<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[x] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
VIRAGEN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Roxanne K. Beilly, Esq.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6j(2)
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(45) and
0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
<PAGE> 2
[_] 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:
- --------------------------------------------------------------------------------
2
<PAGE> 3
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------
TO THE HOLDERS OF THE COMMON STOCK:
PLEASE TAKE NOTICE that the 1995 Annual Meeting of Stockholders of
Viragen, Inc., a Florida corporation (the "Company"), will be held at Don
Schula's Hotel and Golf Club, Main Street, Miami Lakes, Florida 33014 on
Friday, December 15, 1995 at 3:00 P.M., Eastern Standard Time, or at any and
all adjournments thereof, for the following purposes:
1. To elect seven directors to the Board of Directors
until the next annual meeting of stockholders of the
Company and until their successors have been elected
and qualified;
2. To adopt the 1995 Amended Stock Option Plan;
3. The ratification of the appointment of independent
auditors; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Proxy Statement dated November 9, 1995 is attached.
The Board of Directors has fixed the close of business on November 1,
1995 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
The financial statements of the Company for the fiscal year ended June
30, 1995 are contained in the accompanying Annual Report on Form 10-KSB. The
Annual Report does not form any part of the material for the solicitation of
proxies.
Stockholders who do not expect to be present at the meeting are urged
to complete, date, sign and return the enclosed proxy. No postage is required
if the enclosed envelope is used and mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS,
Dennis W. Healey, Secretary
Hialeah, Florida
November 9, 1995
THIS IS AN IMPORTANT MEETING, AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT THEIR
EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED PROXY CARD WILL BE
APPRECIATED. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE
MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 4
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
The Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Viragen, Inc., a Florida corporation (the
"Company"), of proxies for use at the 1995 Annual Meeting of Stockholders
("Annual Meeting") to be held at Don Schula's Hotel and Golf Club, Main Street,
Miami Lakes, Florida 33014 on Friday, December 15, 1995, at 3:00 P.M., Eastern
Standard Time, or at any and all adjournments thereof. The cost of this
solicitation will be borne by the Company. Directors, officers and employees
of the Company may solicit proxies by telephone, telegraph or personal
interview. The Annual Report on Form 10-KSB of the Company for the fiscal year
ended June 30, 1995, is being mailed together with this Proxy Statement and
form of Proxy. The date of mailing of this Proxy Statement and form of Proxy
is approximately November 9, 1995.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-Laws of the Company, the Board of Directors
has fixed the close of business on November 1, 1995, as the record date for
determining the stockholders entitled to notice of, and to vote at, the Annual
Meeting. Only stockholders of record on that date will be entitled to vote. A
stockholder who submits a proxy on the accompanying form has the power to
revoke it by notice of revocation directed to the proxy holders of the Company
at any time before it is voted. Unless authority is withheld in writing,
proxies which are properly executed will be voted for the proposals thereon.
Although a stockholder may have given a proxy, such stockholder may
nevertheless attend the meeting, revoke the proxy and vote in person. The
election of the directors nominated, the appointment of the Company's auditors
and the approval of the newly established 1995 Amended Stock Option Plan will
require the affirmative vote of a majority of the shares of the Company's
Common Stock voting at the Annual Meeting in person or by proxy.
As of November 1, 1995, the record date for determining the
stockholders of the Company entitled to vote at the Annual Meeting,
approximately 35,436,782 shares of the Common Stock of the Company, $.01 par
value ("Common Stock"), were issued and outstanding. Each share of Common
Stock entitles the holder to one vote on all matters brought before the Annual
Meeting. The quorum necessary to
<PAGE> 5
conduct business at the Annual Meeting consists of a majority of the
outstanding shares of Common Stock as of the record date. Abstentions and
broker non-votes are counted for purposes of determining the presence or
absence of a quorum and have the effect of a negative vote on the ratification
of the appointment of the Company's independent auditors and on the adoption of
the 1995 Amended Stock Option Plan. Abstentions and broker non-votes have no
effect for the election of directors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
Company's Common Stock beneficially owned at September 15, 1995, (i) by each
person who is known by the Company to own beneficially or exercise voting or
dispositive control over 5% or more the Company's Common Stock, (ii) by each of
the Company's directors, and (iii) by all officers and directors as a group. A
person is also deemed to be a beneficial owner of any securities of which the
person has the right to acquire beneficial ownership within 60 days. At
September 15, 1995, there were 35,355,532 shares of Common Stock of the Company
outstanding.
<TABLE>
<CAPTION>
Amount
Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership(1) Class(2)
- ------------------- ------------ --------
<S> <C> <C>
Gerald Smith 1,162,847(3) 3.2%
Robert H. Zeiger 1,000,000(4) 2.7%
Dennis W. Healey 600,000(5) 1.7%
Peter D. Fischbein 300,000(6) 0.8%
Sidney Dworkin, Ph.D. 225,244(7) 0.6%
Jay M. Haft 320,744(8) 0.9%
William B. Saeger 1,767,776(9) 5.0%
Officers & Directors
(as a Group 8 persons) 5,937,866 116.5%
</TABLE>
- ------------------
(1) Based upon information furnished to the Company by the principal
security holders or obtained from the stock transfer books of the
Company. Other than indicated in the notes, the Company has been
informed that such persons have sole voting and dispositive power with
respect to their shares.
2
<PAGE> 6
(2) Based on 35,355,532 shares of Common Stock outstanding as of September
15, 1995. Exclusive of (i) 14,697 shares of Common Stock reserved for
issuance pursuant to conversion of 3,450 outstanding shares of
Preferred Stock each convertible into 4.26 shares of Common Stock; and
(ii) 6,315,999 shares of Common Stock reserved for issuance pursuant
to exercise of options and warrants of the Company.
(3) Mr. Smith is Chairman of the Board of Directors and President of the
Company. Includes (i) 362,847 shares owned directly by Mr. Smith;
(ii) 750,000 options exercisable at $.30 per share pursuant to Mr.
Smith's Employment Agreement; and (iii) 50,000 options exercisable at
$1.00 per share granted to all Directors in August 1994. Does not
include 1,600,000 options exercisable at $.50 per share granted
subsequent to September 15, 1995, pursuant to the provisions of the
Plan (as defined herein).
(4) Mr Zeiger is Chief Executive Officer, Chief Operating Officer and a
Director of the Company. Includes 1,000,000 Common Stock purchase
options exercisable at $.96 per share pursuant to Mr. Zeiger's
Employment Agreement. Does not include 100,000 options exercisable at
$.50 per share granted subsequent to September 15, 1995, pursuant to
the provisions of the Plan.
(5) Mr. Healey is Executive Vice President, Treasurer, Chief Financial
Officer, Secretary and a Director of the Company. Includes (i)
425,000 shares held in Mr. Healey's name; (ii) 125,000 options
exercisable at $.30 per share pursuant to Mr. Healey's Employment
Agreement; and (iii) 50,000 options exercisable at $1.00 per share
granted to all Directors in August 1994. Does not include 500,000
options exercisable at $.50 per share granted subsequent to September
15, 1995, pursuant to the provisions of the Plan.
(6) Mr. Fischbein is a Director of the Company. Includes (i) 125,000
shares held in Mr. Fischbein's name; (ii) 125,000 options exercisable
at $.30 per share pursuant to a Sale of Stock and Stock Option
Agreement and (iii) 50,000 options exercisable at $1.00 per share
granted to all Directors in August 1994. Does not include 225,000
options exercisable at $.50 per share granted subsequent to September
15, 1995, pursuant to the provisions of the Plan.
(7) Mr. Dworkin is a Director of the Company. Includes (i) 175,244 shares
owned directly by Mr. Dworkin and his wife; and (ii) 50,000 options
exercisable at $1.00 per share granted to all Directors in August
1994. Does not include 100,000 options exercisable at $.50 per share
granted subsequent to September 15, 1995, pursuant to the provisions
of the Plan.
3
<PAGE> 7
(8) Mr. Haft is a Director of the Company. Includes (i) 220,744 shares
owned directly by Mr. Haft; (ii) 50,000 options exercisable at $.30
per share and (iii) 50,000 options exercisable at $1.00 per share
granted to all Directors in August 1994. Does not include 100,000
options exercisable at $.50 per share granted subsequent to September
15, 1995, pursuant to the provisions of the Plan.
(9) Mr. Saeger is a Director of the Company. Includes (i) 26,100 shares
owned directly by Mr. Saeger; (ii) 1,691,676 shares held by
Fundamental Management Corp. and Hedge Fund Management. Mr. Saeger
holds a controlling position as Fund Manager of the Fundamental Fund
Group, holder of these shares and is considered a beneficial owner
and; (iii) 50,000 options exercisable at $1.00 per share granted to
all Directors in August 1994. Does not include 100,000 options
exercisable at $.50 per share granted subsequent to September 15,
1995, pursuant to the provisions of the Plan.
ELECTION OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. The names of the nominees, their principal occupations and the year
in which they became Directors, are set forth below. Each Director is elected
for a period of one year at the Company's annual meeting of stockholders.
Executive officers are elected annually and, except to the extent governed by
employment contracts, serve at the discretion of the Board of Directors.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
Served as
Position with Officer and/or
Name Age the Company Director Since
- ---- --- ----------- --------------
<S> <C> <C> <C>
Gerald Smith 64 Chairman of the Board and 1994
President 1993
Robert H. Zeiger 51 Chief Executive Officer 1995
and Director
Dennis W. Healey 47 Executive Vice President, 1993
Treasurer, Chief Financial 1994
Officer, Secretary and 1981
Director 1989
Peter D. Fischbein 55 Director 1981
1994
Sidney Dworkin, Ph.D. 73 Director 1994
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Jay M. Haft 59 Director 1994
William B. Saeger 43 Director 1994
</TABLE>
Gerald Smith, in accordance with the February 1993 Stock Agreement,
became a Director on February 5, 1993, the date of the Initial Purchase by
Cytoferon Corp. ("Cytoferon"). On May 12, 1993, Mr. Smith became President of
the Company. In June 1994, Mr. Healey relinquished his position as Chairman of
the Board of Directors in favor of Mr. Smith. Mr. Smith is Chairman of the
Board, Chief Executive Officer and President of Cytoferon. Since 1982, he was
a principal stockholder, President, Chief Executive Officer and director of
Business Development Corp ("BDC"), which has served as a managing entity and
consultant to several high technology ventures including Compupix Technology
Joint Venture. From August 1991 to December 1991, Mr. Smith was the Chief
Executive Officer of Electronic Imagery, Inc., a company engaged in the
development of imaging software. Mr. Smith is also the President, Chief
Executive Officer and a director of Cinescopic Corporation and International
Database Service, Inc., computer-oriented companies which developed database
technology using the personal computer for audio, video, animation and real
time communication. Mr. Smith has discontinued BDC's operations in order to
devote all of his time to the Company. See Transactions with Management.
Robert H. Zeiger was appointed Chief Executive Officer and Chief
Operating Officer and was elected as a Director in May 1995. Mr. Zeiger is a
pharmaceutical executive. From 1985 to 1994, Mr. Zeiger was employed by GLAXO,
Inc., Research Triangle Park, North Carolina, serving as Vice President and
General Manager of their Dermatological Division from 1985 to 1988, Vice
President and General Manager of Alan & Hansburgs from 1988 to 1991, and Vice
President and General Manager of Glaxo Pharmaceuticals from 1991 to 1994. Mr.
Zeiger also served as Vice President, Marketing and Sales with Stiefel
Laboratories, Inc., Coral Gables, Florida, from 1979 to 1985, as National Sales
Manager to Knoll Pharmaceutical Company, Whipping, New Jersey from 1971 to
1979.
Dennis W. Healey was appointed Chairman of the Board and Chief
Executive Officer on April 13, 1993. In June 1994, Mr. Healey relinquished his
position as Chairman of the Board to Mr. Smith and in July 1994, relinquished
the position of Chief Executive Officer upon the employment of Mr. Fistel.
Upon Gerald Smith becoming President on May 12, 1993, Mr. Healey became
Executive Vice President and has served as Chief Financial Officer and
Treasurer of the Company since 1980. Mr. Healey was appointed Secretary in
1994. Mr. Healey is Senior Vice President, Principal Financial Officer and
Treasurer of Medicore, Inc. ("Medicore") and was appointed Executive Vice
President of its Techdyne affiliate in November 1991. Mr. Healey is a
Certified Public Accountant and
5
<PAGE> 9
joined Medicore in 1976 as its controller. He is also Treasurer of most of
Medicore's subsidiaries and serves as Vice President of Dialysis Corporation of
America ("DCA"), a subsidiary of Medicore and Secretary, Treasurer and director
of other DCA subsidiaries. Mr. Healey devotes approximately 75% of his
business time to the affairs of the Company.
Peter D. Fischbein is an attorney who has been practicing law for
approximately 30 years. Mr. Fischbein served as the Company's Secretary
between May and December 1994. His former firm on occasion represented the
Company, Medicore and the Viragen Research Associates Limited Partnership
("Limited Partnership") which has certain contracts with the Company. Mr.
Fischbein is also a director of Medicore (since 1984) and Techdyne (since
1985). Mr. Fischbein has been a general partner of several limited
partnerships engaged in oil exploration and real estate development. See
Transactions with Management.
Sidney Dworkin, Ph.D., elected a Director in August 1994, was a
founder, former President, Chief Executive Officer and Chairman of Revco, Inc.
Between 1987 and the present, Dr. Dworkin has also served as Chief Executive
Officer of Stonegate Trading, Inc., an importer and exporter of various health,
beauty aids, groceries and sundries. Between 1988 and the present, Dr. Dworkin
has served as Chairman of the Board of Advanced Modular Systems, which is
engaged in the sale of modular buildings. Between June 1993 and the present,
Dr. Dworkin has also served as Chairman of Global International, Inc., which is
involved in the sale and leasing of modular buildings to hospitals and
radiology groups. Between 1993 and the present, Dr. Dworkin has also served as
Chairman of the Board of Comtrex Systems, which is engaged in the provision of
data processing services. In addition, between July 1988 and the present, Dr.
Dworkin has served as Chairman of the Board of General Computer Corp., which is
engaged in the marketing of data processing equipment. Dr. Dworkin also serves
on the Board of Directors of CCA Industries, Inc., Interactive Technologies,
Inc. and Northern Technologies International Corporation, all of which are
publicly-traded companies.
Jay M. Haft, elected a Director in August 1994, is an attorney and of
counsel to Parker Duryee Rosoff & Haft, New York, NY and Ruden, McCloskey,
Smith, Schuster & Russell, P.A., Ft. Lauderdale, FL and has been a practicing
lawyer since 1959. Mr. Haft has specialized in the representation of emerging
growth companies, and has participated in fund raising for a number of leading
edge medical technology companies.
William B. Saeger, elected a Director in August 1994, is a Certified
Public Accountant with 16 years experience in corporate strategic planning,
financial and tax planning, acquisitions, corporate capitalizations, analysis
and management of financial assets. Mr. Saeger has served as a portfolio
manager and analyst
6
<PAGE> 10
for a number of funds and is currently Vice President of Fundamental Management
and serves as a director of Telemac Cellular Corp. Mr. Saeger has also written
for financial publications on federal taxation and investment portfolio
management.
There is no family relationship between any of the officers and
directors.
The term of office for the Company's Directors is one year and they
serve until the next annual meeting of stockholders. The Company has not had
an annual meeting since 1990, although a special meeting was held in May 1993.
Cytoferon, a former affiliate of the Company of which Gerald Smith was
an executive officer, director and principal stockholder, failed to file a Form
4 on a timely basis reflecting the conversion of convertible debentures
previously reported as well as the sale of common stock of Cytoferon which
carried the right to acquire 74,999 shares of Common Stock of the Company.
Gerald Smith, as the beneficial holder of such securities in his capacity as an
executive officer, director and principal stockholder of Cytoferon, similarly
failed to file the corresponding Form 4 for such transactions for December
1994.
All duly submitted and unrevoked Proxies will be voted FOR the Board's
nominees, except where authorization so to vote is withheld. If any nominee
should become unavailable for election for any presently unforeseen reason, the
persons designated as proxies will have full discretion to vote for another
person designated by the Board, or, if none is so designated, to vote for the
persons in accordance with their judgment. Proxies cannot be voted for the
election of more than eight persons to the Board.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table sets forth information concerning the compensation
and employment agreements of the Chief Executive Officers of the Company and
two other most highly compensated executive officers as of June 30, 1995.
<TABLE>
<CAPTION>
All Other
Other Annual Restricted --------------------
Name and ------------------- Stock Options/ LTIP Other
Principal Position Year Salary Bonus Compensation Awards SARS(#) Payouts Compensation
- ------------------ ---- ------ ----- ------------ ------ -------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald Smith, Chairman 1995 $ 70,000 $ 0 $ 9,317 -- 50,000(5) -- --
of Board and Pres.(1) 1994 $ 0 $7,500 $ 0 -- -- -- --
1993 $ 0 $ 0 $ 0 -- -- -- --
Dennis W. Healey, 1995 $ 75,000 $ 0 $10,167 -- 50,000(6) -- --
Exec. V.P., Treasurer, 1994 $ 75,000 $ 0 $ 0 -- -- -- --
CFO and Director(2) 1993 $ 7,200 $ 0 $ 0 -- -- -- --
Charles F. Fistel, 1995 $106,615 $ 0 $19,208 -- -- -- --
Exec. V.P., CEO 1994
(former)(3) 1993
Robert H. Zeiger, 1995 $ 11,538 $ 0 $ 0 -- -- -- --
CEO, Director(4) 1994
1993
</TABLE>
7
<PAGE> 11
(1) Mr. Smith is Chairman of the Board, Chief Executive Officer and
President of Cytoferon, a former affiliate of the Company. Cytoferon
previously had a consulting and marketing agreement with the Company
pursuant to which Cytoferon was entitled to receive consulting fees,
commissions, fees for certain foreign transactions and foreign
royalties.
In November 1993, as modified on December 15, 1994, Mr. Smith entered
into a two-year employment agreement expiring November 18, 1995, with
the Company at no salary. The agreement provided for the sale of
750,000 shares of common stock at $.30 per share payable through the
issuance of a promissory note with the shares being issued into escrow
pending cash payments reflecting the shares to be released from escrow
in increments of no less than $3,000. These shares were purchased
through the issuance of a note in the principal amount of $217,500 in
April 1994 with Mr. Smith receiving a bonus equal to the par value
($7,500) of shares purchased. On May 15, 1995, the Company forgave
Mr. Smith's note in lieu of bonus for the 1995 fiscal year, following
unanimous approval of the independent members of the Board of
Directors. The agreement also provided for the issuance of 750,000
options to purchase common stock subject to meeting certain production
related or capital raising criteria. The criteria were successfully
met with the closing of the Company's $3.5 million Private Placement
in August 1994 and, accordingly, these options became exercisable.
Mr. Smith had an employment agreement with Cytoferon effective June 2,
1992, for a term ending June 30, 1995. He was provided with an annual
salary of $120,000 the first year, $130,000 the second year and
$140,000 the third year. The salary for the period prior to May 12,
1993, the completion of the Stock Agreement, was accrued and was
payable from available cash. Mr. Smith was entitled to participate in
any Cytoferon benefit plans of which there were none. The Cytoferon
employment agreement further provided Mr. Smith with certain severance
arrangements if there was a change in control of Cytoferon or the
Company. In August 1994, the Board of Directors of the Company voted
to terminate the Management and Marketing Services Agreement with
Cytoferon, terminating all fees payable thereunder, concurrent with
the issuance of the 1,750,000 contingently issuable shares subject to
receipt of a fairness opinion which was subsequently received. In
connection with this transaction, the Company agreed to assume the
obligations of Mr. Smith's employment agreement with Cytoferon through
November 18, 1995. The Company has entered into a two-year employment
agreement with Mr. Smith, effective October 6, 1995, under terms
similar to his current employment agreement, modified to increase his
salary by $20,000 and $10,000 for the first and second years,
respectively. See Transactions with Management.
8
<PAGE> 12
(2) In April 1994, as modified on December 15, 1994, Mr. Healey entered
into an employment agreement expiring November 18, 1995, with the
Company at an annual salary of $75,000. The agreement provides for
health, life and similar employee benefits generally made available to
other employees of the Company, an automobile and related expenses.
The agreement further provided for the sale of 125,000 shares of
common stock at $.30 per share payable through the issuance of a
promissory note with the shares being issued into escrow pending cash
payments reflecting the shares to be released from escrow in
increments of no less than 10,000 shares. These shares were purchased
in June 1994 through the issuance of a note in the principal amount of
$36,250, with Mr. Healey receiving a bonus equal to the par value
($1,250) of the shares purchased. On May 15, 1995, the Company
forgave Mr. Healey's note in lieu of bonus for the 1995 fiscal year,
following unanimous approval of the independent members of the Board
of Directors. The agreement also provides for the issuance of 125,000
options to purchase common shares at $.30 per share subject to the
Company reaching certain production levels or raising certain minimums
in capital during the employment contract period, consistent with
similar provisions contained in Mr. Smith's November 1993 employment
agreement. These criteria were met in August 1994 and, accordingly,
these options became exercisable. The Company has entered into a
two-year employment agreement with Mr. Healey, effective October 6,
1995, under terms similar to his current employment agreement,
modified to increase his salary by $5,000 and $5,000 for the first and
second years, respectively.
(3) On July 1, 1994, as modified on December 15, 1994, the Company entered
into a two-year employment agreement expiring July 1, 1996, with
Charles Fistel to serve as Chief Executive Officer (which position he
relinquished to Mr. Zeiger in May 1995, assuming the position of
Executive Vice President) at an annual salary of $110,000. The
agreement provides for health, life, and similar employee benefits
generally made available to other employees of the Company, use of an
automobile and related expenses. The agreement provides for the
issuance of options to purchase the aggregate of 300,000 shares of
common stock at an exercise price of $.30 per share, exercisable with
respect to 150,000 shares commencing June 30, 1995, through July 1,
1999, and exercisable for the remaining 150,000 shares commencing June
30, 1996, through July 1, 2000. The right to exercise such options
have accelerated based on the Company having raised certain minimums
in capital.
(4) On May 9, 1995, the Company entered into a two-year employment
agreement expiring May 1, 1997, with Robert H. Zeiger to serve as
Chief Executive Officer and Chief Operating Officer of the Company at
an annual salary of $120,000. The agreement provides for health, life
and similar employee benefits
9
<PAGE> 13
generally made available to other employees of the Company, use of an
automobile and related maintenance expenses and reimbursement for
expenses incurred in fulfilling his normal responsibilities to the
Company. The agreement provides for the issuance of options to
purchase the aggregate of 1,000,000 shares of Common Stock of the
Company at an exercise price of $.96 per share, exercisable with
respect to 500,000 shares commencing May 8, 1997, through May 8, 2001.
The right to exercise such options may be accelerated upon the
occurrence of certain material corporate transactions. The options
are terminable prior to the lapse of their respective terms only if
Mr. Zeiger's employment should be terminated for cause, and, in that
event, the options must be exercised to the extent that they have
theretofore accrued within 90 days of such termination.
(5) Does not include 1,600,000 options granted subsequent to June 30,
1995, pursuant to the provisions of the Plan.
(6) Does not include 500,000 options granted subsequent to June 30, 1995,
pursuant to the provisions of the Plan.
TRANSACTIONS WITH MANAGEMENT
Gerald Smith, Chairman of the Board of Directors, President and
Director of the Company, is the sole stockholder of Cytoferon, a former active
affiliate of the Company.
Peter D. Fischbein is a Director of the Company, and a director of
Medicore and Techdyne, was a member of a law firm, now dissolved, which firm
acted as counsel to the Company, and Medicore from time to time. Mr.
Fischbein's firm also handled the legal work for the Limited Partnership which
has licensing agreements with the Company. In December 1994, Mr. Fischbein
resigned as Secretary of the Company. In July 1994, Mr. Fischbein, in
recognition for several years' services as a Director of the Company, was
provided the right to purchase 125,000 shares of Common Stock at $.30 per share
(market price at that time was approximately $.53 per share), payable through
the issuance of a note in the principal amount of $36,250, with Mr. Fischbein
receiving a bonus equal to the par value ($1,250) of the shares purchased. On
May 15, 1995, the Company forgave Mr. Fischbein's note in lieu of a bonus for
the 1995 fiscal year, following unanimous approval of the independent members
of the Board of Directors.
On February 5, 1993, the Stock Agreement with Cytoferon was executed,
the initial $100,000 investment was made by Cytoferon and Gerald Smith, Chief
Executive Officer, director and principal of Cytoferon became a Director of the
Company. Upon Cytoferon's additional investment in May 1993, pursuant to which
Cytoferon had invested $1,000,000 for 6,000,000 shares of Common Stock of the
10
<PAGE> 14
Company, Seymour Friend resigned as director. Mr. Friend is an officer and
director of Medicore. In May 1993, Cytoferon moved its offices to the
Company's facilities in Hialeah, Florida. In November 1993, the Company
entered into the Additional Stock Purchase Agreement with Cytoferon and
thereafter, issued 1,333,333 shares of common stock to Cytoferon for an
additional investment of $400,000.
In connection with Cytoferon's investments, the Company entered into a
Marketing and Management Services Agreement ("MMS Agreement") with Cytoferon
pursuant to which agreement Cytoferon became consultant to and exclusive
distributor of products of the Company not approved by the U.S. Food and Drug
Administration ("FDA") for national distribution in exchange for certain fees
and commissions. The MMS Agreement provided for a management consulting fee of
$240,000 per year subject to Cytoferon meeting certain per year and aggregate
initial term and renewal term sales requirements. In addition, the MMS
Agreement provided that Cytoferon was to have been the exclusive worldwide
distributor, subject to maintaining certain sales minimums for all of the
Company's non-FDA approved products for three years, a 4% sales commission on
such sales, 50% of all fees received by the Company from the sale of any
foreign franchises, licenses, technology transfer or joint venture agreements
and 20% of any ongoing foreign royalty payments.
Cytoferon had obtained funds for such investments through sale of
$2,181,500 principal amount of its Debentures between February 1993 and March
1994 (net of $849,250 of Debentures which were retired as a result of the
settlement of the Cytoferon Debenture holders' suit against Cytoferon, Viragen
and certain other parties). Each of the series of Debentures issued by
Cytoferon carried an identical interest rate of 8.5%, were convertible into
Common Stock of Viragen at $.30 per share and were secured by Common Stock of
Viragen acquired through Cytoferon's investment in Viragen. The Cytoferon's
Debentures were converted into 7,271,666 shares of Common Stock of Viragen in
December 1994, at which time accrued interest of $133,364 was converted into
444,547 shares of Common Stock of Viragen also at a conversion ratio of $.30
per share.
The Company's management believed it was in the long-term best
interest of the Company to unify and consolidate management functions and
efforts and eliminate conflicts that could arise by virtue of minimum sales
requirements that could be inconsistent with the Company's plans to introduce
new production technologies and refinement of related protocols. Accordingly,
the Company executed the Subsequent Agreement, subject to receipt of a fairness
opinion received in December 1994, which terminated the MMS Agreement, the
Stock Purchase Agreement and Additional Stock Purchase Agreement and
accelerated the issuance of the 1,750,000 shares previously contingently
issuable under the Additional Stock
11
<PAGE> 15
Agreement concurrent with the cancellation of the aforementioned agreements.
Messrs, Sydney Dworkin, Jay M. Haft, and William B. Saeger, Directors
of the Company, Mr. Jerome E. Treisman, a former director, and Charles F.
Fistel, an Executive Vice President of the Company, purchased Cytoferon 8 1/2%
Convertible Debentures in the respective principal amounts of $40,000, $62,500,
$150,000, $22,500 and $50,000 which were convertible into common stock of the
Company. The principal amount of such Debentures together with accrued
interests were converted, effective September 30, 1994, at $.30 per share and
accrued interest into 175,244 shares, 220,744 shares, 533,766 shares, 78,668
and 177,922 shares of common stock of the Company.
In November 1993, the Company issued $200,000 in 8 1/2%, three-year
convertible debentures. These debentures were converted at $.30 per share in
666,668 shares of common stock on October 31, 1994. These shares are held by
Fundamental Management Corp. and Hedge Fund Management, which are investment
funds managed by William B. Saeger, a Director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTORS SET FORTH ABOVE.
PROPOSAL RELATING TO THE 1995 AMENDED STOCK OPTION PLAN
On May 15, 1995 the Board of Directors adopted, subject to approval by
the stockholders, a stock option plan called the "1995 Stock Option Plan." A
copy of the 1995 Stock Option Plan is attached to this proxy statement as
Appendix A. On September 22, 1995, the Board of Directors amended the 1995
Stock Option Plan (collectively the "Plan") to define certain terms and clarify
the minimum exercise price of the Non-Qualified Options, described herein, as
not less than 55% of the fair market value. Stockholders will be asked at the
meeting to vote on a proposal to adopt the Plan. The following summary
describes features of the Plan. This summary is qualified in its entirety by
reference to the specific provisions of the Plan, the full text of which is set
forth as Appendix A.
The Board of Directors have determined that the Plan will work to
increase the employees', consultants' and non-employee directors' proprietary
interest in the Company and to align more closely their interests with the
interests of the Company's stockholders. The Plan will also maintain the
Company's ability to attract and retain the services of experienced and highly
qualified employees and non-employee directors. The Board of Directors
believes that the Plan is in the Company's best interests and therefore
recommends adoption of the Plan on essentially the terms and conditions as are
set forth below.
12
<PAGE> 16
Under the Plan, the Company has reserved an aggregate of 4,000,000
shares of Common Stock for issuance pursuant to options granted under the Plan
("Plan Options"). The Compensation Committee of the Board of Directors (the
"Committee") of the Company administers the Plan including, without limitation,
the selection of the persons who will be granted Plan Options under the Plan,
the type of Plan Options to be granted, the number of shares subject to each
Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying
as incentive stock options ("Incentive Options") under Section 422 of the
Internal Revenue Code of 1986, as amended, or options that do not so qualify
("Non- Qualified Options"). In addition, the Plan also allows for the
inclusion of a reload option provision ("Reload Option"), which permits an
eligible person to pay the exercise price of the Plan Option with shares of
Common Stock owned by the eligible person and receive a new Plan Option to
purchase shares of Common Stock equal in number to the tendered shares. Any
Incentive Option granted under the Plan must provide for an exercise price of
not less than 100% of the fair market value of the underlying shares on the
date of such grant, but the exercise price of any Incentive Option granted to
an eligible employee owning more than 10% of the Company's Common Stock must be
at least 110% of such fair market value as determined on the date of the grant.
The term of each Plan Option and the manner in which it may be exercised is
determined by the Board of the Directors or the Committee, provided that no
Plan Option may be exercisable more than 10 years after the date of its grant
and, in the case of an Incentive Option granted to an eligible employee owning
more than 10% of the Company's Common Stock, no more than five years after the
date of the grant.
The exercise price of Non-Qualified Options shall be determined by the
Board of Directors or the Committee.
The per share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in the Company's
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors, key employees and consultants of the Company and
its subsidiaries are eligible to receive Non-Qualified Options under the Plan.
Only officers, directors and employees of the Company who are employed by the
Company or by any subsidiary thereof are eligible to receive Incentive Options.
All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment
is terminated for any reason, other than his death or disability or termination
for cause, or if an
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<PAGE> 17
optionee is not an employee of the Company but is a member of the Company's
Board of Directors and his service as a director is terminated for any reason,
other than death or disability, the Plan Option granted to him shall lapse to
the extent unexercised on the earlier of the expiration date or 30 days
following the date of termination. If the optionee dies during the term of his
employment, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date of the Plan Option or the
date one year following the date of the optionee's death. If the optionee is
permanently and totally disabled within the meaning of Section 22(c)(3) of the
Internal Revenue Code of 1986, the Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability.
The Board of Directors or Committee may amend, suspend or terminate
the Plan at any time, except that no amendment shall be made which (i)
increases the total number of shares subject to the Plan or changes the minimum
purchase price therefor (except in either case in the event of adjustments due
to changes in the Company's capitalization), (ii) affects outstanding Plan
Options or any exercise right thereunder, (iii) extends the term of any Plan
Option beyond ten years, or (iv) extends the termination date of the Plan.
Unless the Plan shall theretofore have been suspended or terminated by the
Board of Directors, the Plan shall terminate on May 15, 2005. Any such
termination of the Plan shall not affect the validity of any Plan Options
previously granted thereunder.
The following discussion is based on federal income tax laws and
regulations in effect on March 31, 1995. It does not purport to be a complete
description of the federal income tax consequences of the Plan, nor does it
describe the consequences of state, local or foreign tax laws which may be
applicable. Accordingly, any person receiving a grant under the Plan should
consult with his own tax adviser.
An employee granted an Incentive Stock Option does not recognize
taxable income either at the date of grant or at the date of its timely
exercise. However, the excess of the fair market value of Common Stock
received upon exercise of the Incentive Stock Option over the Option exercise
price is an item of tax preference under Section 57(a)(3) of the Code and may
be subject to the alternative minimum tax imposed by Section 55 of the Code.
Upon disposition of stock acquired on exercise of an Incentive Stock Option,
long-term capital gain or loss is recognized in an amount equal to the
difference between the sales price and the Incentive Stock Option exercise
price, provided that the option holder has not disposed of the stock within two
years from the date of grant and within one year from the date of exercise. If
the Incentive Stock Option holder disposes of the acquired stock (including the
transfer of acquired stock in payment of the exercise price of an Incentive
Stock Option) without complying with both of these
14
<PAGE> 18
holding period requirements ("Disqualifying Disposition"), the option holder
will recognize ordinary income at the time of such Disqualifying Disposition to
the extent of the difference between the exercise price and the lesser of the
fair market value of the stock on the date the Incentive Stock Option is
exercised (the value six months after the date of exercise may govern in the
case of an employee whose sale of stock at a profit could subject him to suit
under Section 16(b) of the Securities Exchange Act of 1934) or the amount
realized on such Disqualifying Disposition. Any remaining gain or loss is
treated as a short-term or long-term capital gain or loss, depending on how
long the shares are held. In the event of a Disqualifying Disposition, the
Incentive Stock Option tax preference described above may not apply (although,
where the Disqualifying Disposition occurs subsequent to the year the Incentive
Stock Option is exercised, it may be necessary for the employee to amend his
return to eliminate the tax preference item previously reported). The Company
and its subsidiary are not entitled to a tax deduction upon either exercise of
an Incentive Stock Option or disposition of stock acquired pursuant to such an
exercise, except to the extent that the Option holder recognized ordinary
income in a Disqualifying Disposition.
In respect to the holder of Non-Qualified Options, the option holder
does not recognize taxable income on the date of the grant of the Non-Qualified
Option, but recognizes ordinary income generally at the date of exercise in the
amount of the difference between the option exercise price and the fair market
value of the Common Stock on the date of exercise. However, if the holder of
Non-Qualified Options is subject to the restrictions on resale of Common Stock
under Section 16 of the Securities Exchange Act of 1944, such person generally
recognizes ordinary income at the end of the six-month period following the
date of exercise in the amount of the difference between the option exercise
price and the fair market value of the Common Stock at the end of the six-month
period. Nevertheless, such holder may elect within 30 days after the date of
exercise to recognize ordinary income as of the date of exercise. The amount
of ordinary income recognized by the option holder is deductible by the Company
in the year that income is recognized.
If the Plan is approved by the stockholders effective September 22,
1995, the Company will have granted 1,985,000 Plan Options.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THE 1995 AMENDED STOCK OPTION PLAN SET FORTH ABOVE.
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<PAGE> 19
APPOINTMENT OF THE COMPANY'S AUDITORS
The appointment of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ended June 30, 1996, will be ratified.
Although the Board of Directors of the Company is submitting the
appointment of Ernst & Young LLP for stockholder approval, it reserves the
right to change the selection of Ernst & Young LLP as auditors, at any time
during the fiscal year, if it deems such change to be in the best interest of
the Company, even after stockholder approval. Representatives of Ernst & Young
LLP are not expected to be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING JUNE 30, 1996.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before
the meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 1996 Annual
Meeting of Stockholders of the Company must be received by the Company, at its
principal executive offices not later than July 1, 1996, for inclusion in the
Proxy Statement and Proxy relating to the 1996 Annual Meeting of Stockholders.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-KSB for the year
ended June 30, 1995, has been included in this Proxy Statement, but exclusive
of certain exhibits filed therewith, including related exhibits as filed with
the Securities and
16
<PAGE> 20
Exchange Commission, is available without charge to stockholders upon request
to Gerald Smith, President, 2343 West 76th Street, Hialeah, Florida 33016.
BY ORDER OF THE BOARD OF DIRECTORS
Dennis W. Healey, Secretary
Hialeah, Florida
November 9, 1995
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<PAGE> 21
APPENDIX A
AMENDED
VIRAGEN, INC.
1995 STOCK OPTION PLAN
1. Grant of Options; Generally. In accordance with the
provisions hereinafter set forth in this stock option plan, the name of which
is the VIRAGEN, INC. 1995 STOCK OPTION PLAN (the "Plan"), the Board of
Directors (the "Board") or, the Compensation Committee (the "Stock Option
Committee") of Viragen, Inc. (the "Corporation") is hereby authorized to issue
from time to time on the Corporation's behalf to any one or more Eligible
Persons, as hereinafter defined, options to acquire shares of the Corporation's
$.01 par value common stock (the "Stock").
2. Type of Options. The Board or the Stock Option Committee is
authorized to issue Incentive Stock Options ("ISOs") which meet the
requirements of Section Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), which options are hereinafter referred to collectively as
ISOs, or singularly as an ISO. The Board or the Stock Option Committee is
also, in its discretion, authorized to issue options which are not ISOs, which
options are hereinafter referred to collectively as Non Statutory Options
("NSOs"), or singularly as an NSO. The Board or the Stock Option Committee is
also authorized to issue "Reload Options" in accordance with Paragraph 8
herein, which options are hereinafter referred to collectively as Reload
Options, or singularly as a Reload Option. Except where the context indicates
to the contrary, the term "Option" or "Options" means ISOs, NSOs and Reload
Options.
3. Amount of Stock. The aggregate number of shares of Stock
which may be purchased pursuant to the exercise of Options shall be 4,000,000
shares. Of this amount, the Board or the Stock Option Committee shall have the
power and authority to designate whether any Options so issued shall be ISOs or
NSOs, subject to the restrictions on ISOs contained elsewhere herein. If an
Option ceases to be exercisable, in whole or in part, the shares of Stock
underlying such Option shall continue to be available under this Plan.
Further, if shares of Stock are delivered to the Corporation as payment for
shares of Stock purchased by the exercise of an Option granted under this Plan,
such shares of Stock shall also be available under this Plan. If there is any
change in the number of shares of Stock on account of the declaration of stock
dividends, recapitalization resulting in stock split-ups, or combinations or
exchanges of shares of Stock, or otherwise, the number of shares of
<PAGE> 22
Stock available for purchase upon the exercise of Options, the shares of Stock
subject to any Option and the exercise price of any outstanding Option shall be
appropriately adjusted by the Board or the Stock Option Committee. The Board
or the Stock Option Committee shall give notice of any adjustments to each
Eligible Person granted an Option under this Plan, and such adjustments shall
be effective and binding on all Eligible Persons. If because of one or more
recapitalizations, reorganizations or other corporate events, the holders of
outstanding Stock receive something other than shares of Stock then, upon
exercise of an Option, the Eligible Person will receive what the holder would
have owned if the holder had exercised the Option immediately before the first
such corporate event and not disposed of anything the holder received as a
result of the corporate event.
4. Eligible Persons.
(a) With respect to ISOs, an Eligible Person means any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i)
any individual who has been employed by the Corporation or by any subsidiary of
the Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or by any subsidiary of the Corporation or (iii)
any consultant of the Corporation or by any subsidiary of the Corporation.
5. Grant of Options. The Board or the Stock Option Committee has
the right to issue the Options established by this Plan to Eligible Persons.
The Board or the Stock Option Committee shall follow the procedures prescribed
for it elsewhere in this Plan. A grant of Options shall be set forth in a
writing signed on behalf of the Corporation or by a majority of the members of
the Stock Option Committee. The writing shall identify whether the Option
being granted is an ISO or an NSO and shall set forth the terms which govern
the Option. The terms shall be determined by the Board or the Stock Option
Committee, and may include, among other terms, the number of shares of Stock
that may be acquired pursuant to the exercise of the Options, when the Options
may be exercised, the period for which the Option is granted and including the
expiration date, the effect on the Options if the Eligible Person terminates
employment and whether the Eligible Person may deliver shares of Stock to pay
for the shares of Stock to be purchased by the exercise of the Option.
However, no term shall be
2
<PAGE> 23
set forth in the writing which is inconsistent with any of the terms of this
Plan. The terms of an Option granted to an Eligible Person may differ from the
terms of an Option granted to another Eligible Person, and may differ from the
terms of an earlier Option granted to the same Eligible Person.
6. Option Price. The option price per share shall be determined
by the Board or the Stock Option Committee at the time any Option is granted,
and shall be not less than (i) in the case of an ISO, the fair market value,
(ii) in the case of an ISO granted to a ten percent or greater stockholder, 110
percent of the fair market value, or (iii) in the case of an NSO, not less than
55% of the fair market value (but in no event less than the par value) of one
share of Stock on the date the Option is granted, as determined by the Board or
the Stock Option Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of
Stock on such exchange or over-the-counter market on which such shares shall be
traded on that date, or if such exchange or over-the-counter market is closed
or if no shares shall have traded on such date, on the last preceding date on
which such shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange
or over-the-counter market, the value as determined by a recognized appraiser
as selected by the Board or the Stock Option Committee.
7. Purchase of Shares. An Option shall be exercised by the
tender to the Corporation of the full purchase price of the Stock with respect
to which the Option is exercised and written notice of the exercise. The
purchase price of the Stock shall be in United States dollars, payable in cash,
check, Promissory Note secured by the Shares issued through exercise of the
related Options, or in property or Corporation stock, if so permitted by the
Board or the Stock Option Committee in accordance with the discretion granted
in Paragraph 5 hereof, having a value equal to such purchase price. The
Corporation shall not be required to issue or deliver any certificates for
shares of Stock purchased upon the exercise of an Option prior to (i) if
requested by the Corporation, the filing with the Corporation by the Eligible
Person of a representation in writing that it is the Eligible Person's then
present intention to
3
<PAGE> 24
acquire the Stock being purchased for investment and not for resale, and/or
(ii) the completion of any registration or other qualification of such shares
under any government regulatory body, which the Corporation shall determine to
be necessary or advisable.
8. Grant of Reload Options. In granting an Option under this
Plan, the Board or the Stock Option Committee may include a Reload Option
provision therein, subject to the provisions set forth in Paragraphs 20 and 21
herein. A Reload Option provision provides that if the Eligible Person pays
the exercise price of shares of Stock to be purchased by the exercise of an
ISO, NSO or another Reload Option (the "Original Option") by delivering to the
Corporation shares of Stock already owned by the Eligible Person (the "Tendered
Shares"), the Eligible Person shall receive a Reload Option which shall be a
new Option to purchase shares of Stock equal in number to the tendered shares.
The terms of any Reload Option shall be determined by the Board or the Stock
Option Committee consistent with the provisions of this Plan.
9. Stock Option Committee. The Stock Option Committee may be
appointed from time to time by the Corporation's Board of Directors. The Board
may from time to time remove members from or add members to the Stock Option
Committee. The Stock Option Committee shall be constituted so as to permit the
Plan to comply in all respects with the provisions set forth in Paragraph 20
herein. The members of the Stock Option Committee may elect one of its members
as its chairman. The Stock Option Committee shall hold its meetings at such
times and places as its chairman shall determine. A majority of the Stock
Option Committee's members present in person shall constitute a quorum for the
transaction of business. All determinations of the Stock Option Committee will
be made by the majority vote of the members constituting the quorum. The
members may participate in a meeting of the Stock Option Committee by
conference telephone or similar communications equipment by means of which all
members participating in the meeting can hear each other. Participation in a
meeting in that manner will constitute presence in person at the meeting. Any
decision or determination reduced to writing and signed by all members of the
Stock Option Committee will be effective as if it had been made by a majority
vote of all members of the Stock Option Committee at a meeting which is duly
called and held.
10. Administration of Plan. In addition to granting Options and
to exercising the authority granted to it elsewhere in this Plan, the Board or
the Stock Option Committee is granted the full
4
<PAGE> 25
right and authority to interpret and construe the provisions of this Plan,
promulgate, amend and rescind rules and procedures relating to the
implementation of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan, consistent, however, with the
intent of the Corporation that Options granted or awarded pursuant to the Plan
comply with the provisions of Paragraph 20 and 21 herein. All determinations
made by the Board or the Stock Option Committee shall be final, binding and
conclusive on all persons including the Eligible Person, the Corporation and
its stockholders, employees, officers and directors and consultants. No member
of the Board or the Stock Option Committee will be liable for any act or
omission in connection with the administration of this Plan unless it is
attributable to that member's willful misconduct.
11. Provisions Applicable to ISOs. The following provisions shall
apply to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from
May 15, 1995, the date that this Plan was originally adopted by the
Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of
ten (10) years from the date the ISO is granted.
(c) The option price may not be less than the fair market
value of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to
whom it is granted except by will, or the laws of descent and distribution, and
is exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the
time of the grant stock possessing more than ten (10%) percent of the total
combined voting power of all classes of stock of the employer corporation or of
its parent or subsidiary corporation (as those terms are defined in the Code),
then the option price shall be at least 110% of the fair market value of the
Stock, and the ISO shall not be exercisable after the expiration of five (5)
years from the date the ISO is granted.
(f) The aggregate fair market value (determined at the
time the ISO is granted) of the Stock with respect to which the ISO
5
<PAGE> 26
is first exercisable by the Eligible Person during any calendar year (under
this Plan and any other incentive stock option plan of the Corporation) shall
not exceed $100,000.
(g) Even if the shares of Stock which are issued upon
exercise of an ISO are sold within one year following the exercise of such ISO
so that the sale constitutes a disqualifying disposition for ISO treatment
under the Code, no provision of this Plan shall be construed as prohibiting
such a sale.
(h) This Plan was adopted by the Corporation on May 15,
1995, by virtue of its approval by the Corporation's Board of Directors.
Approval by the stockholders of the Corporation is to occur prior to May 15,
1996.
12. Determination of Fair Market Value. In granting ISOs under
this Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. Restrictions on Issuance of Stock. The Corporation shall not
be obligated to sell or issue any shares of Stock pursuant to the exercise of
an Option unless the Stock with respect to which the Option is being exercised
is at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted
in accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such
exercise it is his or her then present intention to acquire the shares of Stock
for investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by
will or under the laws of descent and distribution. Prior to issuing any
shares of Stock pursuant to the exercise of an Option, the Corporation shall
take such steps as it deems necessary to satisfy any withholding tax
obligations imposed upon it by any level of government.
14. Exercise in the Event of Death of Termination or Employment.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of
his employment with the Corporation or a Subsidiary
6
<PAGE> 27
because of his disability, or retirement or otherwise, his Options may be
exercised, to the extent that the optionee shall have been entitled to do so on
the date of his death or such termination of employment, by the person or
persons to whom the optionee's right under the Option pass by will or
applicable law, or if no such person has such right, by his executors or
administrators, at any time, or from time to time. In the event of termination
of employment because of his death while an employee or because of disability,
his Options may be exercised not later than the expiration date specified in
Paragraph 5 or one year after the optionee's death, whichever date is earlier,
or in the event of termination of employment because of retirement or
otherwise, not later than the expiration date specified in Paragraph 5 hereof
or one year after the optionee's death, whichever date is earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such optionee has not
died within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the termination
of his employment, at any time, or from time to time, but not later than the
expiration date specified in Paragraph 5 hereof or one year after termination
of employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason
of his retirement in accordance with the terms of the Corporation's
tax-qualified retirement plans or with the consent of the Board or the Stock
Option Committee or involuntarily other than by termination for cause, and such
optionee has not died within the following three months, he may exercise his
Option to the extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from to time, but not later than
the expiration date specified in Paragraph 5 hereof or thirty (30) days after
termination of employment, whichever date is earlier. For purposes of this
Paragraph 14, termination for cause shall mean termination of employment by
reason of the optionee's commission of a felony, fraud or willful misconduct
which has resulted, or is likely to result, in substantial and material damage
to the Corporation or a Subsidiary, all as the Board or the Stock Option
Committee in its sole discretion may determine.
(d) If an optionee's employment shall terminate for any
reason other than death, disability, retirement or otherwise, all right to
exercise his Option shall terminate at the date of such termination of
employment.
7
<PAGE> 28
15. Corporate Events. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and
each such Eligible Person shall have the right, during the period of thirty
(30) days preceding such termination, to exercise his Option as to all or any
part of the shares of Stock covered thereby, including shares of Stock as to
which such Option would not otherwise be exercisable. Nothing set forth herein
shall extend the term set for purchasing the shares of Stock set forth in the
Option.
16. No Guarantee of Employment. Nothing in this Plan or in any
writing granting an Option will confer upon any Eligible Person the right to
continue in the employ of the Eligible Person's employer, or will interfere
with or restrict in any way the right of the Eligible Person's employer to
discharge such Eligible Person at any time for any reason whatsoever, with or
without cause.
17. Nontransferability. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by
him.
18. No Rights as Stockholder. No optionee shall have any rights
as a stockholder with respect to any shares subject to his Option prior to the
date of issuance to him of a certificate or certificates for such shares.
19. Amendment and Discontinuance of Plan. The Corporation's Board
of Directors may amend, suspend or discontinue this Plan at any time. However,
no such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this
Plan which has the effect of (a) increasing the aggregate number of shares of
Stock subject to this Plan (except for adjustments pursuant to Paragraph 3
herein), or (b) changing the definition of Eligible Person under this Plan, may
be effective unless and until approval of the stockholders of the Corporation
is obtained in the same manner as approval of this Plan is required. The
Corporation's Board of Directors is authorized to seek the approval of the
Corporation's stockholders for any other changes it proposes to make to this
Plan
8
<PAGE> 29
which require such approval, however, the Board of Directors may modify the
Plan, as necessary, to effectuate the intent of the Plan as a result of any
changes in the tax, accounting or securities laws treatment of Eligible Persons
and the Plan, subject to the provisions set forth in this Paragraph 19, and
Paragraphs 20 and 21.
20. Compliance with Rule 16b-3. This Plan is intended to comply
in all respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with respect to participants who are subject to Section
16 of the Exchange Act, and any provision(s) herein that is/are contrary to
Rule 16b-3 shall be deemed null and void to the extent appropriate by either
the Stock Option Committee or the Corporation's Board of Directors.
21. Compliance with Code. The aspects of this Plan on ISOs is
intended to comply in every respect with Section 422 of the Code and the
regulations promulgated thereunder. In the event any future statute or
regulation shall modify the existing statute, the aspects of this Plan on ISOs
shall be deemed to incorporate by reference such modification. Any stock
option agreement relating to any Option granted pursuant to this Plan
outstanding and unexercised at the time any modifying statute or regulation
becomes effective shall also be deemed to incorporate by reference such
modification and no notice of such modification need be given to optionee.
If any provision of the aspects of this Plan on ISOs is
determined to disqualify the shares purchasable pursuant to the Options granted
under this Plan from the special tax treatment provided by Code Section 422,
such provision shall be deemed null and void and to incorporate by reference
the modification required to qualify the shares for said tax treatment.
1. Compliance With Other Laws and Regulations. The
Plan, the grant and exercise of Options thereunder, and the obligation of the
Corporation to sell and deliver Stock under such options, shall be subject to
all applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required. The
Corporation shall not be required to issue or deliver any certificates for
shares of Stock prior to (a) the listing of such shares on any stock exchange
or over-the-counter market on which the Stock may then be listed and (b) the
completion of any registration or qualification of such shares under any
federal or state law, or any ruling or regulation of any
9
<PAGE> 30
government body which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option may be exercised if its
exercise or the receipt of Stock pursuant thereto would be contrary to
applicable laws.
2. Disposition of Shares. In the event any share of
Stock acquired by an exercise of an Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution
within two years of the date such Option was granted or within one year after
the transfer of such Stock pursuant to such exercise, the optionee shall give
prompt written notice thereof to the Corporation or the Stock Option Committee.
3. Name. The Plan shall be known as the "Viragen, Inc.
1995 Stock Option Plan."
4. Notices. Any notice hereunder shall be in writing
and sent by certified mail, return receipt requested or by facsimile
transmission (with electronic or written confirmation of receipt) and when
addressed to the Corporation shall be sent to it at its office, 2343 West 76th
Street, Hialeah, Florida 33016, and when addressed to the Committee shall be
sent to it at 2343 West 76th Street, Hialeah, Florida 33016, subject to the
right of either party to designate at any time hereafter in writing some other
address, facsimile number or person to whose attention such notice shall be
sent.
5. Headings. The headings preceding the text of
Sections and subparagraphs hereof are inserted solely for convenience of
reference, and shall not constitute a part of this Plan nor shall they affect
its meaning, construction or effect.
6. Effective Date. This Plan, the Viragen, Inc. 1995
Stock Option Plan, was adopted by the Board of Directors of the Corporation on
May 15, 1995. The effective date of the Plan shall be the same date.
Dated as of September 22, 1995.
VIRAGEN, INC.
By:___________________________
Its: President
10
<PAGE> 31
APPENDIX B
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
VIRAGEN, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 15, 1995
The undersigned, revoking all previous proxies, hereby appoint(s) Gerald
Smith as Proxy, with full power of substitution, to represent and to vote all
Common Stock of Viragen, Inc. owned by the undersigned at the Annual Meeting of
Stockholders to be held in Miami Lakes, Florida on Friday, December 15, 1995,
including any original or subsequent adjournment thereof, with respect to the
proposals set forth in the Notice of Annual Meeting and Proxy Statement. No
business other than matters described below is expected to come before the
meeting, but should any other matter requiring a vote of stockholders arise, the
person named herein will vote thereon in accordance with his best judgment. All
powers may be exercised by said Proxy. Receipt of the Notice of Annual Meeting
and Proxy Statement is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. ELECTION OF DIRECTORS. NOMINEES: Gerald Smith, Robert H. Zeiger, Dennis
W. Healey, Peter D. Fischbein, Sidney Dworkin, Ph.D., Jay M. Haft and William B.
Saeger.
/ / FOR ALL NOMINEES LISTED (Except as specified here: )
---------------
OR
/ / WITHHOLDING AUTHORITY to vote for all nominees listed above
2. Proposal to adopt the 1995 Amended Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to Ratify the Appointment of Independent Auditors.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
SPECIFIC DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND FOR PROPOSAL 3.
Dated , 1995
-----------------------
----------------------------------
(Signature)
----------------------------------
(Signature)
Where there is more than one
owner, each should sign. When
signing as an attorney,
administrator, executor, guardian
or trustee, please add your full
title as such. If executed by a
corporation or partnership, the
proxy should be signed in the
corporate or partnership name by a
duly authorized officer or other
duly authorized person, indicating
such officer's or other person's
title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
