne Oparil. Under the rules of the National
Association of Securities Dealers' listing standards, all of the members of the
audit committee were, and are, independent. In addition, our board of directors
has determined that Mr. Cruikshank, as defined by Securities and Exchange
Commission rules, is both independent and an audit committee financial expert.
The audit committee operates under a written charter adopted by the board of
directors. The audit committee met four times during 2002. The audit committee
assists the board in fulfilling its oversight responsibilities to stockholders
and other matters relating to our corporate accounting and reporting practices
and the quality and integrity of our financial reports. The audit committee
selects the independent accountants, reviews the performance of the independent
accountants' and reviews the scope and results of the external audit process.
Compensation and Corporate Governance Committee. The board of directors
changed the name of the compensation, personnel and nominating committee to the
compensation and corporate governance committee. During the year ended December
31, 2002, the members of the compensation- governance committee were James A.
Thomson (Chair), Frank C. Carlucci, and Ron J. Anderson. During 2002, John M.
Pietruski also served on the compensation and governance committee as Chair
until September 2002. The compensation and governance committee met four times
during 2002.
The compensation and corporate governance committee reviews and
recommends to the board of directors the compensation and employee benefits for
our elected officers, and the key officers and employees who participate in
various incentive compensation plans. The compensation and corporate governance
committee approves the grant of employee stock awards in accordance with our
various incentive stock plans and administers any incentive plans and bonus
plans. The compensation and corporate governance committee is also responsible
for reviewing our significant personnel compensation policies and benefit
programs and major changes thereto, and our management's long-range planning for
executive development and succession. The compensation and corporate governance
committee establishes policies on management perquisites, and also monitors our
non-discrimination polices and practices. Following the compensation and
corporate governance committee's review and approval, all
10
issues pertaining to officer compensation, other than employee stock awards, are
submitted to the full board of directors for approval.
In addition to its other responsibilities the compensation and corporate
governance committee is responsible for recommending to the board of directors
nominees for election to the board, composition of committees of the board and
other matters regarding composition of the board of directors.
11
PROPOSAL 2
APPROVAL OF THE AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN AMENDMENT
The 1999 plan provides for the grant of incentive and non-qualified
stock options, shares of restricted stock and stock bonuses. Currently, the 1999
plan provides that the maximum amount of shares subject to the plan is
3,000,000. As of April 2, 2003, no shares remained available for grant under the
1999 plan, and the grant of 202,790 shares under the 1999 plan are subject to
the approval of the stockholders of this amendment. Because of this, the
compensation and governance committee adopted this amendment, subject to
stockholder approval, to increase the number of shares available for grant under
the 1999 plan and to assure that adequate shares will be available for future
grants. The amendment to the 1999 plan is intended to (i) further our efforts in
attracting, retaining and motivating key employees, consultants, and
non-employee directors and (ii) continue to closely align the interests of
participants in the 1999 plan with those of stockholders by encouraging stock
ownership and by tying compensation to the long term growth of our business and
the performance of our common stock. If this amendment is approved, the
authorized shares available for grant under the 1999 plan will be increased from
3,000,000 to 4,750,000. If approved, this amendment will not change any other
term of the 1999 plan.
The amendment appears as Appendix A, entitled the Amended and Restated
1999 Stock Incentive Plan Amendment, to this proxy statement.
PARTICIPATION IN THE 1999 PLAN
The grant of incentive and non-qualified stock options, shares of
restricted stock and stock bonuses under the 1999 plan to key employees,
consultants, and non-employee directors, including our Chief Executive Officer,
a former Chief Executive Officer and each of the other three most highly-paid
executive officers of the company whose salary and bonus exceeded $100,000,
collectively referred to as the Named Executive Officers, is subject to the
discretion of the compensation and governance committee. As of April 2, 2003,
the fair market value of our common stock was $1.26 per share, which was the
closing sale price reported by The Nasdaq Stock Market. The following table sets
forth information with respect to grants of options to the Named Executive
Officers and the other individuals and groups indicated that were previously
approved by the compensation and governance committee and are subject to the
approval of the stockholders of the 1999 plan amendment. No associate of any of
such individuals has been granted options under the 1999 plan.
12
AMENDED PLAN BENEFITS
AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN
SHARES OF
COMMON
STOCK WEIGHTED AVERAGE
UNDERLYING EXERCISE PRICE
NAME AND POSITION OPTION GRANTS PER SHARE ($)
- ------------------------------------------------------ ---------------- ------------------
Bruce D. Given, M.D.
President and Chief Executive Officer -- --
David B. McWilliams
Former President and Chief Executive Officer -- --
Richard A.F. Dixon, Ph.D.
Senior Vice President, Research,
Chief Scientific Officer 96,300 0.93
Stephen L. Mueller
Vice President, Finance and Administration,
Secretary and
Treasurer 31,600 0.93
Pamela M. Murphy
Vice President, Corporate Communications -- --
All current executive officers as a group (3 persons) 127,900 0.93
All current directors who are not executive officers
as a group (8 persons) -- --
All employees, including all current officers who are
not executive officers, as a group 202,790 0.93
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of
common stock outstanding, entitled to vote and represented at the annual
meeting, in person or by proxy, is required to approve the 1999 plan amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 PLAN
AMENDMENT.
13
PROPOSAL 3
APPROVAL OF THE AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN AMENDMENT
The purpose of the 1995 director plan, is:
- to align the personal financial incentive of our directors with
our interest in the long-term growth of our business and the
interests of our stockholders through the ownership and
performance of our common stock; and
- to permit us to attract and retain qualified non-employee
directors by offering comparable compensation packages to those
offered by other competitive and growing companies in the
industry.
The 1995 director plan entitles each non-employee director to receive:
- a non-qualified stock option, commonly known as NQO, to purchase
15,000 shares of common stock upon their initial election to the
board of directors;
- a NQO to purchase 7,500 shares of common stock upon each
subsequent election; and
- common stock in lieu of cash to be issued upon a proper
conversion election, for compensation provided to non-employee
directors for meeting attendance.
There are currently eight existing non-employee directors that are
eligible to participate in the 1995 director plan. Each NQO granted under the
1995 director plan is exercisable at a per share exercise price equal to the
fair market value of a share of common stock on the date of grant of such NQO
and vests one-third on the date of grant and one-third at the end of each of the
two subsequent calendar years.
Currently, the 1995 director plan provides that the maximum amount of
shares subject to the plan is 500,000. As of April 2, 3003, only 48,371 shares
remained available under the 1995 director plan. As described above,
non-employee directors may elect to receive stock in lieu of cash directors fees
which will have the effect of utilizing shares otherwise available for option
grants under the 1995 director plan. Because of this, and the need to keep
options available for new directors, we believe that in order to assure that
adequate shares are available for grant pursuant to the 1995 director plan, the
authorized shares available for use pursuant to this plan should be increased
from 500,000 to 800,000.
Effective March 21, 2003, the compensation and governance committee
adopted a plan amendment, subject to the approval of our stockholders. The
amendment appears as Appendix B, entitled the Amended and Restated 1995
Non-Employee Director Stock Option Plan Amendment, to this proxy statement.
14
PARTICIPATION IN THE 1995 DIRECTOR PLAN
The 1995 director plan entitles each non-employee director to receive
non-qualified stock options and common stock in lieu of cash as described above.
As of April 2, 2003, the fair market value of our common stock was $1.26 per
share, which was the closing sale price reported by The Nasdaq Stock Market. The
following table sets forth information with respect to the expected grants of
non-qualified stock options to our Chief Executive Officer, our former Chief
Executive Officer and each of our other three most highly-paid executive
officers whose salary and bonus exceeded $100,000, and the other individuals and
groups indicated during fiscal year 2003. No associate of any of such
individuals has been granted options under the 1995 director plan.
AMENDED PLAN BENEFITS
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SHARES OF
COMMON
STOCK WEIGHTED AVERAGE
UNDERLYING EXERCISE PRICE
NAME AND POSITION OPTION GRANTS PER SHARE ($)
- ------------------------------------------------------ ---------------- ------------------
Bruce D. Given, M.D.
President and Chief Executive Officer -- --
David B. McWilliams
Former President and Chief Executive Officer -- --
Richard A.F. Dixon, Ph.D.
Senior Vice President, Research, Chief
Scientific Officer -- --
Stephen L. Mueller
Vice President, Finance and Administration,
Secretary and Treasurer -- --
Pamela M. Murphy
Vice President, Corporate Communications -- --
All current executive officers as a group (3 persons) -- --
All current directors who are not executive officers
as a group (8 persons) 60,000(1) (2)
All employees, including all current officers who are
not executive officers, as a group -- --
- ----------------
(1) These grants are subject to such persons being re-elected to the board
of directors at the annual meeting.
(2) These grants will be exercisable at a per share exercise price equal to
the fair market value of a share of common stock on the date of grant,
which will be the date of the annual meeting.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of
common stock outstanding, entitled to vote and represented at the annual
meeting, in person or by proxy, is required to approve the 1995 director plan
amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1995
DIRECTOR PLAN AMENDMENT.
15
PROPOSAL 4
AMENDMENT OF CERTIFICATE OF INCORPORATION
At the annual meeting, you will be asked to consider and vote upon a
proposal to amend our certificate of incorporation to change our corporate name
from "Texas Biotechnology Corporation" to "Encysive Pharmaceuticals Inc."
Our board of directors has adopted resolutions that set forth the
proposed amendment, declare the advisability of the amendment, and submit the
amendment to you for approval. The primary reasons for the proposed name change
are to better clarify the identity of the company and to reflect the fact that
the company has evolved into a more diverse enterprise than it was originally.
Texas Biotechnology as a name is somewhat misleading given that we are really a
pharmaceutical or biopharmaceutical company, not a true biotechnology company.
Therefore, we believe that our name is a distraction to shareholders, analysts
and employees, and a barrier to effectively marketing the company in the key
markets we serve. To reflect our new focus and mission as a commercially driven
pharmaceutical company, we are asking our stockholders to approve a change of
name to Encysive Pharmaceuticals. This name embodies our energy and commitment
to succeed. As we begin to reach new audiences, physicians and patients, we
believe that a name that better represents our mission and culture is critical
to our success now and in the future.
If the amendment is approved by the requisite number of stockholders
entitled to vote at the special meeting, the amendment will become effective
upon the filing of a certificate of amendment to our certificate of
incorporation with the Secretary of State of Delaware, which is expected to
occur shortly after the annual meeting. A copy of the certificate of amendment
is attached to this proxy statement as Appendix C. In addition, if the amendment
is approved, we will change our ticker symbol on The Nasdaq Stock Market, Inc.
from "TXBI" to "ENCY."
The change of our corporate name will not affect the rights of any
stockholder or the validity or transferability of stock certificates currently
outstanding. Stockholders will not be required to surrender or exchange any of
our stock certificates that they currently hold as a result of the name change
for new stock certificates.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the outstanding
shares of common stock is required to approve the amendment to the certificate
of incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE CERTIFICATE OF INCORPORATION.
16
OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common
stock as of April 2, 2003 by:
- each person who is known by us to be the beneficial owner of
more than 5% of our outstanding common stock;
- each of our executive officers and directors; and
- all of our directors and executive officers as a group.
Unless otherwise noted, each person has sole investment and voting power
of the shares listed. The information in the following table is based on
information supplied by officers, directors and principal stockholders and
filings, if any, filed with the Securities and Exchange Commission by each
person.
NUMBER OF SHARES
-------------------------------------------------------
EXERCISABLE
OPTIONS PERCENT
TO PURCHASE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES SHARES TOTAL CLASS
---------------------- -------------- --------------- ---------------
Wellington Management Company, LLP (2)............. 6,132,754 --- 6,132,754 14.0%
Ron J. Anderson, M.D............................... --- 44,750 44,750 *
Frank C. Carlucci.................................. 46,583 56,254 102,837 *
Robert J. Cruikshank............................... 15,248 55,254 70,502 *
Richard A. F. Dixon, Ph.D.......................... 159,498(3) 644,364 803,862 1.8%
Bruce D. Given, M.D................................ 191,183(4) 141,667 332,910 *
David B. McWilliams................................ 83,591(5) 751,876 835,467 1.9%
Stephen L. Mueller................................. 55,614(3)(6) 242,706 298,320 *
Pamela M. Murphy................................... 8,676 0 8,676 *
Suzanne Oparil, M.D................................ 7,467 31,250 38,717 *
John M. Pietruski.................................. 69,101(7) 53,213 122,314 *
William R. Ringo, Jr............................... 1,519 13,750 15,269 *
James A. Thomson, Ph.D............................. 5,443(8) 55,457 60,900 *
James T. Willerson, M.D............................ 99,999(9) 56,622 156,621 *
All directors and executive officers
as a group (13 persons).................... 743,922 2,147,163 2,891,085 6.3%
- --------------
* Less than 1%
(1) Unless otherwise indicated, the address of all persons set forth above
is 7000 Fannin, 20th Floor, Houston, Texas 77030.
(2) The beneficial owner of these shares of common stock has shared
dispositive power with respect to all of the shares and shared voting
power with respect to 5,104,154 of the shares as reflected on Schedule
13G/A filed by Wellington Management Company, LLP with the Securities
and Exchange Commission on February 12, 2003. The address of Wellington
Management Company, LLP is 75 State Street, Boston, Massachusetts 02109.
(3) Includes the following shares of restricted common stock: Dr. Dixon -
66,403 and Mr. Mueller - 41,653. The shares of restricted common stock
vest in three equal annual amounts beginning on the one year anniversary
at the grant date.
17
(4) Dr. Given joined us as President and Chief Executive Officer on March
25, 2002. Includes grants of 50,000 and 131,183 shares of restricted
common stock. The shares of restricted common stock vest in three equal
annual installments beginning on the one-year anniversaries of the grant
dates.
(5) Mr. McWilliams retired effective March 25, 2002. The shares of common
stock do not include 1,000 shares held by a daughter of Mr. McWilliams
for which he disclaims beneficial ownership.
(6) Does not include 1,000 shares held by Mr. Mueller's daughter for which
he disclaims beneficial ownership.
(7) Includes 42,857 shares held by the Pietruski Family Partnership, of
which Mr. Pietruski is the general partner.
(8) Includes 200 shares held by Dr. Thomson's granddaughter.
(9) Includes 14,285 shares owned by The James T. Willerson Fund, Inc., a
not-for-profit corporation, of which Dr. Willerson is the Chairman of
the board of directors.
EXECUTIVE OFFICERS
Our executive officers serve at the pleasure of the board of directors
and are subject to annual appointment by the board. All of our executive
officers are listed in the following table. Certain information concerning Drs.
Given and Dixon, who are also members of the board of directors, can be found in
Proposal 1 to this proxy statement, and certain information concerning Mr.
Mueller follows the table:
NAME AGE POSITION
---- --- --------
Bruce D. Given, M.D. 49 President, Chief Executive Officer and Director
Richard A. F. Dixon, 49 Senior Vice President, Research, Chief Scientific
Ph.D. Officer and Director
Stephen L. Mueller 55 Vice President, Finance and Administration, Secretary
and Treasurer
Stephen L. Mueller has served as Vice President, Finance and
Administration since March 1998, as Vice President of Administration since March
1995, as Secretary since May 1994 and as Treasurer since December 1991. From
September 1991 to March 1995, Mr. Mueller served as Director of Finance and
Administration. Prior to joining us, Mr. Mueller was a financial consultant for
wholesale distribution and oil and gas companies. Mr. Mueller was Vice President
and Controller of Bado Equipment Co., Inc. in Houston, Texas from 1976 to 1990.
He was associated with Deloitte & Touche, Certified Public Accountants in
Houston, Texas from 1973 to 1976. Mr. Mueller received a B.B.A. from The
University of Texas at Austin in accounting and is a Certified Public Accountant
in the State of Texas.
18
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides information
concerning compensation paid or accrued during the fiscal years ended December
31, 2002, 2001 and 2000 to our Chief Executive Officer, our former Chief
Executive Officer and each of our other three most highly-paid executive
officers whose salary and bonus exceeded $100,000, collectively referred to as
the Named Executive Officers, determined at the end of the last fiscal year:
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- -------------------------
RESTRICTED SHARES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) OPTIONS (2) COMPENSATION
- ---------------------------------- ------- --------- ---------- ------------ ----------- -------------
Bruce D. Given, M.D............ 2002 $247,055 $122,000 $ 430,500 550,000 $103,917(3)
President and Chief 2001 -- -- -- -- --
Executive Officer 2000 -- -- -- -- --
David B. McWilliams (4)........ 2002 $322,013 -- -- 62,500 $ 36,198(5)
Former President and Chief 2001 $318,387 $ 61,182 $ 61,181 215,625 $ 5,100
Executive Officer 2000 $283,086 $140,625 $140,621 56,823 --
Richard A.F. Dixon, Ph.D....... 2002 $281,121 $ 72,205 $ 55,524 60,300 $ 5,500(6)
Senior Vice President, Research, 2001 $263,504 $ 33,883 $ 33,887 141,300 $ 5,100
Chief Scientific Officer 2000 $245,492 $ 78,127 $ 78,121 81,929 --
Stephen L. Mueller............. 2002 $177,897 $ 51,456 $ 34,775 30,800 $ 5,359(6)
Vice President, Finance and 2001 $168,466 $ 21,459 $ 21,462 75,500 $ 4,636
Administration, Secretary 2000 $147,398 $ 50,001 $ 50,000 24,831 --
and Treasurer
Pamela M. Murphy (7)........... 2002 $160,948 -- -- 21,600 $ 4,520(6)
Vice President, Corporate 2001 $151,718 $ 19,702 $ 19,705 39,000 $ 3,962
Communications 2000 $136,186 $ 45,313 $ 45,310 16,913 --
- ----------------------------
(1) Represents restricted shares of common stock issued under bonus plans
for executive officers and other key personnel. The restricted shares
vest in three equal annual installments over three years beginning on
the first anniversary of the date of grant except for Mr. McWilliams'
restricted shares, which were vested 100% pursuant to his retirement
agreement, and except for 50,000 of Dr. Given's restricted shares, which
vest on the third anniversary of the date of grant. The restricted
shares are eligible for dividend distributions should any dividends be
declared. The number and value of restricted shares held as of December
31, 2002, respectively, were as follows: Dr. Given - 50,000/$70,000; Dr.
Dixon - 11,394/$15,952; Mr. Mueller - 7,252/$10,153; and Ms. Murphy -
6,617/$6,618. The shares awarded under the bonus plan for fiscal 2002
were: Dr. Given - 131,183; Dr. Dixon - 59,703; and Mr. Mueller - 37,392.
The dollar amounts reported in the table represent the value of the
restricted shares on the date of grant.
(2) See "Option Grants in Last Fiscal Year" for certain information with
respect to options granted during the fiscal year ended December 31,
2002.
(3) Includes $495 for insurance premiums for term life insurance, $4,755
for employer contributions pursuant to our 401(k) plan and $98,667 for
reimbursement of relocation expenses.
(4) Mr. McWilliams, who was the President and Chief Executive Officer and a
member of the board of directors, retired effective March 25, 2002.
(5) Includes $6,000 for employer contributions pursuant to our 401(k) plan
and $30,198 for unused vacation.
(6) Represents amounts for employer contributions pursuant to our 401(k)
plan.
(7) Ms. Murphy resigned in January 2003.
19
Option Grants in Last Fiscal Year. The following table provides
information concerning stock options granted to the Named Executive Officers
during the year ended December 31, 2002:
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION FOR OPTION TERM(2)
NAME GRANTED FISCAL YEAR PRICE DATE(1) 5% 10%
- -------------------------- ------------ -------------- ---------- ---------- ----------- -------------
Bruce D. Given, M.D....... 425,000 35.35 $6.17 03/21/12 $1,649,119 $4,179,191
Bruce D. Given, M.D....... 125,000 10.40 $6.29 03/25/12 $ 494,468 $1,253,080
David B. McWilliams (3)... 62,500 5.20 $5.63 06/10/05 $ 60,394 $ 127,608
Richard A.F. Dixon, Ph.D.. 60,300 5.02 $5.63 03/12/12 $ 213,503 $ 541,058
Stephen L. Mueller........ 30,800 2.56 $5.63 03/12/12 $ 109,053 $ 276,361
Pamela M. Murphy.......... 21,600 1.80 $5.63 03/12/12 $ 76,479 $ 193,812
- ----------------------
(1) These stock options vest and become exercisable in approximately three
equal annual installments beginning on the first anniversary of the date
of grant.
(2) Potential Realizable Value is based on the assumed annual growth rates
for each of the grants shown over their ten-year option term. Actual
gains, if any, on option exercises are dependent on the future
performance of the common stock. Because the exercise price of options
granted is equal to the fair market value of the common stock a zero
percent appreciation in stock price will result in no gain.
(3) Mr. McWilliams' options will vest and become exercisable pursuant to the
terms of his retirement agreement and will expire on the earlier to
occur of their respective expiration dates or July 31, 2005. See
"Executive Agreements."
Aggregated Option Exercises In Last Fiscal Year and Year-End Option
Values. The following table provides information concerning the number of
unexercised options and the value of in-the-money options held by the Named
Executive Officers as of December 31, 2002:
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT FY-END IN-THE-MONEY OPTIONS (1)
NAME EXERCISE # REALIZED $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- ---------- ----------- ------------- ----------- -------------
Bruce D. Given, M.D.... 0 0 0 550,000 $0 $0
David B. McWilliams.... 50,000 18,737 630,852 225,190 $0 $0
Richard A.F. Dixon, Ph.D.. 42,858 107,359 563,450 181,809 $0 $0
Stephen L. Mueller..... 2,000 80 205,594 89,410 $0 $0
Pamela M. Murphy....... 0 0 68,525 53,238 $0 $0
- ----------------------
(1) Value of in-the-money options calculated based on the closing price of
$1.40 per share of common stock on December 31, 2002, as reported by The
Nasdaq National Market.
20
Securities Authorized For Issuance Under Equity Compensation Plans. The
following table sets forth information regarding our equity compensation plans
as of December 31, 2002:
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO EXERCISE AVAILABLE FOR FUTURE ISSUANCE
BE ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING UNDER EQUITY COMPENSATION
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND PLANS (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (a))
PLAN CATEGORY (a) (b) (c)
- --------------------------- -------------------------- --------------------- -------------------------------
Equity compensation
plans approved by 5,012,500 $6.72 745,913
security holders (1)......
Equity compensation
plans not approved by -- -- --
security holders .........
-------------------------- --------------------- -------------------------------
Total 5,012,500 $6.72 745,913
- --------------------------- -------------------------- --------------------- -------------------------------
- ----------------------
(1) Consists of the Amended and Restated 1990 Incentive Stock Option Plan,
the Amended and Restated 1992 Incentive Stock Option Plan, the Amended
and Restated Stock Option Plan for Non-Employee Directors, the Amended
and Restated 1995 Stock Option Plan, the Amended and Restated 1995
Non-Employee Director Stock Option Plan and the Amended and Restated
1999 Stock Incentive Plan.
Compensation Committee Interlocks and Insider Participation. In January
1992, we entered into a consulting agreement with John M. Pietruski, Chairman of
our board of directors. Under the terms of the agreement, Mr. Pietruski is
expected to devote an average of one day per week of his consulting services to
us. In 2002, the agreement was amended to extend the term for an additional
two-year period, effective January 1, 2003. During 2002, Mr. Pietruski received,
and will receive over the remaining term of the agreement, an annual fee of
$60,000.
21
COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Our compensation program for officers (including the Chief Executive
Officer and the other executive officers) is administered by the compensation
and governance committee, which is composed of three non-employee directors. The
committee makes decisions regarding the reward of stock options and stock
incentives under our stock option plans. Following review and approval by the
committee, all other issues pertaining to officer compensation are submitted to
the full board of directors for approval. The objective of our compensation
program is to provide a total compensation package that will enable us to
attract, motivate and retain outstanding individuals and align their success
with that of the stockholders.
Base salaries for management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
comparable companies within the biotechnology industry. In furtherance of these
goals, we have entered into agreements with certain of our key management
personnel, including Dr. Given, our Chief Executive Officer. During the year
2002, Dr. Given received a base salary of $325,000 pursuant to the terms of his
agreement. See "Executive Agreements." The agreements with key personnel
establish annual base salary amounts that the board of directors, on
recommendation of the committee, may increase from time to time. Annual salary
adjustments are determined by evaluating the competitive marketplace, our
performance, the performance of the executive, and any increased
responsibilities assumed by the executive. We attained a number of important
milestones during the year 2002, including the expansion of the market and
increasing sales of Argatroban, approval by the U.S. Food and Drug
Administration of the supplemental New Drug Application for a new use of
Argatroban, completion of patient enrollment and the announcement of top-line
results in clinical trials by ICOS-Texas Biotechnology L.P., our 50%-owned
partnership, initiation and completion of clinical trials by Revotar, our German
affiliate, nomination of a clinical candidate for further development in our
VLA-4 program, and progress in research and clinical development of certain
compounds. Based on a review of these factors and Dr. Given's performance in
2002, the compensation and governance committee increased Dr. Given's base
salary to $350,000 effective March 1, 2003.
Section 162(m) of the Internal Revenue Code restricts the ability of a
publicly held corporation to deduct compensation in excess of $1,000,000 paid to
its chief executive officer and each of the four most highly compensated
officers. The compensation and governance committee intends to maintain
executive compensation packages below this threshold, and based on its current
compensation structure, we do not anticipate that any of our officers will reach
the $1,000,000 threshold in the near future.
The principal methods for long-term incentive compensation are our
incentive stock plans. Compensation under these plans principally takes the form
of incentive and non-qualified stock options that have an exercise price equal
to the market price of our common stock at time of grant and restricted stock
grants. In this manner, key individuals are rewarded commensurate with increases
in stockholder value. Moreover, our incentive stock plans provide a non-cash
form of compensation, which is intended to benefit us by enabling us to continue
to attract and to retain qualified personnel. Pursuant to the terms of his
agreement, on the commencement of his
22
employment, Dr. Given was granted options to purchase an aggregate of 550,000
shares of common stock and 50,000 shares of restricted common stock in March
2002. No other option grants were made regarding his performance in 2002.
During 1998, the board of directors instituted a bonus plan for
executive officers and certain other key personnel. Generally, bonuses are paid
based upon attainment of annual corporate goals as approved by the board of
directors. Payments are made one half in cash and one half in restricted common
stock. Pursuant the terms of his agreement, Dr. Given received a bonus of
$244,000 for his performance in 2002, consisting of $122,000 in cash and 131,183
shares of restricted common stock.
The compensation and governance committee is authorized to make
incentive awards under the stock plans mentioned above to key employees,
including officers of the company. In determining incentive awards for
management, the compensation and governance committee considers management's
ability to implement our research and clinical development programs, successful
completion of corporate partnering agreements, financing activities, and control
of expenses. The compensation and governance committee utilizes incentive awards
as a key element to provide incentives for employees and officers consistent
with the goal of increasing stockholder value.
James A. Thomson, Chair
Ron J. Anderson
Frank C. Carlucci
23
AUDIT COMMITTEE REPORT
The audit committee of the board of directors is responsible for
monitoring the integrity of the company's consolidated financial statements, its
system of internal controls and the retention and selection of the company's
independent accountants. The audit committee has reviewed the relevant
requirements of the Sarbanes-Oxley Act of 2002, the proposed rules of the
Securities and Exchange Commission and the proposed new listing standards of The
Nasdaq Stock Market, Inc. regarding audit committee procedures and
responsibilities. Although the audit committee's existing procedures and
responsibilities generally complied with the requirements of these rules and
standards, the board of directors has adopted amendments to the committee's
charter to voluntarily implement certain of the rules and to make explicit its
adherence to others.
The audit committee is also responsible for oversight of the financial
reporting process, including the system of internal control, and the preparation
of consolidated financial statements in accordance with generally accepted
accounting principles. The company's independent accountants are responsible for
auditing those financial statements. Our responsibility is to monitor and review
these processes. However, we are not professionally engaged in the practice of
accounting or auditing and are not experts in the fields of accounting or
auditing. We rely, without independent verification, on the information provided
to us and on the representations made by management and the independent
accountants.
We have met with the company's independent accountants, KPMG LLP, and
discussed the overall scope and plans for their audit. We have also met with the
independent accountants, with and without management present, to discuss the
results of their examinations and their evaluations of the company's internal
controls. We also discussed with the independent accountants matters required to
be discussed with audit committees under generally accepted auditing standards,
including, among other things, matters related to the conduct of the audit of
the company's consolidated financial statement and the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended.
The independent accountants also provided to us the written disclosures
and the letter required by Independence Standards Board Standard No. 1, and we
discussed with the independent accountants their independence from the company.
When considering KPMG's independence, we considered the non-audit services
provided by the independent accountants and concluded that such services are
compatible with maintaining their independence.
24
We have reviewed and discussed the audited consolidated financial
statements for the fiscal year ended December 31, 2002 with management and KPMG.
Based on our review of the audited consolidated financial statements and the
meetings and discussions with management and the independent accountants, and
subject to the limitations on our role and responsibilities referred to above
and in the audit committee charter, we recommended to the board of directors
that the company's audited consolidated financial statements be included in the
company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Robert J. Cruikshank, Chair
Suzanne Oparil
William R. Ringo, Jr.
James T. Willerson
25
PERFORMANCE GRAPH
The following is a line graph presentation comparing our common stock's
cumulative five year return with various indices, including broad market indices
and a peer group index. Our common stock traded on the American Stock Exchange
until June 19, 2001 and then began trading on The Nasdaq National Market System.
The peer group index includes Sicor, Inc., Corvas International, Inc., and
Vertex Pharmaceuticals, Incorporated.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TEXAS BIOTECHNOLOGY CORP.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPH]
ASSUMES $100 INVESTED ON DECEMBER 31, 1997
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2002
FISCAL YEAR ENDING
1997 1998 1999 2000 2001 2002
COMPANY/INDEX/MARKET
Texas Biotechnology Corp. 100 79.80 128.28 138.83 105.05 22.63
Peer Group Index 100 85.29 115.68 367.88 190.92 153.91
Nasdaq Market Index 100 141.04 248.76 156.35 124.64 86.94
26
EXECUTIVE AGREEMENTS
We entered into an agreement with Dr. Bruce D. Given effective as of
March 25, 2002, and amended on March 21, 2003, whereby he agreed to serve as our
President and Chief Executive Officer. Upon the expiration of the initial
one-year term, the agreement automatically renews for successive one-year
periods unless either party provides notice at least sixty days before the
scheduled expiration. The agreement provides Dr. Given with an annual base
salary of $325,000 subject to increase by the compensation and governance
committee in accordance with our practices based upon Dr. Given's performance.
Under the agreement, Dr. Given was also granted options to purchase 425,000
shares of common stock and 125,000 shares of common stock, which will vest in
equal installments of one-third on the first, second and third anniversaries of
the date of grant and the second, third and fourth anniversaries of the date of
grant, respectively. In addition, we granted Dr. Given 50,000 restricted shares
of common stock, 10 shares for each share he purchased on the open market or
from the company. He will also receive a bonus of at least $244,000 for fiscal
year 2002 in accordance with the terms of the agreement, and is entitled to
annual bonuses in other years (if any, as determined by the compensation and
corporate governance committee) and to participate in all retirement or other
benefit plans, policies and programs maintained or provided by us for our
officers. Under the agreement, we also agreed to pay Dr. Given's reasonable
relocation expenses according to our relocation policy.
In March 2003, we entered into agreements with Richard A.F. Dixon,
Senior Vice President, Research, Chief Scientific Officer and Director, and
Stephen L. Mueller, Vice President, Finance Administration, Secretary and
Treasurer. Those agreements provide for a one year initial term, and the
agreements automatically renew for successive one year periods unless the other
party provides notice at least sixty days before the scheduled expiration. The
agreements provide for an annual base salary for Dr. Dixon and Mr. Mueller of
$289,000 and $181,000, respectively, subject to increase by the compensation and
governance committee in accordance with our practices based on their
performance. In addition they will also receive bonuses to be determined by the
compensation and governance committee in its sole discretion, and are entitled
to participate in all retirement or other benefit plans, policies and programs
maintained or provided by us for executive officers.
The agreements with Dr. Given, Dr. Dixon and Mr. Mueller may be
terminated by us with or without "cause," as defined in the agreements. The
executives can terminate the agreements with or without "good reason," as
defined in the agreements. In the event of termination by us without "cause," or
by the executives for "good reason," the executives will receive in a lump sum
their one-year's base salary and, only in the case of Dr. Given, a prorata
bonus, and will receive other benefits and rights under the agreements for the
twelve months following their termination. During the twelve-month period after
the date of termination, all stock options and restricted stock held by the
executives will continue to vest and be exercisable in accordance with their
terms in effect on the date of termination. On the conclusion of this
twelve-month period, all unexpired, unexercised options will be fully vested and
all restricted stock will be fully vested. Thereafter, all such fully vested
stock options will be exercisable by the executives until the earlier to occur
of the expiration of the term of each stock option or twelve months after the
date they become fully vested. However, in the event of termination by us for
"cause" or their termination without "good reason," the executives are only
entitled to receive that portion of
27
their base salary that has been earned but not paid through the termination
date. In addition, the agreements provide certain benefits in the event of a
termination within two years of a "change of control," as defined in the
agreements. The agreements provide for a lump-sum payment in cash of three years
of annual base salary and annual bonus if any for Dr. Given and Dr. Dixon, and
18 months of annual base salary and annual bonuses if any for Mr. Mueller. In
addition, the agreements provide for gross-up for certain taxes on the lump-sum
payment, continuation of certain insurance and other benefits for periods of 18
months to three years and reimbursement of certain legal expenses in conjunction
with the agreements. During the term of the agreements, and for the twelve
months following the termination of the agreements, Dr. Given and Dr. Dixon may
not engage, directly or indirectly, in any business or enterprise which is in
competition with us or induce any of our employees to accept with any of our
competitors.
In July 1992, we entered into a three-year agreement with David B.
McWilliams to serve as our President and Chief Executive Officer. Upon the
expiration of the initial term, the agreement automatically renews for
successive one-year periods unless either party provides notice at least sixty
days before scheduled expiration. Effective March 1, 2001, the compensation
committee increased Mr. McWilliams' annual salary package to $325,000. In
connection with Mr. McWilliams' retirement as our President and Chief Executive
Officer on March 25, 2002, we entered into a retirement agreement with him. The
retirement agreement provides that Mr. McWilliams will continue to receive his
salary, at a monthly rate of $27,083, and benefits during a transition period,
which will not exceed six weeks, and for twelve months following the transition
period and that all shares of restricted stock previously granted to Mr.
McWilliams will be vested. During the transition period and the following twelve
months his options will continue to vest and be exercisable, or terminate, in
accordance with their terms, and after this period a portion of Mr. McWilliams'
options will only be exercisable for an agreed period.
AUDITORS
KPMG LLP has served as our independent auditors for a number of years.
Although we anticipate that this relationship will continue to be maintained
during fiscal 2003, we have not proposed any formal action be taken at the
meeting concerning the continued employment of KPMG, because no such action is
legally required. Representatives of KPMG plan to attend the annual meeting and
will be available to answer appropriate questions. These representatives will be
able to make a statement at the meeting if they wish, although we do not expect
them to do so.
During the calendar year 2002, we incurred professional service fees
with KPMG as indicated below:
AUDIT FEES
The aggregate fees billed or expected to be billed by KPMG
related to the 2002 annual financial statement audit and reviews of
quarterly financial statements included in our quarterly reports filed
on Form 10-Q during 2002 were $133,000.
28
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG provided no information technology services relating to
financial information systems design and implementation during the
fiscal year ended December 31, 2002.
ALL OTHER FEES
The aggregate fees billed or expected to be billed by KPMG for
services rendered to us, other than the services described above under
"Audit Fees," for the fiscal year ended December 31, 2002 were
approximately $15,000, which are primarily for tax services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and executive officers, and persons who own more than 10%
of our equity securities to file initial reports of ownership and reports of
changes in ownership of our common stock with the Securities and Exchange
Commission and to furnish us a copy of each filed report.
To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended December 31, 2002, our officers, directors and
greater than 10% beneficial owners timely filed all required Section 16(a)
reports.
STOCKHOLDER PROPOSAL INFORMATION
If you want to present a proposal from the floor at the 2004 Annual
Meeting or nominate a person for election to the board at such meeting, you must
give us written notice no sooner than March 2, 2004 and no later than March 27,
2004 and follow the procedures outlined in our by-laws. These dates assume we
make notice of the 2004 Annual Meeting at least 65 days prior to such meeting.
If we do not make notice of the 2004 Annual Meeting at least 65 days before the
date of such meeting, your written notice will be timely if we receive it by the
close of business on the 15th day following the date that we publicly announce
the date of the 2004 Annual Meeting. Your notice should be sent to our Secretary
at 7000 Fannin, 20th Floor, Houston, Texas 77030. You may request a copy of the
by-law provisions governing the requirements for notice from our Secretary at
the above address.
If instead of presenting your proposal at the meeting you want your
proposal to be considered for inclusion in next year's proxy statement, you must
submit the proposal in writing to our Secretary so that it is received at the
above address by December 16, 2003.
29
OTHER MATTERS
We have included a copy of our 2002 annual report to stockholders, which
includes our Form 10-K covering the fiscal year ended December 31, 2002. We will
bear the cost of soliciting proxies in the accompanying form. We have engaged
Georgeson Shareholder Communications, Inc. to assist in the solicitation of
proxies for a fee of $5,000, plus out-of-pocket expenses. In addition to
solicitation by mail and by Georgeson Shareholder Communications, our officers
and regular employees may solicit your proxy by telephone, by facsimile
transmission or in person, for which they will not be compensated.
By Order of the Board of Directors,
/s/ STEPHEN L. MUELLER
------------------------------------------
STEPHEN L. MUELLER,
Vice President, Finance and Administration
Secretary and Treasurer
April 14, 2003
30
Appendix A
AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN AMENDMENT
The Amended and Restated 1999 Stock Incentive Plan (the "1999 Plan") of
Texas Biotechnology Corporation (the "Company") is hereby amended as follows
effective March 21, 2003.
1. Section 1.4 is amended to read as follows in its entirety:
Subject to adjustment under Section 5.5, there shall be
available for Incentive Awards under the Plan granted wholly or partly
in Common Stock (including rights or Stock Options that may be exercised
for or settled in Common Stock) Four Million Seven Hundred Fifty
Thousand (4,750,000) Shares of Common Stock. Four Million Seven Hundred
Fifty Thousand (4,750,000) of the Shares reserved under the Plan shall
be available for grants of Incentive Stock Options. The number of Shares
of Common Stock that are the subject of Incentive Awards under this
Plan, that are forfeited or terminated, expire unexercised, are settled
in cash in lieu of Common Stock or in a manner such that all or some of
the Shares covered by an Incentive Award are not issued to a Grantee or
are exchanged for Incentive Awards that do not involve Common Stock,
shall again immediately become available for Incentive Awards hereunder.
The Committee may from time to time adopt and observe such procedures
concerning the counting of Shares against the Plan maximum as it may
deem appropriate. The Board and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to file any
required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that Shares are available for
issuance pursuant to Incentive Awards.
During such period that the Company is a Publicly Held
Corporation, then unless and until the Committee determines that a
particular Incentive Award granted to a Covered Employee is not intended
to comply with the Performance-Based Exception, the following rules
shall apply to grants of Incentive Awards to Covered Employees:
(a) Subject to adjustment as provided in Section
5.5, the maximum aggregate number of Shares of Common Stock
(including Stock Options, Restricted Stock, or Other Stock-Based
Awards paid out in Shares) that may be granted or that may vest,
as applicable, in any calendar year pursuant to any Incentive
Award held by any individual Covered Employee shall be 4,750,000
Shares.
(b) The maximum aggregate cash payout (including
Other Stock-Based Awards paid out in cash) with respect to
Incentive Awards granted in any calendar year which may be made
to any Covered Employee shall be Ten Million dollars
($10,000,000).
31
(c) With respect to any Stock Option granted to a
Covered Employee that is canceled or repriced, the number of
Shares subject to such Stock Option shall continue to count
against the maximum number of Shares that may be the subject of
Stock Options granted to such Covered Employee hereunder and, in
this regard, such maximum number shall be determined in
accordance with Section 162(m) of the Code.
(d) The limitations of subsections (a), (b) and (c)
above shall be construed and administered so as to comply with
the Performance-Based Exception.
32
Appendix B
AMENDED AND RESTATED 1995 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN AMENDMENT
The Amended and Restated 1995 Non-Employee Director Stock Option Plan
(the "Plan") of Texas Biotechnology Corporation (the "Company") is hereby
amended as follows effective March 21, 2003.
1. The first paragraph of Section 3 is amended to read as follows
in its entirety:
The stock subject to the Options and other provisions of the
Plan shall be shares of the Company's Common Stock, par value $.005 per
share (the "Common Stock"). The total amount of the Common Stock with
respect to which Options may be granted or issued pursuant to other
provisions of the Plan shall not exceed 800,000 shares in the aggregate;
provided, that the class and aggregate number of shares which may be
subject to the Options granted hereunder shall be subject to adjustment
in accordance with the provisions of Section 11 of this Plan. Such
shares may be treasury shares or authorized but unissued shares.
33
Appendix C
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TEXAS BIOTECHNOLOGY CORPORATION
Texas Biotechnology Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), hereby certifies as follows:
FIRST: That at a meeting of the Board of Directors of the Corporation on
March 21, 2003, resolutions were duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of the Corporation, declaring said amendment
to be advisable and calling a meeting of the stockholders of the Corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that Article FIRST of the Certificate of Incorporation
of the Corporation, as amended, shall be amended to read as follows:
FIRST: The name of the corporation is Encysive
Pharmaceuticals Inc. (hereinafter referred to as the
"Corporation").
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the DGCL, at which meeting
the holders of a majority of the shares of issued and outstanding common stock,
par value $.005 per share, of the Corporation voted in favor of the foregoing
amendment.
THIRD: That the foregoing amendment to the Certificate of Incorporation
was duly adopted by the stockholders of the Corporation on May 16, 2003 pursuant
to the applicable provisions of Section 242 of the DGCL.
34
IN WITNESS WHEREOF, the undersigned, being the duly authorized Secretary
of the Corporation, for the purpose of amending the Certificate of Incorporation
of the Corporation pursuant to Section 242 of the DGCL, does make and file this
Certificate of Amendment this 16th day of May, 2003.
TEXAS BIOTECHNOLOGY CORPORATION
By:
-----------------------------------
Stephen L. Mueller, Secretary
35
*DETACH PROXY CARD HERE*
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] SIGN, DATE AND RETURN THE [X]
PROXY CARD PROMPTLY USING VOTES MUST BE INDICATED
THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK.
1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote for [ ] *EXCEPTIONS [ ]
listed below all nominees listed below
Nominees: John M. Pietruski, Ron J. Anderson, Frank C. Carlucci, Robert J. Cruikshank,
Richard A.F. Dixon, Bruce D. Given, Suzanne Oparil, William R. Ringo, Jr.,
James A. Thomson and James T. Willerson.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*EXCEPTIONS _______________________________________________________________
2. Proposal to amend the Amended and Restated 1999 Stock Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to amend the Amended and Restated 1995 Non-Employee Director
Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to amend our certificate of incorporation to change our
corporate name to Encysive Pharmaceuticals Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, upon such other matters as may properly come before the
meeting; hereby revoking any proxy or proxies heretofore given by the
undersigned.
To change your address, please mark this box. [ ]
To include any comments, please mark this box [ ]
Signatures should agree with name printed hereon.
If common stock is held in the name of more than
one person, EACH joint owner should sign.
Executors, administrators, trustees, guardians, and
attorneys should indicate the capacity in which
they sign. Attorneys should submit powers of
attorney.
Date Share Owner sign here Co-Owner sign here
------------------------------ ----------------------
TEXAS BIOTECHNOLOGY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL STOCKHOLDERS' MEETING TO BE HELD ON MAY 16, 2003
The undersigned stockholder of Texas Biotechnology Corporation (the
"Company") hereby appoints Bruce D. Given, Richard A.F. Dixon and Stephen L.
Mueller, or any of them, attorneys and proxies of the undersigned, each with
full power of substitution, to vote on behalf of the undersigned at the Annual
Meeting of Stockholders of the Company to be held at The Intercontinental Hotel,
2222 West Loop South, Houston, Texas 77027, on May 16, 2003, at 9:00 a.m.
(Houston time), and at any adjournments or postponements of said meeting, all of
the shares of common stock in the name of the undersigned or which the
undersigned may be entitled to vote.
The board of directors recommends a vote FOR the nominees listed on the
reverse side, FOR the adoption of the amendment to the Amended and Restated 1999
Stock Incentive Plan, FOR the adoption of the amendment to the Amended and
Restated 1995 Non-Employee Director Stock Option Plan, and FOR the adoption of
the amendment to our certificate of incorporation to change our corporate name
to Encysive Pharmaceuticals Inc. and IF NO SPECIFICATION IS MADE, THE SHARES
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, FOR THE ADOPTION
OF THE AMENDMENT TO THE AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN, FOR THE
ADOPTION OF THE AMENDMENT TO THE AMENDED AND RESTATED 1995 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN, AND FOR THE ADOPTION OF THE AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION TO CHANGE OUR CORPORATE NAME TO ENCYSIVE PHARMACEUTICALS INC.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders, the Annual Report and the Proxy Statement furnished herewith.
TEXAS BIOTECHNOLOGY CORPORATION
P.O. BOX 11061
NEW YORK, N.Y. 10203-0061
(Please sign the reverse side of this card and return it promptly.)