SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ARONEX PHARMACEUTICALS, 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
_______________________________________________________________
[ X] 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
ARONEX PHARMACETICALS, INC.
3400 Research Forest Drive
The Woodlands, Texas 77381
May 7, 1996
TO OUR STOCKHOLDERS:
You are cordially invited to attend a Special Meeting of Stockholders
of Aronex Pharmaceuticals, Inc. to be held on Friday, May 24, 1996, at
10:00 a.m., local time, at the Company's offices at 3400 Research Forest
Drive, The Woodlands, Texas. A Notice of the Special Meeting, Proxy
Statement and form of proxy are enclosed with this letter.
We encourage you to read the Notice of the Special Meeting and Proxy
Statement so that you may be informed about the business to come before the
meeting. Your participation in the Company's business is important,
regardless of the number of shares that you hold. To ensure your
representation at the meeting, please promptly sign and return the
accompanying proxy card in the postage-paid envelope.
We look forward to seeing you on May 24th.
Sincerely,
James M. Chubb
President
<PAGE> 3
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 1996
To the Stockholders of Aronex Pharmaceuticals, Inc.:
A Special Meeting of Stockholders (the "Special Meeting") of Aronex
Pharmaceuticals, Inc. will be held on Friday, May 24, 1996, at 10:00 a.m.,
local time, at the Company's offices at 3400 Research Forest Drive, The
Woodlands, Texas, for the following purposes:
1. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to effect a one-for-two reverse
stock split; and
2. To act upon such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on May 2, 1996
will be entitled to notice of and to vote at the Special Meeting.
It is important that your shares be represented at the Special Meeting
regardless of whether you plan to attend. THEREFORE, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID ENVELOPE
AS PROMPTLY AS POSSIBLE. If you are present at the Special Meeting, and
wish to do so, you may revoke the proxy and vote in person.
By Order of the Board of Directors,
Terance A. Murnane
Secretary
The Woodlands, Texas
May 7, 1996
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<PAGE> 4
ARONEX PHARMACEUTICALS, INC.
3400 Research Forest Drive
The Woodlands, Texas 77381
PROXY STATEMENT
For
SPECIAL MEETING OF STOCKHOLDERS
To Be Held May 24, 1996
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of
Aronex Pharmaceuticals, Inc. (the "Company"), to be voted at the Special
Meeting of Stockholders of the Company to be held on Friday, May 24, 1996
(the "Special Meeting"), at 10:00 a.m., local time, at the Company's
offices at 3400 Research Forest Drive, The Woodlands, Texas, for the
purposes set forth in the accompanying Notice of Special Meeting of
Stockholders, and at any adjournment(s) of the Special Meeting. When
Proxies in the accompanying form are properly executed and received, the
shares represented thereby will be voted at the Special Meeting in
accordance with the directions noted thereon. If no directions are
indicated, the shares will be voted in favor of the proposal set forth in
this Proxy Statement and in the discretion of the persons appointed as
proxies in the accompanying form of Proxy with respect to any other matter
that is properly brought before the Special Meeting.
Each stockholder of the Company has the unconditional right to revoke
his Proxy at any time prior to its exercise, either in person at the
Special Meeting or by written notice to the Company addressed to Secretary,
Aronex Pharmaceuticals, Inc., 3400 Research Forest Drive, The Woodlands,
Texas 77381. No revocation by written notice will be effective unless such
notice has been received by the Secretary of the Company prior to the day
of the Special Meeting or by the inspector of election at the Special
Meeting.
The principal executive offices of the Company are located at 3400
Research Forest Drive, The Woodlands, Texas 77381. This Proxy Statement and
the accompanying Notice of Special Meeting of Stockholders and Proxy are
being mailed to the Company's stockholders on or about May 7, 1996.
In addition to the solicitation of proxies by use of this Proxy
Statement, directors, officers and employees of the Company may solicit the
return of proxies by mail, personal interview, telephone or telegraph.
Officers and employees of the Company will not receive additional
compensation for their solicitation efforts, but they will be reimbursed
for any out-of-pocket expenses incurred. Brokerage houses and other
custodians, nominees and fiduciaries will be requested, in connection with
the stock registered in their names, to forward solicitation materials to
the beneficial owners of such stock.
All costs of preparing, printing, assembling and mailing the Notice of
Special Meeting of Stockholders, this Proxy Statement, the enclosed form of
Proxy and any additional materials, as well as the cost of forwarding
solicitation materials to the beneficial owners of stock and all other
costs of solicitation, will be borne by the Company.
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<PAGE> 5
PURPOSES OF THE MEETING
At the Special Meeting, the Company's stockholders will be asked to
consider and act upon the following matters:
1. A proposal to amend the Company's Amended and Restated
Certificate of Incorporation (the "Amended and Restated
Certificate of Incorporation") to effect a one-for-two reverse
stock split of the Company's Common Stock, par value $.001 per
share (the "Reverse Split"); and
2. The transaction of any and all other business that may properly
come before the Special Meeting or any adjournment(s) thereof.
QUORUM AND VOTING
The close of business on May 2, 1996 has been fixed as the record date
(the "Record Date") for the determination of stockholders entitled to vote
at the Special Meeting and any adjournment(s) thereof. As of the Record
Date, the Company had issued and outstanding 21,919,115 shares of Common
Stock and no shares of the Company's Preferred Stock, par value $.001 per
share.
Each stockholder of record of Common Stock will be entitled to one
vote per share on each matter that is called to vote at the Special
Meeting.
The presence, either in person or by proxy, of holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a
quorum at the Special Meeting. Assuming the presence of a quorum, the
affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock is required for the approval of the proposal
described in this Proxy Statement.
All Proxies that are properly completed, signed and returned prior to
the Special Meeting will be voted. Any Proxy given by a stockholder may be
revoked at any time before it is exercised by the stockholder (i) filing
with the Secretary of the Company an instrument revoking it, (ii) executing
and returning a proxy bearing a later date or (iii) attending the Special
Meeting and expressing a desire to vote his shares of Common Stock in
person. Votes will be counted by American Stock Transfer & Trust Company,
the Company's transfer agent and registrar. With respect to abstentions,
the shares are considered present at the meeting for purposes of
determining a quorum and voting on a particular matter. With respect to
broker non-votes, the shares are considered present at the meeting for
purposes of determining a quorum but are not entitled to vote on the
particular matter as to which the broker does not have voting authority.
Since abstentions and broker non-votes are not affirmative votes for the
matter, they will have the same effect as votes against the matter.
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<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding the
beneficial ownership of the Company's Common Stock as of March 31, 1996 by
(i) each person who is known by the Company to own beneficially more than
five percent of the outstanding shares of Common Stock, (ii) each director
of the Company, (iii) the Company's chief executive officer and each of the
other executive officers of the Company with annual compensation in excess
of $100,000 and (iv) all directors and officers as a group. Except as
described below, each of the persons listed in the table has sole voting
and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
Number of
Shares of Percentage
Name Common Stock of Shares
Beneficially Beneficially
Owned Owned
<S> <C> <C>
Amerindo Investment Advisors, Inc. (1)............... 2,015,000 9.3%
One Embarcadero Center, Suite 2300
San Francisco, California 94111
Hillman Medical Venture Partnerships (2)............. 1,986,540 9.2%
824 Market Street, Suite 900
Wilmington, Delaware 19801
HealthCare Ventures Partnerships (3)................. 1,917,103 8.8%
Twin Towers at Metro Bank
379 Thornall Street
Edison, New Jersey 08837
The Allstate Corporation (4)......................... 1,533,928 7.1%
2775 Sanders Road
Northbrook, Illinois 60062
Martin P. Sutter (5)................................. 932,704 4.3%
James M. Chubb (6)................................... 232,381 1.1%
Gabriel Lopez-Berestein (7)(11)...................... 222,587 1.0%
George B. Mackaness (11)............................. 80,000 *
Ronald J. Brenner (8)(11)............................ 2,028,410 9.3%
Geoffrey F. Cox (9)(11).............................. 873,611 4.0%
Gregory F. Zaic (10)(11)............................. 701,831 3.2%
John F. Chappell (11)................................ 36,809 *
Paul A. Cossum (12).................................. 28,140 *
Gillian Ivers-Read (12).............................. 23,750 *
All directors and officers as a group
(11 persons) (5)-(12)............................. 5,174,195 23.8%
* Less than one percent.
<FN>
(1) Consists of 1,917,500 shares owned by Amerindo Investment
Advisors, Inc. ("Amerindo"), 77,500 shares owned by Amerindo
Advisors (U.K.) Limited ("Amerindo UK"), and 20,000 shares owned
by Amerindo Investment Advisors Inc. Profit Sharing Trust
("Plan"). The sole shareholders and directors of Amerindo and
Amerindo UK are Alberto W. Vilar and Gary A. Tanaka, each of whom
may by deemed to be the beneficial owner of the 1,995,000 shares
owned by Amerindo and Amerindo UK. Mr. Vilar is sole trustee of
the Plan and may be deemed to be the beneficial owner of the
20,000 shares owned by the Plan. Based on Schedule 13G, Amendment
No. 1, dated February 15, 1996, of Amerindo, Amerindo UK, the
Plan, Mr. Vilar and Mr. Tanaka.
3
<PAGE> 7
(2) Consists of 236,180 shares owned by Hillman Medical Ventures 1989
L.P., 738,114 shares owned by Hillman Medical Ventures 1990 L.P.
and 1,012,246 shares owned by Hillman Medical Ventures 1991 L.P.
(collectively, the "Hillman Medical Venture Partnerships"). The
general partners of the Hillman Medical Venture Partnerships are
Cashon Biomedical Associates, L.P. and Hillman/Dover Limited
Partnership. The general partner of Hillman/Dover Limited
Partnership is a wholly-owned subsidiary of The Hillman Company,
a firm engaged in diversified investments and operations. The
Hillman Company is controlled by Henry L. Hillman, Elsie Hilliard
Hillman and C.G. Grefenstette, Trustees of the Henry L. Hillman
Trust, which Trustees may be deemed the beneficial owners of the
1,986,540 shares owned by the Hillman Medical Venture
Partnerships. Dr. Brenner, a director of the Company, is the
managing partner of Cashon Biomedical Associates, L.P., of which
the other general partners are Hal S. Broderson, M.D. and Charles
G. Hadley. Dr. Brenner, Dr. Broderson and Mr. Hadley may be
deemed to beneficially own such shares.
(3) Consists of 489,246 shares owned by HealthCare Venture Partners
L.P., 382,356 shares owned by HealthCare Venture Partners II
L.P., 808,199 shares owned by HealthCare Venture Partners III
L.P. and 237,302 shares owned by HealthCare Venture Partners IV
L.P. (collectively, the "HealthCare Venture Partnerships"). James
H. Cavanaugh, Harold R. Werner, John W. Littlechild, Ronald
Shipman and William Crouse are general partners of each of the
HealthCare Venture Partnerships and may be deemed to beneficially
own such shares.
(4) Consists of 1,533,928 shares owned by Allstate Insurance Company,
a wholly owned subsidiary of The Allstate Corporation, based on
Schedule 13G, Amendment No. 3, dated February 9, 1996, of The
Allstate Corporation.
(5) Includes 893,704 shares owned by The Woodlands Venture Fund,
L.P., and 1,000 shares owned by The Woodlands Venture Partners,
L.P. Mr. Sutter is a general partner of The Woodlands Venture
Partners, L.P., which is the general partner of The Woodlands
Venture Fund, L.P. Mr. Sutter disclaims beneficial ownership of
the 893,704 shares owned by The Woodlands Venture Fund, L.P. Also
includes 37,000 shares which may be acquired on the exercise of
the currently vested portion of stock options.
(6) Includes 91,031 shares that may be acquired on the exercise of
stock options.
(7) Includes 91,364 shares that may be acquired on the exercise of
stock options. Includes 55,000 shares that may be acquired on the
exercise of stock options granted subject to stockholder approval
prior to issuance. The Company intends to seek such approval at
its 1996 annual meeting of stockholders. Excludes 39,394 shares
held by a relative of Dr. Lopez-Berestein, but as to which he
disclaims beneficial ownership.
(8) Includes 1,986,540 shares owned by the Hillman Medical Venture
Partnerships, of which Dr. Brenner is the managing partner of one
of the general partners.
(9) Includes 846,611 shares owned by Genzyme Corporation. Dr. Cox is
Senior Vice President of Genzyme. Dr. Cox disclaims beneficial
ownership of the shares held by Genzyme.
(10) Includes 674,831 shares owned by Prince Venture Partners III,
L.P. Mr. Zaic is a general partner of Prince Ventures, L.P.,
which is a general partner of Prince Venture Partners III, L.P.
Mr. Zaic disclaims beneficial ownership of the shares held by
Prince Venture Partners III, L.P.
(11) Includes 25,000 shares that may be acquired on the exercise of
stock options granted subject to stockholder approval prior to
issuance. The Company intends to seek such approval at its 1996
annual meeting of stockholders.
(12) Represents shares that may be acquired on the exercise of stock
options.
</FN>
</TABLE>
The holders of an aggregate of approximately 9,669,616 shares of
Common Stock are parties to a Stockholders Agreement. Those stockholders
include the Hillman Medical Venture Partnerships, the HealthCare Ventures
Partnerships, The Woodlands Venture Fund, L.P., The Woodlands Venture
Partners, L.P., Genzyme Corporation, Prince Venture Partners III, L.P. and
Gabriel Lopez-Berestein. The Stockholders Agreement continues in effect
until the later of (i) the completion of the second annual meeting of
stockholders of the Company after September 11, 1995 and (ii) September 11,
1997.
4
<PAGE> 8
REVERSE SPLIT
GENERAL
At the Special Meeting, the stockholders of the Company will consider
and vote upon a proposal providing for a one-for-two Reverse Split of the
Common Stock. The Reverse Split will be effected by an amendment to the
Company's Amended and Restated Certificate of Incorporation (the "Reverse
Split Amendment") that is contained in Exhibit A to this Proxy Statement,
which is incorporated by reference herein. The Reverse Split Amendment will
become effective upon its filing with the Secretary of State of the State
of Delaware (the "Effective Date"). Fractional shares of Common Stock will
not be issued as a result of the Reverse Split. Stockholders entitled to
receive a fractional share of Common Stock as a consequence of the Reverse
Split will, instead, receive from the Company a cash payment in United
States dollars equal to such fraction multiplied by two times the average
closing price of the Common Stock on the Nasdaq National Market for the
five trading days immediately preceding the Effective Date.
AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Reverse Split Amendment will amend Article IV of the Amended and
Restated Certificate of Incorporation to add a new Section D. At the
Effective Date, without further action on the part of the Company or the
stockholders, each share of Common Stock will be converted into one-half of
a share of Common Stock. The Reverse Split Amendment will become effective
upon its filing with the Secretary of State of the State of Delaware.
A vote for the Reverse Split proposal will include authorization of
the Company's Board of Directors not to file the Reverse Split Amendment in
the event the Board of Directors determines that filing the Reverse Split
Amendment would not be in the best interest of the Company's stockholders.
Factors leading to such determination could include, without limitation,
abandonment of the proposed Offering discussed below under "--Reasons for
the Reverse Split."
VOTE NEEDED FOR APPROVAL
The proposed Reverse Split and the related amendment to the Company's
Amended and Restated Certificate of Incorporation must be approved by the
holders of at least a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED A RESOLUTION SETTING
FORTH THE PROPOSED REVERSE SPLIT AMENDMENT, AND HEREBY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE FOR THE PROPOSED AMENDMENT.
---
EFFECT OF THE PROPOSED REVERSE SPLIT
The proposed Reverse Split will be effected by means of an amendment
to the Amended and Restated Certificate of Incorporation. Under Delaware
law, no appraisal rights are available to dissenting stockholders. Each
stockholder who owns fewer than two shares of Common Stock will have his
fractional share of Common Stock converted into the right to receive cash
as set forth below in "--Exchange of Stock Certificates and Payment for
Fractional Shares." The interest of such stockholder in the Company will
thereby be terminated, and such stockholder will have no right to share in
the assets or future growth of the Company. Each stockholder who owns two
or more shares of Common Stock will continue to own shares of Common Stock
and will share in the assets and future growth of the Company. Such
interest will be represented by one-half as many shares as such stockholder
owned before the Reverse Split, except that no fractional shares will be
issued.
The following schedule of stockholders' equity sets forth as of
December 31, 1995, on a pro forma basis, the effect of the adoption of the
Reverse Split proposal. Adoption of the Reverse Split proposal will result
in a one-for-two reverse split of the Common Stock.
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<PAGE> 9
PRO FORMA SCHEDULE OF STOCKHOLDERS' EQUITY
ASSUMING ADOPTION OF REVERSE SPLIT PROPOSAL
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
Pro Adjusted
Historical Forma Balance
December 31, Adjust- December 31,
1995 ments(1) 1995
<S> <C> <C> <C>
Stockholders' equity:
Preferred stock $.001 par value, 10,000,000 shares
authorized, none issued and outstanding........ $ - $ - $ -
Common stock $.001 par value, 75,000,000 shares
authorized, 20,760,112 shares issued and
outstanding pre-split; 10,380,056 shares issued
and outstanding post-split....................... 21 (10) 11
Additional paid-in capital......................... 56,331 10 56,341
Common stock warrants.............................. 1,488 - 1,488
Treasury stock..................................... (11) - (11)
Deferred compensation.............................. (1,536) - (1,536)
Unrealized loss on available-for-sale securities... (116) - (116)
Deficit accumulated during development stage....... (44,183) - (44,183)
---------- -------- ---------
Total stockholders' equity....................... $ 11,994 $ - $ 11,994
========== ======== =========
<FN>
- ---------
(1) Represents the proposed one-for-two Common Stock reverse stock
split which results in a net reduction of 10,380,056 shares of
Common Stock outstanding assuming no fractional shares are
purchased.
</FN>
</TABLE>
Adoption of the Reverse Split proposal as of January 1, 1995 would not
have had an effect on net income for the fiscal year ended December 31,
1995. However, net loss per share would have been proportionately increased
from $(1.34) to $(2.68). No adjustment has been made for the reduction in
the number of shares of Common Stock resulting from the payment of cash for
fractional shares. The Company does not believe that adoption of the
Reverse Split will adversely affect the continued listing of the Company's
Common Stock on the Nasdaq National Market.
REASONS FOR THE REVERSE SPLIT
Management of the Company believes that it may be more difficult to
attract new investors to the Company because the Common Stock trades at a
relatively low price (the closing price on May 2, 1996 was $6.125 per
share). Institutional investors typically are unwilling to invest in
companies whose stock trades at less than $5, or, in some cases, $10 per
share. Stockbrokers also are sometimes subject to internal restrictions on
their ability to recommend stocks trading at less than $5 per share because
of the general presumption that such stock may be highly speculative. In
addition, stock which trades in the trading range of the Company's Common
Stock may not be marginable under the internal policies of some
stockbrokers.
In addition, the Company has filed a registration statement on Form
S-3 related to a proposed public offering by the Company of 6,000,000
shares of Common Stock (the "Offering"). The underwriters engaged by the
Company in connection with the Offering have advised the Company that they
believe the marketability of the Common Stock for purposes of the Offering
would be enhanced by the Reverse Split.
It is anticipated that following the consummation of the Reverse
Split, the shares of Common Stock will trade at a price per share that is
significantly higher than the current market price. However, there can be
no assurance that, after the consummation of the Reverse Split, the shares
of Common Stock will trade at two times the market price of the Common
Stock prior to the Reverse Split.
6
<PAGE> 10
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
The exchange of shares of Common Stock will occur on the Effective
Date without any action on the part of stockholders of the Company and
without regard to the date certificates representing pre-split shares of
Common Stock are physically surrendered for certificates representing
post-split shares of Common Stock. The Company's Transfer Agent will
exchange certificates. In the event that the number of shares of post-split
Common Stock includes a fraction, the Company will pay to the stockholder,
in lieu of the issuance of fractional shares of the Company, a cash amount
in United States dollars which will be equal to the same fraction
multiplied by two times the average closing price of the Common Stock on
the Nasdaq National Market for the five trading days immediately preceding
the Effective Date. The closing price of the Common Stock ranged from
$5.375 to $6.50 from April 26 to May 2, 1996, with an average closing price
of $6.00. A change in the closing price of the Common Stock will affect the
amount received for a fractional share by a stockholder.
As soon as practicable after the Effective Date, transmittal forms
will be mailed to each holder of record of certificates for shares of
Common Stock to be used in forwarding their certificates for surrender and
exchange for certificates representing the number of shares of post-split
Common Stock such stockholders are entitled to receive as a consequence of
the Reverse Split. After receipt of such transmittal form, each holder
should surrender the certificates representing pre-split shares of Common
Stock of the Company. Each holder who surrenders certificates will receive
new certificates representing the whole number of shares of post-split
Common Stock to which he is entitled and any cash payable in lieu of a
fractional share. The transmittal forms will be accompanied by instructions
specifying other details of the exchange. STOCKHOLDERS SHOULD NOT SEND
THEIR CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
After the Effective Date, each certificate representing pre-split
shares of Common Stock will, until surrendered and exchanged as described
above, be deemed, for all corporate purposes, to evidence ownership of the
whole number of post-split shares of Common Stock, and the right to receive
from the Company the amount of cash for any fractional shares, into which
the shares evidenced by such certificate have been converted, except that
the holder of such unexchanged certificates will not be entitled to receive
any dividends or other distributions payable by the Company after the
Effective Date, until the certificates representing pre-split shares of
Common Stock have been surrendered. Such dividends and distributions, if
any, will be accumulated, and at the time of the surrender of the
certificates for pre-split shares of Common Stock, all such unpaid
dividends or distributions will be paid without interest.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes certain federal income tax
consequences of the Reverse Split. This discussion is based upon the
Internal Revenue Code of 1986 (the "Code"), existing and proposed
regulations thereunder, reports of congressional committees, judicial
decisions and current administrative rulings and practices, all as amended
and in effect on the date hereof. Any of these authorities could be
repealed, overruled or modified at any time. Any such change could be
retroactive and, accordingly, could cause the tax consequences to vary
substantially from the consequences described below. No ruling from the
Internal Revenue Service (the "IRS") with respect to the matters discussed
herein has been requested, and there is no assurance that the IRS would
agree with the conclusions set forth in this discussion.
This discussion is for general information only and does not address
the federal income tax consequences that may be relevant to particular
stockholders in light of their personal circumstances or to certain types
of stockholders (such as dealers in securities, insurance companies,
foreign individuals and entities, financial institutions and tax-exempt
entities) who may be subject to special treatment under the federal income
tax laws. This discussion also does not address any tax consequences under
state, local or foreign laws.
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF PARTICIPATION IN THE REVERSE SPLIT,
INCLUDING THE
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<PAGE> 11
APPLICABILITY OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, CHANGES IN
APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION.
The Company should not recognize any gain or loss as a result of the
Reverse Split. No gain or loss should be recognized by a stockholder who
receives only Common Stock upon the Reverse Split. The aggregate tax basis
of post-split Common Stock received by such a stockholder in connection
with the Reverse Split will equal the stockholder's aggregate tax basis in
the pre-split Common Stock exchanged therefor and generally will be
allocated among post-split Common Stock received on a pro rata basis.
Stockholders who have used the specific identification method to identify
their basis in pre-split Common Stock surrendered in the Reverse Split
should consult their own tax advisors to determine their basis in the
post-split Common Stock received in exchange therefor. A stockholder who
receives cash in lieu of a fractional share of Common Stock that otherwise
would be held as a capital asset generally should recognize capital gain or
loss on the receipt of such cash in an amount equal to the difference
between the cash received and his basis in such fractional share of Common
Stock. For this purpose, a stockholder's basis in such fractional share of
Common Stock will be determined as if the stockholder actually received
such fractional share.
OTHER INFORMATION
ADDITIONAL MATTERS
While the notice for the Special Meeting calls for the transaction of
any other business as may be properly presented, management is not aware of
any business to be submitted at the Special Meeting not referred to in this
Proxy Statement. If any further business is presented, the persons named in
the Proxy will act according to their best judgment on behalf of the
stockholders they represent.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the
1996 Annual Meeting of Stockholders and who wishes to have it set forth in
the proxy statement and identified in the form of proxy prepared by
management must have notified management of the Company in such a manner so
that such notice was received by management by February 1, 1996, and in
such form as required under the rules and regulations promulgated by the
Securities and Exchange Commission.
By Order of the Board of Directors
Terance A. Murnane
Secretary
May 7, 1996
The Woodlands, Texas
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<PAGE> 12
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ARONEX PHARMACEUTICALS, INC.
Aronex Pharmaceuticals, Inc. (the "Corporation"), organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL") does hereby certify:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth the following amendment to the Amended and
Restated Certificate of Incorporation of the Corporation (the "Amendment"),
declaring the Amendment to be advisable and calling for the submission of
the proposed Amendment to the stockholders of the Corporation for
consideration thereof. The resolution setting forth the proposed Amendment
is as follows:
ARTICLE IV of the Amended and Restated Certificate of Incorporation of
Aronex Pharmaceuticals, Inc., a Delaware corporation, is hereby amended by
adding thereto new Section D to read as follows:
D. Reverse Split
(i) Effective immediately upon the filing of this Amendment to the
Amended and Restated Certificate of Incorporation in the office of the
Secretary of State of the State of Delaware, each outstanding share of
previously existing Common Stock shall be and hereby is converted into and
reclassified as one-half of a share of Common Stock; provided, however,
that fractional shares of Common Stock will not be issued and each holder
of a fractional share of Common Stock shall receive in lieu thereof a cash
payment from the Corporation determined by multiplying such fractional
share of Common Stock by two times the average closing price of a share of
previously existing Common Stock on the Nasdaq National Market for the five
trading days immediately preceding the effective date, and upon such other
terms as the officers of the Corporation, in their sole discretion, deem to
be advisable and in the best interests of the Corporation.
(ii) Certificates representing reclassified shares are hereby canceled
and upon presentation of the canceled certificates to the Corporation, the
holders thereof shall be entitled to receive certificate(s) representing
the new shares into which such canceled shares have been converted.
SECOND: That thereafter pursuant to a resolution of the Board of
Directors, a special meeting of the stockholders of the Corporation was
duly called and held, upon notice in accordance with Section 222 of the
DGCL at which meeting the necessary number of shares as required by statute
were voted in favor of the Amendment.
THIRD: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the DGCL.
FOURTH: That the Amendment shall be effective on the date this
Certificate of Amendment is filed and accepted by the Secretary of State of
the State of Delaware.
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IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by James M. Chubb, its President, and attested by Terance A.
Murnane, its Secretary, this 24th day of May, 1996.
ARONEX PHARMACEUTICALS, INC.
By: -----------------------------
James M. Chubb
President
ATTEST: ----------------------------------
Terance A. Murnane
Secretary
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P ARONEX PHARMACEUTICALS, INC.
R
O 3400 Research Forest Drive
X The Woodlands, Texas 77381
Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS JAMES M. CHUBB AND TERANCE A. MURNANE,
AND EACH OF THEM, AS PROXIES, EACH WITH THE POWER TO APPOINT HIS
SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRESENT AND VOTE, AS DESIGNATED
ON THE REVERSE SIDE, ALL OF THE SHARES OF THE COMMON STOCK, PAR VALUE $.001
PER SHARE, OF ARONEX PHARMACEUTICALS, INC. (THE "COMPANY"), HELD OF RECORD
BY THE UNDERSIGNED ON MAY 2, 1996, AT THE SPECIAL MEETING (THE "SPECIAL
MEETING") OF STOCKHOLDERS OF THE COMPANY TO BE HELD ON MAY 24, 1996, AND
ANY ADJOURNMENT(S) THEREOF.
--------------
SEE REVERSE
(TO BE DATED AND SIGNED ON REVERSE SIDE) SIDE
--------------
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSAL 1, AND THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO IN PROPOSAL 2.
1. PROPOSAL TO APPROVE AN
AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
TO EFFECT A ONE-FOR-TWO
REVERSE STOCK SPLIT OF THE
COMPANY'S COMMON STOCK, PAR
VALUE $.001 PER SHARE, AS FOR AGAINST ABSTAIN
DESCRIBED IN THE COMPANY'S
PROXY STATEMENT RELATING TO / / / / / /
THE SPECIAL MEETING.
2. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE / / / / / /
SPECIAL MEETING AND ANY
ADJOURNMENT(S) THEREOF.
MARK HERE FOR
ADDRESS CHANGE / /
AND NOTE AT LEFT
Please execute this Proxy as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by the
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN,
DATE AND RETURN THIS
PROXY PROMPTLY USING Signature: Date
THE ENCLOSED ENVELOPE.
Signature: Date
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