<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 a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Viragen, 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:
<PAGE> 2
VIRAGEN, INC.
865 S.W. 78TH AVENUE, SUITE 100
PLANTATION, FLORIDA 33324
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 31, 1998
TO THE STOCKHOLDERS OF VIRAGEN, INC.
PLEASE TAKE NOTICE that the 1997 Annual Meeting of Stockholders of Viragen,
Inc., a Delaware corporation (the "Company"), will be held at Signature Grand,
6900 State Road 84, Davie, FL 33317 on Friday, July 31, 1998 at 3:00 P.M., Local
Time, or at any and all adjournments thereof, for the following purposes:
1. To elect seven directors to the Board of Directors, and who will be
classified as either Class A, Class B or Class C directors, to serve for
the term of their designated classes and until their successors have been
elected and qualified;
2. To ratify the amendment of the Company's 1997 Stock Option Plan, in
order to increase the number of shares of Common Stock included within such
Plan;
3. To ratify 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 June 26, 1998 is attached.
The Board of Directors has fixed the close of business on June 15, 1998 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, 1997 and for the nine months ended March 31, 1998 are
contained in the accompanying Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, respectively. The Annual Report and Quarterly Report do 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
Plantation, Florida
June 26, 1998
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> 3
VIRAGEN, INC.
865 S.W. 78TH AVENUE, SUITE 100
PLANTATION, FLORIDA 33324
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Viragen, Inc., a Delaware corporation (the "Company"),
of proxies for use at the 1997 Annual Meeting of Stockholders ("Annual Meeting")
to be held at Signature Grand, 6900 State Road 84, Davie, FL 33317 on Friday,
July 31, 1998 at 3:00 P.M., Local 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-K of the Company for the fiscal
year ended June 30, 1997 and Quarterly Report on Form 10-Q for the nine months
ended March 31, 1998 are 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 June 26, 1998.
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 June 15, 1998 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 requires
the affirmative vote of a plurality of the shares of the Company's Common Stock
voting at the Annual Meeting in person or by proxy. The ratification of the
amendment to the Company's 1997 Stock Option Plan and the appointment of the
Company's auditors 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 June 15, 1998, the record date for determining the stockholders of
the Company entitled to vote at the Annual Meeting, approximately 53,316,912
shares of the Common Stock of the Company, $.01 par value ("Common Stock"), were
issued, of which 606,277 shares are held as treasury stock. Each share of Common
Stock outstanding entitles the holder to one vote on all matters brought before
the Annual Meeting. The quorum necessary to conduct business at the Annual
Meeting consists of a majority of the outstanding shares of Common Stock
outstanding (52,710,635 shares) as of the record date. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum. Abstentions and broker non-votes have no effect for the election of
directors, ratification of the amendment to the 1997 Stock Option Plan or the
ratification of the Company's auditors.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned at June 15, 1998 (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 on the record date based upon certain
reports regarding ownership filed with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) by each of the Company's Directors or nominees for
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. Except as otherwise
indicated, the business address for the persons set forth below is 865 S.W. 78th
Avenue, Suite 100, Plantation, Florida 33324. At June 15, 1998, there were
52,710,635 shares of Common Stock of the Company outstanding.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
------------------------------------ ------------ --------
<S> <C> <C>
Gerald Smith................................................ 3,000,000(3) 5.4
Robert H. Zeiger............................................ 1,050,000(4) 1.9
Dennis W. Healey............................................ 1,025,000(5) 1.9
Charles F. Fistel........................................... 790,455(6) 1.5
Sidney Dworkin, Ph.D........................................ 375,244(7) 0.7
Peter D. Fischbein.......................................... 450,000(8) 1.8
Charles J. Simons........................................... 10,000(9) .0
Carl N. Singer.............................................. 1,665,541(10) 3.2
Jay M. Haft................................................. 247,744(11) 0.5
Fred D. Hirt................................................ 75,000(12) 0.1
William B. Saeger........................................... 690,089(13) 1.3
Officers & Directors as a Group (14 persons)................ 10,569,073 17.5
</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) Based on 52,710,635 shares of Common Stock outstanding as of June 15, 1998.
Exclusive of 10,156,690 shares of Common Stock reserved for issuance
pursuant to the conversion of convertible preferred stock and the 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) 300,000 shares owned directly by Mr. Smith; (ii)
50,000 options exercisable at $1.00 per share granted to all Directors in
August 1994; (iii) 1,600,000 options exercisable at $.50 per share pursuant
to the provisions of the Company's 1995 Amended Stock Option Plan (the
"1995 Plan"); (iv) 1,000,000 options exercisable at $3.22 per share
pursuant to the provisions of Mr. Smith's two-year employment agreement
executed in March 1997; and (v) 50,000 options exercisable at $3.22 per
share granted to all Directors in February 1997.
(4) Mr. Zeiger is Chief Executive Officer and a Director of the Company.
Includes 1,000,000 options exercisable at $.96 per share pursuant to Mr.
Zeiger's employment agreement with the Company; and (ii) 50,000 options
exercisable at $3.22 per share granted to all Directors in February 1997.
(5) Mr. Healey is Executive Vice President, Treasurer, Chief Financial Officer,
Secretary and a Director of the Company. Includes (i) 125,000 shares held
in Mr. Healey's name; (ii) 50,000 options exercisable at $1.00 per share
granted to all Directors in August 1994; (iii) 500,000 options exercisable
at $.50 per share granted pursuant to the provisions of the 1995 Plan; (iv)
300,000 options exercisable at $3.22 per share pursuant to the provisions
of Mr. Healey's two-year employment agreement executed in March 1997; and
(v) 50,000 options exercisable at $3.22 per share granted to all Directors
in February 1997.
2
<PAGE> 5
(6) Mr. Fistel is Executive Vice President and a Director of the Company.
Includes (i) 80,455 shares held by Mr. Fistel and his wife; (ii) 300,000
options exercisable at $.30 per share pursuant to Mr. Fistel's employment
agreement with the Company; (iii) 110,000 options exercisable at $.50 per
share; (iv) 250,000 options exercisable at $2.75 per share; and (v) 50,000
options exercisable at $3.22 per share granted to all Directors in February
1997. Mr. Fistel is not a nominee for Director at the Annual Meeting.
(7) Mr. Dworkin is a Director of the Company. Includes (i) 175,244 shares owned
directly by Mr. Dworkin and his wife; (ii) 50,000 options exercisable at
$1.00 per share granted to all Directors in August 1994; (iii) 100,000
options exercisable at $.50 per share granted pursuant to the provisions of
the 1995 Plan; and (iv) 50,000 options exercisable at $3.22 per share
granted to all Directors in February 1997.
(8) Mr. Fischbein is a Director of the Company. Includes (i) 125,000 shares
held in Mr. Fischbein's name; (ii) 50,000 options exercisable at $1.00 per
share granted to all Directors in August 1994; (iii) 225,000 options
exercisable at $.50 per share granted pursuant to the provisions of the
1995 Plan; and (iv) 50,000 options exercisable at $3.22 per share granted
to all Directors in February 1997.
(9) Mr. Simons is a nominee for Director. Includes 10,000 shares owned directly
by Mr. Simons.
(10) Mr. Singer is a Director of the Company. Includes (i) 1,591,041 shares held
by the Fundamental Group of funds of which Mr. Singer holds a controlling
position and is considered a beneficial owner; (ii) 24,500 shares owned
directly by Mr. Singer and his wife; and (iii) 50,000 options exercisable
at $1.19 per share granted in January 1998 pursuant to the provisions of
the 1997 Amended Stock Option Plan (the "1997 Plan").
(11) Mr. Haft is a Director of the Company. Includes (i) 47,744 shares owned
directly by Mr. Haft; (ii) 50,000 options exercisable at $1.00 per share
granted to all Directors in August 1994; (iii) 100,000 options exercisable
at $.50 per share granted pursuant to the provisions of the 1995 Plan; and
(iv) 50,000 options exercisable at $3.22 per share granted to all Directors
in February 1997. Mr. Haft is not a nominee for Director at the Annual
Meeting.
(12) Mr. Hirt is a Director of the Company. Includes (i) 25,000 options
exercisable at $3.96 per share granted in June, 1996 pursuant to the
provisions of the 1995 Plan and (ii) 50,000 options exercisable at $3.22
per share granted to all Directors in February 1997. Mr. Hirt is not a
nominee for Director at the Annual Meeting.
(13) Mr. Saeger is a Director of the Company. Includes (i) 40,500 shares owned
directly by Mr. Saeger; (ii) 449,589 shares held by Hedge Fund Management
(Mr. Saeger holds a controlling position as Fund Manager of the holder of
these shares and is considered a beneficial owner); (iii) 50,000 options
exercisable at $1.00 per share granted to all Directors in August 1994;
(iii) 100,000 options exercisable at $.50 per share granted pursuant to the
provisions of the 1995 Plan and (iv) 50,000 options exercisable at $3.22
per share granted to all Directors in February 1997. Mr. Saeger is not a
nominee for Director at the Annual Meeting.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "Commission") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten (10%) stockholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representation that no other
reports were required, during the fiscal year ended June 30, 1997, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent (10%) beneficial owners were completed except that Dr. Jay
Savandeker, a Vice President, did not file a Form 4 Report covering an options
grant transaction in a timely manner.
3
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. On February 28, 1997, the Company amended its Certificate of
Incorporation and established a classified Board of Directors pursuant to which
the Directors of the Company are to be divided into three subclasses commencing
with the 1997 Annual Meeting consisting of Class A, Class B and Class C,
respectively. Inasmuch as the 1997 Annual Meeting represents the first Annual
Meeting at which Directors will be elected following the establishment of the
three subclasses, Directors for each of the three subclasses will need to be
elected at the 1997 Annual Meeting. At subsequent annual meetings, only
Directors for the subclass whose term is expiring will be elected at that annual
meeting.
Each subclass of Directors will have staggered terms of three years each.
The number of Directors in each class shall continue to be determined by the
Board of Directors and shall consist of as nearly equal a number of Directors as
possible. Inasmuch as there are seven nominees for Directors, one subclass
includes three directors and two subclasses will include two Directors, which
may be adjusted from time to time should the Company increase or decrease the
number of Directors representing a separate subclass. The term of the Class A
Directors initially shall expire after the 1998 Annual Meeting of Stockholders;
the term of the Class B Directors initially shall expire after the 1999 Annual
Meeting of Stockholders; and the term of the Class C Directors initially shall
expire after the 2000 Annual Meeting of Stockholders. At each Annual Meeting of
Stockholders, Directors of the respective class whose term expired shall be
elected, and the Directors chosen to succeed those whose terms shall have
expired shall be elected to hold office for a term to expire at the third
ensuing Annual Meeting of Stockholders after their election, and until their
respective successors are elected and qualified. The two nominees for Class A
Directors, whose terms would expire at the 1998 Annual Meeting of Stockholders,
are Messrs. Sidney Dworkin and Charles J. Simons. The three nominees for Class B
Directors, whose terms would expire at the 1999 Annual Meeting of Stockholders,
are Messrs. Robert H. Zeiger, Peter D. Fischbein and Dennis W. Healey. The two
nominees for Class C Directors, whose terms would expire at the 2000 Annual
Meeting of Stockholders, are Messrs. Gerald Smith and Carl N. Singer.
The following table sets forth the names of the nominees, positions with
the Company, the year, if applicable, in which they became Directors and other
related information. 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>
POSITION WITH SERVED AS
NAME AGE THE COMPANY DIRECTOR SINCE CLASS
---- --- ------------- -------------- -----
<S> <C> <C> <C> <C>
Gerald Smith...................... 67 Chairman of the Board and 1993 C
President 1995
Robert H. Zeiger.................. 53 Chief Executive Officer and 1995 B
Director 1995
Dennis W. Healey.................. 49 Executive Vice President, Chief 1984 B
Financial Officer, Treasurer,
Secretary and Director
Peter D. Fischbein................ 57 Director 1981 B
Sidney Dworkin, Ph.D.............. 76 Director 1994 A
Carl N. Singer.................... 79 Director 1997 C
Charles J. Simons................. 80 Director A
</TABLE>
Gerald Smith, was elected a Director of the Company in February 1993. On
May 12, 1993, Mr. Smith became President of the Company. Since 1982, Mr. Smith
was a principal stockholder, President, Chief
4
<PAGE> 7
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 was 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. Mr. Smith is also
Chairman of the Board and President of Viragen (Europe) Ltd. ("VEL") and Viragen
U.S.A., Inc. ("VUSA"), subsidiaries of the Company.
Robert H. Zeiger was appointed Chief Executive Officer and was elected as a
Director in May 1995. Mr. Zeiger has served as a pharmaceutical executive since
1971. 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, 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, and as National Sales Manager to Knoll
Pharmaceutical Company, Whipping, New Jersey, from 1971 to 1979. Mr. Zeiger is
also Chief Executive Officer and a Director of VEL.
Dennis W. Healey is a Certified Public Accountant and 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. Until his resignation in July 1996, Mr. Healey served as
Senior Vice President, Principal Financial Officer and Treasurer of Medicore,
Inc., a public company engaged primarily in the electronics assembly and
ownership of hemodialysis centers ("Medicore") and Executive Vice President of
its Techdyne affiliate ("Techdyne"). He also served as Treasurer of most of
Medicore's subsidiaries and as a Vice President of Dialysis Corporation of
America ("DCA"), a subsidiary of Medicore and Secretary, Treasurer and director
of other DCA subsidiaries. Mr. Healey joined Medicore in 1976 as its Controller.
Mr. Healey is also Executive Vice President, Treasurer, Secretary and a Director
of VEL and VUSA.
Peter D. Fischbein is an attorney who has been practicing law for
approximately 33 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.
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 Chairman of Stonegate
Trading, Inc., an importer and exporter of various health and 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 Comtrex Systems, Inc., which is engaged in development and
sale of programmable cash registers. Dr. Dworkin also serves on the Board of
Directors of CCA Industries, Inc., Interactive Technologies, Inc., Northern
Technologies International Corporation and Cragar Industries, Inc., all of which
are publicly-traded companies.
Carl N. Singer, elected as Director in August 1997, is the Chairman of
Fundamental Management Corporation, a Florida-based institutional investment
fund. Mr. Singer has served as a director, President and CEO of Sealy, Inc.,
Scripto, Inc. and the BVD Company.
Charles J. Simons is being nominated as Director for the initial time. Mr.
Simons retired in 1981 as Vice Chairman of the Board and Executive Vice
President of Eastern Airlines, Inc., where he served for more than
5
<PAGE> 8
41 years. Mr. Simons also served as a Director and Chairman of the Executive
Committee of the Board of Directors of American West Airlines until his
resignation in September 1986. Mr. Simons currently serves as a Director and
Vice Chairman of the Board of G.W. Plastics, Inc., a manufacturer of plastic
products, Director and Chairman of the Finance Committee of Veridian
Corporation, an aerospace subcontracting and consulting company, Director and
Chairman of the Finance Committee of Renex Corp., a provider of hemodialysis
services, Director and Chairman of the Finance Committee of DSS Corp., which
provides training and markets products for use by diabetics, and Director of
Arrow Air Corp., which is engaged in cargo transportation.
There are no family relationships between any of the officers and
directors.
During fiscal 1997, the Company's Board of Directors met twice.
The Company has constituted an Audit, Finance and Compensation Committee
and an Executive Committee. The Audit, Finance and Compensation Committee
consists of Messrs. Healey, Dworkin, Singer and Simons. The Executive Committee
consists of Messrs. Smith, Zeiger and Singer.
The Audit, Finance and Compensation Committee oversees the Company's audit
activities to protect against improper and unsound practices and to furnish
adequate protection to all assets and records. The Audit, Finance and
Compensation Committee also acts as liaison to the Company's independent
certified public accountants, and conducts such work as is necessary and
receives written reports, supplemented by such oral reports as it deems
necessary, from the audit firm. The Audit, Finance and Compensation Committee
also provides overall guidance for officer compensation programs, including
salaries and other forms of compensation, and for implementation of the
Company's budget process. Prior to fiscal 1998, the Company's Board of Directors
acted as a whole as the Audit and Compensation Committee.
The Executive Committee is empowered to act for the full Board in intervals
between Board meetings, with the exception of certain matters which by law may
not be delegated. The Executive Committee will meet as necessary, and all
actions by the Committee are to be reported at the next Board of Directors
meeting. During fiscal 1997, the Executive Committee met on 10 occasions.
AUDIT, FINANCE AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Currently, there are four members of the Audit, Finance and Compensation
Committee, which was reorganized in February 1998, two of whom are outside
Directors, one is a Director nominee, and one is an inside Director. The one
inside Director is Dennis W. Healey, an Executive Vice President, Treasurer,
Chief Financial Officer, and Secretary of the Company. Mr. Healey also serves in
a similar capacity for one or more of the Company's subsidiaries. Mr. Healey
abstains from any discussions or votes concerning his salary and other forms of
compensation received from the Company. Discussions concerning the compensation
received by Mr. Healey are set forth elsewhere in this Notice of Annual Meeting
and Proxy Statement.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
Audit, Finance and Compensation Committee Report on Executive
Compensation. Under the rules established by the Securities and Exchange
Commission, the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer (CEO) and other executive officers. The disclosure
requirements for the CEO and executive officers include the use of tables and a
report explaining the rationale and considerations that led to the fundamental
compensation decision affecting those individuals.
Compensation Report. The Audit, Finance and Compensation Committee of the
Board of Directors is responsible for establishing compensation levels and
benefits for the executive officers of the Company. The Audit, Finance and
Compensation Committee is also responsible for reviewing recommendations made by
management regarding compensation, including stock options, and benefits for
other employees.
6
<PAGE> 9
Executive Compensation Policy. For the last fiscal year, the goals
established by the Audit, Finance and Compensation Committee for executive
compensation are as follows:
- to provide a compensation package which would attract and retain
experienced, scientific, pharmaceutical and administrative personnel;
- to maintain reasonable yet competitive base salaries while conserving the
liquid assets of the Company;
- to provide an environment where innovation, dedication and success are
rewarded; and
- to provide participation in stock appreciation as part of an incentive
based compensation package.
The performance of executive officers is evaluated routinely by the Audit,
Finance and Compensation Committee as well as by the Board of Directors as a
whole. The Audit, Finance and Compensation Committee considers each employee's
total compensation package, including base salary, stock options and other
benefits as provided in their respective employment agreements.
Chief Executive Officer. The Chief Executive Officer entered into a
one-year employment agreement in August 1997, the terms of which provided for
the bulk of his compensation to be derived from appreciation in the Company
stock and market value. His compensation consists of a base annual salary of
$120,000 and 1,000,000 stock options at the then current market value of $.96
per share, vesting over the term of his prior employment agreement. The Audit,
Finance and Compensation Committee believes that this structure, heavily
weighted towards performance compensation, would provide the motivational
structure necessary for the competitive environment in which the Company
operates.
Other Executive Officers. As with the compensation of the CEO, the Audit,
Finance and Compensation Committee evaluates and establishes the compensation
packages for other executive officers of the Company. These executives are
evaluated routinely based on the effectiveness of their efforts in their
respective areas of responsibility as well as their contribution to achieving
the overall goals of the Company. The Audit, Finance and Compensation Committee
has structured compensation packages so that the base salaries are conservative
by pharmaceutical industry standards. The emphasis is on compensation through
the issuance of stock options. As a consequence, the executive officers may
maximize their total compensation through the attainment of corporate goals as
reflected in appreciated stock values.
Submitted by the Audit, Finance and Compensation Committee of the Board of
Directors:
CARL N. SINGER CHARLES J. SIMONS
SIDNEY DWORKIN, PH.D. DENNIS W. HEALEY
7
<PAGE> 10
SUMMARY COMPENSATION
The following table sets forth information concerning the compensation and
employment agreements of the Chief Executive Officer of the Company and three
other most highly compensated executive officers as of June 30, 1997.
<TABLE>
<CAPTION>
OTHER RESTRICTED OPTIONS/
ANNUAL STOCK SARS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (#)
- --------------------------- ---- -------- ------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gerald Smith.......................... 1997 $175,885 1,050,000
Chairman of Board 1996 154,615 $7,500 $14,000 1,600,000
and President(1) 1995 70,000 9,317 50,000
Robert H. Zeiger, CEO................. 1997 65,250 0 5,000 50,000
and Director(2)..................... 1996 66,653 100,000
1995 11,538 1,000,000
Dennis W. Healey, Exec................ 1997 163,345 350,000
V.P., Treasurer, CFO 1996 78,653 1,250 8,500 500,000
and Director(3) 1995 75,000 0 10,167 50,000
Charles F. Fistel,.................... 1997 138,886 300,000
Exec. V.P. 1996 110,000 6,000 110,000
and Director(4) 1995 106,615 -- 19,208 300,000
</TABLE>
- ---------------
(1) The Company entered into a two-year employment agreement with Mr. Smith,
effective October 6, 1995, providing for an annual salary of $160,000 and
$170,000 for the first and second years, respectively. The agreement
provided for health, life insurance and similar employee benefits generally
available to other employees of the Company, use of an automobile and
related maintenance expenses and reimbursement of expenses incurred in
fulfilling his normal responsibilities to the Company. In January 1996, Mr.
Smith exercised options to purchase 750,000 shares of Common Stock
previously granted through the issuance of a note in the principal amount of
$217,500, with the shares being issued into escrow pending cash payments and
further providing the shares may be released from escrow in increments of no
less than $3,000. Mr. Smith received a bonus equal to the par value
(totaling $7,500) of the shares purchased. On June 6, 1996, the Company
forgave Mr. Smith's note in lieu of bonus for the 1996 fiscal year,
following unanimous approval of the independent members of the Board of
Directors. On March 1, 1997, Mr. Smith entered into a two-year employment
agreement, superseding all previous agreements, under terms similar to his
previous employment agreement. The agreement provided for a salary of
$190,000 and $200,000 for the first and second years, respectively, and
further provided for options to purchase 1,000,000 shares of common stock at
$3.22 per share, exercisable over five years.
(2) 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 provided for health, life and similar employee
benefits 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 provided 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,
1996, through May 8, 2001, and exercisable for the remaining 500,000 shares
commencing May 8, 1997 through May 8, 2002. 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. On August 1, 1997, Mr. Zeiger entered into a one-year
employment agreement under terms similar to his previous agreement except
for certain notice of termination provisions. This agreement provides for a
salary of $120,000 per year with an additional $5,000 per month, payable
monthly, for the first six months of the contract term.
8
<PAGE> 11
(3) The Company entered into a two-year employment agreement with Mr. Healey,
effective October 6, 1995, providing for an annual salary of $80,000 and
$85,000 for the first and second years, respectively. In July 1996, Mr.
Healey entered into an employment agreement with Viragen (Europe) Ltd. This
agreement provided for a salary of $85,000 per year and expired in September
1997. In January 1996, Mr. Healey exercised options to purchase 125,000
shares of Common Stock previously granted through the issuance of a note in
the principal amount of $36,250 with the shares being issued into escrow
pending cash payments, and further providing the shares may be released from
escrow in increments of no less than $3,000. Mr. Healey received a bonus
equal to the par value (totaling $1,250) of the shares purchased. On June 6,
1996, the Company forgave Mr. Healey's note in lieu of bonus for the 1996
fiscal year, following unanimous approval of the independent members of the
Board of Directors. On March 1, 1997, Mr. Healey entered into a two-year
employment agreement, superseding all previous agreements, under terms
similar to his previous employment agreements. The agreement, as amended
July 1, 1997, provided for a salary of $190,000 and $195,000 for the first
and second years, respectively, and further provided for options to purchase
300,000 shares of Common Stock at $3.22 per share, exercisable over five
years.
(4) On July 1, 1996, the Company entered into a two-year employment agreement
with Charles Fistel to serve as Executive Vice President, providing for an
annual salary of $140,000 and $150,000 for the first and second years,
respectively. The agreement provided for health, life, and similar employee
benefits generally made available to other employees of the Company, use of
an automobile and related expenses. In February 1997, the Company issued to
Mr. Fistel five-year options to purchase 250,000 shares at $2.75 per share.
The Company recognized $218,750 in compensation expenses as a result of the
issuance of these options.
In November 1995, Viragen Scotland, Ltd. ("VSL") a wholly-owned subsidiary
of Viragen (Europe) Ltd., issued an aggregate of 7.144 shares of VSL common
stock at $56.00 per share to individuals serving as officers and directors of
VEL and one employee of the Company. Pursuant to an Agreement and Plan of
Reorganization, these shares were exchangeable into an aggregate of 400,000
shares of VEL. Of these options, 100,000 were granted each to (i) Mr. Gerald
Smith, (ii) Mr. Robert H. Zeiger, and (iii) Mr. Dennis Healey, all serving as
officers and directors of VEL. All options on VSL were exercised and the related
shares exchanged for VEL common stock. The Company recognized $243,000 in
compensation expense as a result of the issuance of these shares.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of
options to purchase shares of Common Stock during the fiscal year ended June 30,
1997 to each person named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARES) DATE
- ---- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Gerald Smith.................................... 1,050,000 35.5% $3.22 02-27-02
Robert H. Zeiger................................ 50,000 1.7% $3.22 02-27-02
Dennis W. Healey................................ 350,000 11.8% $3.22 02-27-02
Charles F. Fistel............................... 300,000 10.1% $3.22 02-27-02
</TABLE>
9
<PAGE> 12
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the exercise of
options to purchase shares of Common Stock during the fiscal year ended June 30,
1997 to each person named in the Summary Compensation Table and the unexercised
options held as of the end of the 1997 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
VALUE REALIZED IN THE MONEY OPTIONS AT
MARKET PRICE NUMBER OF UNEXERCISED FY-END (BASED ON FY-END
SHARES AT EXERCISE OPTIONS AT FY-END PRICE OF $5.44/SHARE)
ACQUIRED LESS PRICE --------------------------- ---------------------------
NAME ON EXERCISE EXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Smith............. -- $ -- 2,700,000 -- $3,588,500 --
Robert H. Zeiger......... 25,000 90,625 1,050,000 -- 1,730,000 --
Dennis W. Healey......... -- -- 900,000 -- 1,179,500 --
Charles F. Fistel........ -- -- 710,000 -- 957,900 --
</TABLE>
1997 STOCK OPTION PLAN AND 1995 AMENDED STOCK OPTION PLAN
On May 15, 1995 the Board of Directors adopted, subject to approval by the
stockholders, a stock option plan, subsequently amended, called the "1995
Amended Stock Option Plan." On September 22, 1995, the Board of Directors
amended the 1995 Stock Option Plan (collectively the "1995 Plan") to define
certain terms and clarify the minimum exercise price of the Non-Qualified
Options, described therein, as not less than 55% of the fair market value. The
1995 Plan was submitted to the stockholders of the Company at the Annual Meeting
of Stockholders held on December 15, 1995, and the Stockholders ratified the
1995 Plan at that time.
On January 27, 1997, the Board of Directors adopted, subject to approval by
the stockholders, a stock option plan, subsequently amended, called the "1997
Amended Stock Option Plan" (the "1997 Plan"), containing terms and provisions
similar to the 1995 Plan. The 1997 Plan was submitted to the Stockholders for
approval at the Annual Meeting of Stockholders held on February 28, 1997 at
which time the 1997 Plan was ratified.
Under both the 1995 Plan and the 1997 Plan (collectively the "Plans"), the
Company has reserved an aggregate of 4,000,000 Shares of Common Stock (1995
Plan) and 3,000,000 shares of Common Stock (increased to 4,000,000 shares by the
Board of Directors in April 1998) (1997 Plan) for issuance pursuant to options
granted under the Plans ("Plan Options"). The Audit, Finance and Compensation
Committee of the Board of Directors (the "Committee") and the Board of Directors
currently administer the Plans including, without limitation, the selection of
the persons who will be granted Plan Options under the Plans, the type of Plan
Options to be granted, the number of shares subject to each Plan Option and the
Plan Options price.
Plan Options granted under the Plans 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 allow 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 Options granted
under the Plans 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.
10
<PAGE> 13
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 Plans Options granted
under the Plans 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 Plans.
Officers, directors, key employees and consultants of the Company and its
subsidiaries are eligible to receive Non-Qualified Options under the Plans. 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 Incentive 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. Under a recent amendment to
the 1997 Plan, Non-Qualified Options may be transferable under limited
circumstances to facilitate estate planning if authorized by the Committee or
the Board of Directors. If an optionee's employment is terminated for any
reason, other than his death or disability or termination for cause, or if an
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 may amend, suspend or terminate the Plans at any
time, except that no amendment shall be made which (i) 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 Plans shall theretofore have been suspended or terminated by the
Board of Directors, the 1995 Plan shall terminate on May 15, 2005 and the 1997
Plan shall terminate on January 27, 2007. Any such termination of the Plans
shall not affect the validity of any Plan Options previously granted thereunder.
As of June 15, 1998, 3,996,500 options has been issued under the 1995 Plan
and 3,226,000 options have been issued under the 1997 Plan.
ADDITIONAL STOCK OPTIONS
In February 1997, the Board of Directors awarded options to purchase
1,750,000 shares of Common Stock to officers and directors of the Company
exercisable over five years at an exercise price of $3.22 per share. The options
were granted to the following individuals: Gerald Smith (1,050,000), Robert H.
Zeiger (50,000), Dennis W. Healey (350,000), Charles F. Fistel (50,000), Peter
D. Fischbein (50,000), Sidney Dworkin (50,000), Jay Haft (50,000), William B.
Saeger (50,000) and Fred D. Hirt (50,000). In addition, between August 1996 and
June 1997, the Company awarded options to purchase up to 459,500 shares of
Common Stock to other employees of the Company (inclusive of 250,000 shares to
Charles F. Fistel), which options are exercisable at prices ranging from $1.97
to $3.69 per share during the five year term of the options.
On October 6, 1995, the Board of Directors awarded options to purchase
2,935,000 shares of Common Stock to the officers, directors and key employees of
the Company exercisable of $0.50 per share at any time on or prior to October 6,
2000. The options were granted to the following individuals: Gerald Smith
(1,600,000), Robert H. Zeiger (100,000), Dennis W. Healey (500,000), Charles F.
Fistel (110,000), Peter D. Fischbein (225,000), Sidney Dworkin (100,000), Jay W.
Haft (100,000), William B. Saeger (100,000) and to key employees (100,000). In
addition, between October 1995 and June 1996, the Company awarded options to
purchase up to 500,500 shares of Common Stock to other employees of the Company,
11
<PAGE> 14
which options are exercisable at prices ranging from $0.50 to $5.90 per share
during the five-year term of the options.
In June 1995, the Company issued 33,000 Incentive Stock Options to
non-executive employees under the 1995 Plan. The options granted vest over
different periods not exceeding two years.
In May 1995, the Company issued options to purchase 1,000,000 shares to Mr.
Robert H. Zeiger, Chief Executive Officer, and a Director, pursuant to an
Employment Agreement. Under the terms of the Agreement, 500,000 options became
exercisable in May 1996 and 500,000 options became exercisable in May 1997. The
options carry a five year term and are exercisable at $.96 per share, which
represented the market value of the Common Stock at the date of grant.
In August 1994, the Company issued five-year options to purchase an
aggregate of 350,000 shares exercisable at $1.00 per share which were divided
equally among the seven directors of the Company (one of whom subsequently
resigned). In addition, between May 1994 and March 1995, the Company issued
five-year options to purchase an aggregate of 570,000 shares of Common Stock at
exercise prices ranging from $.62 to $1.00 per share to six key employees.
PERFORMANCE GRAPH -- STOCKHOLDER RETURN
ON COMMON STOCK
<TABLE>
<CAPTION>
NASDAQ NASDAQ
MEASUREMENT PERIOD (NATIONAL HEALTH
(FISCAL YEAR COVERED) VIRAGEN, INC. MARKET) SERVICES
<S> <C> <C> <C>
1992 100 100 100
1993 200 126 115
1994 200 127 131
1995 270 169 143
1996 1740 218 218
1997 810 265 201
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Gerald Smith, Robert H. Zeiger and Dennis W. Healey, who are
principal executive officers with the Company, also serve as the principal
executive officers of VEL. Messrs. Smith, Healey and Fistel also serve as
principal executive officers of VUSA. Commencing in July 1996, following his
resignation from Medicore and subsidiaries, Mr. Healey who is serving as VEL's
Executive Vice President, Treasurer and Secretary, began receiving an annual
salary of $85,000 per year. On March 1, 1997, Messrs. Smith and Healey
12
<PAGE> 15
entered into two year employment agreements, subsequently amended, with VEL
under terms similar to their employment agreements with the Company. The
Agreements provide for annual salaries of $72,000 and $52,000, respectively. In
November 1995, VSL issued options to purchase an aggregate of 5.358 shares of
its Common Stock to Messrs. Smith, Zeiger and Healey which, following the
consummation of the reorganization agreements, were converted into options to
purchase and aggregate of 300,000 shares of Common Stock of VEL exercisable at
$.001 per share. All of such options were exercised at January 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES FOR DIRECTORS SET FORTH ABOVE.
PROPOSAL RELATING TO THE AMENDMENT TO THE 1997 STOCK OPTION PLAN
On January 27, 1997, the Board of Directors adopted, subject to
ratification by the stockholders, a stock option plan called the "1997 Stock
Option Plan." The 1997 Plan was submitted to the Stockholders for approval at
the Annual Meeting of Stockholders held on February 28, 1997, at which time the
1997 Plan was ratified. Under the 1997 Plan, as initially adopted and approved
by the stockholders, the Company reserved an aggregate of 3,000,000 shares of
Common Stock for issuance pursuant to options granted under the 1997 Plan. On
April 24,1998, the Board of Directors approved an amendment to the 1997 Plan
reserving an aggregate of 4,000,000 shares of Common Stock for issuance pursuant
to options granted under the 1997 Plan. As of June 15, 1998, 3,226,000 options
have been issued under the 1997 Plan, leaving a balance of 774,000 options
available for issuance under the 1997 Plan. A description of the 1997 Plan is
described above under "1997 Stock Option Plan and 1995 Amended Stock Option
Plan."
In order to continue to maintain an adequate number of shares under the
1997 Plan for purposes of rewarding the performance of the Company's employees,
as well as attracting new employees, members of management and Directors, as the
Company further expands its operations and reaches critical phases of its
product development and testing, the Board of Directors on April 24, 1998 voted
to reserve an additional 1,000,000 shares of Common Stock for issuance under the
1997 Plan, thereby reserving an aggregate of 4,000,000 shares of Common Stock
under the 1997 Plan. This will allow the Company additional flexibility in
fashioning compensation arrangements with present and future employees, members
of management and the Board of Directors.
The Board of Directors deems it advisable and recommends that ratification
by stockholders of the proposed amendment to the 1997 Plan to increase the
number of shares reserved for issuance by 1,000,000 shares to an aggregate of
4,000,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE RATIFICATION OF THE AMENDMENT TO THE
1997 STOCK OPTION PLAN
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, 1998, will be submitted for ratification by
the stockholders.
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
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, 1998.
13
<PAGE> 16
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 1998 Annual Meeting
of Stockholders of the Company must be received by the Company, at its principal
executive offices not later than 95 days from the proposed date of the 1998
meeting, for inclusion in the Proxy Statement and Proxy relating to the 1998
Annual Meeting of Stockholders. Any such proposal will be subject to the
Company's Bylaws and 17 C.F.R. sec. 240.142-8 of the Rules and Regulations under
the Securities Act of 1933, as amended.
AVAILABILITY OF FORM 10-K ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the year ended June
30, 1997, has been included with this Proxy Statement, but is exclusive of
certain exhibits filed therewith, including related exhibits as filed with the
Securities and Exchange Commission. These exhibits are available without charge
to stockholders upon request to Gerald Smith, President, 865 S.W. 78th Avenue,
Suite 100, Plantation, Florida 33324.
BY ORDER OF THE BOARD OF DIRECTORS
Dennis W. Healey, Secretary
Plantation, Florida
June 26, 1998
14
<PAGE> 17
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
VIRAGEN, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- JULY 31, 1998
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 Davie, Florida on Friday, July 31, 1998, 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:
<TABLE>
<CAPTION>
CLASS A DIRECTORS CLASS B DIRECTORS CLASS C DIRECTORS
- ----------------- ----------------- -----------------
<S> <C> <C>
Sidney Dworkin Peter D. Fischbein Carl N. Singer
Charles J. Simons Robert H. Zeiger Gerald Smith
Dennis W. Healey
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE PLEASE DRAW A LINE THROUGH THAT NOMINEE'S NAME)
[ ] WITHHOLDING AUTHORITY to vote for all nominees listed above
</TABLE>
2. To ratify the adoption of the 1997 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 PROPOSAL 3.
The undersigned stockholder hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement and hereby revokes any proxy
or proxies heretofore given. This proxy may be revoked at any time prior to the
Annual Meeting. If you received more than one proxy card, please date, sign and
return all cards in the accompanying envelope.
Please sign exactly as name appears below. 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 or other
entity, please sign in the corporate name by President or other authorized
officer or person. If a partnership, please sign in partnership name by
authorized person.
--------------------------------
Signature
--------------------------------
Signature If Held Jointly
--------------------------------
(Please Print Name)
--------------------------------
Number of Shares Subject to
Proxy
Dated:
-------------------, 1998
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
