<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 FEBRUARY 14, 2001
To The Stockholders of Viragen, Inc.
PLEASE TAKE NOTICE that Viragen, Inc., a Delaware corporation, will hold
its 2000 annual meeting of stockholders at the American Stock Exchange, located
at 86 Trinity Place, New York, NY, on February 14, 2001 at 3:00 P.M., local
time, or at any and all adjournments for the following purposes:
1. To elect two directors to the board of directors, who will be
classified as class C directors, to serve for the term of their
designated class and until their successors have been elected and
qualified;
2. To ratify an amendment to our Certificate of Incorporation increasing
the number of authorized shares of our common stock from 125 million
to 150 million;
3. To ratify the appointment of Ernst & Young LLP, as our independent
auditors; and
4. To transact other business that may properly come before the meeting
or any adjournment.
The proxy statement dated January 15, 2001 is attached.
The board of directors has fixed the close of business on December 31,
2000, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting. Viragen's financial statements for the
fiscal year ended June 30, 2000 are contained in the accompanying annual report
on Form 10-K. Viragen's financial statements for the quarterly period ended
September 30, 2000 are contained in the accompanying quarterly report on Form
10-Q. Neither the annual report nor the quarterly report form any part of the
material for the solicitation of proxies. If you do not expect to be present at
the meeting, you 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. You may also vote electronically via the internet or by
telephone.
By Order of the Board of Directors
/s/ DENNIS W. HEALEY
--------------------------------------
Dennis W. Healey, Secretary
Plantation, Florida
January 15, 2001
THIS IS AN IMPORTANT MEETING, AND YOU ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. IF YOU ARE UNABLE TO ATTEND IN PERSON, PLEASE EXECUTE AND
RETURN THE ENCLOSED PROXY CARD, OR VOTE ELECTRONICALLY VIA THE INTERNET OR BY
TELEPHONE AT YOUR EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED
PROXY CARD WILL BE APPRECIATED. IF YOU VOTE BY PROXY, YOU MAY NEVERTHELESS
ATTEND THE MEETING, REVOKE YOUR PROXY AND VOTE YOUR 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 being furnished to you by the board of directors of
Viragen, Inc., a Delaware corporation, in connection with a solicitation of
proxies for use at our 2000 annual meeting of stockholders. We will hold our
annual meeting at the American Stock Exchange located at 86 Trinity Place, New
York, NY, on February 14, 2001 at 3:00 P.M., local time, or at any and all
adjournments. Viragen will bear the cost of this solicitation. Viragen's annual
report on Form 10-K for the fiscal year ended June 30, 2000 and our quarterly
report for the quarterly period ended September 30, 2000 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 January 15, 2001.
OUTSTANDING STOCK AND VOTING RIGHTS
The board of directors has fixed the close of business on December 31, 2000
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. If you submit your proxy on the accompanying form, you have
the power to revoke it by notice of revocation directed to the proxy holder at
any time before it is voted. Unless you withhold authority in writing, proxies,
which are properly executed, will be voted for the proposals. Although you may
have given your proxy, you may nevertheless attend the meeting, revoke your
proxy and vote in person. The election of the directors nominated requires the
affirmative vote of a plurality of the shares of Viragen's common stock voting
at the annual meeting in person or by proxy.
As of December 31, 2000, the record date for determining our stockholders
entitled to notice of, and to vote at, the annual meeting, 96,261,564 shares of
our common stock, $.01 par value, were issued, of which 845,277 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 shares
of common stock outstanding (47,708,144 shares) as of the record date.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum at the annual meeting, and have the effect of a
negative vote on the approval of the amendment to Viragen's Certificate of
Incorporation to increase the number of authorized shares. Abstentions and
broker non-votes will have no effect for the election of directors or the
ratification of our auditors. Approval of the amendment to our Certificate of
Incorporation requires the affirmative vote of a majority of our outstanding
shares. Ratification of the appointment of our auditors requires the affirmative
vote of a majority of the shares of our common stock voting at the annual
meeting in person or by proxy.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
On February 28, 1997, we amended our certificate of incorporation and set
up a classified board of directors with the 1997 annual meeting. Following that
meeting, we divided directors into three subclasses consisting of class A, class
B and class C. The initial term of the class A directors expired after the 1998
annual meeting of stockholders; the term of the class B directors initially
expired after the 1999 annual meeting; and the term of the class C directors
initially expires after the 2000 annual meeting. At the annual meeting,
stockholders will be asked to elect two class C directors.
At each annual meeting of stockholders, directors of the respective class
whose term has expired will be elected, and the directors chosen to succeed
those whose terms have expired will 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 term of the
class A directors elected at the 1998 annual
<PAGE> 4
meeting will expire after our 2001 annual meeting of stockholders. The term of
the class B directors elected at the 1999 annual meeting will expire after our
2002 annual meeting of stockholders. The term of the class C directors elected
at this meeting will expire after our 2003 annual meeting of stockholders.
The following table lists Viragen's directors and officers:
<TABLE>
<CAPTION>
SERVED AS
OFFICER AND/OR
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE CLASS
---- --- ------------------------- -------------- -----
<S> <C> <C> <C> <C>
Gerald Smith.................................. 70 Chairman of the Board 1994 C
Chief Executive Officer 1998
President 1993
Dennis W. Healey.............................. 52 Chief Financial Officer 1980
Treasurer 1980
Director 1984 B
Executive Vice President 1993
Secretary 1994
Dr. D. Magnus Nicolson........................ 40 Chief Operating Officer 1999
Melvin Rothberg............................... 54 Executive Vice President 1999
Carl N. Singer................................ 84 Director 1997 C
Peter D. Fischbein............................ 61 Director 1981 B
Charles J. Simons............................. 82 Director 1998 A
Robert C. Salisbury........................... 57 Director 1998 A
Jose I. Ortega................................ 29 Controller 1996
</TABLE>
Gerald Smith became president of Viragen in May 1993. Since 1982, Mr. Smith
was a principal stockholder, president, chief executive officer and a director
of Business Development Corp. Business Development 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. These are computer-oriented companies which developed
database technology using the personal computer for audio, video, animation and
real time communication. Mr. Smith discontinued the operations of Business
Development Corp. in order to devote all of his time to Viragen. Mr. Smith is
also chairman of the board and president of Viragen (Europe) Ltd.
Dennis W. Healey is a certified public accountant. He was appointed
chairman of the board and chief executive officer in April 1993. In June 1994,
Mr. Healey relinquished his position as chairman of the board to Mr. Smith. In
July 1994, he relinquished the position of chief executive officer. Upon Gerald
Smith becoming president in May 1993, Mr. Healey became executive vice
president. He has served as chief financial officer and treasurer since 1980.
Mr. Healey was appointed secretary in 1994. Mr. Healey is also executive vice
president, treasurer, secretary and a director of Viragen (Europe).
D. Magnus Nicolson, Ph.D. was appointed chief operating officer of Viragen
and Viragen (Europe) upon the resignation of Dr. Jay Sawardeker in July 1999 and
August 1999, respectively. Dr. Nicolson was elected a director of Viragen
(Europe) in 1997. He has served as the managing director of Viragen (Scotland)
since April 1996. From 1992 to 1995, Dr. Nicolson was employed by Scottish
Enterprise, an agency of the Scottish government responsible for generating
economic development in Scotland. During his time at Scottish Enterprise, he
served as:
- technology manager for Locate in Scotland (1995),
- a senior executive (1993 to 1995), and
- contractor, healthcare liaison office of Dunbartonshire Enterprise (1992
to 1993).
2
<PAGE> 5
From 1990 to 1992, Dr. Nicolson conducted various market research projects
for a variety of public and private enterprises as an independent marketing
consultant. In 1988, Dr. Nicolson was awarded a Doctorate in Immunology from the
University of Strathclyde. He earned Masters Degrees in both Immunology and
Business in 1985 and 1992, respectively. Dr. Nicolson is a Fellow of the Royal
Society of Medicine, a Member of the Royal Society of Chemistry, and a Member of
the Chartered Institute of Marketing.
Melvin Rothberg joined Viragen as chief executive officer of Viragen U.S.A.
in April 1998. In April 1999, Mr. Rothberg assumed the position of an executive
vice president of Viragen. Prior to joining Viragen, Mr. Rothberg served as a
vice president of Althin Medical, Inc., a U.S. subsidiary of a Swedish medical
company, from 1990 to 1998. Mr. Rothberg served as a director and manager of a
number of divisions of C.D. Medical, a division of the Dow Chemical Company,
from 1983 to 1990.
Carl N. Singer was elected a director in August 1997 and currently serves
as chairman emeritus. He currently serves as chairman of the executive committee
and as a member of the compensation committee of the board of directors. Since
1981, Mr. Singer has served as chairman of Fundamental Management Corporation, a
Florida-based institutional investment fund, which manages the Active Investors
II fund. During fiscal 2000, Active Investors II invested a total of $2,000,000
in Viragen, in two separate transactions, receiving 1,800,016 shares of common
stock. Mr. Singer has also served as a director, president and CEO of Sealy,
Inc., Scripto, Inc. and the BVD Company.
Peter D. Fischbein is an attorney who has been practicing law for
approximately 36 years. Mr. Fischbein has served as a director of Viragen Inc.,
since 1981. Mr. Fischbein served as Viragen's secretary between May and December
1994. Mr. Fischbein was appointed to serve on the audit and finance committee in
November 2000. His former law firm on occasion represented Viragen and the
Viragen Research Associates Limited Partnership, which has contracts with
Viragen, Inc. Mr. Fischbein has been general partner of several limited
partnerships engaged in oil exploration and real estate development.
Charles J. Simons was elected to the board of directors in July 1998. He
currently serves as chairman of the audit and finance committee and the
compensation committee of the board of directors. Mr. Simons is the
vice-chairman of the board of G.W. Plastics, Inc., a plastic manufacturer. Also,
he is an independent management and financial consultant. From 1940 to 1981, he
was employed by Eastern Airlines, last serving as vice chairman, executive vice
president and as a director. Mr. Simons is a director of Veridian Corporation,
an aerospace company, and a number of private companies. He was also a director
of Home Intensive Care, Inc. from 1988 until July 1993. Mr. Simons is also a
director of MedWaste, Inc., Work Group, Inc. and Excalibur Corporation. Mr.
Simons is an investor in Active Investors II. During fiscal 2000, Active
Investors II invested a total of $2,000,000 in Viragen in two separate
transactions, in exchange for 1,800,016 shares of our common stock.
Robert C. Salisbury was appointed a director of Viragen in December 1998.
From 1974 to 1995, Mr. Salisbury was employed by the Upjohn Company serving in
several financial related positions. These positions included manager of cash
management, internal control and corporate finance from 1975 to 1981. He also
served as a vice president from 1985 to 1990, senior vice president from 1991 to
1994, and executive vice president for finance and chief financial officer from
1994 to 1995. Following the merger of Pharmacia and Upjohn, Inc. in 1995, Mr.
Salisbury served as executive vice president and chief financial officer until
1998. Mr. Salisbury also serves as a director of Packard Bio-Science Company, a
leading supplier of instruments to the life sciences research and nuclear
industries. Mr. Salisbury also serves as a director and investor in Fundamental
Management Corporation, a Florida-based institutional investment fund which
manages the Active Investors II fund. During fiscal 2000, Active Investors II
invested a total of $2,000,000 in Viragen, in two separate transactions,
receiving 1,800,016 shares of common stock.
Jose I. Ortega is a certified public accountant and joined Viragen as its
controller in June 1996. From 1993 until joining Viragen, Mr. Ortega was a
member of the audit staff of Ernst & Young LLP, Viragen's independent audit
firm.
There is no family relationship between any of the officers and directors.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows certain information regarding Viragen's common
stock beneficially owned at December 31, 2000, by:
- each person who is known by us to own beneficially or exercise voting or
dispositive control over 5% or more of Viragen's common stock,
- each of Viragen's directors,
- each officer named in the summary compensation table, and
- all officers and directors as a group.
A person is considered a beneficial owner of any securities that the person
owns or has the right to acquire beneficial ownership of within 60 days. At
December 31, 2000, there were 95,416,287 shares of common stock outstanding.
Other than indicated in the notes, we have been informed that these persons have
sole voting and dispositive power with respect to their shares.
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY OWNED
--------------------------
BENEFICIAL ACQUIRABLE
NAME OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS CURRENTLY WITHIN 60 DAYS
------------------------ ---------- ---------------- --------- --------------
<S> <C> <C> <C> <C>
Gerald Smith................................. 2,067,000 2.1% 17,000 2,050,000
Carl N. Singer............................... 4,015,841 4.2 3,915,841 100,000
Dennis W. Healey............................. 715,000 0.7 365,000 350,000
Peter D. Fischbein........................... 400,000 0.4 350,000 50,000
Charles J. Simons............................ 35,000 0.0 10,000 25,000
Robert C. Salisbury.......................... 30,000 0.0 30,000 --
Officers & Directors (as a Group of 9
persons)................................... 7,783,791 7.9 4,703,791 2,988,333
</TABLE>
Section 16(a) of the Exchange Act of 1934 requires a 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 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 percent (10%) stockholders are required by
Securities and Exchange Commission regulation to furnish the company with copies
of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representation that no other reports were required,
during the fiscal year ended June 30, 2000, all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten percent
(10%) beneficial owners were timely filed.
4
<PAGE> 7
ELECTION OF CLASS C DIRECTORS
The following table sets forth the names of the nominees, their positions
with Viragen, the year, if applicable, in which they became directors and other
related information. Executive officers are appointed 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 THE SERVED AS OFFICER
NAME AGE COMPANY AND/OR DIRECTOR SINCE CLASS
---- --- ----------------------- --------------------- -----
<S> <C> <C> <C> <C>
Gerald Smith.............................. 70 Chairman of the Board 1994 C
Chief Executive Officer 1998
President 1993
Carl N. Singer............................ 84 Director 1997 C
</TABLE>
During fiscal 2000, Viragen's board of directors met on three occasions.
Viragen has an executive committee, an audit and finance committee and a
compensation committee.
EXECUTIVE COMMITTEE
The executive committee acts for the full board during intervals between
board meetings, except on matters which by law may not be delegated. The
executive committee will meet as necessary. All actions by the committee are to
be reported at the next board of directors meeting. During fiscal 2000, the
executive committee met on four occasions. The executive committee consists of
Carl N. Singer (chairperson) and Gerald Smith.
AUDIT AND FINANCE COMMITTEE
The audit and finance committee of the Viragen, Inc. board of directors was
organized in February 1998. It is composed of three independent directors and
operates under a written charter adopted by the board of directors in July 2000
(Appendix A). The committee members are Charles J. Simons (chairperson), Robert
C. Salisbury and Peter D. Fischbein. During fiscal 2000, the audit and finance
committee met on eight occasions.
The audit and finance committee reviews our financial reporting process on
behalf of the board of directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls.
In this context, the committee has met and held discussions with management
and the independent auditors. Management represented to the committee that
Viragen's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
In addition, the committee has discussed with the independent auditors, the
auditor's independence from the company and its management, including the
matters in the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions With Audit Committees).
The committee discussed with our independent auditors the overall scope and
plans for their respective audit. The committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, the evaluations of Viragen's internal controls, and the overall
quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors, and the board has approved, that the
audited consolidated financial statements be included in Viragen's annual report
on Form 10-K for the year ended June 30, 2000, for filing with the Securities
and
5
<PAGE> 8
Exchange Commission. The committee and the board also have recommended, subject
to shareholder approval, the selection of Ernst & Young, LLP, as our independent
auditors.
Submitted by the audit and finance committee of the board of directors:
Charles J. Simons Robert C. Salisbury Peter D. Fischbein
COMPENSATION COMMITTEE
The compensation committee provides overall guidance for officer
compensation programs, including salaries and other forms of compensation
including all employee stock option grants and warrant grants to non-employees.
The compensation committee consists of Charles J. Simons (chairperson), Carl N.
Singer and Robert C. Salisbury.
AUDIT AND FINANCE COMMITTEE AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
Currently, there are three members of the audit and finance committee and
the compensation committee. All members are outside directors.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
Compensation Committee Report on Executive Compensation. Under the rules
established by the Securities and Exchange Commission, management is required to
provide certain data and information in regard to the compensation and benefits
provided to the chief executive officer and other executive officers. The
disclosure requirements for the chief executive officer 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 compensation committee of the board of directors
is responsible for establishing compensation levels and benefits for the
executive officers of the company. The compensation committee is also
responsible for reviewing recommendations made by management regarding
compensation, including stock options, and benefits for other employees.
Executive Compensation Policy. For the last fiscal year, the goals
established by the 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
compensation committee as well as by the board of directors as a whole. The
compensation committee considers each employee's total compensation package,
including base salary, stock options and other benefits as provided in their
respective employment agreements.
Chairman of the Board and Chief Executive Officer. On March 1, 1997, Mr.
Smith entered into a two-year employment agreement. This agreement provided for:
- a salary of $190,000 and $200,000 for the first and second years,
respectively,
- options to purchase 1,000,000 shares of common stock at $3.22 per share
exercisable over five years,
- health and life insurance,
- similar employee benefits generally available to other employees,
- use of an automobile and related maintenance, and
- reimbursement of business related expenses.
On March 1, 1997, Mr. Smith also entered into a two-year employment
agreement with Viragen (Europe) Ltd. under terms similar to those of his Viragen
employment agreement. The agreement provided for an annual salary of $10,000 and
$20,000 for the first and second years. We amended the agreement on July 3,
1997, to provide for an annual salary of $72,000 for the year July 1, 1997
through June 30, 1998, and $82,000 per annum for the period from July 1, 1998
through February 28, 1999. Mr. Smith's employment agreements with both Viragen
and Viragen (Europe) expired on March 1, 1999. On that date, he entered into a
single two-year employment agreement with Viragen under terms similar to his
previous agreement. This agreement provides for a total annual salary of
$282,000. Mr. Smith continues to serve as the president and chairman of Viragen
(Europe).
Other Executive Officers. As with the compensation of the chief executive
officer, the compensation committee evaluates and establishes the compensation
packages for other executive officers of the company. These executives are
evaluated routinely based on the effectiveness of their efforts in their
respective areas of responsibility as well as their contribution to achieving
our overall goals. The compensation committee has structured compensation
packages so that the base salaries are conservative by pharmaceutical industry
7
<PAGE> 10
standards. The emphasis is on compensation through the issuance of stock
options. As a consequence, the executive officers may maximize their total
compensation through the attainment of corporate goals as reflected in
appreciated stock values.
Submitted by the compensation committee of the board of directors:
Charles J. Simons Carl N. Singer Robert C. Salisbury
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table includes information concerning the compensation and
employment agreements of the chief executive officers of Viragen and the four
other most highly compensated executive officers as of June 30, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
----------------------- -----------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
---------------------------------------------- STOCK OPTIONS/
OTHER ANNUAL AWARDS SARs LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($) (#) PAYOUTS($)
--------------------------- ---- --------- -------- ---------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald Smith............... 2000 $282,000 $-- $-- $-- -- $--
Chairman of the 1999 282,000 -- -- -- -- --
Board, CEO and 1998 263,000 -- -- -- -- --
President
Dennis W. Healey........... 2000 252,000 -- -- -- -- --
Exec. V.P., 1999 252,000 -- -- -- -- --
Treasurer, CFO 1998 240,000 -- -- -- -- --
and Director
D. Magnus Nicolson......... 2000 170,000 -- -- -- 200,000 --
COO 1999 115,000 -- -- -- -- --
1998 100,054 -- -- -- -- --
Melvin Rothberg............ 2000 160,000 -- -- -- 350,000 --
Exec. V.P 1999 150,000 -- -- -- -- --
1998 25,000 -- -- -- -- --
Patrick Yeramian........... 2000 162,000 -- -- -- -- --
Chief Medical 1999 171,000 -- -- -- -- --
Director 1998 14,000 -- -- -- 250,000 --
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION($)
--------------------------- ----------------
<S> <C>
Gerald Smith............... $--
Chairman of the --
Board, CEO and --
President
Dennis W. Healey........... --
Exec. V.P., --
Treasurer, CFO --
and Director
D. Magnus Nicolson......... --
COO --
--
Melvin Rothberg............ --
Exec. V.P --
--
Patrick Yeramian........... --
Chief Medical --
Director --
</TABLE>
Employment Agreements
On March 1, 1997 Mr. Healey entered into a two-year employment agreement.
The agreement, which was amended on July 1, 1997, provided for:
- a salary $190,000 and $195,000 for the first and second years,
- options to purchase 300,000 shares of common stock at $3.22 per share,
exercisable over five years,
- health and life insurance,
- similar employee benefits generally available to other employees, and
- reimbursement of automobile and business related expenses.
On March 1, 1997, Mr. Healey entered into a two-year employment agreement
with Viragen (Europe) Ltd., subsequently amended on July 3, 1997. This agreement
was to run concurrent with Mr. Smith's Viragen (Europe) agreement and superceded
all previous agreements. This agreement provided for a salary of $31,700 for the
four-month period ending June 30, 1997, $52,000 for the year ended June 30,
1998, and $38,000 for the eight-month period ending February 28, 1998. Upon the
expiration of Mr. Healey's employment agreements with Viragen and Viragen
(Europe), on March 1, 1999, he entered into a single employment agreement with
8
<PAGE> 11
Viragen under terms similar to his previous agreements. The agreement provides
for a total annual salary of $252,000. Mr. Healey continues to serve as
executive vice president, chief financial officer, secretary and director of
Viragen (Europe).
On July 1, 1999, Dr. Nicolson entered into a two-year employment agreement
with Viragen. This agreement supercedes all previous agreements. The agreement
provided for:
- an annual salary of $170,000,
- the grant of an option to acquire 200,000 shares of common stock at
$.625, vesting one-third on the date of grant, one-third on the first
anniversary of the grant date and one-third on the second anniversary,
- similar employee benefits generally available to executive officers,
- use of an automobile, and
- reimbursement of business related expenses.
On July 1, 1999, Mr. Rothberg entered into a two-year employment agreement
with Viragen. This agreement supercedes all previous agreements. The agreement
provided for:
- an annual salary of $160,000 and $172,500 for the first and second years,
respectively,
- the grant of an option to acquire 250,000 shares of common stock at $.625
per share, vesting one-half on the date of grant and one-half on the
first year anniversary,
- health insurance,
- similar employee benefits generally available to executive employees,
- $400 per month auto allowance, and
- reimbursement of business related expenses.
In April 2000, Mr. Rothberg was granted an option to acquire 100,000 shares
of common stock at $2.00 per share, vesting on the date of grant. These options
were granted simultaneously with the cancellation of an option to acquire
100,000 shares of Viragen U.S.A., Inc. at $0.22 per share held by Mr. Rothberg.
The potential replacement of Viragen U.S.A. options was addressed in Mr.
Rothberg's April 28, 1998 option agreement.
On June 1, 1998, Dr. Yeramian entered into a two-year employment agreement
with Viragen. The agreement provided for:
- an annual salary of $170,000 and $177,000 for the first and second years,
respectively,
- the grant of an option to acquire 250,000 shares of common stock at $2.22
per share exercisable over 5 years,
- health and life insurance,
- similar employee benefits generally available to other employees, and
- reimbursement of business related expenses.
Upon the expiration of his employment agreement in May 2000, Dr. Yeramian
entered into a two year consulting agreement with Viragen. The consulting
agreement provides for:
- consulting fee of $1,000 per day and $1,100 per day for the first and
second years, respectively,
- the grant of a warrant to acquire 50,000 shares of common stock at $1.44
per share, exercisable 25,000 after the first year and 25,000 after the
second year, and
- reimbursement of business related expenses.
9
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table includes information as to the grant of options to
purchase shares of common stock during the fiscal year ended June 30, 2000 to
each person named in the summary compensation table.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ------------ ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald Smith..................................... -- -- $ -- -- $ -- $ --
Dennis W. Healey................................. -- -- -- -- -- --
D. Magnus Nicolson............................... 200,000 -- 0.63 -- 42,666 97,667
Melvin Rothberg.................................. 350,000 -- 1.02 -- 103,250 230,750
Patrick Yeramian................................. -- -- -- -- -- --
</TABLE>
On February 7, 2000, the board of directors approved a three-year extension
on 1,400,000 options held by Mr. Smith. The options, exercisable at $.50 per
share, were extended to October 5, 2003. No other terms of the option agreement
were modified. Viragen recognized approximately $941,000 in compensation
expense, under the provisions of APB No. 25, relating to the modification of
this grant.
Following the expiration of his employment agreement, Dr. Yeramian received
50,000 warrants to acquire common shares at $1.44, under the terms of a
consulting agreement.
OPTION EXERCISES AND HOLDINGS
The following table includes information as to the exercise of options to
purchase shares of common stock during the fiscal year ended June 30, 2000 by
each person named in the summary compensation table and the unexercised options
held as of the end of the 2000 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FY
OPTIONS AT FY END(#) END($)
SHARES ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Smith...................... 400,000 $369,000 2,050,000 -- $1,750,000 $ --
Dennis W. Healey.................. 200,000 21,880 450,000 -- 175,000 --
D. Magnus Nicolson................ 20,000 42,500 46,666 133,334 133,334 217,000
Melvin Rothberg................... 125,000 143,595 100,000 125,000 125,000 203,750
Patrick Yeramian.................. -- -- 250,000 -- 10,000 --
</TABLE>
1997 AMENDED 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, called the 1995 stock option plan. On
September 22, 1995, the board of directors amended the 1995 stock option plan to
define certain terms and clarify the minimum exercise price of the non-qualified
options. The minimum exercise price of non-qualified options cannot be less than
55% of the fair market value. Viragen stockholders ratified the 1995 stock
option plan at the annual meeting held on December 15, 1995.
On January 27, 1997 the board of directors adopted, subject to approval by
the stockholders, a stock option plan called the 1997 stock option plan. The
1997 stock option plan contains terms and provisions similar to the 1995 stock
option plan. Viragen stockholders ratified the 1997 stock option plan at the
annual meeting held on February 28, 1997. On April 24, 1998 the board of
directors adopted, subject to ratification by the stockholders, an amendment to
the 1997 stock option plan. This amendment reserved an additional 1,000,000
shares of common stock for issuance under that plan. This amendment brought the
total shares reserved under the 1997 stock option plan to 4,000,000 shares. On
July 31, 1998, the stockholders ratified this amendment to the 1997 stock option
plan.
10
<PAGE> 13
The audit and finance committee and the compensation committee of the board
of directors and the board of directors currently administer the plans.
Administration of the plan includes determining:
- the persons who will be granted plan options,
- the type of plan options to be granted,
- the number of shares subject to each plan options, and
- the plan options price.
Options granted under either the 1995 or the 1997 stock option plans may
qualify as incentive stock options, under Section 422 of the Internal Revenue
Code of 1986, as amended. In addition, the plans also include a reload option
provision. This provision permits an eligible person to pay the exercise price
of the plan option with shares of common stock owned by the eligible person. The
person then receives a new plan option to purchase shares of common stock equal
in number to the tendered shares. Any incentive option, which is granted under a
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. The exercise price of
any incentive option granted to an eligible employee owning more than 10% of our
common stock must be at least 110% of the fair market value, as determined on
the date of the grant. The board of directors, the audit and finance committee
or the compensation committee determines the term of each plan option and the
manner in which it may be exercised. No plan option may be exercisable more than
10 years after the date of its grant. In the case of an incentive option granted
to an eligible employee owning more than 10% of Viragen's common stock, no plan
option may be exercisable more than five years after the date of the grant.
Officers, directors, key employees and consultants of Viragen and its
subsidiaries are eligible to receive non-qualified options under the stock
option plans. Only officers, directors and employees who are employed by Viragen
or by any of its subsidiaries are eligible to receive incentive options.
Incentive options are non-assignable and nontransferable, except by will or
by the laws of descent and distribution during the lifetime of the optionee.
Only the optionee may exercise incentive options. Under a recent amendment to
the 1997 stock option plan, non-qualified options may be transferable under
limited circumstances for estate planning, if authorized by the board of
directors or the committee. If an optionee's employment is terminated for any
reason, other than his death or disability, or if an optionee is not an employee
but is a member of Viragen's board of directors and his service as a director is
terminated for any reason, other then death or disability, the plan option
granted to him will 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 will
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, 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 the disability.
The board of directors may amend, suspend or terminate the stock option
plans at any time. However, no amendment can be made which changes the minimum
purchase price, except in the event of adjustments due to changes in Viragen's
capitalization. Unless the plans have been suspended or terminated by the board
of directors, the 1995 stock option plan will terminate on May 15, 2005, and the
1997 stock option plan will terminate on January 27, 2007. The termination of
either plan will not affect the validity of any plan options previously granted.
As of December 31, 2000, we have issued 3,197,800 options under the 1995
stock option plan and 3,692,700 options under the 1997 stock option plan.
OTHER OPTION GRANTS
In March 2000, Mr. Carl Singer, a director and chairperson of our executive
committee was granted 100,000 options to purchase common stock. The options are
exercisable at $3.75 per share. In July 1999, Mr. Jose Ortega was granted 50,000
options to purchase common stock. The options are exercisable at $0.625 per
share.
11
<PAGE> 14
PERFORMANCE GRAPH -- STOCKHOLDER RETURN
ON COMMON STOCK
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VIRAGEN, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET
VIRAGEN, INC. (U.S.) NASDAQ HEALTH SERVICES
------------- ------------------- ----------------------
<S> <C> <C> <C>
6/95 100 100 100
6/96 644 128 152
6/97 300 156 141
6/98 222 205 137
6/99 107 296 129
6/00 267 437 100
</TABLE>
* $100 invested on 6/30/95 in stock or index -- including reinvestment of
dividends. Fiscal year ending June 30.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gerald Smith and Dennis W. Healey, who are principal officers of Viragen,
also serve as the principal officers of Viragen (Europe).
On April 25, 1997, Viragen loaned William Saeger, a former director,
$100,000. In exchange, Viragen received a one-year promissory note bearing
interest at 8 1/2%. In April 1998, Mr. Saeger defaulted on this note. Due to a
subsequent deterioration in Mr. Saeger's health and financial condition, we were
unable to determine the amounts which could ultimately be realized on the
promissory note. Accordingly, we wrote-off the entire amount due under the note
with related accrued interest of approximately $10,000 as uncollectible by
fiscal 1998 year end. We are continuing to pursue collection efforts relative to
this transaction.
On September 1, 1998, Gerald Smith and Dennis W. Healey each exercised
250,000 options to purchase common stock. Both exercised their options through
the issuance of promissory notes payable to Viragen totaling $300,000. Mr. Smith
and Mr. Healey also entered into related pledge and escrow agreements. The
promissory notes carried an interest rate of 5.47%, payable semi-annually, and
were secured by the underlying common stock purchased. The purchased shares were
being held in escrow, pending payment of the related notes pursuant to the
provisions of the pledge and escrow agreements. Mr. Smith paid $100,000 of the
12
<PAGE> 15
principal on his promissory note, plus related interest, during January 2000.
Mr. Healey paid-in-full the $150,000 principal, plus related interest, on his
promissory note, during March 2000. Viragen released the collateral on the two
promissory notes.
Carl N. Singer, a director of Viragen and the chairman of its executive
committee, also exercised options for 50,000 shares on October 1, 1998. Peter
Fischbein, a director, exercised options for 200,000 shares on October 8, 1998.
Charles F. Fistel, a former officer, exercised options totaling 410,000 shares
on May 3, 1999 and May 11, 1999 These options were all exercised through the
issuance of promissory notes payable to Viragen totaling $302,000, and related
pledge and escrow agreements. The promissory notes bear interest at rates
ranging between 5.06% and 5.15%, payable semi-annually, and are secured by the
underlying common stock purchased. The purchased shares are being held in
escrow, pending payment of the related notes pursuant to the provisions of the
pledge and escrow agreements. During February 2000, Mr. Fischbein exercised
options for an additional 25,000 common shares through the issuance of another
promissory note and escrow agreement. Principal on the promissory note totals
$12,500 and bears interest at 6.46%. Mr. Singer paid-in-full the $59,000
principal, plus related interest, on his promissory note, during March 2000. Mr.
Singer's collateral was released from escrow upon receipt of his payment. Mr.
Fistel paid $30,000 of the principal on his promissory notes, plus related
interest, during March 2000. A pro-rated number of escrowed common shares were
released to Mr. Fistel upon receipt of his payment.
During January 2000, we contracted Cameron Associates, Inc. to act as an
investor relation's consultant. Cameron Associates received $6,000 per month
through February 2000, subsequently reduced to $3,000 per month, as compensation
for their services. They also received warrants to purchase 100,000 common
shares of Viragen at $1.17 per share through January 2005. The consulting
agreement and related warrants were cancelled in December 2000. Mr. Singer
serves as a director on Cameron Associates' board of directors and is a minority
stockholder.
On February 7, 2000, the board of directors voted to modify the terms of an
option to purchase 1.4 million shares of common stock, which had been granted to
Mr. Smith, Viragen's president, during October 1995. The board of directors
extended the expiration of this common stock option by three years. Under the
modified terms, the common stock option will now expire on October 5, 2003. No
other terms were changed. Under the provisions of APB 25, we recognized
compensation expense of $941,000 relating to this modification.
On February 18, 2000, we entered into a subscription agreement with Active
Investors Ltd. II, an investment fund managed by Mr. Carl Singer, a director of
Viragen, through Fundamental Management Corporation, a Florida-based
institutional investment fund. Under the terms of the subscription agreement, we
issued to Active Investors Ltd. II a convertible promissory note for the
principal amount of $1,000,000. The promissory note had an interest rate of 9.5%
per annum. The principal and interest were payable on February 17, 2001.
Active Investors Ltd. II could elect to convert the unpaid principal and
interest, at any time, into common shares at the fixed rate of $1.00 per share.
They also received a warrant to purchase 100,000 common shares. The warrant is
exercisable at $2.00 per share through February 17, 2003. This note was
converted into 1,015,716 shares of common stock, which included $35,400 in
interest on June 30, 2000.
Active Investors Ltd. II has also participated as an investor under the
shelf registration on Form S-3 dated March 21, 2000 (File No. 333-32306). Active
Investors Ltd. II invested $1,000,000 in exchange for 784,300 shares of our
common stock.
Mr. Robert Salisbury, a director of Viragen, also serve as a director and
investor in Fundamental Management Corporation which manages the Active
Investors II fund. Mr. Charles Simons, a director of Viragen, is an investor in
the Active Investors II fund.
Between February and March 2000, Mr. Smith exercised options for 400,000
additional common shares through the issuance of two promissory notes and escrow
agreements. Principal on the promissory notes totaled $200,000. Mr. Smith
paid-in-full both notes during March 2000 and the escrowed shares were released.
13
<PAGE> 16
During March 2000, Melvin Rothberg, an executive vice-president of Viragen,
exercised options for 100,000 common shares through the issuance of a promissory
note and related escrow agreement. Principal on the promissory note totaled
$62,500. Mr. Rothberg paid-in-full the principal on his note during April 2000,
and the escrowed shares were released.
Commencing in March 2000, Mr. Singer is receiving $100,000 per year for his
services as a director and chairperson of the executive committee. He receives
no other director fees. In addition, for these services on March 14, 2000, Mr.
Singer was granted an option to acquire 100,000 shares of common stock. The
option provides for:
- an exercise price of $3.75 per share,
- are exercisable for 5 years from the vesting date,
- an exercisable 33,333 shares on the grant date; 33,333 shares on the
first anniversary of the grant date and 33,334 shares on the second
anniversary of the grant date.
In October 2000, Mr. Healey and Dr. Dworkin each exercised options to
purchase 100,000 shares of common stock at $.50 per share. The options were
exercised through the issuance of two promissory notes totaling $100,000 and
related escrow agreements.
APPROVAL OF NOMINEES
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR THE CLASS C DIRECTORS SET FORTH ABOVE. THE ELECTION OF THE
DIRECTORS NOMINATED REQUIRES THE AFFIRMATIVE VOTE OF A PLURALITY OF THE SHARES
OF VIRAGEN COMMON STOCK VOTING AT THE ANNUAL MEETING IN PERSON OR BY PROXY.
PROPOSAL TO AMEND VIRAGEN'S CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
The board of directors has voted to amend our Certificate of Incorporation
to increase the authorized shares of common stock, par value $.01 per share,
from 125,000,000 to 150,000,000 shares. The board of directors determined that
such an amendment is advisable and directed that the proposed amendment be
considered at the annual meeting of stockholders to be held on February 14,
2001. The amendment will not effect the number of shares of preferred stock
authorized.
The board of directors believes that an increase in authorized capital may
be desirable for a number of reasons, including but not limited to, facilitating
our ability to effect growth through future acquisitions and financings, future
stock splits or dividends for other corporate purposes.
If the proposed amendment is approved by the stockholders, the board of
directors will be empowered, without the necessity of further action or approval
of our stockholders to issue up to 150,000,000 shares of common stock.
Notwithstanding the foregoing, guidelines of the American Stock Exchange may
require us to submit for approval of our stockholders, any issuance of our
common stock in a single transaction or in a series of related transactions, in
excess of 20% of our outstanding common stock if such issuance could be made at
less than fair market value measured on the date the agreement to issue the
stock is made. In addition, Delaware law may require stockholder approval for
certain corporate transactions such as a merger or sale of all or substantially
all of our assets. Each share of newly authorized common stock will have the
same rights and privileges as each share of existing common stock. To the extent
issued, newly authorized common stock will decrease the percentage ownership of
us by our existing stockholders and, depending upon the price at which such
shares are issue, could be dilutive to existing stockholders.
The board of directors has not yet identified any particular acquisition or
financing that will result in the issuance of additional shares of our common
stock other than previously disclosed, nor have we entered into any
understandings or agreements to do so.
14
<PAGE> 17
The affirmative vote of the holders of a majority of the outstanding shares
of our common stock is required for approval of the amendment. If the amendment
is approved by the stockholders, the amendment will become effective upon the
filing with the Secretary of State of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" AND AMENDMENT TO VIRAGEN'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
THAT VIRAGEN IS AUTHORIZED TO ISSUE FROM 125,000,000 TO 150,000,000.
APPOINTMENT OF THE COMPANY'S AUDITORS
The appointment of Ernst & Young LLP as our independent auditors for the
fiscal year ended June 30, 2001, will be submitted for ratification by the
stockholders.
Although the board of directors 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 Viragen's best interest, 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 VIRAGEN'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING JUNE 30, 2001. RATIFICATION OF THE APPOINTMENT OF OUR
AUDITORS REQUIRES, THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF VIRAGEN'S
COMMON STOCK VOTING AT THE ANNUAL MEETING IN PERSON OR BY PROXY.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
Management 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 our 2001 annual meeting
of stockholders of must be received by us, at our principal executive offices
not later than September 17, 2001, or if the 2001 annual meeting of stockholders
differs by more than 30 days from the date of the 2000 annual meeting, then a
reasonable time before we print and mail the proxy materials for the 2001 annual
meeting, for inclusion in the proxy statement and proxy relating to the 2001
annual meeting of stockholders. Any proposal will be subject to our by-laws and
17 C.F.R. sec.240.14a-8 of the Rules and Regulations under the Securities
Exchange Act of 1934.
In addition, the proxy solicited by the board of directors for the 2001
annual meeting of stockholders will confer discretionary authority to vote on
any stockholder proposal presented at that meeting, unless management is
provided with notice of such proposal no later than December 16, 2001, or if the
2001 annual meeting of stockholders differs by more than 30 days from the date
of the 2000 annual meeting, then a reasonable time before we print and mail our
proxy materials for the 2001 annual meeting.
15
<PAGE> 18
AVAILABILITY OF FORM 10-K ANNUAL REPORT
AND FORM 10-Q QUARTERLY REPORT
A copy of Viragen's annual report on Form 10-K for the year ended June 30,
2000, has been included with this proxy statement along with a copy of its
quarterly report on Form 10-Q for the quarterly period ended September 30, 2000.
Both are exclusive of exhibits 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
/s/ DENNIS W. HEALEY
--------------------------------------
Dennis W. Healey, Secretary
Plantation, Florida
January 15, 2001
16
<PAGE> 19
APPENDIX A
CHARTER OF VIRAGEN, INC.'S AUDIT AND FINANCE COMMITTEE OF THE BOARD OF DIRECTORS
<PAGE> 20
CHARTER
AUDIT AND FINANCE COMMITTEE
ORGANIZATION
This charter governs the operations of the audit and finance committee. The
committee shall review and reassess the charter at least annually and obtain the
approval of the board of directors. The committee shall be appointed by the
board of directors and shall comprise at least three directors, each of whom are
independent of management and the company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the company. All committee
members shall be financially literate, [or shall become financially literate
within a reasonable period of time after appointment to the committee,] and at
least one member shall have accounting or related financial management
expertise.
Statement of Policy
The audit and finance committee shall provide assistance to the board of
directors in fulfilling their oversight responsibility to the shareholders,
potential shareholders, the investment community, and others relating to the
company's financial statements and the financial reporting process, the systems
of internal accounting and financial controls, the internal audit function, the
annual independent audit of the company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the company and the power to
retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit and finance committee is to oversee
the company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee is carrying
out its responsibilities believes its policies and procedures should remain
flexible, in order to best react to changing conditions and circumstances. The
committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principal recurring processes of the audit and
finance committee in carrying out its oversight responsibilities. The processes
are set forth as a guide with the understanding that the committee may
supplement them as appropriate.
- Review and update the committee's charter annually.
- The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit and finance committee, as
representatives of the company's shareholders. The committee shall have
the ultimate authority and responsibility to evaluate and, where
appropriate, recommend the replacement of the independent auditors. The
committee shall discuss with the auditors their independence from
management and the company and the matters included in the written
disclosures required by the Independence Standards Board. Annually, the
committee shall review and recommend to the board the selection of the
company's independent auditors, subject to shareholders' approval.
- The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the
committee
<PAGE> 21
shall meet separately with the internal auditors and the independent
auditors, with and without management present, to discuss the results of
their examinations.
- The committee is authorized to approve a director of internal audit and
review and have veto power over the appointment, replacement,
reassignment or dismissal of the director of internal audit.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
- The committee shall review with management and the independent auditors
the financial statements to be included in the company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K), including their judgement about the quality,
not just acceptability, of accounting principles, the reasonableness of
significant judgements, and the clarity of the disclosures in the
financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards.
- Review policies and procedures covering officers' expense accounts and
prerequisites, including their use of corporate assets, and consider the
results of any review of those areas by the internal auditor or the
independent auditors.
- Review the annual departmental budget prepared by management and make
recommendations as indicated to management and the board of directors.
- Review legal and regulatory matters that may have a material effect on
the organization's financial statements, compliance policies and programs
and reports from regulators.
<PAGE> 22
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
VIRAGEN, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 14, 2001
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 New York, New York on February 14, 2001, 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 judgement. All powers may be
exercised by said Proxy.
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.
(continued and to be signed and dated on other side)
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FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Call TOLL-FREE 1-800-840-1208 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
OR
2. Vote by internet at our Internet Address: http://www.eproxy.com/vra/
OR
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
<PAGE> 23
\Please mark your
votes as indicated
in this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. To elect two directors to the board of directors, and who will be
classified as class C directors, to serve for the term of their designated
class and until their successors have been elected and qualified.
Nominees: CLASS C DIRECTORS
01 Gerald Smith
02 Carl N. Singer
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PLEASE
DRAW A LINE THROUGH THAT NOMINEE'S NAME.)
2. To ratify an amendment to our Certificate of Incorporation increasing the
number of authorized shares of our common stock from 125 million to 150
million.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Ernst & Young LLP, as our independent
auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
By checking the box to the right, I consent to future access of the Annual [ ]
Report, Proxy Statements, Prospectuses and other communications
electronically via the Internet. I understand that the Company may no
longer distribute printed materials to me for any future shareholder
meeting until such consent is revoked. I understand that I may revoke
my consent at any time by contacting the Company's transfer agent,
Mellon Investor Services, L.L.C., Ridgefield Park, NJ. I also understand
that costs normally associated with electronic access, such as usage and
telephone charges, will be my responsibility.
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.
<TABLE>
<CAPTION>
<S> <C>
------- Please sign exactly as name appears to the left. 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)
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Number of Shares Subject to Proxy
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE Date: , 2001
ENCLOSED ENVELOPE. -------------------------------------------------
</TABLE>
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VOTE BY TELEPHONE OR INTERNET
QUICK * * * EASY * * * IMMEDIATE
YOUR VOTE IS IMPORTANT! -- YOU CAN VOTE IN ONE OF THREE WAYS:
1. TO VOTE BY PHONE: CALL TOLL-FREE 1-800-840-1208 ON A TOUCH TONE TELEPHONE
24 HOURS A DAY -- 7 DAYS A WEEK. THERE IS NO CHARGE TO YOU
FOR THIS CALL -- HAVE YOUR PROXY CARD IN HAND. You will be
asked to enter a CONTROL NUMBER, which is located in the
lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL
proposals, press 1.
When asked, please confirm by pressing 1.
OPTION 2: If you choose to vote on each proposal separately,
press 0. You will hear these instructions:
PROPOSAL 1: To vote FOR ALL nominees, press 1; to WITHHOLD
FOR ALL nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions.
PROPOSAL 2: To vote FOR, press 1; AGAINST, press 9;
ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
The instructions are the same for all remaining proposals.
OR
2. VOTE BY INTERNET: FOLLOW THE INSTRUCTIONS AT OUR WEBSITE ADDRESS:
http://www.eproxy.com/vra/
OR
3. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly
in the enclosed envelope.
NOTE: IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR
PROXY CARD.
THANK YOU FOR VOTING.
