UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
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:
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Preliminary
Proxy Statement
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Confidential, for use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §.240.14a-12
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(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):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
_________________________________________
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(2)
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Aggregate
number of securities to which transaction applies:
_________________________________________
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(3)
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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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_______________________________________________________________________________________ |
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(4)
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Proposed
maximum aggregate value of transaction:
________________________________________________
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(5)
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Total
fee paid:
_________________________________________
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Fee
paid previously with preliminary
materials.
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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.
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(1)
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Amount
Previously Paid:
_______________________________________________
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(2)
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Form
Schedule or Registration Statement No.:
__________________________________________
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(3)
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Filing
Party:
______________________________________________________________________________
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(4)
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Date
Filed:
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13700
Progress Boulevard
Alachua,
Florida 32615
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON AUGUST 25, 2010
Notice
is hereby given to the shareholders of Oragenics, Inc., a Florida Corporation
(the "Company") that the 2010 Annual Meeting of Shareholders of the Company
(including any postponements or adjournments thereof, the "Annual Meeting") will
be held at the Grand Hyatt Tampa Bay, 2900 Bayport Drive, Tampa, FL 33607 on
Wednesday, August 25, 2010, at 10:00 a.m., local time, for the
following purposes:
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(i)
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To
elect Directors to serve until the next annual meeting of
shareholders;
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(ii)
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Approve
an amendment to our articles of incorporation to effect a reverse
stock split of our common stock by a ratio of not less than one-for-two
and not more than one-for-twenty with the exact ratio to be set at a whole
number within this range to be determined by our board of directors in its
discretion and to authorize our board of directors to implement the
reverse stock split at any time prior to the date of the Company’s 2011
annual meeting of shareholders by filing an amendment to our articles of
incorporation,
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(iii)
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To
transact such other business as may properly come before the Annual
Meeting.
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All
shareholders are cordially invited to attend the Annual
Meeting. Information relating to the Annual Meeting and matters to be
considered and voted upon at the Annual Meeting are set forth in the attached
Proxy Statement.
Only
those shareholders of record at the close of business on July 9, 2010, are
entitled to notice of and to vote at the Annual Meeting. A complete list of
shareholders entitled to vote at the Annual Meeting will be available for
examination by any shareholder at the Annual Meeting and for a period of ten
days prior thereto at the executive offices of the Company in Alachua,
Florida.
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BY
ORDER OF THE BOARD OF DIRECTORS,
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/s/ Brian Bohunicky
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Alachua,
Florida
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BRIAN
BOHUNICKY
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July
21, 2010
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Secretary
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WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE. IF
YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY
APPOINTMENT AND VOTE IN PERSON.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDERS MEETING TO BE HELD ON AUGUST 25, 2010.
This
Proxy Statement and our 2009 Annual Report on Form 10-K for the year ended
December 31, 2009, which was amended by Amendment No. 1 filed on April 29, 2010,
as filed with the Securities and Exchange Commission, except for exhibits, are
available at:
www.oragenics.com/annualreport.html
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Page
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Information
Concerning Solicitation and Voting
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1
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General
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1
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Record
Date and Voting Securities
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1
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Quorum
Requirement
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1
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Vote
Required
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2
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Recommendation
of the Board of Directors
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2
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Voting
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2
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Changing
Vote; Revocability of Proxies
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3
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Effect
of Not Casting Your Vote
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3
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Expenses
of Solicitation
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3
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Shareholder
Proposals to Be Presented at Next Annual Meeting
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4
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Delivery
of Proxy Materials to Shareholders
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4
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Proposal I—
Election of Directors
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5
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Nominees
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5
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Recommendation
of the Board of Directors
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5
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Information
About Nominees
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5
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Proposal II —
Approval of amendment to articles of incorporation to effect reverse stock
split
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General
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8
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Purpose
and Effect of the Reverse Stock Split
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Impact
of the Reverse Stock Split Amendment if Implemented
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11
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Certain
Risks Associated with the Reverse Stock Split
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12
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Effective
Time
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13
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Board
Discretion to Implement the Reverse Stock Split Amendment
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Fractional
Shares
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14
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Effect
on Beneficial Holders of Common Stock
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14
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Effect
on Registered “Book-Entry” Holders of Common Stock
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Effect
on Certificated Shares
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15
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Accounting
Matters
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15
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No
Appraisal Rights
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15
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Certain
United States Federal Income Tax Considerations
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16
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Required
Vote and Recommendation
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corporate
Governance
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Corporate
Governance Principles
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18
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Code
of Ethics/Standards of Business Conduct
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18
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Independence
of Directors
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18
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Board
Leadership Structure
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19
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Risk
Oversight
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19
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Meetings
of the Board of Directors and Committees
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19
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Compensation
Committee Interlocks and Insider Participation
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22
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Compensation
of Directors
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22
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Direct
Shareholder Communications to Board Members
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24
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executive
Compensation
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26
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Compensation
Practices and Risk
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26
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Compensation
Discussion and Analysis
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26
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Summary
Compensation Table
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29
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Outstanding
Equity Awards
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31
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Employment
Contracts and Change in Control Arrangements
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32
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Security
Ownership of management and certain beneficial owners
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36
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Certain
Relationships and Related Transactions
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38
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Section 16(a)
Beneficial Ownership Reporting Compliance
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41
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Report
of the Audit Committee
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42
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INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
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43
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Non-Ratification
by Shareholders
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43
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principal
Accountant Fees
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43
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Pre-Approval
Policies and Procedures
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Other
Matters
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Appendix A
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A-1
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Appendix
b
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B-1
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APPENDIX C
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C-1
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ORAGENICS,
INC.
PROXY
STATEMENT
FOR
HOLDERS OF COMMON STOCK
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON AUGUST 25, 2010
General
This
Proxy Statement is furnished to shareholders, of Oragenics, Inc., a Florida
corporation (the "Company"), in connection with the solicitation of proxies by
the Company's Board of Directors from shareholders for use at the 2010 Annual
Meeting of Shareholders to be held at 10:00 a.m. local time at the Grand Hyatt Tampa
Bay, 2900 Bayport Drive, Tampa, FL 33607 on, August 25, 2010 (including any
postponements or adjournments thereof, the "Annual Meeting").
The
Annual Meeting will be held for the following purposes:
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(i)
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To
elect six (6) Directors to serve until the next annual meeting of
shareholders;
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(ii)
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To
approve an amendment to our articles of incorporation to effect a reverse
stock split of our common stock at the discretion of our board of
directors at a ratio ranging from one-for-two to one-for-twenty, with the
exact ratio to be set at a whole number within the range to be determined
by our board of directors and to authorize our board of directors to
implement the reverse stock split at any time prior to the date of the
Company’s 2011 annual meeting of shareholders by filing an amendment to
our articles of incorporation; and
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(iii)
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To
transact such other business as may properly come before the Annual
Meeting.
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This
Proxy Statement and the accompanying Proxy are first being mailed to
shareholders of the Company on or about July 21, 2010.
Record
Date and Voting Securities
Only
shareholders of record of the Company at the close of business on July 9, 2010
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, there were 108,203,148 shares of common stock
issued and outstanding (“Common Stock”)and no shares of our preferred stock were
outstanding. Each share of Common Stock is entitled to one vote for each
share of Common Stock held.
Notwithstanding
the Record Date specified above, the Company's stock transfer books will not be
closed and shares may be transferred subsequent to the Record Date. However, all
votes must be cast in the names of shareholders of record on the Record
Date.
Quorum
Requirement
The
holders of record of a majority of the votes of Common Stock entitled to be
voted at the Annual Meeting, present in person or by proxy, are required to
establish a quorum for the Annual Meeting and for voting on each matter. For the
purpose of determining the presence of a quorum, abstentions and “broker
non-votes” are counted as present and entitled to vote for purposes of
determining the presence or absence of a quorum for all purposes for which the
meeting was noticed. A broker non-vote is when a brokerage firm or
bank holding shares of record for their customers in street name does not
receive specific instructions from their customers, as the beneficial owners,
and the brokerage firm or bank advises that it lacks discretionary voting
authority on a particular proposal and has not received instructions from the
beneficial owner.
Vote
Required
PROPOSAL II: Approval of an
amendment to our Articles of Incorporation to effect a reverse stock split of
our common stock at the discretion of our Board of Directors. Approval of the
amendment requires the affirmative vote of a majority of the shares of Common
Stock of the Company present in person or represented by proxy and entitled to
vote at the Annual Meeting for approval of the plan amendment. With respect to
this proposal, shareholders may (i) vote “for” the proposal, (ii) vote
“against” the proposal, or (iii) abstain from voting. Abstentions and
broker non-votes have the same effect as votes “against” this
proposal.
Recommendation
of the Board of Directors
The Board unanimously recommends that
you vote your shares:
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“FOR” the nominees
listed in Proposal I below: and
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“FOR” the approval of an
amendment to our Articles of Incorporation to effect a reverse stock split
of our common stock at the discretion of our board of
directors.
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Voting
All
shares entitled to vote and represented by properly executed proxies received
prior to the Annual Meeting, and not revoked, will be voted at the annual
meeting in accordance with the instructions indicated. If you submit a proxy and
do not make voting selections, the shares represented by that proxy will be
voted as recommended by the Board. If any other matters are properly presented
for consideration at the Annual Meeting, including, among other things,
consideration of a motion to adjourn the annual meeting to another time or place
(including, without limitation, for the purpose of soliciting additional
proxies), the persons named as proxies and acting thereunder will have
discretion to vote on those matters in accordance with their best judgment. We
do not currently anticipate that any other matters will be raised at the Annual
Meeting. As permitted by Rule 14a-4(c) of the Securities and Exchange
Commission, the persons named as proxies on the proxy cards will have
discretionary authority to vote in their judgment on any proposals properly
presented by shareholders for consideration at the Annual Meeting that were not
submitted to the Company within a reasonable time prior to the mailing of these
proxy materials. Such proxies also will have discretionary authority to vote in
their judgment upon the election of any person as a Director if a Director
nominee named in Proposal I is unable to serve for good cause or will not serve,
and on matters incident to the conduct of the Annual Meeting.
Shareholders of record —
If your shares are registered directly in your name with Oragenic’s transfer
agent, Continental Stock Transfer & Trust Company, you are
considered, with respect to those shares, the shareholder of record, and the
proxy materials and Annual Report have been sent directly to you. As a
shareholder of record, you may instruct the proxy holders how to vote your
shares by completing, signing, dating and returning the proxy card in the
postage pre-paid envelope provided. Proxy cards submitted by mail must be
received by the time of the Annual Meeting in order for your shares to be voted.
If you sign and return a proxy card without giving specific voting instructions,
your shares will be voted as recommended by our Board.
If you
attend the Annual Meeting, you may also submit your vote in person, and any
previous votes that you submitted, will be superseded by the vote that you cast
at the Annual Meeting. If you plan to attend the annual meeting, please bring
proof of identification for entrance to the annual meeting.
Beneficial owners — Many
Oragenics shareholders hold their shares through a broker, trustee or other
nominee, rather than directly in their own name. If your shares are held in a
brokerage account or by a bank or another nominee, you are considered the
“beneficial owner” of shares held in “street name,” and the Annual Meeting proxy
materials have been forwarded to you by your broker, trustee or nominee who is
considered, with respect to those shares, the shareholder of record. As a
beneficial owner, you have the right to direct your broker, trustee or other
nominee on how to vote your shares, and you will receive instructions from them
that you must follow in order to have your shares voted. The instructions from
your broker, bank or other nominee will indicate if Internet and telephone
voting are available, and if they are available, will provide details regarding
Internet and telephone voting.
Because a
beneficial owner is not the shareholder of record, you may not vote these shares
in person at the Annual Meeting unless you obtain a “legal proxy” from the
broker, trustee or nominee that holds your shares, giving you the right to vote
the shares at the Annual Meeting.
Subject
to any rules your broker, trustee or nominee may have, you may change your proxy
instructions at any time before your proxy is voted at the Annual
Meeting.
Shareholders of record —
If you are a shareholder of record, you may change your vote (1) by
delivering to us (Attention: Corporate Secretary, 13700 Progress Boulevard,
Alachua, Florida 32615), prior to your shares being voted at the Annual Meeting,
a later dated written notice of revocation or a duly executed proxy card, or
(2) by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not, by itself, revoke a proxy). A
shareholder of record that has voted on the Internet or by telephone may also
change his or her vote by subsequently making a timely and valid later Internet
or telephone vote.
Beneficial owners — If
you are a beneficial owner of shares held in street name, you may change your
vote (1) by submitting new voting instructions to your broker, trustee or
nominee, or (2) if you have obtained a legal proxy from the broker, trustee
or nominee that holds your shares giving you the right to vote the shares, by
attending the Annual Meeting and voting in person.
Shareholders of record —
If you are a shareholder of record and you do not cast your vote, no votes will
be cast on your behalf on any of the items of business at the Annual
Meeting.
Beneficial owners — If
you hold your shares in street name it is critical that you cast your vote if
you want it to count in the election of directors (Proposal I) and in the
approval of the amendment to our Articles of Incorporation (Proposal II).
In the past, if you held your shares in street name and you did not indicate how
you wanted your shares voted in the election of directors, your bank or broker
was allowed to vote those shares on your behalf in the election of directors as
they felt appropriate. Recent changes in the relevant regulations were made to
take away the ability of your bank or broker to vote your uninstructed shares in
the election of directors on a discretionary basis. Thus, if you hold your
shares in street name and you do not instruct your bank or broker how to vote in
the election of directors, no votes will be cast on your
behalf.
We will
bear the entire cost of proxy solicitation, including preparation, assembly,
printing and mailing of the Proxy Materials, the Notice, and any additional
materials furnished to shareholders. Copies of proxy solicitation material will
be furnished to brokerage houses, fiduciaries, and custodians holding shares in
their names which are beneficially owned by others to forward to such beneficial
owners. In addition, we may reimburse such persons for their cost of forwarding
the solicitation material to such beneficial owners. Solicitation of proxies by
mail may be supplemented by one or more of telephone, email, telegram,
facsimile, or personal solicitation by our directors, officers, or regular
employees. No additional compensation will be paid for such
services.
Shareholder Proposals to Be Presented
at Next Annual Meeting
Requirements for shareholder
proposals to be considered for inclusion in Oragenic’s proxy
materials. Shareholders interested in submitting a proper
proposal for inclusion in the proxy materials for our next annual meeting may do
so by submitting such proposal in writing to our offices located at 13700
Progress Boulevard, Alachua, Florida 32615, Attn: Corporate Secretary. To be
eligible for inclusion, stockholder proposals must be received by us not less
than 120 days before the one year anniversary on which Oragenic’s first
mailed its proxy statement to shareholders in connection with the previous
year’s annual meeting of shareholders, which will be March 22, 2011 for the next
annual meeting, and must otherwise comply with the requirements of
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), provided, however, that in the event that we did not hold
an annual meeting the previous year, or if the date of the annual meeting has
been changed more than 30 days from the one year anniversary of the date of
the previous year’s meeting, then the deadline for receipt of notice by the
shareholder is within a reasonable time before the Company begins to print
and send its proxy materials in order to be eligible for inclusion in the
Company's Proxy Statement and Proxy relating to that meeting.
Requirements for shareholder
business or nominations to be brought before Oragenic’s annual
meetings. Our bylaws do not establish an advance notice
procedure for shareholders who wish to present certain matters, including
nominations of persons for election to the Board and shareholder proposals not
included in our proxy statement, to be brought before an annual meeting of
shareholders. Shareholder proposals, including the nomination of a person for
election to the Board, brought before the meeting should consider including,
among other things: information as follows: (i) a description of the
business desired to be brought before the meeting and the reasons for conducting
the business at the meeting, (ii) the name and address, as they appear on the
Company's books, of the shareholder submitting the proposal, (iii) the number of
shares that are beneficially owned by such shareholder, (iv) the dates on which
the shareholder acquired the shares, (v) documentary support for any claim of
beneficial ownership, (vi) any material interest of the shareholder in the
proposal, (vii) a statement in support of the proposal, and (viii) any other
information that may be required by applicable rules and regulations of the
Commission.
Shareholders
may also submit a recommendation (as opposed to a formal nomination) for a
candidate for membership on our Board by following the procedures set forth in
“Corporate Governance — Director Candidates.”
If you
share an address with another shareholder, each shareholder may not receive a
separate copy of the Notice or Proxy Materials. Shareholders may request to
receive a separate copy of the Notice or Proxy Materials, by writing to
Oragenics, Inc., 13700 Progress Boulevard, Alachua, Florida 32615, Attention:
Corporate Secretary. Alternatively, shareholders who share an address and
receive multiple copies of the Notice or Proxy Materials may request to receive
a single copy by following the same instructions.
ELECTION
OF DIRECTORS
Nominees
The Board
of Directors currently is comprised of six board members Christine L. Koski,
Robert C. Koski, Jeffrey Hillman, David B. Hirsch, Frederick W. Telling and
Charles L. Pope. On June 4, 2010 the board expanded to include two
additional board members Dr. Telling and Mr. Pope to our board of
directors. All of our existing Directors are nominated for
re-election at the Annual Meeting. If elected, each of the Directors
will hold office until the next annual meeting of shareholders and until their
successor is elected and qualified, or as otherwise provided by the Company's
Bylaws or by Florida law.
If any of
the nominees should be unavailable to serve for any reason, the Board of
Directors may:
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designate
a substitute nominee, in which case the persons named as proxies will vote
the shares represented by all valid Proxies for the election of such
substitute nominee;
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allow
the vacancy to remain open until a suitable candidate is located and
nominated; or
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adopt
a resolution to decrease the authorized number of
Directors.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR EACH DIRECTOR NOMINEE. Our majority shareholder, Koski
Family Limited Partnership, has indicated that it will vote in favor of each of
these nominees.
If
a choice is specified on the Proxy by the shareholder, the shares will be voted
as specified. If no specification is made, the shares will be voted FOR the
Director nominees. Election of each Director nominee will require the
affirmative vote of a plurality of the votes cast by shares of Common Stock
represented and entitled to vote at the Annual Meeting.
Information
About Nominees
Information
about each nominee is set forth below:
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Name
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Age
as of
July 9, 2010
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Position
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Christine
L. Koski
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53
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Director
and Non-executive Chairperson
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David
B. Hirsch
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41
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Chief
Executive Officer, President and Director
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Dr.
Jeffrey D. Hillman
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61
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Chief
Scientific Officer and Director
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Robert
C. Koski
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51
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Director
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Frederick
W. Telling
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58
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Director
Nominee
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Charles
L. Pope
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58
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Director
Nominee
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Christine L.
Koski. Ms. Koski has been a director and Chairperson of our
Board of Directors since June 2009. Ms. Koski joined the
executive team of nMetric, LLC as head of marketing in July
2006. Prior to joining nMetric, Ms. Koski founded Koski
Consulting Group, Inc. in June 2001 to work with start-up companies in the area
of business strategy and marketing. In May 2001, Ms. Koski
completed an Executive MBA degree from Southern Methodist
University. From 1980 through 2000, Ms. Koski held various
positions in sales, product management, purchasing, sales management, and
international marketing management with Celanese A.G. or its former affiliates,
including Celanese Ltd., Hoechst AG and Hoechst Celanese Chemical Group
Ltd. In addition to her positions at nMetric and Oragenics, Koski
serves on the Board of Directors at Sun Hydraulics Corporation, (NASDAQ: SNHY),
manufacturer of high performance hydraulic valves and solutions, and Cheltec, a
specialty chemical company. Ms. Koski is a partner in the Koski
Family Limited Partnership (“KFLP”), which beneficially owns a controlling
interest in us. Ms. Koski is a member of the nonprofit National
Association of Corporate Directors (NACD), and she is a graduate of St. Lawrence
University and Southern Methodist University’s Cox School of
Business. Ms. Koski is the sister of our director Robert
Koski.
Ms. Koski
brings to the Board over a decade of experience as an executive officer and
member of other boards of directors involving technology based companies,
including another public company. Through her extensive executive
management and board service experience, Ms. Koski has developed the leadership,
business judgment and consensus-building skills necessary to effectively lead
our Board as a Non-executive Chairperson. Her strong expertise and
background in management and marketing and track record as an accomplished
executive have provided her with the business acumen and skills necessary to
serve as our Chairperson.
David B.
Hirsch. Mr. Hirsch has been a Director and our President and
Chief Executive Officer since June 2009. Mr. Hirsch became a
Director, President and Chief Executive Officer following the change of control
transaction with the Koski Family Limited Partnership, discussed
below. Mr. Hirsch began working for the Company as a consultant
in April 2008 and joined the Company as a full-time employee in May
2008. Mr. Hirsch became our Chief Operating Officer effective
June 27, 2008 and assumed the role of Chief Financial Officer on
July 15, 2008. Mr. Hirsch assumed the additional role of Acting President
and Chief Executive Officer on March 18, 2009 upon the resignation of the
Company’s former chief executive officer and president and Mr. Hirsch
relinquished his position as Chief Operating Officer at that
time. Mr. Hirsch further relinquished his position as our Chief
Financial Officer in June 2009 upon the appointment of Mr. Bohunicky to that
position. Prior to joining the Company, Mr. Hirsch operated a
boutique legal and consulting practice since January 2002 with a focus on
financing and advising emerging technology companies. Prior to starting his own
firm, Mr. Hirsch worked at Deloitte and Touche, LLP in San Francisco, California
as a Manager in its restructuring group; at Mutual Ascent, a registered
investment advisor; and at The Cottonwood Group, a venture capital firm in San
Mateo, California in various capacities. He holds a MSIA (MBA) from
the Tepper School of Business at Carnegie Mellon University, a JD from Drake
University Law School and a B.A. in Economics from Indiana University.
Mr. Hirsch is also a licensed attorney in the States of Florida and
Indiana.
As our
President, Chief executive Officer and a member of our Board, Mr. Hirsch draws
upon over a decade of experience in an array of executive roles in various
industries. In addition to his industry experience, Mr. Hirsch brings
to the Board the critical expertise gained over his career on corporate and
business unit strategy, financial structures and alternatives and a background
in law.
Dr. Jeffrey D. Hillman.
Dr. Hillman has been our Chief Scientific Officer since November 1996, a
Director since November 1996 and served as Chairman of the Board of Directors
from November 1996 to December 2004. Since November 1991, Dr. Hillman has been a
Professor in the College of Dentistry at the University of Florida in
Gainesville, Florida. However, Dr. Hillman retired from the
University of Florida, as of July 2008. Dr. Hillman received
undergraduate training at the University of Chicago (Phi Beta Kappa), and his
D.M.D. degree (cum Laude) from the Harvard School of Dental Medicine and his
Ph.D. from Harvard University Medical School. He has authored or
co-authored more than 100 publications and textbook chapters on subjects related
to infectious diseases, including their etiology
and prevention. He has also worked extensively in the area of novel
antibiotics. He is the inventor or co-inventor of Oragenics’ technologies,
including the platform technologies to identify targets for the development
of new vaccines and diagnostic tests for a wide variety of infectious diseases
and cancer.
Dr.
Hillman, our founder and longest serving Board member, brings to our Board an
extensive background spanning nearly thirty years in biotechnology research and
development and a deep knowledge and understanding of Oragenics’ business,
operation and employees.
Robert C. Koski. Mr. Koski has been a
Director since June 2009. Mr. Koski is an attorney with the Koski
Firm, located in Atlanta, Georgia, where his practice includes litigation and
tax law. Mr. Koski received his B.A. from Colgate University and his
J.D. from Emory School of Law. He was admitted to the Bar in
1985. Mr. Koski is also a partner in the KFLP and is the brother of
our director and Chairperson, Ms. Christine Koski.
Mr. Koski
brings to our Board over two decades of experience in the legal field as a
practicing attorney. In addition to his legal experience Mr. Koski’s
educational background provides a foundation for leadership and
consensus-building.
Frederick W.
Telling. Dr. Telling has been a Director since June 2010.
Prior to retiring from Pfizer in June 2007 after 30 years, Dr. Telling was
elected a Corporate Vice President of Pfizer Inc and its Vice President of
Corporate Strategic Planning and Policy in October 1994. He oversaw the
company's realignment and focus on its human and animal health business -
divesting its Food Science and Medical Technology groups, while acquiring Warner
Lambert, Pharmacia and various consumer product brands. Concurrently, Dr.
Telling was responsible for the company's policy development regarding the
Prescription Drug User Fee Act's original passage and all of its subsequent
reauthorizations, health care reform, pricing and indigent access programs,
intellectual property, Medicare prescription benefit expansion and other
business related policy matters. He represented the company in many industry
related outside Boards, including BIO where he served on its Board for over 10
years. Dr. Telling is a Director of Cell Therapeutics Inc. (NASDAQCM:
“CTIC”) based in Seattle, Washington, Eisai N.A. Inc. in Woodcliff Lake,
New Jersey and Medex Inc in Baltimore, Maryland, Dr. Telling chairs CTICs
Compensation Committee and serves on the Audit Committee. Dr. Telling
also serves on the boards of various civic and non-profit
organizations. Dr. Telling received his BA from Hamilton College and
his Master's of Industrial and Labor Relations and Ph. D. in Economics and
Public Policy from Cornell University.
Dr.
Telling brings to our Board an extensive array of business and industry
experience as well as experience as a director of public companies.
Charles L.
Pope. Mr. Pope has been a Director since June
2010. Mr. Pope, a 30 year veteran in executive management, finance
and accounting, adds significant strength to the Oragenics Board. During his 20
years at PricewaterhouseCoopers LLP, Mr. Pope served as a Partner in the
Audit and Financial Advisory Consulting Divisions and was a Partner in the
Accounting and SEC Directorate. Currently, Mr. Pope serves as the CFO and
COO of the Palm Bank in Tampa, Florida. Previously, Mr. Pope held CFO
positions for public companies including, Aerosonic Corporation, Reptron
Manufacturing,SRI/Surgical and UTEK Corporation. He currently serves
on the board of directors of Inuvo, Inc. and UTEK Corporation each of which are
public companies. He holds a B.S. in Economics and Accounting from
Auburn University, and is a Certified Public Accountant in Florida.
Mr. Pope
brings to our Board over three decades of experience in the finance and
accounting fields. In addition, Mr. Pope also has experience serving
as a director of public companies.
See
“Corporate Governance” and “Compensation of Directors” below for additional
information regarding the Board.
PROPOSAL
II
APPROVAL
OF AMENDMENT TO ARTICLES
OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
Our board of directors has approved,
and is hereby soliciting shareholder approval of, an amendment to our
certificate of incorporation to effect a reverse stock split at a ratio of not
less than one-for-two and not more than one-for-twenty in
the form set forth in Appendix A to this proxy statement (the
“Reverse Stock Split Amendment”). A vote FOR this Proposal II will constitute
approval of the Reverse Stock Split Amendment providing for the combination of
any whole number of shares of common stock between and including
two and twenty into one
share of common stock and will grant our board of directors the authority to
select which of the approved exchange ratios within that range will be
implemented. If shareholders approve this proposal, our board of directors will
have the authority, but not the obligation, in its sole discretion and without
further action on the part of the shareholders, to select one of the approved
reverse stock split ratios and effect the approved reverse stock split by filing
the Reverse Stock Split Amendment with the Secretary of State of the State of
Florida at any time after the approval of the Reverse Stock Split Amendment. If
the Reverse Stock Split Amendment has not been filed with the Department of
State of the State of Florida by the date of the Company’s 2011
annual meeting of shareholders, the board of directors will abandon the Reverse
Stock Split Amendment and shareholder approval would again be
required prior to implementing any reverse stock
split
thereafter.
If the
reverse stock split is implemented, the Reverse Stock Split Amendment also would
reduce the number of authorized shares of our common stock as set forth below
but would not change the par value of a share of our common stock. Except for
any changes as a result of the treatment of fractional shares, each shareholder
will hold the same percentage of common stock outstanding immediately after the
reverse stock split as such shareholder held immediately prior to the reverse
stock split.
Our board
of directors believes that shareholder approval of an exchange ratio range
(rather than an exact exchange ratio) provides the board with maximum
flexibility to achieve the purposes of the reverse stock split. The reverse
stock split will be effected, if at all, only upon a determination by the board
of directors that the reverse stock split is in the company’s and the
shareholders’ best interests at that time. In connection with any determination
to effect the reverse stock split, the board of directors will set the time for
such a split and select a specific ratio within the range. These determinations
will be made by the board of directors with the intention to create the greatest
marketability for our common stock based upon prevailing market conditions at
that time.
Purpose and Effect of the Reverse
Stock Split
The
primary purpose for implementing the proposed reverse stock split is to increase
the per share trading price of our common stock and decrease the number of
outstanding shares of our common stock which our board of directors believes
would help us:
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Satisfy
the minimum bid price requirements in connection with attempting to
qualify our common stock for initial listing on a major exchange such as
the NASDAQ Global market or the NASDAQ Capital
Market;
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•
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attract
new investors who are reluctant to invest in shares with low
prices;
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attract
investment from certain institutional investors and investment funds who
are presently prevented under their guidelines from investing in our stock
at its current price levels;
and
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•
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attract
and retain employees who may be less likely to work for a company with a
low stock price.
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We are
planning for our future financing needs, and the ability to attract such
institutional investors may be important to the success of any capital raising
efforts.
We
believe that a higher per share price of our common stock will increase interest
in our stock within the financial community and broaden the pool of investors
that may consider investing in our stock. Both of these factors can potentially
increase the trading volume and liquidity of our common stock. The Board has
been advised that our low stock price actually prohibits some institutional
investors from purchasing our stock because of minimum price per share
requirements they observe. If the Board effects a reverse stock split after
receiving shareholder approval, it intends to select a split ratio to result in
a post-split share price that is more typical of NASDAQ-listed
companies.
Listing on a National Securities
Exchange.
Our Board
has authorized Oragenics management to submit an application to list our shares
on the NASDAQ Global Market or the NASDAQ Capital Market, in its discretion. Our
common stock, which currently trades on the Over the Counter Bulletin Board
under the symbol “ORNI”, could not presently qualify for initial listing on
NASDAQ because its sale price is below minimum requirements of NASDAQ. A reverse
stock split, by raising our common stock sale price, may remove this impediment
to listing with NASDAQ.
If we are
successful in listing on NASDAQ it should increase the liquidity of our common
stock and may minimize the spread between the “bid” and “ask” prices quoted by
market makers. Further, we believe that a listing on NASDAQ would make our stock
a more attractive investment for institutional investors and would also improve
the perception of Oragenics by persons with whom we do business.
NASDAQ
has several quantitative listing criteria that companies must satisfy in order
for their shares to be listed on the NASDAQ Global Market or the NASDAQ Capital
Market, including a minimum bid price per share of $4.00. Companies such as
Oragenics may effect a reverse stock split to meet this requirement, subject to
certain conditions, including meeting the minimum bid price for a minimum of
five to ten consecutive trading days, but may need to trade at or above $4.00
for as long as 90 consecutive trading days, if the Company must rely on the
“market value” listing standard.
The Board
believes that the proposed reverse stock split will make it possible for our
common stock to satisfy the consecutive trading day price requirements for
listing. NASDAQ also requires that listed companies meet other quantitative
criteria, including, in some instances, a minimum aggregate market value, a
minimum net worth, and a minimum number of market makers, as well as qualitative
criteria, including those regarding composition of the Board of Directors,
committees composed of independent directors, and other corporate governance
requirements. While we expect that the proposed reverse stock split, together
with other actions required to meet applicable listing standards, will enable
our shares to qualify for listing with NASDAQ and that we will be able to
continue to meet on-going quantitative and qualitative listing requirements, we
cannot be sure that this will be the case. Negative financial results, adverse
clinical trials developments, or market conditions could adversely affect the
market price of our common stock and jeopardize our ability to meet or maintain
applicable NASDAQ listing requirements. Furthermore, in addition to its
enumerated listing and maintenance standards, NASDAQ has broad discretionary
authority over the initial and continued listing of securities, which it could
exercise with respect to our shares.
Other
Considerations.
In
addition to the foregoing considerations, the Board considered that, as a matter
of policy, many institutional investors will not purchase stocks trading below
certain minimum price levels, and brokers often discourage their customers from
purchasing such stocks. We believe that these concerns will be reduced if the
price per share of our common stock increases.
The Board
believes that the total number of shares of our common stock currently
outstanding is disproportionately large relative to our present market
capitalization and that a reverse stock split would bring the number of
outstanding shares to a level more in line with other companies with comparable
market capitalizations. Moreover, the Board considered that when the number of
outstanding shares of common stock is unreasonably large in relation to a
company’s earnings, a significant change in net earnings or losses is required
to create a noticeable change, in absolute terms, in such company’s reported
earnings or loss per share levels. If we implement a reverse stock split and
decrease the number of shares outstanding, our investors could more easily
understand the impact on earnings or loss per share attributable to developments
in our business.
A reverse
stock split may also reduce the relatively high transaction costs and
commissions incurred by our shareholders due to our currently low per share
trading price. The structure of trading commissions, when they are set at a
fixed price per share, can have an adverse impact on holders of lower-priced
securities because the brokerage commissions generally represent a higher
percentage of the sales prices of lower-priced securities than they do on
higher-priced securities, which may discourage trading in such lower-priced
securities. If the price of our shares is higher, then the adverse impact of
these commissions could be reduced.
Any
increase in the liquidity of our common stock due to a higher price per share
may be partially or entirely offset by a reduction in liquidity due to the fewer
number of shares issued and outstanding after the reverse stock split.
Furthermore, the reverse stock split will likely increase the number of common
stock holdings that are not divisible by 100 (often referred to as “odd lots”),
which may make these shares more difficult to sell and could result in higher
selling costs for shareholders who hold odd lots.
The Board
believes that the potential positive effects of a reverse stock split can
outweigh the potential negative effects and intends to implement the proposed
split only if they conclude that to be the case. In making that evaluation the
Board will take into account various negative factors including: (i) the
negative perception of reverse stock splits held by some stock market
participants; (ii) the adverse effect on liquidity that might be caused by
a reduced number of shares outstanding; and (iii) the costs associated with
implementing a reverse stock split. The effect of the reverse stock split upon
the market price of our common stock cannot be predicted with any certainty, and
the history of similar stock splits for companies in similar circumstances to
ours is varied. It is also possible that a reverse stock split may not increase
the per share price of our common stock in proportion to the reduction in the
number of shares of our common stock outstanding or result in a permanent
increase in the per share price, which depends on many factors.
After
considering the foregoing factors, the Board determined that submitting this
Proposal for approval by shareholders is in our best interests and that of our
shareholders. The Board reserves the right not to implement the reverse stock
split if the Board does not deem it to be in our best interests or that of our
shareholders.
Our Board
of Directors, in its sole discretion, may elect to effect any one (but not more
than one) of the reverse split ratios within the range indicated after receipt
of shareholder approval, or none of them if our Board of Directors determines in
its sole discretion not to proceed with the reverse stock split. We believe that
the availability of the alternative reverse split ratios will provide the Board
of Directors with the flexibility to implement the reverse stock split in a
manner designed to maximize the anticipated benefits for the Company and its
shareholders. In determining which of the alternative reverse stock split ratios
to implement, if any, following the receipt of shareholder approval, our Board
of Directors may consider, among other things, factors such as:
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the
trading price and trading volume of our common stock and the anticipated
impact of the reverse stock split on the trading market for our common
stock; and
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which
of the alternative reverse stock split ratios is most likely to produce a
trading price in the $4.00 to $6.00 range post
split.
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The board
of directors reserves its right to elect to abandon the reverse stock split if
it determines, in its sole discretion, that this proposal is no longer in the
best interests of the company and its shareholders.
Impact of the Reverse Stock Split
Amendment if Implemented
If
approved and effected, the reverse stock split will be realized simultaneously
and in the same ratio for all of our common stock. The reverse stock split will
affect all holders of our common stock uniformly and will not affect any
shareholder’s percentage ownership interest in the company. As described below,
holders of common stock otherwise entitled to a fractional share as a result of
the reverse stock split will receive a cash payment in lieu of such fractional
share. These cash payments will reduce the number of post-reverse stock split
holders of our common stock to the extent there are concurrently shareholders
who would otherwise receive less than one share of common stock after the
reverse stock split. In addition, the reverse stock split will not affect any
shareholder’s proportionate voting power (subject to the treatment of fractional
shares).
The
principal effects of the Reverse Stock Split Amendment will be
that:
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depending
on the ratio for the reverse stock split selected by our board of
directors, each two or twenty shares of common stock owned by a
shareholder, or any whole number of shares of common stock between two and
twenty as determined by the board of directors, will be combined into one
new share of common stock;
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the
number of shares of common stock issued and outstanding will be reduced
from approximately 108 million shares to a range of approximately
54 million shares to approximately 5.4 million shares, depending
upon the reverse stock split ratio selected by the board of
directors;
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the
number of authorized shares of common stock will be reduced from 300
million to a range of approximately 150 million to
15 million dependent on the reverse stock split ratio chosen by the
board of directors. The table below illustrates the number of authorized
shares of common stock that will correspond to each range of reverse stock
split ratios:
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Total
Authorized Shares of Common Stock
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Range of Reverse Stock Split
Ratios
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after
Reverse Stock Split
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One-for-two
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150,000,000
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One-for-four
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75,000,000
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One-for-six
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50,000,000
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One-for-eight
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37,500,000
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One-for-ten
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30,000,000
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One-for-fifteen
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20,000,000
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One-for-twenty
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15,000,000
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based
upon the reverse stock split ratio selected by our board of directors,
proportionate adjustments will be made to the per share exercise price
and/or the number of shares issuable upon the exercise or conversion of
all outstanding options, warrants, convertible or exchangeable securities
entitling the holders to purchase, exchange for, or convert into, shares
of common stock, which will result in approximately the same aggregate
price being required to be paid for such options and warrants upon
exercise immediately preceding the reverse stock
split; and
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the
number of shares reserved for issuance or pursuant to the securities or
plans described in the immediately preceding bullet will be reduced
proportionately based upon the reverse stock split ratio selected by our
board of directors.
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The table
below illustrates the effect, as of June 30, 2010, of a reverse stock split at
certain ratios on (i) the shares of common stock outstanding and reserved
for issuance, (ii) the reduced number of total authorized shares of common
stock under our articles of incorporation, and (iii) the resulting number
of shares of common stock available for issuance:
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Shares
of Common
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Stock
Outstanding
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plus
Shares of
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Shares
of Common
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Common
Stock
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Total
Authorized
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Stock
Available for
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Reserved
for
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Shares
of Common
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Issuance
(% of
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Issuance
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Stock
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total
authorized)
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One-for-two
stock split is approved
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61,268,363
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150,000,000
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88,731,637
59.2
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%
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One-for-four
stock split is approved
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30,634,182
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75,000,000
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44,365,819
59.2
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%
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One-for-six
stock split is approved
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20,422,788
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50,000,000
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29,577,212
59.2
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%
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One-for-eight
stock split is approved
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15,317,091
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37,500,000
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22,182,909
59.2
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%
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One-for-ten
stock split is approved
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12,253,673
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30,000,000
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17,746,327
59.2
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%
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One-for-fifteen
stock split is approved
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8,169,115
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20,000,000
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11,830,885
59.2
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%
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One-for-twenty
stock split is approved
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6,126,836
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15,000,000
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8,873,164
59.2
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%
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Other
principal effects of the reverse stock split will include proportional
adjustments to the per share exercise price and the number of shares issuable
upon the exercise of all outstanding options and warrants and a proportional
reduction in the number of shares reserved for issuance under our existing stock
incentive plans.
Immediately
following the effective time of the reverse stock split, we will continue to
have 20,000,000 authorized shares of preferred stock, all of which are unissued
at this time. Authorized but unissued shares will be available for issuance, and
we may issue such shares in the future. If we issue additional shares of common
stock, the percentage ownership interest of holders of our common stock will be
diluted.
We do not
intend for this reverse stock split to constitute, or be the first step in a
series of plans or proposals for, a “going private” transaction pursuant to
Rule 13e-3 under the Securities Exchange Act of 1934. Following the reverse
stock split, we intend for our common stock to remain registered under the
Securities Exchange Act of 1934 and to continue to comply with the reporting
requirements of such Act.
Certain Risks Associated with the
Reverse Stock Split
There are
risks associated with the reverse stock split including the
following:
• There
can be no assurance that we would be able to meet all of the NASDAQ’s
requirements necessary to successfully get our stock listed on NASDAQ or
otherwise meet the continued listing standards of NASDAQ if we are successful in
obtaining the listing;
• If
the reverse stock split is effected and the market price of our common stock
declines, the percentage decline may be greater than would occur in the absence
of a reverse stock split. The market price of our common stock will, however,
also be based on performance and other factors, which are unrelated to the
number of shares outstanding.
• There
can be no assurance that the reverse stock split will result in any particular
price for our common stock. As a result, the trading liquidity of our common
stock may not necessarily improve.
• There
can be no assurance that the market price per share of our common stock after a
reverse stock split will increase in proportion to the reduction in the number
of shares of our common stock outstanding before the reverse stock split. For
example, based on the closing price of our common stock on July 8, 2010 of $0.35
per share, if the reverse stock split were implemented and approved for a
reverse stock split ratio of one-for-twelve, there can be no assurance that the
post-split market price of our common stock would be $4.20 or greater.
Accordingly, the total market capitalization of our common stock after the
reverse stock split may be lower than the total market capitalization before the
reverse stock split. Moreover, in the future, the market price of our common
stock following the reverse stock split may not exceed or remain higher than the
market price prior to the reverse stock split.
• There
can be no assurance the reverse stock split would result in a price per share
that will attract brokers and investors that do not trade in lower priced
shares.
• There
can be no assurance that the reverse stock split would result in a per share
price that would increase our ability to attract and retain
employees.
• Because
the number of issued and outstanding shares of common stock would decrease as
result of the reverse stock split, the number of authorized but unissued shares
of common stock may increase on a relative basis. If we issue additional shares
of common stock, the ownership interest of our current shareholders would be
diluted, possibly substantially.
• The
liquidity of our common stock could be adversely affected by the reduced number
of shares that would be outstanding after the reverse stock split.
• The
proportion of unissued authorized shares to issued shares could, under certain
circumstances, have an anti-takeover effect. For example, the issuance of a
large block of common stock could dilute the stock ownership of a person seeking
to effect a change in the composition of the board of directors or contemplating
a tender offer or other transaction for the combination of the company with
another company.
• The
reverse stock split may result in some shareholders owning “odd lots” of less
than 100 shares of common stock. Odd lot shares may be more difficult to
sell, and brokerage commissions and other costs of transactions in odd lots are
generally somewhat higher than the costs of transactions in “round lots” of even
multiples of 100 shares.
Our board
of directors intends to effect the reverse stock split only if it believes that
a decrease in the number of shares is likely to improve the trading price of our
common stock and if the implementation of the reverse stock split is determined
by the board of directors to be in the best interests of the company and its
shareholders.
The
proposed reverse stock split would become effective as of 11:59 p.m.,
Eastern Time, (the “Effective Time”) on the date of filing the Reverse Stock
Split Amendment with the office of the Department of State of the
State of Florida. Except as explained below with respect to fractional shares,
on the Effective Time, shares of our common stock issued and outstanding
immediately prior thereto will be combined, automatically and without any action
on the part of the shareholders, into one share of our common stock in
accordance with the reverse stock split ratio determined by our board of
directors. Following the reverse stock split, each certificate representing
shares of our common stock will be deemed for all corporate purposes to evidence
ownership of the number of whole shares into which the shares previously
represented by the certificate were combined pursuant to the reverse stock
split.
After the
Effective Time, our common stock will each have new committee on uniform
securities identification procedures (“CUSIP”) numbers, which is a number used
to identify our equity securities, and stock certificates with the older CUSIP
numbers will need to be exchanged for stock certificates with the new CUSIP
numbers by following the procedures described below.
After the
Effective Time, we will continue to be subject to periodic reporting and other
requirements of the Exchange Act. In addition, subject to any potential listing
on an exchange, such as NASDAQ, we expect that our common stock will continue to
be reported on the Over the Counter Bulletin Board under the symbol “ORNI”,
although the letter “D” will be added to the end of the trading symbol for a
period of 20 trading days after the Effective Time to indicate that the
reverse stock split has occurred.
Board Discretion to Implement the
Reverse Stock Split Amendment
If the
reverse stock split is approved by our shareholders, it will be effected, if at
all, only upon a determination by our board of directors that a reverse stock
split (at a ratio determined by the board of directors as described above) is in
the best interests of the company and the shareholders. The board of director’s
determination as to whether the reverse stock split will be effected and, if so,
at what ratio, will be based upon certain factors, including existing and
expected marketability and liquidity of our common stock, prevailing market
conditions and the likely effect on the market price of our common stock. If our
board of directors determines to effect the reverse stock split, the board of
directors will consider various factors in selecting the ratio including the
overall market conditions at the time and the recent trading history of the
common stock.
Shareholders
will not receive fractional post-reverse stock split shares in connection with
the reverse stock split. Shareholders of record who otherwise would be entitled
to receive fractional shares will be entitled, upon surrender to our exchange
agent of certificates representing such shares, to a cash payment in lieu
thereof equal to the fraction to which the shareholder would otherwise be
entitled multiplied by the closing price of our common stock, as such price is
reported on the Over the Counter Bulletin Board (or any other exchange on which
our stocks may be listed, such as NASDAQ) on the last trading day prior to the
effective date of the reverse stock split. In addition, shareholders will not be
entitled to receive interest for the period of time between the Effective Time
and the date a shareholder receives payment for the cashed-out shares. The
payment amount will be paid to the shareholder in the form of a check in
accordance with the procedures outlined below.
After the
reverse stock split, a shareholder will have no further interest in the company
with respect to their cashed-out fractional shares. A person otherwise entitled
to a fractional interest will not have any voting, dividend or other rights
except to receive payment as described above.
Shareholders
should be aware that, under the escheat laws of the various jurisdictions where
shareholders reside, sums due for fractional share interests and underlying
unclaimed shares that are not timely claimed after the effective time of the
reverse stock split may be required to be paid to the designated agent for each
such jurisdiction. Thereafter, shareholders otherwise entitled to receive such
funds or shares may have to seek to obtain them directly from the jurisdiction
to which they were paid.
Effect on Beneficial Holders of
Common Stock (i.e. shareholders who hold in “street
name”)
Upon the
reverse stock split, we intend to treat shares held by shareholders in “street
name,” through a bank, broker or other nominee, in the same manner as registered
shareholders whose shares are registered in their names. Banks, brokers or other
nominees will be instructed to effect the reverse stock split for their
beneficial holders holding our common stock in “street name”. However, these
banks, brokers or other nominees may have different procedures than registered
shareholders for processing the reverse stock split and making payment for
fractional shares. If a shareholder holds shares of our common stock with a
bank, broker or other nominee and has any questions in this regard, shareholders
are encouraged to contact their bank, broker or other
nominee.
Effect on Registered “Book-Entry”
Holders of Common Stock (i.e. shareholders that are registered on the transfer
agent’s books and records but do not hold stock
certificates)
Certain
of our registered holders of common stock may hold some or all of their shares
electronically in book-entry form with the transfer agent. These shareholders do
not have stock certificates evidencing their ownership of the common stock. They
are, however, provided with a statement reflecting the number of shares
registered in their accounts.
If a
shareholder holds registered shares in book-entry form with the transfer agent,
no action needs to be taken to receive post-reverse stock split shares or cash
payment in lieu of any fractional share interest, if applicable. If a
shareholder is entitled to post-reverse stock split shares, a transaction
statement will automatically be sent to the shareholder’s address of record
indicating the number of shares of common stock held following the reverse stock
split.
If a
shareholder is entitled to a payment in lieu of any fractional share interest, a
check will be mailed to the shareholder’s registered address as soon as
practicable after the Effective Time. By signing and cashing the check,
shareholders will warrant that they owned the shares of common stock for which
they received a cash payment. The cash payment is subject to applicable federal
and state income tax and state abandoned property laws. In addition,
shareholders will not be entitled to receive interest for the period of time
between the Effective Time of the reverse stock split and the date payment is
received.
Effect on Certificated
Shares
Shareholders
holding shares of our common stock in certificate form will be sent a
transmittal letter by the transfer agent after the Effective Time. The letter of
transmittal will contain instructions on how a shareholder should surrender his
or her certificate(s) representing shares of our common stock (“Old
Certificates”) to the transfer agent in exchange for certificates representing
the appropriate number of whole shares of post-reverse stock split common stock
(“New Certificates”). No New Certificates will be issued to a shareholder until
such shareholder has surrendered all Old Certificates, together with a properly
completed and executed letter of transmittal, to the transfer agent. No
shareholder will be required to pay a transfer or other fee to exchange his, her
or its Old Certificates.
Shareholders
will then receive a New Certificate(s) representing the number of whole shares
of common stock which they are entitled as a result of the reverse stock split.
Until surrendered, we will deem outstanding Old Certificates held by
shareholders to be cancelled and only to represent the number of whole shares of
post-reverse stock split common stock to which these shareholders are
entitled.
Any Old
Certificates submitted for exchange, whether because of a sale, transfer or
other disposition of stock, will automatically be exchanged for new
certificates. If an Old Certificate has a restrictive legend on the back of the
Old Certificate(s), the New Certificate will be issued with the same restrictive
legends that are on the back of the Old Certificate(s).
If a
shareholder is entitled to a payment in lieu of any fractional share interest,
such payment will be made as described above under “Fractional
Shares”.
Shareholders should not destroy any
stock certificate(s) and should not submit any stock certificate(s) until
requested to do so.
The
reverse stock split will not affect the par value of a share of our common
stock. As a result, as of the Effective Time of the reverse stock split, the
stated capital attributable to common stock on our balance sheet will be reduced
proportionately based on the reverse stock split ratio (including a retroactive
adjustment of prior periods), and the additional paid-in capital account will be
credited with the amount by which the stated capital is reduced. Reported per
share net income or loss will be higher because there will be fewer shares of
common stock outstanding.
Under the
Florida Business Corporation Act, shareholders are not entitled to appraisal
rights with respect to the reverse stock split, and we will not independently
provide shareholders with any such right.
Certain United States Federal Income
Tax Considerations
The
following is a summary of certain material United States federal income tax
consequences of the reverse stock split and does not purport to be a complete
discussion of all of the possible federal income tax consequences of the reverse
stock split. This summary is included for general information only. Further, it
does not address any state, local or foreign income or other tax consequences.
Also, it does not address the tax consequences to holders that are subject to
special tax rules, including, but not limited to, banks, insurance companies,
regulated investment companies, personal holding companies, foreign entities,
nonresident alien individuals, broker-dealers and tax-exempt entities. The
discussion is based on the provisions of the United States federal income tax
law as of the date hereof, which is subject to change retroactively as well as
prospectively. We have not sought any ruling from the Internal Revenue Service
with respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the Internal Revenue Service will
agree with such statements and conclusions. This summary also assumes that the
pre-reverse stock split shares were, and the post-reverse split shares will be,
held as a “capital asset,” as that term is defined in the Internal Revenue Code
of 1986, as amended (generally, property held for investment). The tax treatment
of a shareholder may vary depending upon the particular facts and circumstances
of such shareholder. Each
shareholder is urged to consult with such shareholder’s own tax advisor with
respect to the tax consequences of the reverse stock split. As used
herein, the term United States holder means a shareholder that is, for federal
income tax purposes: (i) a citizen or resident of the United States;
(ii) a corporation or other entity taxed as a corporation created or
organized in or under the laws of the United States, any state of the United
States or the District of Columbia; (iii) an estate the income of which is
subject to federal income tax regardless of its source; or (iv) a trust if
a United States court is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
Tax
Consequences of the Reverse Stock Split Generally
Other
than the cash payments for fractional share interests discussed below,
Section 354 of the Internal Revenue Code provides that no gain or loss
should be recognized by a shareholder upon such shareholder’s exchange of
pre-reverse stock split shares for post-reverse stock split shares pursuant to
the reverse stock split. Pursuant to Section 368(a)(1)(E) of the Internal
Revenue Code, Oragenics should not recognize any gain or loss as a result of the
reverse stock split.
In
the reverse stock split (including any fraction of a post-reverse stock split
share deemed to have been received), the tax basis will be the same as the
shareholder’s aggregate tax basis in the pre-reverse stock split shares
exchanged therefor. In general, shareholders who receive cash in exchange for
their fractional share interests in the post-reverse stock split shares as a
result of the reverse stock split will recognize gain or loss based on their
adjusted basis in the fractional share interests redeemed. The receipt of cash
for fractional share interests represents a mere mechanical process and not a
separately bargained for consideration. The shareholder’s holding period for the
post-reverse stock split shares will include the period during which the
shareholder held the pre-reverse stock split shares surrendered in the reverse
stock split. The receipt of cash instead of a fractional share interest in
common stock by a United States holder of common stock will result in a taxable
gain or loss to such holder for federal income tax purposes based upon the
difference between the amount of cash received by such holder and the adjusted
tax basis in the fractional share interests as set forth above.
Cash
Received in Lieu of Fractional Shares
The
cash received by each fractional shareholder will be treated as either
(i) a dividend, (ii) capital gain, or (iii) return of capital. In
general, Section 302 of the Internal Revenue Code provides for dividend
treatment (to the extent of Oragenics’ accumulated earnings and profits) unless
the shareholder realizes a meaningful reduction in his stockholdings or
completely terminates his interest in Oragenics. Amounts received that would
otherwise obtain dividend treatment are treated as return of capital to the
extent they are in excess of our accumulated earnings and profits. Amounts
received which are not classified as dividends generally receive capital gain or
loss treatment and the shareholder’s gain or loss is equal to the difference
between the proceeds received by the shareholder from such fractional share and
the shareholder’s allocable tax basis in such fractional share. In general, the
capital gain or loss will be treated as “long term” to the extent the
shareholder has held the fractional share for investment in excess of one year.
Because each shareholder’s treatment may differ from the above based on a
shareholder’s individual circumstances, and as already mentioned above, each
shareholder is strongly advised to consult with his, her or its tax advisor
concerning the tax treatment of the proceeds such shareholder will receive with
respect to fractional shares.
Each
shareholder who is to receive cash in the reverse stock split will be required
to furnish the shareholder’s social security number or taxpayer identification
number. Failure to provide this information may result in backup
withholding.
The
foregoing summary regarding the tax consequences of the reverse stock split is
not binding on the Internal Revenue Service or the courts. Accordingly, each
shareholder should consult with his or her own tax advisor with respect to all
of the potential tax consequences to him or her of the reverse stock
split.
To ensure compliance with Treasury
Department Circular 230, each holder of common stock is hereby notified that:
(a) any discussion of U.S. federal tax issues in this proxy statement is
limited in scope and not intended or written to be used, and cannot be used, by
such holder for the purpose of (i) avoiding penalties that may be imposed
on such holder under the Internal Revenue Code or (ii) promoting, marketing
or recommending to another party any transaction or matter addressed in this
communication; (b) any such discussion has been included to support the
marketing or promotion of the reverse stock split on the terms described herein;
and (c) each such holder should seek advice based on his, her or its
particular circumstances from an independent tax advisor.
Required Vote and
Recommendation
The
affirmative vote of the holders of a majority of the outstanding shares of
common stock entitled to vote at the annual meeting will be required to approve
the Reverse Stock Split Amendment. Abstentions will have the effect
of a vote against the Proposal, and broker non-votes will not be counted as a
vote in favor of or a vote against the Proposal. If you sign and submit your
proxy card without properly marking your voting instructions, your shares will
be voted “FOR” this Proposal.
The Board of Directors unanimously
recommends a vote “FOR” approval of this Proposal to grant our Board of
Directors authority to amend our Articles of Incorporation to effect a reverse
stock split as desribed above. Our majority shareholder, Koski
Family Limited Partnership, has indicated that it will vote in favor of this
proposal.
CORPORATE
GOVERNANCE
Oragenics’
current corporate governance practices and policies are designed to promote
shareholder value, and Oragenics is committed to the highest standards of
corporate ethics and diligent compliance with financial accounting and reporting
rules. Our Board provides independent leadership in the exercise of its
responsibilities. Our management oversees a system of internal controls and
compliance with corporate policies and applicable laws and regulations, and our
employees operate in a climate of responsibility, candor and integrity. You can
access information regarding our corporate governance practices on our web site
at www.oragenics.com/governance.html
Corporate Governance
Principles
Our Board
has adopted Board of Directors Corporate Governance Policy, which set forth the
principles that guide the Board’s exercise of its responsibility to oversee
corporate governance, maintain its independence, evaluate its own performance
and the performance of our executive officers and set corporate strategy. Our
Corporate Governance Policy, states that currently different individuals fill
the roles of Chairman and Chief Executive Officer. Our Board first
adopted these Corporate Governance Principles in December 2009 and may refine
them from time to time. You can access our Corporate Governance Principles on
our web site at www.oragenics.com/governance.html.
Code of Ethics/Standards of Business
Conduct
It is our
policy to conduct our operations in compliance with all applicable laws and
regulations and to operate our business under the fundamental principles of
honesty, integrity and ethical behavior. This policy can be found in our
Standards of Business Conduct, which is applicable to all of our directors,
officers and employees, and which complies with the SEC’s requirements and with
listing standards of the NYSE Amex, LLC (NYSE Amex) we have
adopted.
Our
Standards of Business Conduct are designed to promote honest and ethical conduct
and compliance with all applicable laws, rules and regulations and to deter
wrongdoing. Our Standards of Business Conduct are also aimed at ensuring that
information we provide to the public (including our filings with and submissions
to the SEC) is accurate, complete, fair, relevant, timely and understandable.
Our Standards of Business Conduct can be accessed on our web site at
www.oragenics.com/governance.. We intend to disclose amendments to certain
provisions of our Standards of Business Conduct, or waivers of such provisions
granted to directors and executive officers, on our web site in accordance with
applicable SEC and NYSE Amex requirements.
Independence of
Directors
The Board
has determined that each of the following directors, constituting a majority of
the Board, is “independent” within the meaning of the NYSE Amex listing
standards:
Christine
L. Koski
Charles
L. Pope
Such
independence definition includes a series of objective tests, including that the
director is not an employee of the company and has not engaged in various types
of business dealings with the company. In addition, as further required by the
NYSE Amex listing standards, the Board has made a subjective determination as to
each independent director that no relationships exist which, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.
Board Leadership
Structure
We
currently separate the positions of Chief Executive Officer and Chairperson of
the Board. Since June 2009, Ms. Koski, one of our independent directors, has
served as our non-executive Chairperson of the Board. The
responsibilities of the Chairperson of the Board include: setting the agenda for
each Board meeting, in consultation with the Chief Executive Officer; presiding
at executive sessions; facilitating and conducting, with the Corporate
Governance and Nominating Committee, the annual self-assessments by the Board
and each standing committee of the Board, including periodic performance reviews
of individual directors; and conducting, with the Compensation Committee, a
formal evaluation of the Chief Executive Officer and other executive officers in
the context of the annual compensation review.
Separating
the positions of Chief Executive Officer and Chairperson of the Board allows our
Chief Executive Officer to focus on our day-to-day business, while allowing the
Chairperson of the Board to lead the Board in its fundamental role of providing
advice to and independent oversight of management. The Board believes that
having an independent director serve as Chairperson of the Board is the
appropriate leadership structure for the Company at this time and demonstrates
our commitment to good corporate governance.
In
addition, as described in more detail below, our Board has three standing
committees, each chairman and each member of which is an independent director.
Our Board delegates substantial responsibility to each Board committee, which
reports their activities and actions back to the Board. We believe that our
independent Board committees and their chairmen are an important aspect of our
Board leadership structure.
Our
Board, as a whole and through its committees, has responsibility for the
oversight of risk management. With the oversight of our Board, our officers are
responsible for the day-to-day management of the material risks Oragenics faces.
In its oversight role, our Board has the responsibility to satisfy itself that
the risk management processes designed and implemented by management are
adequate and functioning as designed. The involvement of the Board in setting
our business strategy at least annually is a key part of its oversight of risk
management, its assessment of management’s appetite for risk and its
determination of what constitutes an appropriate level of risk for Oragenics.
The Board regularly receives updates from management and outside advisors
regarding certain risks the Company faces, including litigation and various
operating risks.
In
addition, our Board committees each oversee certain aspects of risk management.
For example, our Audit Committee is responsible for overseeing risk management
of financial matters, financial reporting, the adequacy of our risk-related
internal controls, and internal investigations; our Compensation Committee
oversees risks related to compensation policies and practices; and our
Nominating Committee oversees governance related risks, such as Board
independence and conflicts of interest, as well as management and director
succession planning. Our Board committees report their findings to the
Board.
Senior
management attends Board and Board committee meetings and is available to
address any questions or concerns raised by the Board on risk management-related
and any other matters. The Board holds periodic strategic planning sessions with
senior management to discuss strategies, key challenges, and risks and
opportunities for the Company.
Meetings
of the Board of Directors and Committees
Board of Directors: The property, affairs and
business of the Company are under the general management of its Board of
Directors as provided by the laws of the State of Florida and the Bylaws of the
Company.
On June
29, 2009, we entered into and consummated a private placement of equity and debt
financing pursuant to a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with the Koski Family Limited Partnership
(“KFLP”). Pursuant to the terms of the Securities Purchase Agreement
we issued 50,000,000 shares of our Common Stock to the KFLP in exchange for
$4,000,000. Collectively the transaction with KFLP is herein referred
to as the “KFLP Transaction. As a result of the KFLP Transaction there was a
change of control of the Company with the KFLP acquiring a controlling interest
in our outstanding voting common stock. See “Certain Relationships
and Related Transactions.”
Effective
upon the closing of the KFLP Transaction former independent directors Richard
Welch, Derek Hennecke and Kevin Sills resigned from our Board of Directors and
our acting President and Chief Executive Officer, David Hirsch, as well as
Christine L. Koski and Robert C. Koski were appointed to fill the vacancies on
our board of Directors created by the aforementioned
resignations. Ms. Koski was elected as Chair to succeed Mr.
Welch. Ms. Koski and Mr. Koski are principals of the KFLP. Following
the closing of the KFLP Transaction, David Hirsch became our President and Chief
Executive Officer and our Controller, Brian Bohunicky was appointed to be our
Chief Financial Officer.
On June
4, 2010 our board of directors expanded the size of our board of directors by
two additional seats from four to six in order to accommodate its appointment of
Mr. Charles L. Pope and Dr. Frederick W. Telling to serve as additional
non-employee, independent, directors.
The Board currently consists of six
members. The Board periodically reviews the size of the Board and
recommends any changes it determines to be appropriate given the needs of the
Company. Under the Company's Bylaws, the number of members on the Board may be
increased or decreased by resolution of the Board.
The Board
of Directors conducts its business through meetings of the full Board and
through committees of the Board. The Board of Directors has appointed
standing Audit, Compensation and Nominating Committees of the Board of
Directors. The Board has no formal policy regarding board member attendance at
the annual meeting. All of our Directors attended the prior year’s annual
meeting and are expected to attend the current Annual Meeting. The Board of Directors
met or unanimously consented to resolutions 18 times during the year
ending December 31, 2009 (“Fiscal 2009”). Our Directors attended at least 75% of
the aggregate number of meetings of the Board of Directors and Committees during
Fiscal 2009. In conjunction with regularly scheduled meetings, our
"independent" Directors met in separate executive sessions.
Director Independence: Our securities
are not listed on a national securities exchange or in an inter-dealer quotation
system which have requirements that directors be independent. Accordingly, we
are not currently required to comply with the director independence requirements
of any securities exchange. In determining whether our Directors are
independent, however, we intend to comply with, and have adopted, the rules of
the NYSE Amex Equities (formerly known as the American Stock
Exchange). The Board of Directors also will consult with counsel to
ensure that the Board of Directors’ determination is consistent with those rules
and all relevant securities and other laws and regulations regarding the
independence of directors, including those adopted under the Sarbanes-Oxley Act
of 2002 Section 301 and Rule 10A-3 under the Securities and Exchange Act of 1934
(“Sarbanes-Oxley”) with respect to the independence of audit committee
members. The NYSE Amex Equities listing standards define an
“independent director” generally as a person, other than an officer of a
company, who does not, in the view of the Company’s Board of Directors, have a
relationship with the company that would interfere with the director’s exercise
of independent judgment.
Because
of the KFLP Transaction, we are a “controlled company” under NYSE Amex Equities
rules and are therefore not currently required to satisfy the requirement that a
majority of a company’s directors be independent. However, with the
recent appointment of Dr. Telling and Mr. Pope to our Board, the Board of
Directors believes it satisfies such independence requirements.
Audit
Committee: The Audit Committee members currently consist of
Mr. Charles Pope and Dr. Frederick Telling and the Board has determined that
each such person met the requirements of independence, with it also being
determined that Mr. Pope met the requirements of a financial
expert. The Audit Committee members during Fiscal 2009 consisted of
former directors Mr. Hennecke and Mr. Welch until their resignations and the
Board determined that each such person met the requirements of independence,
with it also being determined that Mr. Welch met the requirement as a financial
expert. As a result of, and following, the KFLP Transaction described above, we
did not have any Directors meeting the requirements for “independence” under
Sarbanes–Oxley or the NYSE Amex Equities rules for service on an audit committee
because our two outside Directors, Christine L. Koski and Robert C. Koski are
affiliates due to their relationship to the KFLP and the KFLP Transaction.
Accordingly, our full board functioned as our audit committee between the date
of the KFLP Transaction, June 29, 2009, and the recent appointment of Directors
Pope and Telling on June 4, 2010. In March 2004, the Audit Committee
adopted a written charter which was modified on April 24, 2007 and on December
29, 2009. The Company believes that its Audit Committee Charter complies with
the requirements related to Sarbanes-Oxley and a current copy of the Audit
Committee Charter is available on our website at www.oragenics.com.
The Audit
Committee has the sole authority to engage and discharge, review the
independence, qualifications, activities and compensation of the Company’s
independent registered certified public accountants. The Audit Committee reports
to the Board the appointment of the independent registered certified public
accountants. The Audit Committee must assure regular rotation of the lead and
concurring audit partners. The Audit Committee is responsible for the oversight
of the Company’s financial policies, control procedures, accounting staff, and
reviews and approves the Company’s financial statements. The Audit Committee is
responsible for the review of transactions between the Company and any Company
officer, Director or entity in which a Company officer or Director has a
material interest. The Audit Committee must develop and maintain procedures for
the submission of complaints and concerns about accounting and auditing matters.
The Audit Committee must assure CEO and CFO certifications meet their
obligations by performing a review and evaluation of the Company’s disclosure
controls and procedures. The Audit Committee has the authority to engage the
services of an outside advisor when required. The Audit Committee must receive
reports from the independent registered certified public accountants on critical
accounting policies, significant accounting judgments and estimates, off-balance
sheet transactions and non-Generally Accepted Accounting Principles financial
measures.
Compensation Committee: From
the date of the KFLP Transaction through June 3, 2010, the members of the
Compensation Committee consisted of Christine L. Koski and Robert C.
Koski. Currently, and following the appointment to the Board of Dr.
Telling and Mr. Pope, the Compensation Committee consists of directors Telling,
Pope, C. Koski and R. Koski with Dr. Telling serving as Chairman. The
Board has determined that each current member of the Compensation Committee
meets the requirements for independence. Prior to the KFLP
Transaction, the Compensation Committee, consisted of former
directors Welch and Hennecke and the Board determined that each such person
met the requirements of independence. None of the Committee members
has ever been an officer or employee of the Company. The Compensation Committee
is responsible for establishing the compensation of the Company’s Directors,
Chief Executive Officer and all other executive officers, including salaries,
bonuses, severance arrangements, and other executive officer benefits. The
Committee also administers the Company’s various incentive and stock option
plans and designates both the persons receiving awards and the amounts and terms
of the awards. The Compensation Committee adopted a charter in March 2004 to
outline its compensation, benefits and management development philosophy and to
communicate to shareholders the Company’s compensation policies and the
reasoning behind such policies as required by the Securities and Exchange
Commission. The Charter was modified on April 24, 2007 and again on December 29,
2009. A current copy of the compensation Committee charter is
available on our website at www.oragenics.com.
Nominating Committee: The
Board of Directors did not historically have a separate nominating committee and
as such the entire Board functioned as the Company’s nominating committee. On
December 29, 2009, however, the Board formed a nominating committee consisting
of directors Christine Koski and Robert Koski with Robert Koksi serving as
Chairman. In conjunction therewith, the Board adopted a nominating
committee charter. In addition to recommending candidates to the Board for
election at the Annual shareholder Meeting, the Nominating Committee oversees
the evaluation of the board as a whole and its committees, as well as individual
evaluations of those directors who are being considered for possible
re-nomination to the board. The evaluation process occurs
annually. The Nominating Committee has not established specific
minimum age, education, and years of business experience or specific types of
skills for potential director candidates, but, in general, expects qualified
candidates will have ample experience and a proven record of business success
and leadership. The Nominating Committee also believes it is appropriate for
certain key members of the Company’s management to participate as members of the
Board of Directors. The Nominating Committee will only consider as candidates
for director individuals who possess a high level of ethics, integrity and
values, and who are committed to representing the long-term interests of our
shareholders. Such candidates must be able to make a significant contribution to
the governance of our Company by virtue of their business and financial
expertise, educational and professional background. The business discipline that
may be sought at any given time will vary depending on the needs and strategic
direction of our Company, and the disciplines represented by incumbent
directors. In evaluating candidates for nomination as a director, the Nominating
Committee will also consider other criteria, including geographical
representation, independence, practical wisdom, mature judgment and having
sufficient time to devote to the affairs of the Company in order to carry out
the responsibilities of a director. One or more of our directors is required to
possess the education or experience required to qualify as an audit committee
financial expert as defined in the applicable rules of the Securities and
Exchange Commission. The Nominating Committee does not have a formal policy with
respect to diversity; however, the Board of Directors and the Nominating
Committee believe that it is essential that the members of the Board of
Directors represent diverse viewpoints and a diverse mix of the specific
criteria above. The entire Board of Directors is polled for
suggestions as to individuals meeting the aforementioned criteria. Research may
also be performed to identify qualified individuals. To date the
Company has not engaged third parties to identify or evaluate or assist in
identifying potential nominees.
Shareholder Recommendation of
Nominees. The Board does not currently have a policy with
regard to the consideration of any Director candidates recommended by security
holders. Given the Company’s current size, stage of development, and size of the
Board, the Board believes that it is not currently appropriate to establish a
separate policy for security holders to submit such recommendations.
Notwithstanding the lack of a formal policy regarding security holder
nominations, the Board may from time to time consider candidates proposed for
consideration for service on the Company’s Board by security holders. The
Nominating Committee will consider qualified director nominees recommended by
shareholders when such recommendations are submitted in accordance with
applicable law, rule or regulation regarding director nominations. Shareholders
may submit candidates for nomination to our Board of Directors by writing to:
Nominating Committee of the Board of Directors, Oragenics, Inc., 13700 Progress
Boulevard, Alachua, Florida 32615. When submitting a nomination to us
for consideration, a shareholder must provide certain information about each
person whom the shareholder proposes to nominate for election as a director,
including: (i) the name, age, business address and residence address of the
person; (ii) the principal occupation or employment of the person;
(iii) the class or series and number of shares of our capital stock owned
beneficially or of record by the person; and (iv) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, or the Exchange Act, and the rules and
regulations promulgated thereunder. Such notice must be accompanied by the
proposed nominee’s written consent to be named as a nominee and to serve as a
director if elected. The Board has not set any specific minimum
qualifications that must be met by a nominee presented for consideration to the
Board by a security holder. A Board member may become aware of a potential
nominee and present such nominee to the full Board for consideration at a Board
meeting. The Board would evaluate the candidate and determine whether such
person should be considered for Board service based on a variety of criteria
including but not limited to, whether the individual has experience in the
Company’s industry, potential conflicts, and the person’s ability to work with
existing Board members and expected contributions. The Board would evaluate a
nominee submitted by a security holder in the same or similar manner as one
recommended by the Nominating Committee.
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation
Committee were Ms. Koski and Mr. Koski for the fiscal year 2009. No
officer or employee of the Company participated in deliberations of the
Compensation Committee concerning executive officer compensation during the year
ended December 31, 2009 while serving as an officer or employee.
Compensation
of Directors
Directors
who are executive officers of the Company do not receive any cash compensation
for services on our Board.
Due
primarily to our limited operating capital, our director compensation program
during the year consisted of a one time option grant to acquire 100,000 shares
of common stock in lieu of the payment of any meeting fees. Outside
non-employee directors are reimbursed for their expenses associated with travel
to and from Board meetings and meetings with management. Certain fees previously
earned by former non-employee directors for attending Board and Committee
meetings in the amount of $34,000 have been
deferred instead of being paid.
On June
4, 2010, commensurate with the appointment of two new independent directors, the
Board approved changes to the standard Board compensation to be paid to
non-employee directors. Such changes primarily relate to the
reinstating of a cash fee component to the director compensation program for
non-employee directors. The director compensation program consists of
the following:
Cash
Compensation
The
director compensation program changes provide that all non-employee directors
will receive an annual base fee for service on the board of
$24,000. In addition, the Chair of the Board and our Audit Committee,
Compensation Committee and Nominating Committees will also receive annual fees
of $25,000, $20,000, $15,000 and $10,000, respectively. All non-employee
directors serving on committees (other than as the chair) shall receive an
annual fee of $5,000 in connection with such committee service. All
fees for board service are to be paid quarterly in arrears.
Equity
compensation is to be issued to directors upon joining the
Board. Non-employee Directors will receive a nonstatutory stock
option for the purchase of 100,000 shares of our common stock at an
exercise price per share equal to the fair market value per share on date they
became a director, which will immediately vest and be exercisable. As
part of the director compensation program, the board may also make discretionary
equity based awards from time to time under the Company’s existing Amended and
Restated 2002 Stock Option and Incentive Plan (“Option
Plan”).
Reimbursement
of Expenses
Non-Employee
directors are also reimbursed for expenses incurred in connection with their
attendance at Board or committee meetings and reasonable out-of-pocket business
expenses associated with their board service.
Consistent
with past practice, the director compensation program provides that employee
directors receive no additional compensation in connection with their board
service.
The following table sets forth the
compensation of our non-employee directors in 2009.
Director
Compensation
|
Name
|
|
Fees Earned
or Paid in
Cash (1)
|
|
|
Option
Awards ($)
(2)
|
|
|
All Other
Compensation
($) (3)
|
|
|
Total ($)
|
|
|
Christine
L. Koski
|
|
|
— |
|
|
$ |
10,000 |
|
|
—
|
|
|
$ |
10,000 |
|
|
Robert
C. Koski
|
|
|
— |
|
|
$ |
10,000 |
|
|
—
|
|
|
$ |
10,000 |
|
|
*Richard
T. Welch
|
|
$ |
30,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30,000 |
|
|
*Derek G. Hennecke
|
|
$ |
6,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
6,000 |
|
|
*Kevin
H. Sills
|
|
$ |
6,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
6,000 |
|
|
*Marc
K. Siegel
|
|
$ |
3,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
3,000 |
|
* Former directors.
|
|
(1)
|
Amounts
represent cash compensation paid to these former directors during 2009 in
connection with their service on a special committee tasked
with exploring strategic alternatives on behalf of the
Company. This cash compensation was paid following the
successful completion of the investment of capital by the Koski Family
Limited Partnership in June 2009. Commensurate with such
transaction, Messrs. Welch, Hennecke and Sills resigned from our board of
directors and Ms. Christine Koski and Mr. Robert Koski were appointed to
our board. Mr. Siegel resigned as a director on May 9, 2009.
|
|
|
(2)
|
The
compensation amount reflected with respect to these awards represents the
2009 compensation expense associated with outstanding option grants to our
non-employee directors. Upon joining our board of directors in June 2009,
Ms. Christine Koski and Mr. Robert Koski as non-employee directors were
each granted options to acquire 100,000 shares of our common stock at
$0.10 per share in accordance with our director compensation
plan. On December 30, 2009 Ms. Koski and Mr. Koski each
exercised these options in full. The amounts reflected in the
table with respect to these awards represent the 2009 compensation expense
associated with such grants. The Company uses a Black-Scholes
option-pricing model to estimate the fair value of the stock option
grant. The use of a valuation model requires the Company to
make certain assumptions with respect to selected model
inputs. The average expected life is based on the contractual
term of the option and on the simplified approach provided by SAB
107. The risk-free interest rate is based on the U.S. Treasury
zero-coupon issues equal to the expected life assumed at the date of the
grant. As non-employee directors, the options previously awarded to
Messrs. Welch, Hennecke, Sills and Siegel in connection with their board
service were not exercised following their departure from our board of
directors and as such the shares covered by such options reverted back to
the pool of available shares covered by our stock option and incentive
plan.
|
|
|
(3)
|
No
other compensation was paid to the non-employee Directors except for
reimbursement for travel expenses to Board meetings, which did not exceed
$10,000 individually or in the aggregate for our non-employee
directors.
|
Direct
Shareholder Communication to Board Members
The Company does not currently have a
formal process for direct security holder communications to the Board. The basis
for the Board's view that it is appropriate for the Company to not have such a
formal process includes but is not limited to the following: the Company's
limited financial and personnel resources, the Company's stage of operations and
development and the ability for security holders to communicate with Board
members informally.
Shareholders
with questions about the Company are encouraged to contact the Company’s
Corporate Secretary. However, if shareholders feel their questions have not been
addressed, they may communicate with the Company’s Board of Directors by sending
their communications to an individual director(s) or to the Company’s Board of
Directors, c/o Corporate Secretary, Oragenics, Inc., 13700 Progress Boulevard,
Alachua, Florida 32615. All shareholder communications received by the Company’s
Corporate Secretary in this manner will be delivered to the individual
director(s) or to the Company’s Board of Directors.
The
Chairman of the Board of Directors, Christine Koski, is an independent director
and has been designated by the Board of Directors to preside at the executive
sessions of the independent directors. If interested parties wish to make a
concern known to the independent directors, they may do so in a writing
addressed to the Chairman of the Board, Oragenics, Inc. 13700 Progress
Boulevard, Alachua, Florida 32615.
EXECUTIVE
COMPENSATION
Compensation
Practices and Risk
The
following “Compensation Discussion and Analysis” section describes generally our
compensation policies and practices that are applicable for executive and
management employees. We use common variable compensation designs across all of
our business units and divisions, with a significant focus on corporate and
business financial performance as generally described in this Proxy
Statement.
Compensation
Discussion and Analysis
Throughout
this section of the proxy statement, the individuals who served as the Company’s
chief executive officer and chief financial officer, as well as the other
individuals included in the Summary Compensation Table herein, are referred to
as the “named executive officers.”
Overview
of Compensation Program
The
Compensation Committee of the Company’s Board of Directors is responsible for
establishing and evaluating the Company’s policies governing the compensation of
its executive officers, including its named executive officers. The Compensation
Committee ensures that the total compensation paid to the Company’s executive
officers is fair, reasonable and competitive.
Compensation
Objective
The
Company’s executive compensation programs are designed to achieve the following
objectives:
|
|
·
|
Attract
and retain talented and experienced executive
officers;
|
|
|
·
|
Motivate
and reward executive officers whose knowledge, skills, performance and
business relationships are critical to the Company’s
success;
|
|
|
·
|
Align
the interests of the Company’s executive officers and shareholders by
motivating executive officers to ultimately increase shareholder
value;
|
|
|
·
|
Compensate
the Company’s executive officers to manage the Company’s business to meet
its short term and long-range
goals;
|
|
|
·
|
Ensure
fairness among the executive officers by recognizing the contributions
each executive officer makes to the Company’s success;
and
|
|
|
·
|
Provide
a competitive compensation package which includes some pay for performance
factors.
|
Role
of Others in Compensation Decisions
The
Compensation Committee makes all of the decisions with respect to the
compensation received by the Company’s executive officers. The Compensation
Committee meets outside the presence of all of the Company’s executive officers
to consider appropriate compensation for the Company’s chief executive officer.
For all other executive officers, the Compensation Committee meets outside the
presence of all executive officers except for the Company’s chief executive
officer. The Company’s chief executive officer periodically reviews each of the
other executive officers’ performance with the Compensation Committee and makes
recommendations to the Compensation Committee with respect to any appropriate
changes in base salary, bonus and grants of long-term equity incentive awards
for the executive officers, excluding himself. Based in part on these
recommendations from the Company’s chief executive officer and other
considerations, the Compensation Committee approves such compensation
arrangements of the Company’s executive officers other than the Company’s chief
executive officer. The Compensation Committee also annually analyzes the chief
executive officer’s performance and determines his salary, annual cash bonus and
grants of long-term equity incentive awards.
The
Compensation Committee retained a compensation consultant, W.T. Haigh &
Company, Inc. between September and November 2009 to review its policies and
procedures with respect to executive compensation, and to provide advice and
guidance on the competitive market practices with respect to the salaries and
total compensation paid by other similarly-sized companies to their executive
officers.
2009
Executive Compensation Components
For the
fiscal year ended December 31, 2009, the principal components of
compensation for the Company’s executive officers were:
|
|
·
|
Long-term
equity incentive compensation; and
|
Annual
Base Salary
Base
salary is designed to attract and retain experienced executive officers who can
drive the achievement of the Company’s goals. While the initial base salary for
the Company’s executive officers was determined by an assessment based upon the
responsibilities of the position, the expected contribution of the position to
our business, the experience and skill of the position, and competition in the
marketplace for the talent; the factors used in determining increases in base
salary include individual performance, changes in role and/or responsibility and
changes in the competitive market environment. The Compensation Committee
periodically reviews the base salary for each executive officer.
Bonus.
The
Company currently does not have a formal bonus program for its executive
officers. Bonuses are considered by the Compensation Committee and
recommended at the discretion of the Compensation Committee for approval by our
Board of Directors.
Long-Term
Equity Incentive Compensation
The
Company awards long-term equity incentive awards to executive officers,
including the named executive officers, as part of its total compensation
package. These awards are consistent with the Company’s pay for performance
principles and align the interests of the executive officers to the interests of
the Company’s shareholders. The Compensation Committee reviews and approves the
amount of each award to be granted to each named executive officer. Long-term
equity incentive awards are made pursuant to the Oragenics, Inc. Amended and
Restated 2002 Stock Option and Incentive Plan (the “Stock Option
Plan”).
The
Company’s long-term equity incentive is currently in the form of options to
acquire its common stock. Stock option awards provide the Company’s executive
officers with the right to purchase shares of its common stock at a fixed
exercise price for a period of up to ten years under the Stock Option Plan.
Stock options are granted under the Stock Option Plan at a price not less than
the prevailing market value at the time of grant and will have realizable value
only if the Company’s stock price increases. Stock options are earned on the
basis of continued service to the Company and generally vest over a number of
years or based upon other specific performance based criteria.
The
Company’s long-term equity incentive also can be in the form of restricted share
awards of the Company’s common stock under the Stock Option Plan. Restricted
stock awards provide the Company’s executive officers with the shares of its
common stock subject to certain restrictions and/or vesting requirements.
Restricted stock shares will be earned on the basis of continued service to the
Company and will vest as set forth in the separate Restricted Stock Award
Agreements. To date, the Company has not made any restricted share
awards.
The
Compensation Committee will determine the amount and features of the stock
options and/or restricted stock, if any, to be awarded to executive officers.
The Compensation Committee evaluates a number of criteria, including the past
service of each such executive officer to the Company, the present and potential
contributions of such executive officer to the Company’s success and such other
factors as the Compensation Committee shall deem relevant in connection with
accomplishing the purposes of the Option Plan, including the executive officer’s
current stock holdings, years of service, position with the Company and other
factors. The Compensation Committee will not apply a formula assigning specific
weights to any of these factors when making its determination.
Other
Benefits
Retirement
Benefits. The Company maintains a Simple Individual Retirement
Arrangement plan in which all full-time employees, including the Company’s named
executive officers, are eligible to participate. The Company provides this plan
to help its employees save some amount of their cash compensation for retirement
in a tax efficient manner. The Company does not provide an option for its
employees to invest in the Company’s stock under the 401k plan. The Company matches 100%
of the employee’s contribution up to a maximum of 3% of the employee’s
compensation.
Health and Welfare
Benefits. All full-time employees, including our named
executive officers, may participate in the Company’s health and welfare benefit
programs, including medical, dental and vision care coverage as may be provided
and applicable to all employees.
Perquisites. Because
the Company provides limited perquisites to certain executive officers, the
Company does not believe these perquisites and other personal benefits
constitute a material component of the executive officers’ compensation
packages.
Employment
Agreement
The
Company has employment agreements in effect with its executive officers,
Mr. David Hirsch, Dr. Jeffrey Hillman and Mr. Brian Bohunicky as well as
other employees. The Company entered into employment agreements with these
executive officers to ensure that they would perform their respective roles with
the Company for an extended period of time. In addition, the Company also
considered the critical nature of each of their positions and the Company’s need
to retain them when the Company committed to these agreements. See
“Employment Contracts and Change in Control Arrangements— New Executive Officer
Employment Agreements.”
Summary
Compensation Table
The
following table sets forth the aggregate compensation in 2008 and 2009 for
services in all capacities paid or accrued by the Company to our Principal
Executive Officer and our next most highly compensated officers who earned more
than $100,000 in total salary and bonus during the fiscal year ended December
31, 2009 (the “Named Executive Officers”).
|
Name and
Principal Position
|
|
Year
|
|
Salary ($)
|
|
|
Bonus $
|
|
|
Option
Awards ($)
(5)
|
|
|
All Other
Compensation ($)
(6)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Hirsch, Chief
|
|
2009
|
|
$
|
214,583
|
|
|
$
|
100,000
|
|
|
$
|
413,211
|
|
|
$
|
9,417
|
|
|
$
|
737,211
|
|
|
Executive
Officer
(CEO),
President and
Principal
Executive
Officer
(“PEO”) (1)
|
|
2008
|
|
$
|
94,903
|
|
|
$
|
50,000
|
|
|
$
|
16,348
|
|
|
$
|
23,744
|
|
|
$
|
184,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
D. Hillman
|
|
2009
|
|
$
|
182,278
|
|
|
|
|
|
$
|
318,205
|
|
|
$
|
86,650
|
|
|
$
|
587,133
|
|
|
Chief
Scientific Officer (2)
|
|
2008
|
|
$
|
180,000
|
|
|
|
—
|
|
|
$
|
34,069
|
|
|
$
|
5,400
|
|
|
$
|
219,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Bohunicky
|
|
2009
|
|
$
|
156,832
|
|
|
|
|
|
$
|
195,750
|
|
|
$
|
3,840
|
|
|
$
|
356,422
|
|
|
Chief
Financial Officer
And
Principal Financial
Officer
(PEO) (3)
|
|
2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
Stein
|
|
2009
|
|
$
|
39,824
|
|
|
|
|
|
|
|
|
$
|
120,000
|
|
|
$
|
159,824
|
|
|
Former
President, CEO
and
PEO (4)
|
|
2008
|
|
$
|
145,833
|
|
|
$
|
75,000
|
|
|
$
|
54,050
|
|
|
$
|
40,000
|
|
|
$
|
314,833
|
|
|
|
(1)
|
Mr.
Hirsch joined the Company as an executive on May 14, 2008 and was
subsequently appointed to Chief Operating Officer and entered into an
employment agreement with the Company. On July 1, 2008, Mr.
Hirsch also assumed the role of our Chief Financial Officer and Principal
Financial Officer. On March 18, 2009, Mr. Hirsch relinquished
his position as Chief Operating Officer and assumed the positions of
acting President, Chief Executive Officer and Principal Executive
Officer. In connection with his employment, Mr. Hirsch was
awarded a bonus of $50,000 during 2008 of which $33,333 was deferred and
subsequently paid during 2009. In June 2009 Mr. Hirsch was
awarded a bonus of $100,000 payable in 1,000,000 shares of our common
stock at a price per share of $0.10. This bonus was paid to Mr.
Hirsch in recognition of his efforts in guiding the Company through a
significant adverse liquidity crisis. On August 13, 2009, the Compensation
Committee also approved an increase in David Hirsch’s annual base salary
from $150,000 to $225,000.
|
|
|
(2)
|
Effective
December 1, 2009 Dr. Hillman’s annual salary was increased from $180,000
to $200,000. In addition, an amount of $81,250 in the other column
reflects payments to Dr. Hillman in December 2009, for compensation and
consulting fees that had previously been deferred. This amount
net of applicable fees was paid through the issuance of restricted common
stock to Dr. Hillman as part of our December 2009 Private placement
. See “Certain Relationships and Related Transactions and
Director Independence.”
|
|
|
(3)
|
Mr.
Bohunicky joined the Company in January 2009 and became our Chief
Financial Officer and Principal Financial Officer on June 29, 2009
following the Company’s financing transaction with the Koski Family
Limited Partnership and Mr. Bohunicky’s annual compensation was increased
by the Compensation Committee to $200,000. Included in Mr.
Bohunicky’s salary for 2009 is $25,000 in compensation that had been
deferred during a portion of the year which was paid to Mr. Bohunicky
immediately following the KFLP transaction in June 2009 in 250,000 shares
of our common stock at a price per share of
$0.10.
|
|
|
(4)
|
On
March 18, 2009, Mr. Stein resigned as our President, Chief Executive
Officer and Principal Executive Officer and was succeeded by Mr. Hirsch as
our acting President, Chief Executive Officer and Principle Executive
Officer. Pursuant to our separation agreement with Mr. Stein he
was to be paid a severance and provided consulting services to
us. Following a period in which no payments were made to Mr.
Stein under his separation agreement and the investment by the KFLP in
June 2009, we entered into a settlement and release agreement with Mr.
Stein August 31, 2009 pursuant to which we paid him $120,000
terminated the consulting agreement and Mr. Stein’s outstanding
options. Amounts paid to Mr. Stein as severance or in
connection with a settlement agreement are included
under “other
compensation.”
|
|
|
(5)
|
On
August 13, 2009, a portion of the shares covered by the
original option awards, (433,333 shares for Mr. Hirsch and 500,000
shares for Dr. Hillman) vested upon our stock price reaching
certain levels in the future. Following the acceleration of
vesting by the compensation committee, Mr. Hirsch's grant of options to
acquire 500,000 shares of our common stock at $0.49 per share
are now fully vested and exercisable (including the 433,333 shares
impacted by the acceleration of vesting) and Dr. Hillman's grant of
options to acquire 700,000 shares of our common stock at $0.85 per
share are now fully vested and exercisable (including the 500,000 shares
impacted by the acceleration of vesting). The impact of the
acceleration of vesting was $52,086 for Mr. Hirsch and $41,455
for Mr. Hillman which are included in options award
column. All other terms of the prior option awards, including
the share amounts covered by the options and exercise
price remained the same. In addition, the Compensation
Committee believes that the Company’s future success depends, in large
part, upon its ability to maintain a competitive position in attracting,
retaining and motivating key personnel. Accordingly, on December 1, 2009,
options to purchase a total of 5,631,800 shares of Company common stock
which are subject to time vesting and performance vesting were awarded to
Company executive officers and employees. The Company’s
President and Chief Executive Officer, Mr. David Hirsch, was awarded
options to acquire an aggregate of 1,337,500 shares of Company common
stock; Dr. Hillman was awarded options to acquire and aggregate of
1,025,000 shares of Company common stock, and Chief Financial Officer, Mr.
Brian Bohunicky was awarded options to acquire and aggregate of 725,000
shares of Company common stock. These option awards each have
exercise prices of $0.27 per share, which was the closing price on the
date the Compensation Committee granted the options. These
option awards were made pursuant to individual award agreements
substantially similar to the form of stock option agreement attached as an
exhibit to the Company’s Plan which has been previously filed with the
SEC. The amounts included in this column do not reflect compensation
actually received by the named executive officers. Instead the
amounts in this column represent the aggregate grant date fair value
computed in accordance with SFAS 123R. Under SEC rules relating to
executive compensation disclosure, the amounts shown exclude the impact of
estimated forfeitures related to service based vesting conditions. Fair
values relating to share grants have been determined under SFAS 123R and
were calculated using the common stock closing price on the date of grant
and multiplying that price by the number of shares subject to the share
grant. The equity-based compensation expense relating to the stock grants
is recognized over the requisite service period of the grant. For option
awards, we utilize the Black-Scholes option-pricing model to determine the
fair value on the date of the grant multiplied by the number of options
subject to the option grants in accordance with SFAS 123R. The
equity-based compensation expense relating to the stock option grants is
recognized over the requisite service period of the grant. For information
on the assumptions used to calculate the fair value of stock option
grants, refer to Footnote 1, “Organization and Significant Accounting
Policies,” to our financial statements in our Annual Report on Form 10-K
for the year ended December 31, 2009. These amounts
reflect our accounting expense for these awards, and do not necessarily
correspond to the actual value that will be recognized by the executive
officers. Other than our former executive officer, Mr. Stanley Stein, no
stock option awards received by our named executives above were forfeited
or cancelled during 2009.
|
|
|
(6)
|
Company’s
Simple IRA retirement plan requires the Company to match employee
contributions up to the first 3% of compensation earned and amounts
presented also include the Company’s matching contribution and the amounts
in this column represent such contributions. This column
excludes certain payments for personal benefits for Mr. Hirsch and Mr.
Hillman that do not exceed $10,000 individually or in the
aggregate.
|
Outstanding
Equity Awards
The
following table provides information concerning unexercised options, stock that
has not vested, and equity incentive plan awards outstanding as of December 31,
2009:
OUTSTANDING
EQUITY AWARDS AT FISCAL 2009 YEAR-END TABLE
|
|
|
Option Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(1)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) (1)
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Hirsch
|
|
|
500,000 |
(2) |
|
|
|
|
|
— |
|
|
|
0.49 |
|
5/30/2018
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
112,500 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Hillman
|
|
|
75,000 |
|
|
|
|
|
|
|
— |
|
|
|
0.74 |
|
09/08/2011
|
|
|
|
|
|
700,000 |
(2) |
|
|
|
|
|
|
— |
|
|
|
0.85 |
|
5/21/2018
|
|
|
|
|
|
|
|
|
|
700,000 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
Bohunicky
|
|
|
|
|
|
|
500,000 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
0.27 |
|
12/01/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former
Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
Stein (3)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
—
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
—
|
|
|
|
(1)
|
Of
the above total option share amounts awarded to Mr. Hirsch, Dr. Hillman
and Mr. Bohunicky, (i) 1,000,000, 700,000 and 500,000 shares,
respectively, are time vested and vest evenly on an annual basis over
three years, subject to earlier vesting upon a change in control of the
Company as defined in the award agreements; (ii) 112,500 , 100,000 and
100,000 shares respectively, vest upon the first calendar quarter in which
the Company reports a net profit in a Form 10-Q Report or Form 10-K Report
and expire on the earlier of (a) December 1, 2019 or (b) such date the
Company ceases to be required to file quarterly or annual reports with the
Securities and Exchange Commission (“SEC”), and (iii) 125,000, 125,000 and
125,000 shares, respectively, vest upon the Company achieving certain
performance goals tied to the shipment and invoicing of its consumer
products with a third of these options expiring if the Company has not
achieved the vesting performance targets by September 1, 2010, and another
third expiring if the Company has not achieved the vesting performance
targets by December 1, 2010, and another third expiring if the Company has
not achieved the vesting performance targets by March 1, 2011. To the
extent any of these option become vested and exerciseable, they shall
expire December 1, 2019. In addition, included in the option
shares awarded to Mr. Hirsch and Mr. Hillman, are 100,000 shares each that
are subject to vesting based on certain scientific performance milestones
being achieved. These options expire and are void unless they
become vested and exercisable on or before December 31,
2011. To the extent these options become vested and
exercisable, they shall expire December 1,
2019.
|
|
|
(2)
|
On
August 13, 2009, a portion of the shares covered by the
original option awards, (433,333 shares for Mr. Hirsch and 500,000
shares for Dr. Hillman) vested upon our stock price reaching
certain levels in the future. Following the acceleration of
vesting by the compensation committee, Mr. Hirsch's grant of options to
acquire 500,000 shares of our common stock at $0.49 per share
are now fully vested and exercisable (including the 433,333 shares
impacted by the acceleration of vesting) and Dr. Hillman's grant of
options to acquire 700,000 shares of our common stock at $0.85 per
share are now fully vested and exercisable (including the 500,000 shares
impacted by the acceleration of vesting). All other terms of
the prior option awards, including the share amounts covered by the
options and exercise price remained the
same.
|
|
|
(3)
|
Mr.
Stein was originally granted 65,000 upon becoming a Director which vested
immediately. These shares expired on June 18, 2009 following
Mr. Stein’s resignation as a Director on March 18, 2009. Mr.
Stein’s other option grant of 750,000 shares consisted of 100,000 of the
option shares that became exercisable on April 9, 2008 and the remaining
650,000 option shares become exercisable, upon the Company's stock
reaching certain share prices as follows: 150,000 option shares if reaches
$1.00 per share, 150,000 option shares if reaches $2.00 per share, 150,000
option shares if reaches $3.00 per share and 200,000 option shares if
reaches $5.00 per share. This option award was amended to continue in
connection with Mr. Stein’s consultant agreement with the
Company. Pursuant to a subsequent agreement with Mr. Stein on
August 31, 2009 his consulting arrangement with us and his options were
terminated.
|
There
were no stock options exercised by the named executive officers during the year
ending December 31, 2009. No stock awards were made during
2009. We do not have any long-term incentive plans that provide
compensation intended to serve as incentives for performance other than options
granted pursuant to our Amended and Restated 2002 Stock Option and Incentive
Plan.
Employment Contracts and Change in
Control Arrangements
Mr. David Hirsch, our President and
Chief Executive Officer.
Our Chief
Executive Officer and President, Mr. David Hirsch began working for us as a
consultant in April 2008 and became a full time employee in May
2008. In connection with Mr. Hirsch’s appointment, effective June 27,
2008, as our Chief Operating Officer, Mr. Hirsch entered into an employment
agreement with us which was amended on July 15, 2008 when he also became our
Chief Financial Officer upon the retirement of our former chief financial
officer. Mr. Hirsch’s initial employment agreement was for one year,
and was automatically extended for successive one year renewal
terms. Pursuant to his initial employment agreement, Mr. Hirsch
initially received an annual salary of not less than $150,000 and was eligible
to receive bonuses at the discretion of the Compensation Committee of the Board
of Directors. Mr. Hirsch was granted stock options to acquire 500,000
shares of common stock under our Amended and Restated 2002 Stock Option and
Incentive Plan (the “Stock Option Plan”). These options were
scheduled to vest as follows: 66,667 shares vest immediately, 100,000 shares on
the dates which the Company’s stock price equals or exceeds $1.00 per share,
$2.00 per share and $3.00 per share respectively, and 133,333 shares on the date
which the Company’s stock price equals or exceeds $5.00 per
share.
Under the
terms of his initial employment agreement, if Mr. Hirsch was involuntarily
terminated he would receive his base salary accrued through the date of
termination, and any nonforfeitable benefits earned and payable to him under the
terms of the deferred compensation, incentive or other benefit plan, payable in
accordance with the terms of the applicable plan. In addition, if Mr.
Hirsch’s separation from employment was not voluntary, for cause or due to death
or disability, the Company would be obligated to pay Mr. Hirsch a series of nine
(9) equal monthly payments equal to one-twelfth (1/12th) of his
annual base salary in effect on the date of such termination as severance and
any unvested options shall vest. If he was terminated for cause, he
would be entitled to receive his base salary accrued through the date of
termination and any nonforfeitable benefits already earned and payable to Mr.
Hirsch under the terms of the deferred compensation or incentive plans
maintained by the Company. If Mr. Hirsch voluntarily resigned, he would be
entitled to this base salary accrued through termination and any nonforfeitable
benefits already earned and payable to Mr. Hirsch under the terms of the
deferred compensation or incentive plans maintained by the
Company. In the event of a Change in Corporate Control the vesting of
any stock options or other awards under the terms of the Stock Option Plan would
become immediately vested in full and in the case of stock options exercisable
in full. If Mr. Hirsch is terminated within six months of a change in
control (as such term is defined in his employment agreement), Mr. Hirsch would
be entitled to receive, in lieu of the foregoing severance payment described
above, a series of twenty-four (24) equal monthly payments equal to one twelfth
(1/12) of Mr. Hirsch’s annual base salary in effect at the time of a change in
control. The initial employment agreement also included
non-disclosure and non-compete provisions as well as a lump sum payment equal to
the sum of the executive’s accrued base salary, unpaid amounts of any bonuses
earned with respect to the fiscal year of the Company most recently ended and
the death benefits payable under any retirement, deferred compensation or other
employee benefit plan maintained by the Company in the event of an executive’s
death during the term of the agreement.
Mr.
Hirsch became our Acting President and Chief Executive Officer effective March
18, 2009. He also continued in his role as our Chief Financial
Officer. Mr. Hirsch did not receive any adjustment in his
compensation upon assuming the role of our acting President and Chief Executive
Officer. On June 29, 2009, immediately following the KFLP
Transaction, Mr. Hirsch became our President and Chief Executive Officer and
relinquished his position as Chief Financial Officer to Mr.
Bohunicky. On August 13, 2009, the Compensation Committee approved
acceleration of the vesting of the unvested, unexerciseable options awarded to
Mr. Hirsch and approved an increase in his annual base salary to
$225,000.
Dr.
Jeffrey Hillman, our Chief Scientific Officer.
We
also had an employment agreement with Jeffrey D. Hillman, our Chief Scientific
Officer. His three-year agreement commenced on January 1, 2004 and provides for
automatic one-year extensions after December 31, 2007. Under the terms of
our employment agreement with Dr. Hillman, we were obligated to pay Dr.
Hillman compensation of $180,000. He is also eligible for participation in
incentive stock compensation plans. The employment agreement also provided for
other benefits including the right to participate in fringe benefit plans, life
and disability insurance plans, expense reimbursement and 20 days accumulating
vacation/sick leave annually. If Dr Hillman was terminated by the Company
without cause (as defined in the agreement) or within twelve months following a
change of control (as defined in the agreement), or if he left for good reason
(as defined in the agreement), he would have been entitled to severance
payments, at his then annual base salary and all stock options granted to the
executive and any benefits under any benefit plans shall become immediately
vested and to the extent applicable, exercisable. If Dr. Hillman
voluntarily resigned he would have received no further compensation after the
effective date of such resignation. The employment agreement also
included non-disclosure and non-compete provisions, as well as salary payments
for a three month period in the event of an executive’s death or disability
during the term of the agreements. Dr. Hillman was awarded options to
acquire 700,000 share of common stock under the Stock Option Plan on May 21,
2008. These options vested as follows: 200,000 shares immediately and
the remaining 500,000 shares were scheduled to vest when the Company’s stock
price reaches certain levels (150,000 shares vest at $1.00 per share, 150,000
shares vest at $2.00 per share and 200,000 share vest at $3.00 per
share). On August 13, 2009 the Compensation Committee approved the
accelerated vesting of the unvested, unexerciseable options.
Mr.
Brian Bohunicky, our Chief Financial Officer, Secretary and
Treasurer.
Mr.
Bohunicky joined he Company in January 2009 and became our Chief Financial
Officer and Principal Financial Officer on June 29, 2009 following the Company’s
financing transaction with the Koski Family Limited Partnership and Mr.
Bohunicky’s annual compensation was increased by the Compensation Committee to
$200,000. Included in Mr. Bohunicky’s salary for 2009 is $25,000 in
compensation that had been deferred during a portion of the year which was paid
to Mr. Bohunicky immediately following the KFLP transaction in June 2009 in
250,000 shares of our common stock at a price per share of
$0.10. During 2009, Mr. Bohunicky’s employment with us was at will
and was not subject to the terms of an employment agreement.
Our
former Chief Executive Officer.
On April
8, 2008, we entered into an employment agreement with our former chief executive
officer and President, Mr. Stanley Stein. Mr. Stein’s initial
compensation arrangement was pursuant to an offer letter that provided for an
annual rate of compensation of $175,000 and relocation expenses of $10,000.
Mr. Stein also was compensated in the amount $30,000 in connection with his
initially commencing services and was expected to receive an award of stock
options under our Stock Option Plan. The initial term of the
employment agreement was for one year and was subject to automatically being
extended for successive one year renewal terms. Pursuant to the
employment agreement Mr. Stein received an annual salary of not less than
$175,000 and was eligible to receive bonuses at the discretion of the
Compensation Committee of the Board of Directors. Mr. Stein was
granted stock options to acquire 750,000 shares of common stock under our Stock
Option Plan. The options were subject to vesting as
follows: 100,000 shares on April 9, 2008; 150,000 shares on the dates
which the Company’s stock price equals or exceeds $1.00 per share, $2.00 per
share and $3.00 per share respectively, and 200,000 shares on the date which the
Company’s stock price equals or exceeds $5.00 per share. Mr. Stein
resigned as President, Chief Executive Officer and Director effective March 18,
2009 and his employment agreement with us was terminated. In
connection with Mr. Stein’s separation from employment he was to be paid his
accrued compensation earned through the date of termination, which included an
accrued bonus payment of $50,000 upon the occurrence of certain specified
events. In addition, Mr. Stein was to be paid $1,500 for nine months
to cover post-separation expenses. After separation from employment
with us, Mr. Stein also became a consultant to the Company with his previously
granted options continuing so long as Mr. Stein served as a consultant to the
Company. On August 31, 2009, pursuant to a subsequent agreement with
Mr. Stein, all continuing obligations and payments to Mr. Stein including his
consulting agreement and options were terminated in exchange for a one time
payment of $120,000. As a result of Mr. Stein’s resignation in March
2009, Mr. Hirsch was appointed to serve as our acting President and Chief
Executive Officer.
New
Executive Officer Employment Agreements.
On March
11, 2010 our Compensation Committee met and approved and authorized new
employment contracts with Mr. David Hirsch, our Chief Executive Officer and
President, Dr. Hillman, our Chief Scientific Officer and Mr. Brian Bohunicky,
our Chief Financial Officer, Secretary and Treasurer. Each of the new employment
agreements have substantially similar terms other than with respect to their
annual compensation and title (the "Employment Agreements"). As to Mr. Hirsch
and Dr. Hillman the new agreements replaced the existing employment agreements
discussed above and as to Mr. Bohunicky the employment agreement constitutes a
new employment agreement between us and Mr. Bohunicky. The annual base salaries
provided in the Employment Agreements are $225,000, $200,000 and $200,000 for
Mr. Hirsch, Dr. Hillman and Mr. Bohunicky, respectively, and are payable in
installments consistent with our normal payroll practices. The
entering into of these new Employment Agreements did not result in any change to
any of the executive officers existing and previously disclosed annual base
compensation. The executive officers are also eligible under the
Employment Agreements to receive bonuses during the term at the discretion of
the Compensation Committee and the Board of Directors.
The
Employment Agreements are terminable at any time by either
party and if the executive officer is involuntarily
terminated by us he shall receive his base salary and vacation pay
each accrued through the date of termination, and any nonforfeitable benefits
earned and payable to him under the terms of the employee
handbook (which applies to all employees) and benefits available under any
applicable incentive plan which employee participates. In
addition, if the executive officers separation from employment is not
voluntary and without cause, we would be obligated to pay the executive
officer six months of his annual base salary as severance and the
executive shall be entitled to out placement service benefits. If the
executive officer is terminated for cause, he shall be entitled to receive his
base salary and accrued vacation due through the date of termination
and any nonforfeitable benefits already earned and payable to the
executive under the terms of the employee handbook or other applicable
incentive plans maintained by us. Cause is defined in the Employment
Agreements as any action that is illegal, immoral, or improper that reflects on
the Company, the Employee, or the ability of either to function optimally.
If the executive officer voluntarily resigns, he shall be
entitled to this base salary and accrued vacation due through the
date of termination (including any mutually agreed upon notice period) and
any nonforfeitable benefits already earned and payable to the executive
officer under the terms of the employee handbook or other
incentive plans maintained by us.
If the
executive officer dies during the term of employment with us, the estate of the
employee shall be paid the salary of the employee as it would have accrued over
a period of thirty days after the executive officers death. We shall also
extend the executive officers right to exercise vested stock options for six
months provided such extension is permitted under the Plan. In the event
the executive officer becomes disabled (as defined in the any then applicable
short and long-term disability insurance policies) we shall pay to the executive
officer the executive officers salary as it would have accrued over a period of
thirty (30) days after the executive became so disabled and we shall extend the
executive officers right to exercise vested stock options for six months
provided such extension is permitted under the Plan.
The Employment Agreements
also each include non-disclosure and Company ownership of development
provisions, as well as a provision providing for the Company to defend and
indemnify the executive if the executive is named as a defendant in any lawsuit
regarding any action taken within the scope of employment.
In the
event of a Change in Control any stock options or other awards granted
(other than performance awards) under our Amended and Restated Stock
Option and Incentive Plan (as amended, the "Plan") shall become
immediately vested in full and in the case of stock options exercisable in
full. If the change in control results in an involuntary
separation from employment of the executive officer within 180
days following a change in control, the executive officer would be
entitled to (i) receive six (6) months of salary and the
extension of his benefits (excluding vacation time and paid time off) for a six
month period and (ii) exercise vested options for six months from the date
of separation, provided said extension period is allowed under the
Plan. Under the Employment Agreements, "involuntary separation of
employment" means (i) termination without cause, (ii) any reduction in
responsibilities of office altering the status of the executive officer as an
employee, or (iii) the duplication of the executive officers position by an
equivalent executive in an acquiring entity and "Change in Control" means the
sale of the entire company, or substantially all of its assets, or the sale of
the business unit employing an individual which results in the termination of
employment or subsequent transfer of the employment relationship to another
legal entity, or entity, or single party acquiring more shares than are owned by
the Koski Family Limited Partnership, including its members and their immediate
families (including spouses and their children).
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The
following table sets forth, as of July 9, 2010, certain information concerning
the beneficial ownership of each class of our voting securities by:
(i) each person known by us to own beneficially five percent (5%) or
more of the outstanding shares of our common stock, (ii) each of our
Directors and named executive officers, and (iii) all executive officers
and Directors as a group.
The
number of shares beneficially owned by each 5% shareholder, Director or named
executive officer is determined under rules of the SEC and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
those rules, beneficial ownership includes any shares to which the individual
has sole or shared voting power or investment power and also any shares that the
individual has the right to acquire within 60 days after July 9, 2010 through
the exercise of any stock option, warrant or other right, or conversion of any
security. Unless otherwise indicated, each person has sole investment and voting
power (or shares such power with his or her spouse) with respect to the shares
set forth in the following table. The inclusion in the table below of any shares
deemed beneficially owned does not constitute an admission of beneficial
ownership of those shares.
|
|
|
Number of Shares
Beneficially Owned
|
|
|
Percentage of
Ownership(2)
|
|
|
5%
Shareholders
|
|
|
|
|
|
|
|
Koski
Family Limited Partnership (3)
|
|
|
64,140,000 |
|
|
|
56.7 |
% |
|
George
T. Hawes (4)
|
|
|
13,582,713 |
|
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Directors
and Officers
|
|
|
|
|
|
|
|
|
|
David
B. Hirsch (5)
|
|
|
1,500,000 |
|
|
|
1.3 |
% |
|
Jeffrey
D. Hillman (6)
|
|
|
5,433,958 |
|
|
|
5.2 |
% |
|
Christine
Koski (7)
|
|
|
60,853,333 |
|
|
|
53.7 |
% |
|
Robert
Koski (8)
|
|
|
61,813,333 |
|
|
|
54.6 |
% |
|
Charles
L. Pope (9)
|
|
|
100,000 |
|
|
|
* |
|
|
Frederick
W. Telling (9)
|
|
|
100,000 |
|
|
|
* |
|
|
Brian
Bohunicky (10)
|
|
|
250,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
All
Officers and Directors as a Group (7 Persons)
|
|
|
68,690,624 |
|
|
|
59.9 |
% |
* less
than one percent
|
(1)
|
|
Except
as indicated, the address of the person named in the table is c/o 13700
Progress Boulevard, Alachua, Florida 32615.
|
|
(2)
|
|
For
each person and group included in this table, percentage ownership is
calculated by dividing the number of shares beneficially owned by such
person or group by the sum of 108,203,148 shares of common stock
outstanding as of July 9, 2010, plus the number of shares of common stock
that such person has the right to acquire within 60
days.
|
|
(3)
|
|
Based
upon information provided by the Koski Family Limited Partnership (“KFLP”)
in the amendment to its Schedule 13D filing with the SEC on February 15,
2010, includes (i) 54,960,000 shares held directly by the KFLP, (ii)
893,333 shares held by KFLP partner Christine Koski, 453,333 held by KFLP
partner Robert Koski, 40,000 shares held by KFLP partner, Koski
Management, Inc. (solely owned by Beverly Koski), 1,393,334 shares held by
KFLP partner, Thomas Koski and 1,400,000 shares held in trusts which
Robert Koski serves as a trustee (See note 8 below), and (iii) 5,000,000
shares the KFLP has the right to acquire on or before July 31, 2010
pursuant to entering into that certain Common Stock Purchase Agreement
dated July 5, 2010 with the Company announced on July 7, 2010, at a price
per share of $0.40 and as more fully described in a form 8-K filing by the
Company on July 7, 2010. The address for the KFLP is 3525 Turtle Creek
Boulevard, Unit 19-B, Dallas, Texas 75219.
|
|
(4)
|
|
Based
upon information provided by Mr. Hawes in his filings with the SEC (Form 5
and Form 4’s). The amount of shares includes 11,025,035 owned
directly (as reflected on Form 4 dated July 9, 2010), and 2,557,778 shares
issuable pursuant to currently exerciseable warrants and excludes 100,000
shares of common stock and warrants to purchase 105,000 shares of common
stock owned by Mr. Hawes wife for which he disclaimed beneficial
ownership. Mr. Hawes address, as reflected in Schedule 13D/A, is 390
Plandome Road, Suite 222, Manhasset, New York
11030.
|
|
(5)
|
|
Includes
500,000 shares of common stock from currently exerciseable options awarded
to Mr. Hirsch in connection with his employment with us and excludes an
aggregate of 1,337,500 shares able to be acquired pursuant to stock
options which have not vested.
|
|
(6)
|
|
Includes
4,056,914 shares held by the 2002 Jeffrey Hillman Trust, 785,664 shares
held directly by Jeffrey D. Hillman and 775,000 shares pursuant to
currently exerciseable outstanding options and excludes an aggregate of
1,025,000 shares able to be acquired pursuant to stock options which have
not vested.
|
|
(7)
|
|
In
addition to the shares reflected as being directly owned and able to be
acquired by the KFLP pursuant to the Common Stock Purchase Agreement,
described in note (3), the share amounts include 893,333 shares owned
directly by Ms. Koski (which includes 100,000 shares of our common stock
acquired during 2009 upon exercise of director
options).
|
|
(8)
|
|
In
addition to the shares reflected as directly owned and able to be acquired
by the KFLP pursuant to the Common Stock Purchase Agreement, described in
note (3), the share amounts include: (i) 453,333 shares owned directly by
Mr. Koski (which includes 100,000 shares of our common stock acquired
during 2009 upon exercise of director options) and (ii)
1,400,000 shares owned by trusts which Mr. Koski serves as sole trustee as
follows: the Robert Clayton Koski Trust for the benefit of Anthony James
Hunter (200,000 shares); The Robert Clayton Koski Trust for the benefit of
Hunter Buchanan Koski (500,000 shares); The Robert Clayton Koski Trust for
the benefit of Clayton Ward Bennett (500,000 shares); and The Robert
Clayton Koski Trust for the benefit of Robert Edward Koski (200,000
shares).
|
|
(9)
|
|
Includes
100,000 shares able to be acquired upon the exercise of currently
exerciseable stock options granted pursuant to our director compensation
program upon initially becoming directors.
|
|
(10)
|
|
Excludes
an aggregate of 725,000 shares able to be acquired pursuant to stock
options which have not vested.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Consulting
Fees
In
December 2009, we paid Dr. Hillman, our director and Chief Scientific Officer,
$55,000 for consulting services he provided to us in 2001 and
2002. No interest was accrued on this outstanding
obligation. At the same time we paid Dr, Hillman $26,250 for salary
deferred prior to 2008. Together these amounts, net of applicable
taxes, totaled $54,063 were paid through the issuance of 216,250 shares of
restricted common stock at a price per share of $0.25 in accordance with Dr.
Hillman’s participation in the December 2009 Private Placement discussed
below.
Our
former director, Dr. Marc Siegel entered into a consulting agreement with us to
provide certain media relations services to us. In connection with
Dr. Siegel’s services as a consultant he was paid $9,600 in 2008. Mr.
Siegel resigned as a director on May 9, 2009.
Financing
Transactions
The
June 2009 Private Placement.
On June
29, 2009, we successfully entered into and consummated a private placement of
equity and debt financing pursuant to a securities purchase agreement (the
“Purchase Agreement”) with an accredited investor. Pursuant to the
terms of the Purchase Agreement the Company issued 50,000,000 shares of its
Common Stock to the Koski Family Limited Partnership (“KFLP”) and issued
warrants to the KFLP to acquire 1,000,000 shares of Company common stock at an
exercise price of $0.10 per share in exchange for $4,000,000, the payment of
which consisted of the following: $1,500,000 in cash at closing and $2,500,000
pursuant to a non-interest bearing promissory note providing for five
consecutive monthly installment payments of $500,000 commencing July 31, 2009
and the KFLP provided a secured loan of $1,000,000 to the
Company. The loan was secured by substantially all of our assets
(excluding receivables) and bore interest at the rate of Prime plus 4.0% payable
quarterly. The principal of the loan was due in five
years. The warrants expired in five years and were immediately
exercisable. We also agreed to provide the KFLP with certain
registration rights in connection with any underwritten or other offering by us
over the next five years. Specifically, we shall include 15% of the
total number of shares publicly offered from the shares to be sold by us to the
KFLP. Effective upon the closing of the transaction contemplated by
the Purchase Agreement, directors Welch, Hennecke and Sills resigned from our
Board of Directors and our President and CEO, Mr. David Hirsch as well as Ms.
Christine Koski and Mr. Robert Koski were appointed to fill the vacancies
created by such resignations, with Ms. Koski being elected as Chairperson of our
board. Ms. Koski and Mr. Koski are siblings and partners in the
KFLP. As a result of the transaction the board of directors believes
there was a change of control of the Company with the KFLP acquiring a
controlling interest of approximately 56.6 % of our then outstanding voting
common stock.
In
addition to the above, as a further condition to the consummation of the
transaction contemplated by the Purchase Agreement we were required to obtain
satisfactory arrangements with three main creditors for reductions in the
amounts payable by the Company to them. As of June 30, 2009, these reductions
amounted to $707,674 in aggregate and were conditioned upon prompt payment of
the remaining balances owed to such creditors after taking into account the
agreed upon reductions. As of December 31, 2009, the amount of reductions
arranged with our creditors totaled $832,959. These agreed upon reductions in
payables were reflected in our financial statements for the period and reported
under other income.
In
connection with, and as a closing condition to the Purchase Agreement, the
purchasers, (including George Hawes our largest shareholder prior to the June
2009 Private Placement), under that certain securities purchase agreement dated
June 12, 2008, (the “June 2008 Private Placement”) entered into waiver and
release agreements with us on June 25, 2009. In addition, such
individuals waived and relinquished any special rights they possessed pursuant
to agreements with the Company, including, but not limited to, (i) rights of
first refusal (ii) antidilution regarding future equity sales and (iii)
covenants regarding secured lending contained in the June 2008 Private
Placement. In connection with such waivers and releases, warrants to
acquire 3,220,000 shares of our common stock at an exercise price of $1.30 per
share that were previously issued under the June 2008 Private Placement were
subject to the right of exchange for new replacement warrants to acquire the
same number of shares under the same terms except for a change in the exercise
price from $1.30 to $0.75. In addition, to the extent of any future underwritten
registered offerings of our common stock, or the filing of any resale
registration statement, in each case occurring within five years from the date
of the waiver and release, the purchasers shall have the right to include an
aggregate of up to 5% of the shares being registered in such offering or
registration statement, subject to the discretion, in any underwritten primary
offerings, of the underwriter on the inclusion of shares in the offering to be
sold by selling shareholders.
The
December 2009 Private Placement.
On
December 30th, 2009,
we completed the initial closing of a private placement of equity pursuant to a
Common Stock Purchase Agreement (the “Securities Purchase Agreement”) with
accredited investors. The Company issued 10,016,250 shares of its Common Stock
at a price of $0.25 per share to the investors for $2,504,062, the payment of
which consisted of the following: $2,450,000 in cash at closing and $54,063
pursuant to the cancellation of the same dollar amount of outstanding deferred
compensation obligation owed by the Company to Dr. Jeffrey Hillman, our Chief
Scientific Officer and director. Approximately half of the total investment, or
$1,250,000, was made by the KFLP. In conjunction with, and as a condition to
closing of the financing, the KFLP was issued 4,000,000 shares of the Company's
Common Stock at $0.25 per share, which was the same price per share paid by the
investors, in exchange for the cancellation of its $1.0 million secured note.
The loan originally had been secured by substantially all of the Company's
assets (excluding receivables) and required interest payments at the rate of
Prime plus 4.0% which were payable quarterly.
Contemporaneously
with the financing transaction contemplated by the Securities Purchase
Agreement, the KFLP also elected to exercise previously issued warrants (issued
on June 30, 2009 as part of the June 2009 Private Placement) to purchase
1,000,000 shares of Company Common Stock. The warrants were exercised through
the payment by the KFLP of the warrant exercise price of $0.10 per share.
Additionally, Christine L. Koski and Robert C. Koski, as Directors of the
Company, each exercised previously issued options to purchase 100,000 shares of
the Company's Common Stock at the option exercise price of $0.10 per share.
These options were automatically granted to both Christine and Robert Koski when
they became non-employee directors of the Company on June 30, 2009.
On
January 13, 2010, we completed the $3,004,062 private placement contemplated by
the Securities Purchase Agreement and December 2009 Private Placement and issued
another 2,000,000 shares of common stock at a price of $0.25 per share to the
accredited investors for $500,000. Of this amount the KFLP again participated in
one half of the remainder of the aggregate investment by acquiring 1,000,000
shares for $250,000.
The
May 2010 Financing Transaction.
On May
28, 2010, we entered into an Unsecured Promissory Note with Conversion
Provisions (the Note”) with the Koski Family Limited Partnership (the “KFLP”)
pursuant to which Note we borrowed $1,000,000 from the KFLP. Interest
on the Note accrues at the rate of LIBOR plus 6% and the principal of the Note,
together with all accrued interest thereon, is due and payable on such date that
is the earlier of: (a) the closing date of a registered public offering of newly
issued equity securities by us resulting in cash proceeds to us (other than in
connection with employee option plans) or (b) May 27, 2011 (the “Due Date”); provided, however, that in
the event we complete a private offering of equity securities prior to such Due
Date (a “Private Placement”), we may at our option, upon five (5) days written
notice to the KFLP, elect to convert the principal of the Note, together with
all accrued interest thereon, into the same equity securities being sold in the
Private Placement at the same price and terms (the “Conversion Securities”) and
issue the Conversion Securities to the KFLP. Directors Christine L. Koski and
Robert C. Koski are partners in the KFLP. The issuance of the Note was approved
by the disinterested members of the Company’s Board of
Directors.
The
June 2008 Private Placement.
On June
12, 2008, our Securities Purchase Agreement (“SPA”) with two accredited
investors became binding and we closed on $2,600,000 in equity based financing
with net proceeds of $2,515,000. We issued a total of 5,777,778 shares of
restricted common stock in the private placement. The shares were sold to two
accredited investors (including our largest shareholder and affiliate, Mr.
George T. Hawes) at $0.45 per share. Each participating investor also received
warrants to purchase shares of common stock at the price of $1.30 per share. One
warrant was issued for each share of common stock issued for a total of
5,777,778 shares that may be acquired upon exercise of the warrants. The
warrants are exercisable and expire June 12, 2013. In addition, Mr. George T.
Hawes, acquired certain rights pursuant to the SPA. However, these rights were
the subject of the waiver and release agreement noted above under the June 2009
Private Placement and were waived by Mr. Hawes as a condition precedent to such
financing and such rights are no longer in force or effect.
Warrant
Exercises.
On August
7, 2007, we closed on $1,171,591 in equity based financing. We issued a total of
4,600,000 shares of restricted common stock and warrants to acquire 4,600,000
shares of common stock in a private placement to accredited investors. The
shares were sold to accredited investors at $0.25 per share, except that per
stock exchange requirements, a former director, acquired his shares at $0.44 per
share, which was the closing share price on August 7, 2007. One of our largest
shareholders at the time, George Hawes participated in this offering and
acquired 1,100,000 shares and 1,100,000 warrants. Each warrant to purchase
shares of common stock is exercisable at the price of $0.58 per share. The
warrants expired on August 8, 2008 (the “August 2007 Warrants”). On January 31,
2008 we amended the August 2007 Warrants, to reduce the exercise price to $0.44,
which was the fair market value on the date of the amendment for a designated
period of time (from January 28, 2008 to February 29, 2008) following which the
exercise price reverted back to $0.58. Prior to the expiration of the August
2007 Warrants, 3,386,364 shares were issued upon exercise at the amended
exercise price. George Hawes acquired 500,000 shares at the reduced exercise
price.
Relationships
During
2008, Dr. Zahradnik’s wife provided administrative services to the Company as an
independent contractor on an as-needed basis at an hourly rate and was paid an
aggregate of $5,925 during fiscal 2008. As of February 15, 2008, Ms.
Zahradnik was no longer providing these services to the Company.
During
2008 and 2009 we paid $201,665 and $150,406 to a law firm that employs our
director, Dr. Hillman’s daughter and for which we received intellectual property
related legal services.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and
Directors and any persons who beneficially own more than ten percent of the
Company's Common Stock to file reports of ownership and changes in ownership of
such securities with the Securities and Exchange Commission Officers, Directors
and beneficial owners of more than ten percent of the Common Stock are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its
review of copies of forms furnished to the Company and written representations
from the executive officers, directors and holders of ten percent or more of the
Company's Common Stock, the Company believes, all persons subject to the
reporting requirements with regard to the Common Stock complied with the
applicable filing requirements during 2009, except that following
the June 29, 2009 transaction between the Koski Family Limited Partnership
(“KFLP”) and the Company, the following individuals and entities were late in
the filing of Form 4s: the KFLP (together with its partners, which included our
directors Ms. Christine Koski and Mr. Robert Koski) were each two days late in
filing their Form 4s; our Chief Scientific Officer, Dr. Hillman was two days
late in filing his Form 4; and our Chief Financial Officer, Brian Bohunicky, was
two days late in filing his Form 4.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
information contained in this report shall not be deemed to be “soliciting
material” or to be “filed” with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that we specifically incorporate it by reference in such
filing.
The following is the report of the Audit Committee with
respect to our audited financial statements for the fiscal year ended December 31, 2009, and the notes thereto.
Review with Management
The Audit Committee reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2009 and the notes thereto. Management
represented to the Audit Committee that
our financial statements were prepared in
accordance with generally accepted accounting principles.
Review and Discussions with Independent Registered
Public Accounting Firm
The Audit Committee discussed with Kirkland,
Russ, Murphy and Tapp, PA the matters
required to be discussed by Statement on Auditing Standards No. 61, which includes, among other items, matters related
to the conduct of the audit of our financial statements.
The Audit Committee also received and reviewed
written disclosures and the letter from
Kirkland, Russ, Murphy and Tapp, PA
regarding its independence as required by Independence Standards Board
Standard No. 1 and has discussed with
Kirkland, Russ, Murphy and Tapp, PA their
independence from us.
Conclusion
Based
on the review and discussions referred to above,
the Audit Committee recommended to our board of Directors that
our audited financial statements be
included in our Annual Report on
Form 10-K for the year ended December 31, 2009 for filing with the Securities and Exchange
Commission.
Submitted by Audit Committee/Board of Directors:
Charles
L. Pope (Chair)
Frederick
W. Telling
(members
since June 4, 2010)
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
Non-Ratification
By Shareholders
The
Company has elected not to submit its selection of Kirkland, Russ, Murphy &
Tapp, PA, as the Company’s independent registered public accountant to the
shareholders for ratification for the coming fiscal year because it does not
believe that it is required to do so. Representatives from Kirkland,
Russ, Murphy & Tapp, P.A. the Company’s current independent registered
public accountant are expected to be present at the Annual Meeting , able to
make a statement if they desire to do so, and, will be available to respond to
questions.
Principal
Accountant Fees And Services.
The
following table presents fees incurred for
professional audit services
rendered by our independent registered public
accounting firm, Kirkland, Russ, Murphy and Tapp, PA for the audit of
our financial statements for the years ended December 31, 2009 and
December 31, 2008, and fees for other services
rendered by Kirkland, Russ, Murphy and Tapp
and other accounting firms whom assisted on special projects during those
periods.
|
Type of Fees
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Audit Fees (1)
|
|
$ |
124,625 |
|
|
$ |
110,150 |
|
|
Audit-Related Fees (2)
|
|
|
37,037 |
|
|
|
8,075 |
|
|
Tax Fees (3)
|
|
|
3,100 |
|
|
|
3,000 |
|
|
All Other Fees (4)
|
|
|
14,821 |
|
|
|
— |
|
|
Total
|
|
$ |
179,583 |
|
|
$ |
121,225 |
|
(1) Audit Fees: These fees consist of aggregate fees billed or to
be billed by Kirkland, Russ, Murphy and Tapp, PA of $124,625 for professional
services rendered in connection with their audit of the Company’s 2009 and 2008
financial statements, respectively, including the review of the financial
statements included in the Company's Quarterly Reports on Form
10-Q.
(2) Audit-Related
Fees: There were fees billed by Edward Leiber, CPA and
Kirkland, Russ, Murphy and Tapp, PA for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements that are not reported above under the caption "Audit
Fees."
(3) Tax Fees: There
were fees billed by Kirkland, Russ, Murphy and Tapp, PA for professional
services for tax compliance and tax advice.
(4) All Other
Fees: There were fees billed by Taylor White Accounting firm
in 2009 of $14,821 in connection with the professional services associated with
the Company’s compliance with the Sarbanes-Oxley Act of 2002 filings for small
businesses. No other fees were billed for 2008.
Pre-Approval
Policies and Procedures
The Audit
Committee approves in advance all audit and non-audit services to be performed
by the Company’s independent registered public accounting firm. The
Audit Committee considers whether the provision of any proposed non-audit
services is consistent with the SEC’s rules on auditor independence and has
pre-approved certain specified audit and non-audit services to be provided by
Kirkland, Russ, Murphy and Tapp, PA for up to twelve (12) months from the date
of the pre-approval. If there are any additional services to be
provided, a request for pre-approval must be submitted by management to the
Audit Committee for its consideration.
The Audit
Committee approves in advance all audit and non-audit services to be performed
by the Company’s independent registered public accounting firm. The
Audit Committee considers whether the provision of any proposed non-audit
services is consistent with the SEC’s rules on auditor
independence. If there are any additional services to be provided, a
request for pre-approval must be submitted by management to the Audit Committee
for its consideration.
OTHER
MATTERS
Interim
Corporate Mailings
In accordance with National Instrument
54-102 of the Canadian Securities Administrators, registered and beneficial
shareholders of the Company may elect annually to receive interim corporate
mailings, including interim financial statements of the Company, if they so
request. If you wish to receive such mailings, please complete the form in Appendix B and mail as instructed on
the form.
Availability
of Annual Report on Form 10-K
Accompanying this Proxy Statement is a
copy of the Company's Annual Report on Form 10-K for 2009. Shareholders who
would like additional copies of the Annual Report on Form 10-K should direct
their requests in writing to:
Oragenics,
Inc.
13700
Progress Boulevard
Alachua,
Florida 32615
Attention:
Brian Bohunicky, Secretary.
Miscellaneous
Management does not know of any matters
to be brought before the Annual Meeting other than as described in this Proxy
Statement. Should any other matters properly come before the Annual
Meeting, the persons designated as proxies will vote in accordance with their
best judgment on such matters.
| |
BY
ORDER OF THE
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BOARD
OF DIRECTORS
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| |
/s/Brian Bohunicky
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Brian
Bohunicky,
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|
| |
Secretary
|
|
Alachua,
Florida
July 21,
2010
Appendix
A
FORM
OF ARTICLES OF AMENDMENT TO THE
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
ORAGENICS, INC.
(Document
Number P96000091949)
Oragenics,
Inc. (the “Corporation”), does hereby certify that the Corporation’s Articles of
Incorporation originally filed with the Florida Secretary of State on November
4, 1996, as amended and restated on May 8, 2002, as further amended by that
certain amendment filed October 28, 2009, is hereby further amended pursuant to
Section 607.1006 of the Florida Business Corporation Act of the State of
Florida.
The
Corporation does hereby further certify that this Article of Amendment was duly
adopted by the Corporation’s Board of Directors and by the shareholders of the
Corporation in accordance with the applicable provisions of
Section 607.0725 of the Florida Business Corporation Act of the State of
Florida.
The
Amended and Restated Articles of Incorporation of the Corporation, as amended,
are amended as follows:
The
first paragraph of Article II of the Amended and Restated Articles of
Incorporation, as amended, shall be deleted in its entirety and replaced with
the following:
“Capital Stock: The aggregate
number of shares of all classes of capital stock which this Corporation shall
have authority to issue is [*] shares, consisting of (i)[*] shares of common
stock, par value $0.001 per share (“Common Stock”) and
(ii) 20,000,000 shares of preferred stock, no par value (“Preferred
Stock”).
Upon
the effectiveness of the amendment to the Amended and Restated Articles of
Incorporation (the “Effective Time”), each [**] shares of the Corporation’s
common stock, par value $0.001 per share, issued and outstanding immediately
prior to the Effective Time (the “Old Common Stock”) (including the number of
shares of common stock issuable upon exercise or conversion of all issued and
outstanding, options, warrants and convertible securities of every kind,
including all options, shares outstanding and authorized for issuance under the
Corporation's Amended and Restated 2002 Stock Incentive Plan, (as amended), will
automatically and without any action on the part of the respective holders
thereof, be combined and reclassified into one (1) share of common stock,
par value $0.001 per share (the “New Common Stock”) (and such combination and
conversion, the “Reverse Stock Split”). Notwithstanding the
immediately preceding sentence, no fractional shares of New Common Stock shall
be issued to the holders of record of Old Common Stock in connection with the
Reverse Stock Split and the Corporation shall not recognize on its stock record
books any purported transfer of any fractional share of New Common Stock. In
lieu thereof, the Corporation shall make a cash payment equal to the Market
Value (as subsequently defined herein) of such fractional share of Common Stock
to holders thereof who would otherwise be entitled to receive fractional shares,
except for the provisions hereof, upon surrender of certificates representing
those shares to the Corporation’s transfer agent. The ownership of such
fractional interests shall not entitle the holder thereof to any voting,
dividend or other right, except the right to receive payment therefor as
described above. For the purposes hereof, “Market Value” of shares of Common
Stock shall mean an amount per share equal to the closing price of the Common
Stock on the business day immediately preceding the Effective Time as reported
by the OTC Bulletin Board (or another exchange on which the Common Stock is then
listed). Each stock certificate that, immediately prior to the Effective Time,
represented shares of Old Common Stock shall, from and after the Effective Time,
automatically and without the necessity of presenting the same for exchange,
represent that number of whole shares of New Common Stock into which the shares
of Old Common Stock represented by such certificate shall have been reclassified
(as well as the right to receive cash in lieu of any fractional share interests
of New Common Stock as set forth above), provided, however, that each holder of
record of a certificate that represented shares of Old Common Stock shall
receive, upon surrender of such certificate, a new certificate representing the
number of whole shares of New Common Stock into which the shares of Old Common
Stock represented by such certificate shall have been reclassified, as well as
any cash in lieu of fractional share interests of New Common Stock to which such
holder may be entitled as set forth above.”
The
remainder of the Amended and Restated Articles of Incorporation shall remain
unchanged and in full force and effect.
The Board
of Directors of the Corporation adopted the foregoing resolution on June 23,
2010 and recommended that this resolution be adopted by the Corporation’s
shareholders. On August 25, 2010, at a meeting of the Corporation’s
shareholders at which the number of votes cast FOR the foregoing actions were
sufficient for approval pursuant to the provisions of Section 607.0725 of
the Florida Business Corporations Act, the herein contained resolutions were
adopted by the Corporation’s shareholders pursuant to the provisions of Section
607.10025 of the Florida Business Corporations Act.
IN
WITNESS WHEREOF, the Corporation has caused this Article of Amendment to be
signed on ,
2011.
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ORAGENICS,
INC.
|
| |
|
|
|
|
|
|
|
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|
Name:
|
|
|
|
|
Title:
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|
*A vote
FOR Proposal II includes
approval of the amendment to the Amended and Restated Articles of Incorporation
to reduce the authorized shares of common stock with a corresponding and
resulting reduction to our total authorized capital stock as
follows:
the total
number of shares of all classes of capital stock authorized will be as follows
for the split ratios indicated: (1:2)-170,000,000; (1:4)-95,000,000;
(1:6)-70,000,000; (1:8)-57,500,000; (1:10)-50,000,000; (1:15)-40,000,000; and
(1:20)-35,000,000; and
the total
number of shares of common stock authorized will be as follows for the split
ratios indicated: (1:2)-150,000,000; (1:4)-75,000,000; (1:6)-50,000,000;
(1:8)-77,500,000; (1:10)-30,000,000; (1:15)-20,000,000; and
(1:20)-15,000,000.
** A vote
FOR Proposal II includes
approval of an amendment to our Amended and Restated Articles of Incorporation
with a whole number between 2 and 20 where indicated. In Proposal II, our
shareholders are requested to approve an amendment to effect a reverse stock
split in each of the following ratios: one-for-two (1:2), one-for-four (1:4),
one-for-six (1:6), one-for-eight (1:8), one-for-ten (1:10), one-for-fifteen
(1:15), one-for-twenty (1:20) and to authorize the Board to file or not to file
any such amendment with the Secretary of State of Florida in its
discretion.
Appendix
B
Oragenics,
Inc.
Request
for Interim Financial Statements
In
accordance with National Instrument 54-102 of the Canadian Securities
Administrators, registered and beneficial shareholders of the subject
Corporation may elect annually to receive interim corporate mailings, including
interim financial statements of the Corporation, if they so
request. If you wish to receive such mailings, please complete and
return this form to:
Oragenics,
Inc.
Investor
Relations
13700
Progress Boulevard
Alachua,
FL 32615
NAME: _____________________________________________________________
ADDRESS:
_____________________________________________________________
_____________________________________________________________
POSTAL
CODE: ___________________________
I confirm
that I am an owner of common stock of the Corporation.
SIGNATURE
OF
SHAREHOLDER:
__________________________________________DATE:____________
CUSIP: 684023104
SCRIP
COMPANY
CODE: ORGQ
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
ORAGENICS,
INC.
TO BE HELD AT GRAND HYATT TAMPA BAY, 2900 BAYPORT
DRIVE TAMPA, FLORIDA 33607
ON
WEDNESDAY, AUGUST 25, 2010 AT 10:00 A.M. LOCAL TIME
The
undersigned shareholder of Oragenics, Inc.(the "Company"), Alachua, Florida,
hereby constitutes and appoints David Hirsch with full power of substitution or
in the place of the foregoing, Jeffrey Hillman as proxy holder for and on behalf
of the undersigned shareholder with the power of substitution to attend, act and
vote the number of shares of Common Stock which the undersigned would be
entitled to vote if personally present at the annual meeting of Shareholders or
at any adjournments thereof (the "Annual Meeting"), upon the proposals described
in the Notice to the Holders of Common Stock of the Annual Meeting of
Shareholders and Proxy Statement, both dated July 21, 2010, the receipt of which
is acknowledged, in the manner specified below. The proxies, in their
discretion, are further authorized to vote on any shareholder proposals not
submitted to the Company for a vote of the shareholders at the Annual Meeting
within a reasonable time prior to the mailing of the proxy materials, as well as
on the election of any person as a Director if a Director nominee named in
Proposal I is unable to serve or for good cause will not serve, and on matters
incident to the conduct of the Annual Meeting. At the present time, the Board of
Directors knows of no other business to be presented to a vote of the
shareholders at the Annual Meeting.
This
Proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder. If no
direction is made, this Proxy will be voted FOR the election of the Directors listed on the reverse side and FOR
Proposal
II.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ORAGENICS, INC. AND
MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE. The
undersigned reserves the right to revoke this Proxy at any time prior to the
Proxy being voted at the Meeting. The Proxy may be revoked by delivering a
signed revocation to the Company at any time prior to the Meeting, by submitting
a later-dated Proxy, or by attending the Meeting in person and casting a ballot.
The undersigned hereby revokes any proxy previously given to vote such shares at
the Meeting.
PROXY
A.
PROPOSALS – The Board of Directors recommends a vote FOR all the nominees listed
and FOR Proposal II.
Proposal I: Election of
Directors. On the proposal to elect the following Directors to serve until the
indicated Annual Meeting of Shareholders of the Company and until their
successors are elected and qualified:
|
Christine
L. Koski
|
|
For
¨ Withhold
Authority ¨
|
|
Robert
C. Koski
|
|
For
¨ Withhold
Authority ¨
|
|
Jeffrey
D. Hillman
|
|
For
¨ Withhold
Authority ¨
|
|
David
B. Hirsch
|
|
For
¨ Withhold
Authority ¨
|
|
Charles
L. Pope
|
|
For
¨ Withhold
Authority ¨
|
|
Frederick
W. Telling
|
|
For
¨ Withhold
Authority ¨
|
Proposal II: To approve an amendment to
our Articles of Incorporation to effect a reverse stock split of our common
stock at the discretion of our board of directors.
|
|
o
For
|
o
Against
|
o
Abstain
|
B. Authorized
Signatures – This section must be completed for your vote to be counted. — Date
and Sign Below.
Please
sign exactly as your name appears on your stock certificate and date. Where
shares are held jointly, each shareholder should sign. When signing as executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in full partnership name by authorized
person.
Shares
Held: ________________________________________
Signature
of Shareholder ________________________________________
Signature
of Shareholder (If held jointly) ___________________________
Dated:
___________________________________________
THIS PROXY FORM IS NOT VALID UNLESS
IT IS SIGNED.