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 [ ]
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 Rule 14a-11(c) or Rule 14a-12
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):
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[ ] 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.:
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(4) Date Filed:
VIRAGEN, INC.
865 S.W. 78TH AVENUE, SUITE 100
PLANTATION, FLORIDA 33324
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 27, 2002
To The Stockholders of Viragen, Inc.
PLEASE TAKE NOTICE that Viragen, Inc., a Delaware corporation, will hold
its 2001 annual meeting of stockholders at the American Stock Exchange, located
at 86 Trinity Place, New York, NY, on Wednesday, February 27, 2002 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 A directors, to serve for the term of their
designated class and until their successors have been elected and
qualified;
2. To ratify the appointment of Ernst & Young LLP, as our independent
auditors; and
3. To transact other business that may properly come before the meeting
or any adjournment.
A copy of our proxy statement, which is being first mailed to stockholders
on or about January 22, 2002, is attached.
The board of directors has fixed the close of business on December 31,
2001, 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, 2001 are contained in the accompanying annual report
on Form 10-K. Viragen's financial statements for the quarterly period ended
September 30, 2001 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 22, 2002
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.
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 Wednesday, February 27, 2002 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, 2001 and our
quarterly report for the quarterly period ended September 30, 2001 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 22, 2002.
OUTSTANDING STOCK AND VOTING RIGHTS
The board of directors has fixed the close of business on December 31, 2001
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, 2001, the record date for determining our stockholders
entitled to notice of, and to vote at, the annual meeting, 99,972,556 shares of
our common stock, $.01 par value, were outstanding. 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 (49,986,279
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, but have no effect on the election of directors or the ratification of
our auditors. Directors are elected by a plurality of votes cast. 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 commencing 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 expired after the 2000 annual meeting.
At each annual meeting of stockholders, directors of the respective class
whose term has expired will be elected. 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. At the 2001 annual
meeting, stockholders will be asked to elect two class A directors, to hold
office until their successors are elected at the 2004 annual meeting of
stockholders.
The following table lists Viragen's directors and officers:
SERVED AS
OFFICER AND/OR
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE CLASS
---- --- ------------------------- -------------- -----
Gerald Smith.................................. 70 Chairman of the Board 1994 C
1998
Chief Executive Officer
1993
President
Dennis W. Healey.............................. 52 Chief Financial Officer 1980
1980
Treasurer
1984
Director
1993
Executive Vice President
1994 B
Secretary
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
Abraham Cohen................................. 65 Director 2001 B
E. Donald Shapiro............................. 70 Director 2001 B
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 on April 13, 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) 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).
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
2
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. Mr. Rothberg also serves as a director of Viragen (Europe).
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. During fiscal 2000, a fund managed
by Fundamental Management Corporation 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. Mr. Singer also serves as a director of Viragen
(Europe).
Peter D. Fischbein is an attorney who has been practicing law for
approximately 36 years. Mr. Fischbein has served as a director of Viragen 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., Diasa, Inc. and Excalibur Corporation. Mr. Simons is
an investor in Active Investors II, a fund managed by Fundamental Management
Corporation. 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. During
fiscal 2000 a fund managed by Fundamental Management Corporation invested a
total of $2,000,000 in Viragen, in two separate transactions, receiving
1,800,016 shares of common stock.
Mr. Abraham Cohen was elected by our board of directors, during March 2001,
to serve as a class B director. Mr. Cohen currently serves as a director of Akzo
Corporation (Netherlands), Teva Pharmaceutical Industries Ltd. (Israel),
Gen-Probe, Inc., and Smith Barney -- Mutual Funds. Previously, Mr. Cohen served
as President of the Merck Sharp & Dohme International Division and as Senior
Vice President of Merck & Co.
3
Mr. E. Donald Shapiro was elected by our board of directors, during March
2001, to serve as a class B director. Mr. Shapiro currently serves as a director
of Loral Space & Communications, United Industrial Corporation, Frequency
Electronics, Inc., Vasomedical, Inc. and Group Health Inc. He is also the Dean
and Professor Emeritus of the New York Law School. Previously, Mr. Shapiro has
served as a visiting Professor at Harvard Medical School, New York University
School of Medicine and Law, Cleveland-Marshall College and The University
College at Buckingham School of Law, England.
There is no family relationship between any of the officers and directors.
4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows certain information regarding Viragen's common
stock beneficially owned at December 31, 2001, 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, 2001, there were 99,972,556 shares of common stock outstanding.
Except as otherwise indicated, we have been informed that the persons identified
in the table have sole voting and dispositive power with respect to their
shares.
COMMON SHARES
BENEFICIALLY OWNED
--------------------------
BENEFICIAL ACQUIRABLE
NAME OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS CURRENTLY WITHIN 60 DAYS
------------------------ ---------- ---------------- --------- --------------
Gerald Smith................................. 2,917,000 2.8% 17,000 2,900,000
Carl N. Singer............................... 4,253,507 4.2 3,836,841 416,666
Dennis W. Healey............................. 865,000 0.9 365,000 500,000
Peter D. Fischbein........................... 405,000 0.4 350,000 55,000
Charles J. Simons............................ 40,000 0.0 10,000 30,000
Robert C. Salisbury.......................... 35,000 0.0 30,000 5,000
Abraham Cohen................................ 105,000 0.1 -- 105,000
E. Donald Shapiro............................ 105,000 0.1 -- 105,000
D. Magnus Nicolson........................... 180,000 0.2 -- 180,000
Melvin Rothberg.............................. 265,300 0.3 15,300 250,000
--------- --- --------- ---------
Officers & Directors (as a Group of 10
persons)................................... 9,170,807 8.8 4,624,141 4,546,666
The beneficial ownership figures include 3,736,341 common shares and
warrants to acquire 100,000 common shares held by Fundamental Management
Corporation, a Florida-based institutional investment fund, which have been
attributed to Carl N. Singer. Mr. Singer is the chairperson of Fundamental
Management Corporation. Mr. Salisbury is also a director and investor in
Fundamental Management Corporation.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than ten percent (10%) of a registered class
of our equity securities, to file with the Securities and Exchange Commission
initial reports of their ownership and reports of changes in their ownership of
common stock and other equity securities of Viragen. Officers, directors and
greater than ten percent (10%) stockholders are required by regulation to
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of these reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended June 30, 2001, all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten percent
(10%) beneficial owners were completed and timely filed.
5
ELECTION OF CLASS A DIRECTORS
The following table sets forth the names of the class A director 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
POSITION WITH THE SERVED AS OFFICER
NAME AGE COMPANY AND/OR DIRECTOR SINCE CLASS
---- --- ----------------- --------------------- -----
Charles J. Simons.................................. 83 Director 1998 A
Robert C. Salisbury................................ 58 Director 1997 A
During fiscal 2001, Viragen's board of directors met on 5 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 2001, the
executive committee met on 4 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.
The committee members are Charles J. Simons (chairperson), Robert C. Salisbury
and Peter D. Fischbein. During fiscal 2001, the audit and finance committee met
on 5 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, 2001, for filing with the Securities
and 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
6
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.
7
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.
On March 1, 2001, Mr. Smith renewed his two year employment agreement with
Viragen. Under the new agreement, Mr. Smith is to receive an annual salary of
$325,000. He also received options to purchase 850,000 shares of common stock at
$1.35 per share. The options vest one-half on the date of grant and one-half on
the first year anniversary. The options are exercisable over five years from the
vest dates. Mr. Smith's employment agreement contains a provision that in the
event Viragen were to spin-off or split-off any present or future subsidiaries,
he would be entitled to receive a certain number of options in the spun-off
company. The number
8
of options he would receive would be based on a formula reflecting his then
current option position relative to the fully diluted common stock of Viragen
then outstanding. The pricing of the new options would be based on the
relationship of the exercise price of his existing options with the fair market
value of Viragen's stock at the date of the transaction. All other terms are
similar to his previous agreements.
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
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, 2001.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
----------------------- ----------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
--------------------------------------------- STOCK OPTIONS/
OTHER ANNUAL AWARDS SARS LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($) (#) PAYOUTS($)
--------------------------- ---- --------- -------- --------------- ---------- ---------- ----------
Gerald Smith................. 2001 $296,333 $-- $-- $-- 850,000 $--
Chairman of the 2000 282,000 -- -- -- -- --
Board, CEO and 1999 282,000 -- -- -- -- --
President
Dennis W. Healey............. 2001 252,000 -- -- -- 150,000 --
Exec. V.P., 2000 252,000 -- -- -- -- --
Treasurer, CFO 1999 252,000 -- -- -- -- --
and Director
D. Magnus Nicolson........... 2001 170,000 -- -- -- -- --
COO 2000 170,000 -- -- -- 200,000 --
1999 115,000 -- -- -- -- --
Melvin Rothberg.............. 2001 172,500 -- -- -- -- --
Exec. V.P. 2000 160,000 -- -- -- 350,000 --
1999 150,000 -- -- -- -- --
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION($)
--------------------------- ---------------
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. --
--
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,
9
- 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
Viragen under terms similar to his previous agreements. The agreement provides
for a total annual salary of $252,000.
On March 1, 2001, Mr. Healey renewed his two year employment agreement with
Viragen. Under the new agreement, Mr. Healey is to receive an annual salary of
$252,000. He also received options to purchase 150,000 shares of common stock at
$1.35 per share. The options vest one-half on the date of grant and one-half on
the first year anniversary. The options are exercisable over five years from the
vest dates. Mr. Healey's employment agreement contains a provision that in the
event Viragen were to spin-off or split-off any present or future subsidiaries,
he would be entitled to receive a certain number of options in the spun-off
company. The number of options he would receive would be based on a formula
reflecting his then current option position relative to the fully diluted common
stock of Viragen then outstanding. The pricing of the new options would be based
on the relationship of the exercise price of his existing options with the fair
market value of Viragen's stock at the date of the transaction. All other terms
are similar to his previous agreements.
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, 2001, Dr. Nicolson renewed his two year employment agreement
with Viragen. Under the new agreement, Dr. Nicolson is to receive an annual
salary of $172,500. He also received options to purchase 50,000 shares of
Viragen (Europe) Ltd. common stock at $0.85 per share. The options vest one-half
on the date of grant and one-half on the first year anniversary. The options are
exercisable over five years from the vest dates. All other terms are similar to
his previous agreement.
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,
10
- $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 July 1, 2001, Mr. Rothberg renewed his two year employment agreement
with Viragen. Under the new agreement, Mr. Rothberg is to receive an annual
salary of $172,500. He also received options to purchase 50,000 shares of common
stock at $1.25 per share. The options vest one-half on the date of grant and
one-half on the first year anniversary. The options are exercisable over five
years from the vest dates. Mr. Rothberg's auto allowance was increased to $600
per month. All other terms are similar to his previous agreements.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table includes information as to the grant of options to
purchase shares of common stock during the fiscal year ended June 30, 2001 to
each person named in the summary compensation table.
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ------------ ------------ ----------- ---------- -------- --------
Gerald Smith.................. 850,000 48.9% $1.35 2/28/07 $352,750 $790,500
Dennis W. Healey.............. 150,000 8.6 1.35 2/28/07 103,750 232,500
D. Magnus Nicolson............ -- -- -- -- -- --
Melvin Rothberg............... -- -- -- -- -- --
OPTION EXERCISES AND HOLDINGS
The following table includes information as to the exercise of options to
purchase shares of common stock during the fiscal year ended June 30, 2001 by
each person named in the summary compensation table and the unexercised options
held as of the end of the 2001 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FY
OPTIONS AT FY END(#) END($)
SHARES ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ ------------ ----------- ------------- ----------- -------------
Gerald Smith.......... -- $ -- 2,475,000 425,000 $750,000 $ --
Dennis W. Healey...... 100,000 94,000 425,000 75,000 -- --
D. Magnus Nicolson.... -- -- 113,333 66,667 71,400 42,000
Melvin Rothberg....... -- -- 225,000 -- 78,750 --
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.
11
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.
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.
12
As of December 31, 2001, all options under the 1995 stock option plan and
under the 1997 stock option plan had been granted.
OTHER OPTION GRANTS
- Peter D. Fischbein -- 5,000 shares;
- Robert C. Salisbury -- 5,000 shares;
- Charles J. Simons -- 5,000 shares; and
- Carl N. Singer -- 250,000 shares.
On March 21, 2001, we also granted options to purchase common stock to
Abraham Cohen and E. Donald Shapiro. Both are directors of Viragen and received
these options as compensation for additional consulting services being provided
to us. Each received options to purchase 200,000 common shares at $1.20 per
share. These options vest 50,000 shares at the date of grant and 50,000 shares
every six months through September 2002. The options are exercisable over five
years from the vest dates.
Additionally, Messrs. Cohen and Shapiro each received options to purchase
5,000 common shares at $1.16. These options were granted as compensation for
participation in a board of directors meeting held on May 16, 2001. These
options vest one-half on the date of grant and one-half on the first year
anniversary. The options are also exercisable over five years from the vest
dates.
13
PERFORMANCE GRAPH -- STOCKHOLDER RETURN
ON COMMON STOCK
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VIRAGEN, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
THE AMEX MARKET VALUE INDEX, THE NASDAQ BIOTECHNOLOGY INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
(PERFORMANCE GRAPH)
-------------------------------------------------------------------------------------
6/96 6/97 6/98 6/99 6/00 6/01
-------------------------------------------------------------------------------------
VIRAGEN, INC. 100.00 46.55 34.48 16.67 41.38 22.99
NASDAQ STOCK MARKET
(U.S.) 100.00 121.60 160.06 230.22 340.43 184.54
AMEX MARKET VALUE 100.00 107.33 134.64 151.76 178.74 177.21
NASDAQ BIOTECHNOLOGY 100.00 104.93 107.64 172.13 412.90 343.89
NASDAQ HEALTH SERVICES 100.00 92.41 90.03 84.72 65.39 93.33
* $100 invested on 6/30/1996 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 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
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
14
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.
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.
15
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:
- can be exercised at a price of $3.75 per share,
- is exercisable for 5 years from the vesting date, and
- is 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.
During October 2000, Dennis W. Healey and Sidney Dworkin, a former director
of Viragen, each exercised 100,000 options to purchase common stock. Both
exercised their options through the issuance of promissory notes payable to
Viragen totaling $100,000. Messrs. Healey and Dworkin also entered into related
pledge and escrow agreements. The promissory notes carry an interest rate of
6.00%, 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 March 2001, Abraham Cohen and E. Donald Shapiro entered into
consulting agreements with Viragen. Each is to provide consulting services to
Viragen for a two year period ending March 31, 2003. These consulting services
are in addition to their service on the board of directors. As compensation,
each was granted options to purchase 200,000 common shares at $1.20 per share.
These options vest 50,000 shares at the date of grant and 50,000 shares every
six months through September 2002. The options are exercisable over five years
from the vest dates.
During May 2001, Robert C. Salisbury entered into a consulting agreement
with Viragen. He is to provide consulting services to Viragen for a three year
period ending May 31, 2004. These consulting services are in addition to his
service on the board of directors. As compensation, he will be granted warrants
to purchase up to 110,000 common shares. The warrants will be granted in
tranches upon performance of specific criteria. The warrants will vest one-half
on the first anniversary of the date of grant and one-half on the second
anniversary of the date of grant. The warrants will be exercisable for five
years from the vest dates, at 115% of the fair market value of Viragen's common
stock on the dates of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR THE CLASS A 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.
RATIFICATION OF APPOINTMENT OF VIRAGEN'S AUDITORS
The appointment of Ernst & Young LLP as our independent auditors for the
fiscal year ended June 30, 2002, 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, 2002. 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.
16
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 2002 annual meeting
of stockholders of must be received by us, at our principal executive offices
not later than September 16, 2002, or if the 2002 annual meeting of stockholders
differs by more than 30 days from the date of the 2001 annual meeting, then a
reasonable time before we print and mail the proxy materials for the 2002 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 2002
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, 2002, or if the
2002 annual meeting of stockholders differs by more than 30 days from the date
of the 2001 annual meeting, then a reasonable time before we print and mail our
proxy materials for the 2002 annual meeting.
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,
2001, 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, 2001.
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.
17
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
VIRAGEN, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 27, 2002
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 on December 31, 2001,
at the annual meeting of stockholders to be held in New York, New York on
February 27, 2002, including any original or subsequent adjournment thereof,
with respect to the proposals set forth in the notice of annual meeting and
proxy statement. No business other than matters described below is expected to
come before the meeting, but should any other matter requiring a vote of
stockholders arise, the person named herein will vote thereon in accordance with
his best judgment. All powers may be exercised by said Proxy.
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.
(continued and to be signed and dated on other side)
-------------------------------------------------------------------------------
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
Please mark your
votes as indicated
in this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
1. To elect two directors to the board of directors, and who will be
classified as class A directors, to serve for the term of their
designated class and until their successors have been elected and
qualified.
Nominees: CLASS A DIRECTORS
01 Charles J. Simons
02 Robert C. Salisbury
[ ] 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 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.
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)
--------------------------------------------
Number of Shares Subject to Proxy
Date:
--------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
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.
OR
2. TO 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.