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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BIGMAR, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(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:
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[LOGO]
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 30, 1998
___________
Dear Stockholder:
You are cordially invited to attend our 1998 Annual Meeting of
Stockholders (the "Annual Meeting") of Bigmar, Inc., a Delaware corporation
(the "Company"), at The Cherry Valley Lodge, 2299 Cherry Valley Road, Newark,
Ohio on Tuesday, June 30, 1998 at 2:00 p.m. Eastern Daylight Savings Time.
The purposes of this Annual Meeting are:
(1) To elect six directors, each to serve for a term to expire at the
annual meeting of stockholders of the Company in the year 1999;
(2) To approve an amendment to the Certificate of Incorporation
increasing the authorized Common Shares from 15,000,000 to
20,000,000;
(3) To approve adoption of the 1997 Stock Option Plan;
(4) To approve an amendment to the 1997 Stock Option Plan increasing to
900,000 the number of Common Shares for which options may be granted
under such plan;
(5) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent public accountants for fiscal year 1998; and
(6) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Following the formal meeting, we will review the Company's progress
during the last fiscal year and our plans for fiscal 1998 and answer your
questions regarding the Company. Board members and executive officers will
also be available to discuss the Company's operations with you.
Yours truly,
John G. Tramontana
CHAIRMAN OF THE BOARD OF DIRECTORS
Dated: May 29, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN AND
PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED
BY WRITTEN NOTICE OF REVOCATION, THE SUBMISSION OF A LATER PROXY, OR BY
ATTENDING THE MEETING AND VOTING IN PERSON. (If your shares are held of record
by a broker, bank or other nominee and you wish to attend the Annual Meeting,
you must obtain a letter from the broker, bank or other nominee confirming your
beneficial ownership of the shares and bring it to the meeting. In order to vote
your shares at the Annual Meeting, you must obtain from the record holder a
proxy issued in your name.)
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[LOGO]
9711 SPORTSMAN CLUB ROAD
JOHNSTOWN, OHIO 43031
TELEPHONE (740) 966-5800
___________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1998
___________
INTRODUCTION
The Board of Directors and management of Bigmar, Inc. ("Bigmar" or the
"Company") are requesting your proxy for use at the Annual Meeting of
Stockholders to be held on June 30, 1998 (the "Annual Meeting"), and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
The expense of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. In addition, proxies may
be solicited personally or by telephone, mail or telegram. Officers or
employees of the Company may assist with personal or telephone solicitation
and will receive no additional compensation therefor. The Company will also
reimburse brokerage houses and other nominees for their reasonable expenses
in forwarding proxy materials to beneficial owners of the Company's common
stock.
OUTSTANDING VOTING SECURITIES AND DATE OF MAILING
As of May 25, 1998, the record date for determining stockholders
entitled to notice of and to vote at the Annual Meeting, Bigmar had 4,185,000
shares of common stock, par value $.001 per share ("Common Stock")
outstanding. Each share is entitled to one vote. Only stockholders of record
at the close of business on May 25, 1998 will be entitled to vote at the
Annual Meeting. The approximate mailing date of this Proxy Statement and the
accompanying proxy card is May 29, 1998.
VOTING PROCEDURES
Stockholders may vote in person or by proxy at the Annual Meeting.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present or represented by proxy at the Annual Meeting and entitled
to vote on the election of directors. Stockholders do not have cumulative voting
rights with respect to the election of directors. For all other matters to be
voted upon at the meeting, the affirmative vote of holders of a majority of
shares present in person or represented by proxy, and entitled to vote on the
matter, is necessary for approval.
For purposes of determining the number of shares of Common Stock present
in person or represented by proxy on a voting matter, all votes cast "for,"
"against" or "abstain" are included, as are shares of Common Stock
represented by proxy where the authority to vote has been withheld.
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Stockholders may withhold authority to vote for the entire slate as
nominated or, by writing the name of one or more nominees in the space provided
in the proxy card, withhold the authority to vote for such nominee or nominees.
Shares of Common Stock as to which the authority to vote is withheld will be
counted for quorum purposes but will not be counted toward the election of
directors, or toward the election of the individual nominees specified on the
form of proxy.
Broker/dealers who hold their customers' stock in street name may, under
the applicable rules of the exchange and other self-regulatory organizations
of which the broker/dealers are members, sign and submit proxies for such
stock and may vote such stock on routine matters, which, under such rules,
typically include the election of directors, but broker/dealers may not vote
such stock on other matters, which typically include amendments to the
certificate of incorporation of the Company and the approval of stock
compensation plans, without specific instructions from the customer who owns
such stock. Proxies signed and submitted by broker/dealers which have not
been voted on certain matters as described in the previous sentence are
referred to as "broker non-votes."
All shares will be voted as specified on each properly executed proxy
card. If no choice is specified, the shares will be voted as recommended by
the Board of Directors in favor of (i.e.; "For") Proposals No. 1, 2, 3, 4,
and 5, and on all other matters that properly come before the Annual Meeting
for a vote in the discretion of the person holding proxy unless otherwise
specified on the proxy card, unless authority to vote for one or more
nominees, or on a proposal, is withheld.
Proxies given may be revoked at any time by filing with the Company
either a written revocation or a duly executed proxy card bearing a later
date, or by appearing at the Annual Meeting and voting in person. Attendance
at the Annual Meeting will not, in itself, constitute revocation of the
proxy.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
Bigmar's Certificate of Incorporation and Bylaws provide that the number
of directors to constitute the Board of Directors shall be determined by vote
of the Board of Directors or action of stockholders. Effective on July 28,
1997, the date of the last Annual Meeting of Stockholders; the number was
established at six and six directors were elected in accordance with the
Company's Bylaws.
At the Annual Meeting, six directors will be elected to hold office
for one year and until their successors are elected at the next annual
meeting and shall have qualified. The board is nominating for re-election all
of the current directors, namely Bernard Kramer, Michael K. Medors, John R.
Morris, Fabio Giovannini and John G. Tramontana and is also nominating
Massimo Pedrani, for election as a director. The shares of Common Stock voted
by the proxies will be voted for their election unless authority to do so is
withheld as provided in the proxy card. All nominees have consented to serve
if elected. The Board of Directors has no reason to believe that any of the
nominees will not serve if elected, but if any of the nominees become unable
to serve, proxies will be voted for any substitute nominee designated by the
Board of Directors. Nominees receiving the highest number of votes cast for
the positions to be filled will be elected. Proxies solicited by the Board of
Directors will be voted for the election of these nominees.
INFORMATION ABOUT THE NOMINEES
The following information, as of the Record Date, with respect to the
principal occupation or employment, other affiliations and business
experience of each director during the last five years has been furnished to
the Company by each director.
NAME, AGE AND PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE PAST 5 YEARS
John G. Tramontana, 52, Chairman of the Board, President and Chief
Executive Officer of the
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Company since its inception in September 1995. From November 1989 to March
1996, Mr. Tramontana was the chief operating officer and a director of
Chemholding, a holding company for five pharmaceutical companies involved in
the development, manufacture, and commercialization of active pharmaceutical
ingredients and finished pharmaceutical products. Mr. Tramontana purchased
from Chemholding all of its stock in the Company, in May of 1997, as
Chemholding was previously a principle stockholder in the Company. Mr.
Tramontana was the chief operating officer and a director of Cerbios-Pharma,
chairman of the board of Cernelle and the president and a director of
Cernitin America, Inc. ("Cernitin"), a cosmetic and health products
distributor. In March 1996, Mr. Tramontana resigned from all his positions
with Chemholding, Cerbios-Pharma, Cernelle and Cernitin. In September 1996,
following the sale of Cernelle to an unrelated third-party, Mr. Tramontana
rejoined the board of directors of Cernelle. From 1985 to 1989, Mr.
Tramontana was chief operating officer, vice president - finance and a
director of Ben Venue Laboratories, Inc., a pharmaceutical company
specializing in the manufacture of sterile, injectable pharmaceutical
products. From 1974 until 1985, Mr. Tramontana worked at Adria Laboratories
Inc. (now Pharmacia & Upjohn, Inc.), the U.S. operating division of Erbamont
NV, a prominent manufacturer and marketer of oncological products where from
1978 to 1984 he was treasurer, vice-president - finance. Mr. Tramontana and
Mr. Medors are brothers-in-law.
Fabio Giovannini, 40. Director since July 1997 and Chief Executive
Officer of Bigmar Pharmaceuticals SA since August 1997. From May 1996 to July
1997, Mr. Giovannini was Marketing and Sales Director of Argor-Heraeus SA, a
precious metals technology joint-venture between Union Bank of Switzerland
and Heraeus, Germany. From 1988 to April 1996, Mr. Giovannini was most
recently Marketing Director of Sapec SA and Bigmar Pharmaceuticals SA,
divisions of Chemholding SA.
Bernard Kramer, 44, has served as Vice President -- Marketing and a
director of the Company since April 1996. From January 1988 until April 1996,
Mr. Kramer worked at Bioren where he was a manager, responsible for quality
control and business development of pharmaceutical products. Prior to 1988,
Mr. Kramer held various senior management positions in the technical, quality
control and regulatory affairs areas. From 1980 to 1987, Mr. Kramer was
manager of the biological quality control and validation department at Vifor
SA in Geneva. From 1979 to 1980, Mr. Kramer successfully completed
postgraduate practice in research and development at Ciba-Geigy in Basel.
Michael K. Medors, 39, has served as Treasurer, Secretary and a
director of the Company since its inception in September 1995. From February
1991 to March 1995, Mr. Medors was treasurer and general manager of Cernitin,
a cosmetic and health products distributor. From October 20, 1982 to January
31, 1991, Mr. Medors was tax department supervisor of Automatic Data
Processing, a company offering a diverse portfolio of employer, tax, banking
and insurance services. Mr. Tramontana and Mr. Medors are brothers-in-law.
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John R. Morris, 67, was elected to the Board of Directors in March 1997
and is a member of the Executive, Audit, and Compensation and Stock Option
Committees. Mr. Morris has been President and Director of Biotrade Group
since 1978, a worldwide brokerage company active in pharmaceutical and fine
chemical industries. From 1967 to 1978 Mr. Morris was Chief Executive
Officer for several operating companies of Glaxo Group. Mr. Morris is also a
director of Caraco, Inc., Celsis International plc, Toad Innovations plc,
Enviros Ltd., Merlin Ventures, Ltd., and Biomed Pte Ltd.
Massimo Pedrani, 43. Nominee for Director of the Company at the
Annual Meeting. Mr. Pedrani has been Managing Director of Emmepi-Pharma since
January 1997, a pharmaceutical consulting company involved in chemical,
pharmaceutical development and regulatory affairs. From September 1992 to
August 1996, Mr. Pedrani was Managing Director of Applied Analytical
Industries Italy s.r.l. a subsidiary of Applied Analytical Industries, Inc.
in the U.S. Mr. Pedrani is a member of the American Association of
Pharmaceutical Scientists.
As of May 1998, there is one vacancy on the Board of Directors of the
Company. This vacancy is the result of the resignation of Mr. Eric M. Chen in
May 1998.
All directors hold office until the next annual meeting of stockholders
of the Company and until their successors are elected and qualified or until
their earlier resignation or removal. All officers of the Company are
appointed by and serve at the discretion of the Board of Directors, except
that John G. Tramontana has an employment agreement with the Company.
John G. Tramontana and Michael K. Medors are brothers-in-law. There are
no other family relationships between any director, executive officer or
person nominated or chosen to become a director or executive officer and any
other such person.
Pursuant to the Underwriting Agreement, for a period of five years from
the consummation of the Offering, LT Lawrence & Co., Inc. , (the
"Representative") the underwriting representative for the Company, may
designate one representative to be a member of the Board of Directors of the
Company. The Representative previously designated Eric M. Chen, a former
managing director of the Representative, to be a director of the Company.
INFORMATION ABOUT EXECUTIVE OFFICERS WHO ARE NOT NOMINEES
Peter P. Stoelzle, 39, has served as Executive Vice President of the
Company since July 1996. From December 1991 to July 1996, Mr. Stoelzle
worked with Bausch & Lomb Pharmaceuticals, Inc. ("BLP"), most recently as
Director, Regulatory Affairs where he was responsible for establishing and
directing all regulatory aspects of the Company's generic drug program.
During 1990, Mr. Stoelzle served as Associate Director, Product Development
at Smith & Nephew Solopak Laboratories. From March 1987 to January 1990, Mr.
Stoelzle was Associate Director, Research & Development at Ben Venue
Laboratories, Inc., a contract pharmaceutical manufacturer. From February
1986 to March 1987, Mr. Stoelzle served as Senior Analytical Chemist at
Adria Laboratories, Inc. (now Pharmacia & Upjohn, Inc.). From August 1983 to
January 1986, Mr. Stoelzle was Manager of Product Development at Invenex
Laboratories.
William R. Ash, III, 40, joined Bigmar, Inc. on November 3, 1997 as its
new Chief Financial Officer. Most recently, Mr. Ash served as Store Control
Manager of The Limited, Inc. a major women's apparel retailer. From 1995 to
1996, he was Controller of Symbios Logic Inc.'s (formerly NCR Corporation's)
Wichita, Kansas manufacturing facility. From 1987 to 1995, Mr. Ash held
various financial management positions at NCR Corporation, a computer
products manufacturer, and, from 1985 to 1987, was Senior Auditor for Anchor
Hocking Corporation, a glass manufacturer. He began his career at Coopers &
Lybrand, where he held various positions on the Audit Staff.
Philippe Rohrer, 40, is Chief Financial Officer of Bioren SA and Bigmar
Pharmaceuticals SA, 100% owned Swiss subsidiaries of Bigmar, Inc. He joined
Bioren SA in August 1991 as Finance and Administration manager with
responsibility for finance, computerization and administration of Bioren.
From July 1988 to August 1990 Mr. Rohrer was most recently Finance Director
of the group l'AMY SA, a company specializing in optical instruments. From
September 1982 to July 1987 he worked at Cluett Peabody, Inc. as Product
Manager and most recently as Finance and Administration Director for the
company.
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AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED NUMBER OF COMMON SHARES
(PROPOSAL NO. 2 ON PROXY CARD)
The Company's Certificate of Incorporation, as amended and restated,
authorizes the issuance of 15,000,000 shares of Common Stock and 5,000,000
shares of Preferred Stock. At December 31, 1997, the Company had 4,185,000
shares of Common Stock outstanding, with an additional 950,000 shares
(assuming Shareholder adoption of Proposals 3 and 4 of this Proxy Statement)
reserved for the Company's Stock Option Plans, 761,905 shares reserved for
issuance upon conversion of the Banca del Gottardo Notes, and 640,000 shares
reserved for outstanding warrants. Therefore, of the 15,000,000 shares
authorized by the Articles of Incorporation, 8,463,095 remain available for
issuance for general corporate purposes.
The Board of Directors believes that the Company generally should have
authorized Common Shares equal to approximately three times the number of
shares that are outstanding or reserved for issuance. This authorization
would enable the Company to have sufficient shares authorized for issuance
from time to time pursuant to sales for cash, acquisitions, option or other
incentive plans, stock splits, stock dividends or similar occurrences. An
increase in the number of authorized Common Shares is desirable to enable the
Company to issue shares for some or all of such purposes, and to give the
Company sufficient flexibility to respond quickly to advantageous business
opportunities without having to seek further shareholder approval.
To effect the increase in authorized Common Shares, it is proposed that the
first paragraph of Article FOURTH of the Company's Restated and Amended
Certificate of Incorporation be amended to read as follows:
FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue
is twenty-five million (25,000,000) consisting of the following
classes: (i) twenty million (20,000,000) shares of common stock,
par value $.001; (ii) five million (5,000,000) shares preferred
stock, par value $.001.
The Board of Directors has approved the amendment to the Certificate of
Incorporation to increase the total number of authorized Common Shares to
20,000,000 and recommends a vote in favor of this proposal. The affirmative
vote of the holders of a majority of the outstanding Common Shares is required
for approval of this amendment to the Certificate of Incorporation.
ADOPTION OF THE 1997 STOCK OPTION PLAN
(PROPOSAL NO. 3 ON PROXY CARD)
The Company has utilized the 1996 Stock Option Plan (the "1996 Plan")
for employees since 1996. The Board of Directors believes that stock option
grants have proven to be an important factor in enabling the Company to
attract, retain and motivate its employees. Accordingly, on November 4, 1997
the Board of Directors unanimously adopted, subject to shareholder approval,
a new 1997 Stock Option Plan (the "1997 Plan"). The 1997 Plan provides for
the grant of options to purchase up to 600,000 Common Shares of the Company's
stock, consisting of the 300,000 shares originally provided for under the
1996 Stock Option Plan and an additional 300,000 shares. Subject to
Shareholder approval, all options have been reissued under the 1997 Plan and
the 1996 Plan has been terminated. Options granted during 1997 carry the
same provisions as under the 1996 Plan, except the exercise price has been
lowered from a weighted-average exercise price of $8.96 at August 20, 1996 to
$5.19 at November 4, 1997.
The provisions of the 1997 Plan are essentially the same as those of the
1996 Plan except for the adjustment in the exercise price as mentioned above.
The 1997 Plan is incorporated by reference as exhibit 10.54 in the Company's
1997 Form 10-K filed with the United States Securities and Exchange
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Commission on March 31, 1998.
The affirmative vote of the holders of a majority of shares of Common Stock
present at the meeting is required to approve the 1997 Plan.
AMENDEMENT TO THE 1997 STOCK OPTION PLAN
(PROPOSAL NO. 4 ON PROXY CARD)
With respect to the 1997 Stock Option Plan the Board of Directors
believes that a sufficient number of stock options be available to attract,
retain, and motivate its employees. Accordingly the Board of Directors
unanimously amended the 1997 Stock Option Plan, subject to shareholder
approval, to increase the number of option grants available from 600,000 to
900,000 shares. The affirmative vote of the holders of a majority of Common
Shares present at the meeting is required to approve such amendment.
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
(PROPOSAL NO. 5 ON PROXY CARD)
The Audit Committee of the Board of Directors appointed KPMG Peat
Marwick LLP ("KPMG") as its independent public accountants for the fiscal
year ending December 31, 1998. KPMG has been the independent accounting firm
for the Company since August 1997. Although not required by law, the Board
is seeking shareholder ratification of this selection. The affirmative vote
of holders of a majority of common shares present at the meeting is required
for ratification. If ratification is not obtained, the board intends to
continue the engagement of KPMG at least through fiscal 1998.
DIRECTORS MEETINGS, COMPENSATION AND COMMITTEES
DIRECTOR MEETINGS
The Board of Directors met 4 times during fiscal 1997 and took action in
writing on five occasions.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $500 per meeting
attended as a director. Committee members receive $500 per committee meeting
attended. In addition, all directors are reimbursed for their reasonable
out-of-pocket expenses in connection with attending meetings of the Board or
any committee thereof.
DIRECTOR OPTION PLAN
The Board of Directors has adopted a director stock option plan ("Director
Option Plan") pursuant to which directors who are not otherwise affiliated with
the Company (such as employees or consultants of the Company, or an affiliate
thereof) will receive options to purchase Common Stock. The purpose of the
Director Option Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating directors to achieve long-term growth
in stockholder equity in the Company, to further align the interest of the
directors with those of the Company's stockholders and to recruit and retain the
association of
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these directors. The Director Option Plan provides for the award of up to an
aggregate of 50,000 shares of Common Stock and will be administered by the
Compensation and Stock Option Committee.
The Director Option Plan provides for (i) the grant, of an option to
purchase 3,000 shares of Common Stock to each director who was not an
employee or consultant of the Company and (ii) the grant of an option to
purchase 1,500 shares of Common Stock on the date of each regular annual
stockholder meeting to each participant who either is continuing as a
director subsequent to the meeting or who is elected at such meeting to serve
as a director. Options granted under the Director Option Plan must provide
for the purchase of shares of Common Stock at an exercise price of not less
than the fair market value of the Common Stock on the date of grant. No
option under the plan may be exercisable 10 years after its date of grant.
Options granted under the Director Option Plan will not be transferable by
the optionee other than by will, by the laws of descent and distribution or
as required by law.
During the fiscal year ended December 31, 1997, no options were issued
under the Director Option Plan.
OPTION PLAN
In April 1996, the Board of Directors adopted and the stockholders
approved the 1996 Stock Option Plan (the "1996 Plan"). In November 1997, the
Board of Directors approved an option plan, subject to approval of
Shareholders, that provides for the grant of options to purchase up to
600,000 shares of the Company's stock (the "1997 Plan"), consisting of
300,000 shares authorized for issuance under the 1996 Plan and an additional
300,000 shares. In April, 1998, the Board of Directors approved an amendment
to the 1997 Plan, subject to Shareholder approval, increasing the total
number of shares authorized to 900,000. Subject to Shareholder approval of
the 1997 Plan and the Amendment, all options originally granted under the
1996 Plan have been reissued under the 1997 Plan and the 1996 Plan has been
terminated. Options originally granted under the 1996 Plan carry the same
provisions under the 1997 Plan, except the exercise price has been lowered
from a weighted-average exercise price of $8.96 at August 20, 1996 to $5.19
at November 4, 1997. The 1997 Plan provides for the grant of incentive stock
options ('ISOs') (within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended) and non-qualified stock options ('NQSOs') to
directors, officers and employees of the Company. The Option Plan further
provides for the grant of NQSOs to directors and agents of, and consultants
to, the Company, whether or not employees of the Company. The purpose of the
1997 Plan is to attract and retain exemplary directors, employees, agents,
and consultants. All options granted under the 1997 Plan will be at an
exercise price of not less than the fair market value of the Common Stock on
the date of grant. All options granted under the Plan will not be
transferable by the optionee other than by will, by the laws of descent and
distribution or as required by law.
Options granted under the 1997 Plan may not be exercisable for terms in
excess of 10 years from the date of grant. In addition, no options may be
granted under the 1997 Plan later than 10 years after the 1997 Plan's
effective date. The total number of shares of Common Stock with respect to
which options will be granted under the 1997 Plan is 600,000. The shares
subject to and available under the 1997 Plan may consist, in whole or in
part, of authorized but unissued stock or treasury stock not reserved for any
other purpose. Any shares subject to an option that terminates, expires or
lapses for any reason, and any shares purchased pursuant to an option and
subsequently repurchased by the Company pursuant to the terms of the option,
shall again be available for grant under the 1997 Plan.
The 1997 Plan is administered by the Board of Directors of the Company
which determines, in its discretion, among other things, the recipients of
grants, whether a grant will consist of ISOs or NQSOs, or a combination
thereof, and the number of shares of Common Stock to be subject to such
options. The Board of Directors of the Company may, in its discretion,
delegate its power, duties and responsibilities under the 1997 Plan to a
committee consisting of two or more directors who are "disinterested persons"
within the meaning of Rule 16b-3 promulgated under the Securities Act of
1934, as amended. The Compensation and Stock Option Committee, which is
responsible for administering the 1997 Plan, is composed of John R. Morris
and a Nominee for director to be elected at the Company's Annual Meeting on
June 30, 1998.
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The 1997 Plan contains certain limitations applicable only to ISOs granted
thereunder. To the extent that the aggregate fair market value, as of the date
of grant, of the shares to which ISOs become exercisable for the first time by
an optionee during the calendar year exceeds $100,000, the ISO will be treated
as a NQSO. In addition, if an optionee beneficially owns more than 10% of the
Common Stock at the time the individual is granted an ISO, the option price per
share cannot be less than 110% of the fair market value per share and the term
of the option cannot exceed five years.
During the fiscal year ended December 31, 1997, pursuant to the 1997 Plan
and subject to Shareholder approval, options were granted as follows:
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS GRANTED EXERCISE PRICE
---- ------------------------- --------------
<S> <C> <C>
John G. Tramontana 53,541 $5.60
71,459 $5.09
Peter P. Stoelzle 10,000 $5.09
Michael K. Medors 50,000 $5.09
Bernard Kramer 10,000 $5.09
Philippe Rohrer 10,000 $5.09
John R. Morris 10,000 $5.09
</TABLE>
BOARD COMMITTEES
The Company has established an Executive Committee, a Compensation and
Stock Option Committee, and an Audit Committee. The Executive Committee
exercises all the power and authority of the Board of Directors in the
management and affairs of the Company between meetings of the Board of
Directors, to the extent permitted by law. The members of the Executive
Committee are John R. Morris, John G. Tramontana, and a Nominee for director
to be elected at the Company's Annual Meeting on June 30, 1998. The
Executive Committee met twice but did not take any action during 1997.
The Compensation and Stock Option Committee makes recommendations to the
Board of Directors concerning compensation, including incentive arrangements,
of the Company's officers and key employees and others and administers the
Option Plan and determines the officers, key employees and others to be
granted options under the Option Plan and the number of shares subject to
such options. In addition, the Compensation and Stock Option Committee will
administer the Director Option Plan. The members of the Compensation and
Stock Option Committee are John R. Morris and a Nominee for director
to be elected at the Company's Annual Meeting on June 30, 1998.
The Audit Committee (1) reviews the accounting and financial reporting
practices of the Company and the adequacy of its system of internal controls,
(2) reviews the scope and results of any outside audit of the Company, and
(3) makes recommendations to the Board of Directors or management concerning
auditing and accounting matters and the selection of outside auditors. The
members of the Audit Committee are John R. Morris and a Nominee for director
to be elected at the Company's Annual Meeting on June 30, 1998. The
Audit Committee met two times during 1997.
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INFORMATION REGARDING SECURITY HOLDERS
The Common Stock is the Company's only outstanding class of voting
securities.
PRINCIPAL SECURITY HOLDERS
The following table sets forth beneficial ownership of Common Stock as
of April 30, 1998 by each person known by the Company to be the beneficial
owner of more than five percent of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- -------------- ------------------- ----------- ----------------
<S> <C> <C> <C>
Common Stock John G. Tramontana 2,392,031(1) 55.5%
9711 Sportsman Club
Road
Johnstown, Ohio 43031
</TABLE>
(1) Includes 125,000 shares of Common Stock underlying options currently
exercisable. Does not include 125,000 shares of Common Stock underlying
options not currently exercisable and subject to Shareholder approval.
See (b) below for the beneficial ownership by John G. Tramontana.
SECURITY OWNERSHIP OF MANAGEMENT.
The following table sets forth beneficial ownership of Common Stock as
of April 26, 1998 by each (i) director of the Company, (ii) each of the
executive officers included in the Summary Compensation Table (see
"COMPENSATION OF EXECUTIVE OFFICERS" below), and (iii) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Beneficial Percent
Title of Class Owner Ownership of Class
- -------------- ----- --------- --------
<S> <C> <C> <C>
Common Stock...... John G. Tramontana 2,392,031(1) 55.5%
Common Stock...... Fabio Giovannini 107,969 2.6%
Common Stock...... Bernard Kramer 16,667(2) *
Common Stock...... Michael K. Medors -0-(3) *
Common Stock...... John R. Morris -0-(4) *
Common Stock...... Peter P. Stoelzle 50,000(5) 1.2%
Common Stock...... All directors and 2,684,004 59.0%
executive officers as
a group (nine persons)
</TABLE>
- ---------------
* Less than 1%
(1) Includes 125,000 shares of Common Stock underlying options currently
exercisable. Does not include 125,000 shares of Common Stock underlying
options not currently exercisable and subject to
11
<PAGE>
Shareholder approval.
(2) Includes 16,667 shares of Common Stock underlying options currently
exercisable. Does not include 8,333 shares of Common Stock underlying
options not currently exercisable and 10,000 shares of Common Stock not
currently exercisable and subject to Shareholder approval.
(3) Does not include 50,000 shares of Common Stock underlying options not
currently exercisable and subject to Shareholder approval.
(4) Does not include 10,000 shares of Common Stock underlying options
exercisable subject to Shareholder approval.
(5) Includes 50,000 shares of Common Stock underlying options currently
exercisable. Does not include 25,000 shares of Common Stock underlying
options not currently exercisable and 10,000 shares of Common Stock
underlying options not currently exercisable and subject to Shareholder
approval.
CHANGES IN CONTROL
On April 27, 1998, the Company signed a letter of intent with Jericho II
L.L.C. ("Jericho") regarding the terms on which Jericho will guarantee a line
of credit from a commercial institution to the Company in an amount up to
$6.0 million. Subject to approval of the Board of Directors and the execution
of definitive documents, in consideration of Jericho's execution of the
Guaranty, the Company shall execute and deliver to Jericho warrants to
purchase 1,000,000 shares of convertible preferred stock (the "Preferred
Stock") at a price per share equal to $2.5625 and having a term of 10 years
(the "Warrants"). The Preferred Stock shall be convertible to Common Stock on
a one-to-one basis, with such conversion rate to adjust to reflect dilutive
issuances of equity securities by the Company and also to adjust for stock
splits, dividends, combinations and similar events. The Preferred Stock shall
be entitled to five votes per share and shall vote together with the Common
Stock in addition to having certain special approval rights. The Preferred
Stock shall have a liquidation preference equal to the purchase price per
share. The Warrants shall include a net exercise clause (to permit the
conversion of the Warrants into shares having a fair market value equal to
the spread between the exercise price and the then fair market value) and the
shares issuable on exercise shall be entitled to piggyback registration
rights, subject to standard underwriter's cutback. In addition, as of May 27,
1998, Jericho held other warrants with rights to purchase up to 500,000
fully-paid and non-assessable shares of the Company's Common Stock. John G.
Tramontana, Chairman of the Board, President and Chief Executive Officer of
the Company, has a 50% ownership interest in Jericho.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than ten
percent of the Company's Common Stock to file reports of ownership with the
Commission and to furnish the Company with copies of these reports. Based
solely upon its review of reports received by it, or upon written
representation from certain reporting persons that no reports were required,
the Company believes that during fiscal 1997 all filing requirements were met
with the exception of an inadvertent late filing of a Form 3 for Mr. Fabio
Giovannini.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information regarding compensation paid by the
Company for the last two fiscal years to its Chief Executive Officer and the
other most highly compensated executive officers whose annual compensation
exceeded $100,000 for the year ended December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS COMPENSATION(1)
- --------------------------- ---- --------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C>
John G. Tramontana.............................. 1997 $200,000 $50,000 125,000(2) $6,000
Chairman of the Board of Directors, 125,000(3)
President, and Chief Executive Officer
1996 $102,650 $25,000 -0- $3,000
Peter P. Stoelzle............................... 1997 $140,000 -0- 10,000(2) $3,000
Executive Vice President 75,000(4)
1996 $78,077 -0- -0- $1,500
</TABLE>
12
<PAGE>
- ----------
(1) Amounts relate to annual auto allowance.
(2) New shares of common stock underlying options issued pursuant to the 1997
Plan, subject to approval of Shareholders.
(3) Shares of common stock originally issued under the 1996 Plan and repriced
under the 1997 Plan; subject to approval of Shareholders, the exercise
price has been lowered from an exercise price of $9.83 at August 20, 1996
to $5.60 at November 4, 1997 and $8.94 at August 20, 1996 to $5.09 at
November 4, 1997, for Incentive and Non-qualified Options respectively.
(4) Shares of common stock originally issued under the 1996 Plan and repriced
under the 1997 Plan; subject to approval of Shareholders, the exercise
price has been lowered from $8.94 at August 20, 1996 to $5.09 at November
4, 1997.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- --------------------------------------------------------------------------------------------- --------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (1) Fiscal 1997(6) ($ per share) Date 5% 10%
- ---- ----------- -------------- ------------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John G. Tramontana 71,459(2) 14.0% $5.09 4/29/03(7) $100,491 $222,059
53,541(3) 10.5% $5.60 4/29/03(7) $82,837 $183,049
71,459(4) 14.0% $5.09 8/20/01 $78,385 $168,805
53,541(5) 10.5% $5.60 8/20/01 $64,615 $139,151
Peter P. Stoelzle 10,000(3) 2.0% $5.09 4/29/03(7) $14,063 $31,075
16,107(4) 3.2% $5.09 8/20/01 $17,668 $38,049
58,893(5) 11.6% $5.09 8/20/01 $64,601 $139,121
</TABLE>
- ----------------
(1) Underlying Option Amounts are stated in terms of Common Stock.
(2) Non-qualified Stock Option granted pursuant to the 1997 Plan, subject to
Shareholder approval.
(3) Incentive Stock Option granted pursuant to the 1997 Plan, subject to
Shareholder approval.
(4) Non-qualified Stock Option originally granted under the 1996 Plan and
re-priced under the 1997 Plan, subject to Shareholder approval.
(5) Incentive Stock Option originally granted under the 1996 Plan and
re-priced under the 1997 Plan, subject to Shareholder approval.
(6) Includes all Stock Options originally granted under the 1996 Plan and
re-priced under the 1997 Plan, and all new options granted under the
1997 Plan, subject to Shareholder approval.
(7) Assumes a vesting date of April 29, 1998, subject to Shareholder
approval.
13
<PAGE>
FISCAL 1997 OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
No options were exercised during the fiscal year ended December 31, 1997. The
Company has no outstanding stock appreciation rights.
<TABLE>
<CAPTION>
SHARERS NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON VALUE OPTIONS AT FY-END FY-END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John G. Tramontana...... _ _ 125,000/125,000(1) $0/$0
Peter P. Stoelzle....... _ _ 50,000/35,000(2) $0/$0
</TABLE>
(1) Includes 125,000 stock options originally granted under the 1996 Plan
repriced under the 1997 Plan and 125,000 new stock options granted
under the 1997 Plan subject to Shareholder approval.
(2) Includes 75,000 stock options originally granted under the 1996 Plan
repriced under the 1997 Plan and 10,000 new stock options granted under
the 1997 Plan subject to Shareholder approval.
EMPLOYMENT AGREEMENT WITH JOHN G. TRAMONTANA
In April 1996, the Company entered into an employment agreement with Mr.
Tramontana to serve as the Company's President and Chief Executive Officer.
The employment agreement is for a five-year term commencing June 19, 1996 and
is subject to automatic annual renewal unless earlier terminated. Pursuant to
the terms of this employment agreement, Mr. Tramontana is required to devote
his full business time and attention to fulfill his duties and
responsibilities to the Company. Mr. Tramontana will receive a base salary of
$200,000 for the first year of the term of the employment agreement with
subsequent annual cost of living increases at the discretion of the Company's
Board of Directors. In addition to his base salary, Mr. Tramontana is
entitled to receive an annual bonus, at the discretion of the Board of
Directors, provided such bonus is equal to at least 25% of his base salary.
Mr. Tramontana's employment agreement provides that the Company is required
to provide Mr. Tramontana with an automobile allowance of $6,000 per annum
and the Company is required to obtain life insurance coverage on the life and
for the benefit of Mr. Tramontana in an amount equal to $500,000, assuming he
is insurable. Mr. Tramontana will also have the right to participate in all
benefit plans afforded or which may be afforded to other executive officers
during the term of the agreement including, without limitation, group
insurance, health, hospital, dental, major medical, life and disability
insurance, stock option plans and other similar fringe benefits. If Mr.
Tramontana dies or is unable to perform his duties on account of illness or
other incapacity and the agreement is terminated, he or his legal
representative shall receive from the Company the base salary which would
otherwise be due to the end of the month during which the termination of
employment occurred plus three additional months of base salary in the event
of death and six additional months of base salary in the event of illness or
other incapacity. The agreement further provides that if the Company
terminates Mr. Tramontana's employment for cause or if Mr. Tramontana
voluntarily leaves the employment of the Company, Mr. Tramontana shall
receive his salary through the end of the month in which the termination
occurred. If Mr. Tramontana's employment is terminated by the Company without
cause, Mr. Tramontana shall receive from the Company the base salary which
would otherwise be due to the end of the month during which the termination
of employment occurred plus four additional months. Mr. Tramontana's
employment agreement contains certain confidentiality and non-competition
provisions. The Company has obtained $2,000,000 of key-person life insurance
for the benefit of the Company on the life of Mr. Tramontana. Mr. Tramontana
was paid the minimum bonus of 25% of his base salary in 1997.
14
<PAGE>
REPORT ON REPRICING OF OPTIONS
The Compensation and Stock Option Committee (the "Compensation
Committee") believes that the Company should create compensation packages to
attract and retain executives who can bring the experience and skills to the
Company necessary for the development of the Company and its products. The
Compensation Committee intends that this will be accomplished by utilizing
salary as the base compensation and stock options to promote long-term
incentives. The Compensation Committee repriced the options granted pursuant
to the 1996 Plan on the basis that the Company seeks to attract, retain and
reward qualified personnel, and otherwise to provide additional incentive for
grantees to promote the success of its business. The Compensation Committee
desires to more closely align the interest of management with those of
Shareholders enabling them to benefit, along with all Shareholders, if the
market price for Common Stock rises.
Respectfully,
John R. Morris
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
STOCK
MARKET OPTION
NUMBER PRICE OF EXERCISE TERM
OF STOCK STOCK AT PRICE AT NEW REMAINING
OPTIONS TIME OF TIME OF EXERCISE AT DATE OF
NAME DATE(3) REPRICED REPRICING REPRICING PRICE(4) REPRICING(5)
---- ------- -------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
John G. Tramontana 11/4/97 71,459(1) $5.09 $8.94 $5.09 46 months
Chairman of the Board, 11/4/97 53,541(2) $5.09 $9.83 $5.60 46 months
President, and Chief
Executive Officer
Peter P. Stoelzle 11/4/97 16,107(1) $5.09 $8.94 $5.09 46 months
Executive Vice President 11/4/97 58,893(2) $5.09 $8.94 $5.09 46 months
Bernard Kramer 11/4/97 25,000(1) $5.09 $8.94 $5.09 46 months
Vice President Marketing
Philippe Rohrer 11/4/97 25,000(1) $5.09 $8.94 $5.09 46 months
Chief Financial Officer -
Swiss Subsidiaries
Federico Stroppolo 11/4/97 15,000(1) $5.09 $8.94 $5.09 46 months
Chief Operating Officer-
Bigmar Pharmaceuticals SA
</TABLE>
15
<PAGE>
- -------------------
(1) Non-qualified stock options.
(2) Incentive stock options.
(3) Date of approval of Board of Directors for repricing subject to Shareholder
approval.
(4) Subject to Shareholder approval.
(5) Vesting date starts on date of Shareholder approval.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, Michael K. Medors, Treasurer and Secretary of the
Company, served as a member of the Compensation and Stock Option Committee of
the Board of Directors until October 1997.
In March 1996, the Company entered into a sublease agreement with
Cernitin. The sublease was month to month and the Company has now terminated
the lease as of May 31, 1997. The sublease was at a rental of approximately
$22,315 per annum. Mr. Tramontana was the President and a director of
Cernitin and Mr. Medors was the treasurer and general manager of Cernitin at
the time of the negotiation and execution of the sublease. Furthermore, in
December 1996, the Company entered into a lease agreement with JTech
Laboratories, Inc. ("JTech") The lease commenced on the completion of
construction of an approximately 8,600 square foot office and laboratory
facility. The lease is at a rental of approximately $120,000 per annum with
the first years lease due in full at the time of commencement (June 1, 1997)
of the lease, discounted at prime rate plus 1/2%. Mr. Tramontana is the
President and a director of JTech and Michael K. Medors is the Treasurer and
a director of JTech.
In August 1997, Mr. Medors received an annual cost of living increase
and compensation increase commensurate to the duties performed bringing his
annual base pay to $72,000.
During fiscal 1997, John R. Morris served as a member of the
Compensation and Stock Option Committee of the Board of Directors. In August
1997, the Company granted Mr. Morris 10,000 stock options at $5.00 per share
pursuant to the 1996 Plan and these options were repriced at $5.09 per share
pursuant to the 1997 Plan subject to Shareholder approval.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THIS REPORT AND GRAPH SET FORTH BELOW UNDER "PERFORMANCE
GRAPH" SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Compensation and Stock Option Committee of the Board of Directors
(the "Compensation Committee") met once during fiscal 1997, and acted by
unanimous written consent on one occasion. The salaries of the executive
officers have not increased since the Company's IPO, with the exception of
Mr. Medors salary which increased to $72,000. See "Compensation Committee
Interlocks and Insider Participation".
The Compensation Committee believes that the Company should create
compensation packages to attract and retain executives who can bring the
experience and skills to the Company necessary for the development of the
Company and its products. The Compensation Committee intends that this will be
16
<PAGE>
accomplished by utilizing salary as the base compensation and stock options to
promote long-term incentives. As the Company grows, other forms of annual and
long-term compensation arrangements may be developed to provide appropriate
incentives and to reward specific accomplishments.
In determining base salaries, the Compensation Committee intends to
examine, among other factors, the executive's performance, degree of
responsibility and experience, as well as general employment conditions and
economic factors. It is not anticipated that specific weights will be assigned
to any of the factors employed by the Compensation Committee.
The Compensation Committee also intends to use stock options to provide
long-term incentive compensation to the Company's employees, including
executive officers, enabling them to benefit, along with all stockholders, if
the market price for Common Stock rises. The Compensation Committee believes
that the use of stock options ties employee interests to those of the
Company's stockholders through stock ownership and potential stock ownership,
while also providing the Company with a means of compensating employees using
a method which enables the Company to conserve its available cash for
operations and product development. Decisions of the Compensation Committee
as to option grants will be based, in large measure, upon a review of such
factors as the executive's level of responsibility, other compensation,
accomplishments and goals, as well as recommendations and evaluations of the
executive's performance. Determinations will be made subjectively without
giving weight to specific factors.
The salary of John G. Tramontana, the Company's President and Chief
Executive Officer has remained unchanged since the Company's IPO, although
during fiscal 1996 he was granted options to purchase shares of the Company's
Common Stock in recognition of his efforts on behalf of the Company.
Section 162(m) of the Internal Revenue Code places certain restrictions
on the amount of compensation in excess of $1,000,000 which may be deducted
for each executive officer. The Company intends to satisfy the requirements
of Section 162(m) should the need arise.
Respectfully submitted,
John R. Morris
17
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total
stockholder return against the cumulative return of the S&P 500 Index and the
NASDAQ Pharmaceutical Index for the period from June 20, 1996, to December
31, 1997. The comparison assumes $100 was invested on June 20, 1996 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
COMPARISON OF 18 MONTH CUMULATIVE TOTAL RETURN
AMONG BIGMAR, INC., THE S & P 500 INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX
NASDAQ
BIGMAR S&P 500 PHARMACEUTICAL
------ ------- --------------
6/20/96 100 100 100
12/31/96 59 112 99
12/31/97 31 147 102
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS
During the second half of 1996, and in the first quarter of 1997,
Cerbios-Pharma SA ("Cerbios"), a wholly-owned subsidiary of Chemholding SA
("Chemholding"), then, a beneficial owner of approximately 25.4% of the
Company's Common Stock, rendered invoices to the Company totaling
approximately $4,042,000 for various expenses, fees, and services spanning
the years 1995 and 1996 (the foregoing, collectively, the "Claims").
The Company maintains that no substantial services were provided in 1995
by Cerbios to the Company and that the amounts claimed for 1996 by Cerbios
far exceeded the actual expenses incurred by Cerbios on behalf of the
Company. Such actual expenses were accrued in the Company's 1996 quarterly
financial statements. On March 27, 1997, the Company reached a settlement
(the "Settlement") with Cerbios of the Claims for approximately $300,000 and
in connection therewith Cerbios delivered to the Company a release.
In January 1995, Chemholding agreed to be a surety for Bigmar
Pharmaceuticals in the amount of $1.4 million for a loan with respect to the
Bigmar Facility. In March 1997, the Company paid interest in the amount of
$125,000 related to this guarantee to Chemholding. The guarantee was
terminated in March 1997.
Mr. Tramontana, Chairman of the Board of Directors, President and Chief
Executive Officer of the Company, pursuant to privately negotiated
transactions in Switzerland, acquired additional shares of the Common Stock,
sufficient to obtain a controlling equity interest in the Company. Mr.
Tramontana has advised the Company that on March 27, 1997 he entered into an
agreement with each of Chemholding and four individuals to acquire for cash
consideration all shares of Common Stock owned by such persons, subject to
certain conditions. The closing conditions were satisfied on May 2, 1997. The
number of shares of Common Stock purchased and the consideration paid were as
follows:
1,010,563 shares for a price equal to 0.8163766 Swiss francs (or .555
United States dollars) per share. 283,100 shares for a price equal to
9.3253267 Swiss francs (or 6.3394 United States dollars) per share. (The
conversion to U.S. dollars assumes an exchange rate of 1.471 Swiss francs for
every 1.00 U.S. dollar).
The source of the consideration for such purchase was private funds of
Mr. Tramontana. The aggregate number of shares of Common Stock acquired by
Mr. Tramontana was 1,293,663. The shares are restricted within the meaning of
Rule 144 of the Securities and Exchange Commission (the "SEC").
Prior to the stock purchases, Mr. Tramontana beneficially owned
1,098,368 shares of Common Stock (including 125,000 shares underlying options
which were then and are currently exercisable), which comprised 26.7% of the
outstanding shares of Common Stock. Accordingly, Mr. Tramontana is now the
beneficial owner of 2,392,031 shares of Common Stock (including the 125,000
option shares issued under the 1996 Plan), or approximately 55.5% of the
total outstanding, and may therefore be deemed to control the Company. Prior
to such transactions no single person or group owned a controlling equity
interest in Company.
In August 1997, the Company consummated an agreement to acquire the U.S.
rights to sell all oncological products previously assigned to Protyde
Pharmaceuticals, Inc. ("Protyde"). The Company paid $2,000,000 cash to
Protyde which included a return of advances for reimbursable expenses of
$750,000 and $1,250,000 for U.S. rights, including the value of warrants to
purchase up to 500,000 fully paid and non-assessable shares of Common Stock
until July 24, 2002 at an initial exercise price of $5.00 per share.
19
<PAGE>
In October 1997, the warrants originally granted to Protyde were assigned
to Jericho II, LLC ("Jericho") by Protyde. In September 1997, the Company's CEO
acquired a 50% interest in Jericho.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
In March 1996 the Company entered into a sublease agreement with
Cernitin. The sublease was month to month and the Company terminated the
lease on May 31, 1997. The sublease was at a rental of approximately $22,315
per annum. Mr. Tramontana was the President and a director of Cernitin and
Michael K. Medors was the Treasurer and General Manager of Cernitin at the
time of the negotiation and execution of the sublease.
In April 1996, Mr. Tramontana entered into five-year employment
agreement with the Company. In August 1996, pursuant to the 1996 Plan, Mr.
Tramontana was granted an option to purchase 10,171 and 114,829 shares of
Common Stock at exercise prices of $9.83 and $8.94 respectively. Options
originally granted to Mr. Tramontana under the 1996 Plan were repriced under
the 1997 Plan and will carry the same provisions under the 1997 Plan except
the exercise price has been lowered from $9.83 to $5.60 and from $8.94 to
$5.09 respectively.
In November 1997, pursuant to the 1997 Plan, Mr. Tramontana was granted,
subject to Shareholder approval, an option to purchase 17,847 and 107,153
shares of Common Stock at exercise prices of $5.60 and $5.09 respectively. In
addition, the Company granted options to certain directors and officers of
the Company. See "Compensation of Executive Officers" above.
In December 1996, the Company entered into a lease agreement with JTech.
The lease commenced on the completion of construction of an approximately
8,600 square foot office and laboratory facility. The lease is at a rental
of approximately $120,000 per annum with the first years lease due in full at
the time of commencement (June 1, 1997) of the lease, discounted at prime
rate plus 1/2%. Mr. Tramontana is the President and a director of JTech and
Michael K. Medors is the Treasurer and a director of JTech.
In May 1997, Mr. Tramontana became a co-guarantor on a $3.5 million credit
facility (the "Credit Line") benefiting the Company.
In August 1997, pursuant to the terms of the $4.0 million Note Purchase,
Paying and Conversion Agency Agreement ("NPPCAA") with Banca del Gottardo
(the "Bank"), the Bank, at its option, may appoint 2 members of its choice to
the Company's Board of Directors. As of April 15, 1998 the Bank has not
exercised its option to appoint any Board members.
In November 1997, the Company received an advance of $200,000 from
Cernitin, a company of which the Company's President and Treasurer were
formerly officers. The advance was repaid in December 1997, including
interest computed at 8.75%.
In December 1997, Bioren sold land to GMT, a company formed in
Switzerland, for approximately $72,000. Mr. Morris, a director of the
Company, held an ownership interest in GMT at the time of the sale.
In December 1997, the Company advanced Mr. Morris $13,000. The full
amount of the advance was repaid to the Company in January 1998.
20
<PAGE>
Mr. Tramontana, Mr. Giovannini, and Chemholding may be deemed to be
founders or promoters of the Company as that term is defined under the
Securities Act.
Certain of the transactions set forth above have been entered into by
the Company with certain persons who, at the time of such transactions, might
have been deemed control persons or affiliates of the Company.
Notwithstanding the foregoing, the Company believes that the terms of these
transactions are no less favorable to the Company than it would have obtained
from unaffiliated third parties. The Company anticipates that all future
transactions and loans between the Company and its officers, directors, 5%
stockholders and affiliates will be on terms no less favorable than could be
obtained from unaffiliated third parties and that such transactions and loans
will be approved by a majority of the independent disinterested directors of
the Company.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("KPMG") has been the independent accounting firm
for the Company since August 22, 1997. Representatives of KPMG are expected
to be present at the Annual Meeting and will be given an opportunity to
comment, if they so desire, and to respond to appropriate questions that may
be asked by stockholders.
OTHER MATTERS
The Board of Directors knows of no other matters which will be presented
for action at the Annual Meeting. If any other matter requiring a vote of
shareholders properly come before the Annual Meeting or any adjournment, the
persons authorized under proxies will vote according to their best judgment
in light of circumstances then prevailing.
STOCKHOLDER PROPOSALS
Stockholders who desire to have proposals included in the Company's
proxy materials for the annual meeting of stockholders of the Company to be
held in 1999 must submit their proposals in writing to the Company,
Attention: Secretary, at its offices on or before February 1, 1999. Such
proposals must comply with all applicable regulations of the Securities and
Exchange Commission.
ANNUAL REPORT
Bigmar's Annual Report on Form 10-K containing audited financial
statements for the year ended December 31, 1997 is being mailed to all
shareholders of record with these proxy materials.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by Bigmar with the Securities and Exchange
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), after the date
hereof and prior to the date of the Annual Meeting or any adjournment thereof
shall be deemed to be incorporated by reference herein.
Any statements contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document that also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall be
deemed to constitute a part hereof except as so modified or superseded.
21
<PAGE>
AVAILABLE INFORMATION
Bigmar is subject to informational requirements of the Exchange Act and
the rules and regulations promulgated thereunder, and, in accordance
therewith, files reports, proxy statements and other information with the
SEC. Reports, proxy statements and other information filed by Bigmar may be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New
York, New York and at Suite 1400, 500 West Madison Street, Chicago, Illinois.
Copies of such information can be obtained by mail from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Access to such information is also available on the
Internet from the SEC's "EDGAR" World Wide Web page, using a World Wide Web
browser and the following address (in effect prior to and as of the Record
Date):
http://www.sec.gov/cgi-bin/srch-edgar?0001012466
Reports and other information concerning Bigmar can also be inspected at
The NASDAQ Stock Market, Inc., 1735 K Street, Washington, D.C. 20006 and The
Boston Stock Exchange, One Boston Place, Boston, Massachusetts 02108.
By Order of the Board of Directors
MICHAEL K. MEDORS
SECRETARY
May 29, 1998
22
<PAGE>
[LOGO]
DIRECTIONS TO CHERRY VALLEY LODGE
The Cherry Valley Lodge
2299 Cherry Valley Road
Newark, Ohio 43055
(614) 788-1200
From Port Columbus International Airport, I-270 North to State Route 161
East (which becomes State Route 16). Proceed approximately 20 miles to Cherry
Valley Road. Turn Right. Proceed approximately 1/4 mile. The Cherry Valley
Lodge is located on the left.
23
<PAGE>
FIRST AMENDMENT TO THE
BIGMAR, INC. 1997 STOCK OPTION PLAN
WHEREAS, the Corporation adopted the Bigmar, Inc. 1997 Stock Option Plan
(the "Plan") to encourage its employees to acquire a proprietary interest in
the growth and performance of the Corporation, and to generate an increased
incentive to contribute to the future success of the Corporation; and
WHEREAS, Corporation desires to authorize an additional 300,000 shares
for award under the Plan;
NOW, THEREFORE, BE IT RESOLVED, the Corporation amends the Plan as
follows:
Section 2(a) of the Plan is hereby amended by deleting it in its
entirety and by substituting the following;
(a) The total number of shares of the authorized but unissued or
treasury shares of the common stock, $.001 par value per share, of the
Company (the "Common Stock") for which the options (the "Option") may be
granted under the Plan shall be 600,000 plus 300,000 shares for which options
were authorized under the 1996 Stock Option Plan, including those shares
subject to options previously granted and not exercised under the 1996 Stock
Option Plan, which options have been subsequently terminated and
automatically reissued pursuant to the terms of this Plan.
IN WITNESS WHEREOF, the Corporation has caused this First Amendment to
the Bigmar, Inc. 1997 Stock Option to be signed this 14th day of May, 1998.
BIGMAR, INC.
By: /s/ William Ash
---------------------------
Its: Treasurer & Secretary
--------------------------
<PAGE>
BIGMAR, INC.
THIS PROXY IS SOLICIATED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 30, 1998
Revoking all prior proxies, the undersigned, a stockholder of Bigmar, Inc.
(the "Company"), hereby appoints John G. Tramontana and Michael K. Medors,
and each of them, attorneys and agents of the undersigned, with full power of
substitution, to vote all shares of the Common Stock, par value $.001 per
share ("Common Stock"), of the undersigned of the Company at the Annual
Meeting of Stockholders of the Company to be held at The Cherry Valley Lodge,
located at 2299 Cherry Valley Road, Newark, Ohio on June 30, 1998 at 2:00
p.m., local time, and at any adjournment thereof, as fully and effectively as
the undersigned could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or their
substitutes may lawfully do in place of the undersigned as indicated on the
reverse.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
BIGMAR, INC.
JUNE 30, 1998
A / X / Please mark your votes as in this example.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEES
AS DIRECTORS AND FOR THE
PLEASE SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
1. Election of Directors
FOR all nominees WITHHOLD Authority
listed to right (Except as to vote for
marked to the contrary) nominees listed
/ / / /
Nominees: Bernard Kramer
Michael K. Medors
John R. Morris
John G. Tramontana
Fabio Giovannini
Massimo Pedrani
2. To approve an amendment to the Certificate of Incorporation
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve adoption of the 1997 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. To approve an amendment to the 1997 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. Ratify appointment of KPMG Peat Marwick LLP as the Company's independent
public accountants for fiscal year 1998
FOR AGAINST ABSTAIN
/ / / / / /
Signature___________________ Date__________ Signature_________________________
Signature if held jointly
Date__________
NOTE: Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
