DEF 14C: Definitive information statements
Published on January 8, 2008
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
(RULE 14C-101)
Washington, D.C. 20549
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN
INFORMATION STATEMENT
SCHEDULE 14C
INFORMATION
Information Statement Pursuant
Section 14(c) of the Securities
Exchange Act of 1934 (Amendment
No. )
Check appropriate box:
þ Definitive
Information Statement
o Preliminary
Information Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
OPKO HEALTH, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
þ | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
OPKO
HEALTH, INC.
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
Dear Stockholder:
We are writing to advise you that effective as of
December 4, 2007, the Board of Directors and stockholders
holding a majority of the voting power of the outstanding
capital stock of OPKO Health, Inc., a Delaware corporation (the
Company), approved the issuance to the members of
The Frost Group, LLC (the Frost Group), a private
investment group controlled by Dr. Phillip
Frost, M.D., our Chairman and CEO, of an aggregate of
10,869,565 shares (the Shares) of the
Companys common stock, par value $0.01 per share, in
exchange for a $20 million investment in the Company (the
Investment). The Shares will be issued at a price of
$1.84 per share, which represents a discount of approximately
40% to the average trading price of our common stock on the
American Stock Exchange for the five trading days immediately
preceding the effective date of Board and stockholder approval.
The Company has not granted and will not grant any registration
rights in respect of the Shares, which will be restricted
securities as defined by Rule 144 promulgated under
the Securities Act of 1933, as amended. Additionally, the Shares
will be subject to a two-year lockup, during which time the
members of the Frost Group may not sell the Shares.
The principal member of the Frost Group is Frost Gamma
Investments Trust (FGIT), of which Dr. Phillip
Frost, M.D., is the sole trustee. Additionally, the Frost
Group includes in its membership Dr. Jane Hsiao, our Vice
Chairman and Chief Technical Officer, Dr. Rao Uppaluri, our
Chief Financial Officer, and Mr. Steven D. Rubin, our
Executive Vice President-Administration. Following issuance of
the Shares, the members of the Frost Group will beneficially own
an aggregate of approximately 55.2% of our issued and
outstanding common stock. The Frost Group, FGIT, Drs. Hsiao
and Uppaluri and Mr. Rubin voted those shares of our common
stock presently owned by them in favor of the Investment.
Stockholder approval of the Investment was in the form of a
written consent of stockholders in lieu of a special meeting in
accordance with the relevant sections of the Delaware General
Corporation Law (the DGCL), and included those of
our stockholders holding a majority of the voting power of our
issued and outstanding shares of common stock and preferred
stock, voting together as a group. Stockholder approval was
sought solely in order to comply with applicable rules of the
American Stock Exchange, on which our common stock is listed.
The Shares will be issued on or about January 28, 2008,
which is approximately twenty (20) days after the mailing
of this Information Statement.
WE ARE
NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
No action is required by you. The accompanying Information
Statement is furnished only to inform our stockholders of the
Investment and the approval of the issuance of the Shares before
they take effect in accordance with
Rule 14c-2
of the Securities Exchange Act of 1934, as amended. This
Information Statement is first mailed to you on or about
January 7, 2008. Additionally, in accordance with
Section 228 of the DGCL, this Information Statement
constitutes the notice of a corporate action taken without a
meeting by less than unanimous consent of the Companys
stockholders. You are urged to read this Information Statement
carefully in its entirety.
By Order of the Board of Directors of
OPKO Health, Inc.
By: |
/s/ Phillip
Frost, M.D.
|
Phillip Frost, M.D.
CEO and Chairman of the Board
OPKO
HEALTH, INC.
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
INFORMATION
STATEMENT REGARDING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY STOCKHOLDERS
IN LIEU OF A SPECIAL MEETING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY STOCKHOLDERS
IN LIEU OF A SPECIAL MEETING
WE ARE
NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the
stockholders of OPKO Health, Inc., a Delaware corporation (the
Company or OPKO), in connection with the
issuance to the members of The Frost Group, LLC (the Frost
Group), a private investment group controlled by
Dr. Phillip Frost, M.D., our Chairman and CEO, an
aggregate of 10,869,565 shares (the Shares) of
the Companys common stock, par value $0.01 per share, in
exchange for a $20 million investment in the Company (the
Investment). The Investment was approved effective
as of December 4, 2007 by our Board of Directors, our Audit
Committee and pursuant to a written consent of the holders of a
majority of the voting power of our issued and outstanding
common stock and preferred stock, voting together as a group, in
lieu of a special meeting of stockholders. Stockholder approval
was sought solely in order to comply with applicable rules of
the American Stock Exchange, on which our common stock is listed.
The Shares will be issued at a price of $1.84 per share, which
represents a discount of approximately 40% to the average
trading price of our common stock on the American Stock Exchange
for the five trading days immediately preceding the date of
Board and stockholder approval. The Company has not granted and
will not grant any registration rights in respect of the Shares,
which will be restricted securities as defined by
Rule 144 promulgated under the Securities Act of 1933, as
amended (the Securities Act). Additionally, the
Shares will be subject to a two-year lockup, during which time
the members of the Frost Group may not sell the Shares.
The principal member of the Frost Group is Frost Gamma
Investments Trust (FGIT), of which Dr. Phillip
Frost, M.D., is the sole trustee. Additionally, the Frost
Group includes in its membership Dr. Jane Hsiao, our Vice
Chairman and Chief Technical Officer, Dr. Rao Uppaluri, our
Chief Financial Officer, and Mr. Steven D. Rubin, our
Executive Vice President-Administration. Following issuance of
the Shares, the members of the Frost Group will beneficially own
an aggregate of approximately 55.2% of our presently issued and
outstanding common stock. The Frost Group, FGIT, Drs. Hsiao
and Uppaluri and Mr. Rubin voted the shares of our common
stock presently owned by them in favor of the Investment.
The elimination of the need for a meeting of stockholders to
approve the actions described in this Information Statement is
made possible by Section 228 of the Delaware General
Corporation Law (the DGCL), which provides that the
written consent of the holders of outstanding shares of voting
stock, having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and
voted, may be substituted for such a meeting. In order to
eliminate the costs involved in holding a special meeting, we
elected to utilize the written consent of the holders of in
excess of a majority in interest of our voting securities
entitled to vote upon the actions described in this Information
Statement.
Pursuant to Section 228 of the DGCL, we are required to
provide prompt notice of the taking of those actions described
above without a meeting of stockholders to all stockholders who
did not consent in writing to such action. This Information
Statement serves as this notice. This Information Statement will
be mailed on or about January 7, 2008 to stockholders of
record, and is being delivered to inform you of the corporate
actions described herein before they take effect in accordance
with
Rule 14c-2
of the Securities Exchange Act of 1934, as amended.
The entire cost of furnishing this Information Statement will be
borne by the Company. We will request brokerage houses,
nominees, custodians, fiduciaries and other like parties to
forward this Information Statement to
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the beneficial owners of our voting securities held of record by
them, and we will reimburse such persons for out-of-pocket
expenses incurred in forwarding such material.
No
Dissenters Rights
No dissenters rights are afforded to our stockholders
under Delaware law as a result of the actions described in this
Information Statement.
OUR
PRINCIPAL STOCKHOLDERS
Our voting securities are composed of our common stock, par
value $0.01 per share, and our Series A Preferred Stock,
par value $0.01 per share, of which 164,277,995 and
869,366 shares, respectively, were outstanding as of
December 4, 2007. The holders of our common stock and
Series A Preferred Stock are each entitled to one vote for
each outstanding share on all matters submitted to our
stockholders. The Frost Group, Frost Gamma Investments Trust,
Drs. Hsiao and Uppaluri and Mr. Rubin voted those
shares of our common stock presently owned by them in favor of
the Investment.
The following table contains information regarding the
beneficial ownership of our common stock as of December 4 2007,
held by:
| each stockholder known by us to beneficially own more than 5% of our common stock; | |
| our directors; | |
| our sole executive officer in 2006 and our current executive officers; and | |
| all current directors and executive officers as a group. |
Security
Ownership of Certain Beneficial Owners
Before Giving Effect to the Issuance of |
After Giving Effect to the Issuance of |
|||||||||||||||
Shares to the members of the |
Shares to the members of the |
|||||||||||||||
Frost Group** | Frost Group*** | |||||||||||||||
Number of |
Percentage of |
Number of |
Percentage of |
|||||||||||||
Outstanding Shares |
Outstanding |
Outstanding |
Outstanding |
|||||||||||||
Name and Title of |
Beneficially |
Shares of Common |
Shares Beneficially |
Shares of Common |
||||||||||||
Beneficial Owner
|
Owned(1) | Stock | Owned | Stock | ||||||||||||
Frost Gamma Investments Trust
4400 Biscayne Boulevard Suite 1500 Miami, Florida 33137 |
70,629,247 | (2) | 39.6 | % | 77,395,551 | (2) | 40.9 | % | ||||||||
The Frost Group, LLC
4400 Biscayne Blvd. Suite 1500 Miami, Florida 33137 |
20,286,705 | (3) | 12.0 | % | 20,286,705 | (3) | 11.3 | % | ||||||||
Johnson & Johnson Development Corporation
One Johnson & Johnson Plaza New Brunswick, NJ 08933 |
15,583,555 | (4) | 9.3 | % | 15,583,555 | (4) | 8.8 | % | ||||||||
Psilos Group Partners II-S
625 Avenue of the Americas 4th Floor New York, NY 10011 |
11,327,630 | (5) | 6.8 | % | 11,327,630 | (5) | 6.4 | % | ||||||||
Phillip Frost, M.D., CEO & Chairman of the Board
4400 Biscayne Blvd. Suite 1500 Miami, Florida 33137 |
70,629,247 | (6) | 39.6 | % | 77,395,551 | (7) | 40.9 | % |
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Before Giving Effect to the Issuance of |
After Giving Effect to the Issuance of |
|||||||||||||||
Shares to the members of the |
Shares to the members of the |
|||||||||||||||
Frost Group** | Frost Group*** | |||||||||||||||
Number of |
Percentage of |
Number of |
Percentage of |
|||||||||||||
Outstanding Shares |
Outstanding |
Outstanding |
Outstanding |
|||||||||||||
Name and Title of |
Beneficially |
Shares of Common |
Shares Beneficially |
Shares of Common |
||||||||||||
Beneficial Owner
|
Owned(1) | Stock | Owned | Stock | ||||||||||||
Jane H. Hsiao, Ph.D., MBA,
Vice Chairman of the Board & Chief Technical Officer 4400 Biscayne Blvd. Suite 1500 Miami, Florida 33137 |
15,540,724 | (8) | 9.3 | % | 19,616,811 | (8) | 11.0 | % | ||||||||
Steven D. Rubin, Executive Vice President-Administration and
Director
4400 Biscayne Blvd. Suite 1500 Miami, Florida 33137 |
5,182,021 | (9) | 3.1 | % | 5,195,608 | (9) | 2.9 | % | ||||||||
Rao Uppaluri, Ph.D., Chief Financial Officer
4400 Biscayne Blvd Suite 1500 Miami, Florida 33137 |
4,904,352 | (10) | 3.0 | % | 4,917,939 | (10) | 2.8 | % | ||||||||
Adam Logal, Chief Accounting Officer
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
81,085 | (11) | * | 81,085 | (11) | * | ||||||||||
David Eichler, Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
11,347,630 | (12) | 6.8 | % | 11,347,630 | (12) | 6.4 | % | ||||||||
Michael Reich, Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
863,478 | (13) | * | 863,478 | (13) | * | ||||||||||
Robert Baron, Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
258,000 | (14) | * | 258,000 | (14) | * | ||||||||||
John A. Paganelli, Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
272,700 | (15) | * | 272,700 | (15) | * | ||||||||||
Richard A. Lerner, M.D., Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
20,000 | (16) | * | 20,000 | (16) | * | ||||||||||
Pascal J. Goldschmidt, Director
4400 Biscayne Blvd. Suite 1180 Miami, Florida 33137 |
0 | * | 0 | * | ||||||||||||
All Executive Officers and Directors as a group (11 persons)
|
109,099,237 | 58.7 | % | 119,968,802 | 60.9 | % |
* | Less than 1% | |
** | Percentages based upon 164,277,995 shares of our common stock issued and outstanding at December 4, 2007. |
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*** | Percentages based upon 175,147,560 shares of our common stock issued and outstanding after giving effect to the issuance of 10,869,565 shares of common stock to the members of the Frost Group. | |
(1) | All shares beneficially owned represent shares of common stock unless otherwise indicated. | |
(2) | Includes warrants to purchase 9,241,589 shares of common stock. Also includes 15,490,547 shares of common stock and warrants to purchase 4,796,158 shares of common stock held by The Frost Group, LLC, of which Frost Gamma Investments Trust is a principal member. Frost Gamma Investments Trust disclaims beneficial ownership of the common stock and warrants held by The Frost Group, LLC, except to the extent of its pecuniary interest therein. | |
(3) | Includes warrants to purchase 4,796,158 shares of common stock. | |
(4) | Includes warrants to purchase 2,418,164 shares of common stock and options to purchase 191,791 shares of common stock. | |
(5) | Includes warrants to purchase 2,064,399 shares of common stock and options to purchase 181,631 shares of common stock. | |
(6) | Includes 41,100,953 shares of common stock and warrants to purchase 9,241,589 shares of common stock held by Frost Gamma Investments Trust. Dr. Phillip Frost is the trustee and Frost Gamma, Limited Partnership is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma, Limited Partnership. The general partner of Frost Gamma Limited Partnership is Frost Gamma Inc. and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole shareholder of Frost-Nevada Corporation. The number of shares included above also includes 15,490,547 shares of common stock and warrants to purchase 4,796,158 shares of common stock owned directly by The Frost Group, LLC. Frost Gamma Investments Trust is a principal member of The Frost Group, LLC. Dr. Frost and the Frost Gamma Investments Trust disclaim beneficial ownership of these shares of common stock and warrants to purchase common stock, except to the extent of any pecuniary interest therein. | |
(7) | Includes 47,867,257 shares of common stock and warrants to purchase 9,241,588 shares of common stock held by Frost Gamma Investments Trust. Dr. Phillip Frost is the trustee and Frost Gamma, Limited Partnership is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma, Limited Partnership. The general partner of Frost Gamma Limited Partnership is Frost Gamma Inc. and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole shareholder of Frost-Nevada Corporation. The number of shares included above also includes 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock owned directly by The Frost Group, LLC. Frost Gamma Investments Trust is a principal member of The Frost Group, LLC. Dr. Frost and the Frost Gamma Investments Trust disclaim beneficial ownership of these shares of common stock and warrants to purchase common stock, except to the extent of any pecuniary interest therein. | |
(8) | Includes warrants to purchase 2,936,580 shares of common stock. Dr. Hsiao is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Dr. Hsiao disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. | |
(9) | Includes warrants to purchase 1,036,440 shares of common stock. Mr. Rubin is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Mr. Rubin disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. | |
(10) | Includes warrants to purchase 950,070 shares of common stock. Dr. Uppaluri is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Dr. Uppaluri disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. | |
(11) | Includes options to purchase 81,085 shares of common stock. | |
(12) | Includes options to purchase 20,000 shares of common stock. Also includes 9,081,600 shares of common stock, warrants to purchase 2,064,399 shares of common stock and options to purchase 181,631 shares of common stock, all of which are held by Psilos Group Partners II-S, an entity with which Mr. Eichler is |
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affiliated. Mr. Eichler disclaims beneficial ownership of all such shares, warrants and options, except to the extent of any pecuniary interest therein. | ||
(13) | Includes options to acquire 233,904 shares of common stock. Also includes 194,604 shares of common stock held by Edonjes LLC, of which Mr. Reichs children are the beneficial owners. Mr. Reich disclaims beneficial interest of the shares of common stock held by Edonjes LLC, except to the extent of any pecuniary interest therein. | |
(14) | Includes options to acquire 70,000 shares of common stock. | |
(15) | Includes options to acquire 70,000 shares of common stock. | |
(16) | Includes options to acquire 20,000 shares of common stock. |
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
Committee Interlocks and Insider Participation
The current members of our compensation committee are
Dr. Goldschmidt, Dr. Lerner and Mr. Eichler. None
of these individuals was at any time since January 1, 2006
or at any time prior thereto an officer or employee of ours.
During the last completed fiscal year, none of our executive
officers served as a member of the board of directors or
compensation committee of any entity that during such period had
one or more executive officers serving as a member of our board
of directors or compensation committee.
Compensation
Committee Report
The compensation committee reviewed and discussed the
Compensation Discussion and Analysis (appearing below) with
management; and, based such review and discussion, the
compensation committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in
this Information Statement on Schedule 14C. In 2006, we did
not have a compensation committee.
Dr. Lerner, Chairman.
Dr. Goldschmidt, compensation committee member.
Mr. Eichler, compensation committee member.
COMPENSATION
DISCUSSION AND ANALYSIS
The primary goals of our board of directors with respect to
executive compensation will be to attract and retain talented
and dedicated executives, to tie annual and long-term cash and
stock incentives to achievement of specified performance
objectives, and to create incentives which will result in
stockholder value creation. To achieve these goals, we have
formed a compensation committee to recommend executive
compensation packages to our board of directors that are
generally based on a mix of salary, discretionary bonus and
equity awards. Although we have not adopted any formal
guidelines for allocating total compensation between equity
compensation and cash compensation, we intend to implement and
maintain compensation plans that tie a substantial portion of
our executives overall compensation to achievement of
corporate goals.
Benchmarking
of Cash and Equity Compensation
We have not retained a compensation consultant to review our
policies and procedures with respect to executive compensation.
We have, in the past, conducted an annual benchmark review of
the aggregate level of our executive compensation, as well as
the mix of elements used to compensate our executive officers.
This review is based on a survey of executive compensation paid
by peer companies in the pharmaceutical industry of similar size
and stage of development. In addition, we have historically
taken into account input from other independent members of our
board of directors and publicly available data relating to the
compensation practices and policies of other companies within
and outside our industry.
6
We may retain the services of third-party executive compensation
specialists from time to time in connection with the
establishment of cash and equity compensation and related
policies.
Elements
of Compensation
We will evaluate individual executive performance with a goal of
setting compensation at levels the board or any applicable
committee thereof believes are comparable with executives in
other companies of similar size and stage of development while
taking into account our relative performance and our own
strategic goals. The compensation received by our executive
officers consists of the following elements:
Base Salary. Base salaries for our
executives are established based on the scope of their
responsibilities and individual experience, taking into account
competitive market compensation paid by other companies for
similar positions within the pharmaceutical industry.
Discretionary Annual Bonus. In addition
to base salaries, our compensation committee has the authority
to award discretionary annual bonuses to our executive officers.
The annual incentive bonuses are intended to compensate officers
for achieving corporate goals and value-creating milestones.
Each executive officer is eligible for a discretionary annual
bonus up to an amount equal to a specified percentage of such
executive officers salary.
Long-Term Incentive Program. We believe
that long-term performance is achieved through an ownership
culture that encourages such performance by our executive
officers through the use of stock and stock-based awards. We
believe that the use of equity and equity-based awards offers
the best approach to achieving our compensation goals.
Severance and
Change-in-Control
Benefits. Neither our sole executive officer
in 2006 nor our current executive officers are entitled to
severance or change of control benefits.
Restricted Stock Grants or Awards. We
did not grant any restricted stock or restricted stock awards
pursuant to our equity benefit plans to any of our executive
officers in the year ended December 31, 2006. However, our
compensation committee, in its discretion, may in the future
elect to make such grants to our executive officers if it deems
it advisable.
Other Compensation. We intend to
continue to maintain the current benefits and perquisites for
our executive officers; however, our compensation committee, in
its discretion, may in the future revise, amend or add to the
benefits and perquisites of any executive officer if it deems it
advisable.
Summary
Compensation Table
The following table sets forth a summary for the fiscal year
ended December 31, 2006 of the cash and non-cash
compensation awarded, paid or accrued by the Company to our sole
executive officer in 2006.
Stock Award(s) |
Option Award(s) |
All Other |
||||||||||||||||||||||||||
Name and Principal Position(1)
|
Year | Salary ($) | Bonus ($) | ($) | ($) | Compensation ($) | Total ($) | |||||||||||||||||||||
John A. Paganelli(2)
|
2006 | 25,000 | | | 810 | $ | 75,000 | (3) | 100,810 | |||||||||||||||||||
Interim Chief Executive Officer
|
(1) | None of our current executive officers received any compensation from the Company prior to 2007. Our current Chief Executive Officer, Dr. Phillip Frost, receives an annual base salary of $325,000, our current Chief Technical Officer, Dr. Jane Hsiao, receives an annual base salary of $300,000, our current Executive Vice-President Administration, Steven D. Rubin, receives an annual base salary of $300,000, and our Senior Vice President and Chief Financial Officer, Dr. Rao Uppaluri, receives an annual base salary of $275,000. In addition, our former President for part of 2007, Dr. Dale Pfost, who joined us after our acquisition of Acuity Pharmaceuticals, Inc., a privately-held Delaware corporation (Acuity), on March 27, 2007 (the Acquisition Date), received a salary of $325,000 per year for the period beginning on the Acquisition Date and ended May 31, 2007. None of our current executive officers have employment agreements with the Company. | |
(2) | Mr. Paganelli served as our interim Chief Executive Officer from June 29, 2005 through the consummation of our acquisition of Acuity. Mr. Paganelli is no longer an executive officer of the Company. | |
(3) | Includes $75,000 of director fees for Mr. Paganelli. |
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Grants of
Plan-Based Awards in 2006
The following table presents information concerning grants of
plan-based awards to each of the executive officers and certain
other persons during the year ended December 31, 2006. The
exercise price per share of each option granted to our sole
executive officer during 2006 was equal to the fair market value
of our common stock, as determined by our compensation committee
on the date of the grant.
Grant Date |
||||||||||||||||
Number of Securities |
Exercise Price |
Fair Value of |
||||||||||||||
Name
|
Grant Date | Underlying Options | Per Share | Option Awards(1) | ||||||||||||
John A. Paganelli (1)(2)
|
1/3/2006 | 5,000 | $ | 0.41 | $ | 205 | ||||||||||
4/3/2006 | 5,000 | $ | 0.41 | $ | 205 | |||||||||||
7/3/2006 | 5,000 | $ | 0.41 | $ | 205 |
(1) | Amounts reflect the total fair value of stock options granted in 2006, calculated in accordance with SFAS No. 123(R). | |
(2) | Mr. Paganelli served as our interim Chief Executive Officer from June 29, 2005 through the date of the Acquisition. Mr. Paganelli is no longer an executive officer of the Company. |
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information as of
December 31, 2006 with respect to equity awards granted by
the Company to our sole executive officer in 2006.
Option Awards | Stock Awards | |||||||||||||||||||||||
Number of |
Number of |
Number of Shares |
Market Value of |
|||||||||||||||||||||
Securities |
Securities |
or Units of |
Shares or Units of |
|||||||||||||||||||||
Underlying |
Underlying |
Stock That |
Stock That |
|||||||||||||||||||||
Unexercised Options |
Unexercised Options |
Option Exercise |
Option Expiration |
Have Not |
Have Not |
|||||||||||||||||||
Name
|
(#) Exercisable | (#) Unexercisable | Price ($) | Date | Vested (#) | Vested ($) | ||||||||||||||||||
John A. Paganelli(1)
|
5,000(2 | ) | | 0.41 | 07/03/2016 | | | |||||||||||||||||
5,000(2 | ) | | 0.41 | 04/03/2016 | | | ||||||||||||||||||
5,000(2 | ) | | 0.41 | 01/03/2016 | | | ||||||||||||||||||
5,000(2 | ) | | 0.45 | 10/04/2015 | | | ||||||||||||||||||
5,000(2 | ) | | 0.42 | 07/01/2015 | | | ||||||||||||||||||
5,000(2 | ) | | 0.40 | 04/01/2015 | | | ||||||||||||||||||
5,000(2 | ) | | 0.32 | 01/03/2015 | | | ||||||||||||||||||
5,000(2 | ) | | 0.67 | 10/01/2014 | | | ||||||||||||||||||
5,000(2 | ) | | 0.71 | 07/01/2014 | | | ||||||||||||||||||
10,000(2 | ) | | 0.89 | 04/27/2014 | | |
(1) | All options were granted to Mr. Paganelli during his tenure as interim Chief Executive Officer from June 29, 2005 through the consummation of our acquisition of Acuity. | |
(2) | This option was fully vested on the grant date. |
8
Director
Compensation
The following table sets forth information with respect to
compensation of directors of the Company during fiscal year 2006.
Nonqualified |
||||||||||||||||||||||||||||
Fees Earned |
Non-Equity |
Deferred |
||||||||||||||||||||||||||
or Paid |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||
in Cash |
Stock Award |
Awards |
Compensation |
Earnings |
Compensation |
Total |
||||||||||||||||||||||
Name
|
($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Robert Baron
|
50,000 | | 810 | | | | 50,810 | |||||||||||||||||||||
David A, Eichler(1)
|
| | | | | | | |||||||||||||||||||||
Michael Reich(1)
|
| | | | | | | |||||||||||||||||||||
Phillip Frost, M.D.(1)
|
||||||||||||||||||||||||||||
Steven D. Rubin(1)
|
| | | | | | | |||||||||||||||||||||
Jane H. Hsiao, Ph.D.(1)
|
| | | | | | | |||||||||||||||||||||
John Paganelli
|
25,000 | 810 | $ | 75,000 | 100,810 | |||||||||||||||||||||||
Richard Lerner, M.D.(1)
|
| | | | | | | |||||||||||||||||||||
Melvin Rubin, M.D.(1)
|
| | | | | | | |||||||||||||||||||||
Pascal Goldschmidt, M.D.(1)
|
| | | | | | | |||||||||||||||||||||
David Lee Spencer
|
30,000 | | 810 | | | | 30,810 | |||||||||||||||||||||
Robert Benou
|
30,000 | | 810 | | | | 30,810 |
(1) | These persons did not become directors until 2007. |
On September 19, 2007, our Board of Directors, upon
recommendation of the Compensation Committee, approved certain
changes in non-employee director compensation. Previously,
non-employee directors received an option to acquire
15,000 shares of the Companys common stock, and the
chairman of each of the committees of the Board received an
option to acquire an additional 5,000 shares of Company
common stock. Effective as of September 19, 2007,
(i) each non-employee director is entitled to receive:
(a) an annual retainer of $10,000, payable in quarterly
installments; and (b) an option to acquire
40,000 shares of the Companys common stock upon
initial appointment to the Board and an option to acquire
20,000 shares each year thereafter; and (ii) the
chairman of each committee of the Board shall receive $5,000
annually, payable in quarterly installments.
AUTHORIZATION
OR ISSUANCE OF SECURITIES OTHERWISE THAN FOR EXCHANGE
As of December 4, 2007, our Board of Directors and certain
stockholders, holding a majority of our outstanding capital
stock entitled to vote, approved the issuance (the
Issuance) to the members of The Frost Group, LLC
(the Frost Group), a private investment group
controlled by Dr. Phillip Frost, M.D., our Chairman
and CEO, an aggregate of 10,869,565 shares (the
Shares) of our common stock, par value $0.01 per
share, in exchange for a $20 million investment in the
Company. The Shares will be issued at a price of $1.84 per
share, which represents a discount of approximately 40% to the
average trading price of our common stock on the American Stock
Exchange (AMEX) for the five trading days
immediately preceding the date as of which the Board and
stockholders approved the transaction.
The principal member of the Frost Group is Frost Gamma
Investments Trust, of which Dr. Phillip Frost, M.D.,
is the sole trustee. Additionally, the Frost Group includes in
its membership Dr. Jane Hsiao, our Vice Chairman and Chief
Technical Officer, Dr. Rao Uppaluri, our Chief Financial
Officer, and Mr. Steven D. Rubin, our Executive Vice
President-Administration. Following issuance of the Shares, the
members of the Frost Group will beneficially own an aggregate of
approximately 55.2% of our issued and outstanding common stock.
The Shares will be issued in a transaction not involving any
public offering and will therefore be restricted
securities as defined by Rule 144 promulgated under
the Securities Act of 1933, as amended. Additionally, the Shares
will be subject to a two-year lockup, during which time the
members of the Frost Group may not sell the Shares. The proceeds
from the investment will be used to fund research and
development efforts, including the
9
ongoing Phase III trial for bevasiranib and for general
working capital. The Issuance of the Shares will not affect the
rights of our existing security holders.
Our audit committee and Board reviewed the proposed Issuance.
Our audit committee discussed and considered, among other
things, our cash needs, current market conditions, market
discounts in arms-length private-investment-in-public-entity
(PIPE) transactions, the recent arms length sale of a large
number of our securities by an institutional investor at a price
comparable to that proposed by the members of the Frost Group,
the recent volatility and decline in our stock price, the
pending expiration of
lock-ups
covering a significant amount of the Companys securities
and the impact such expiration would have on the Companys
stock price and capital raising efforts, purchases by
Dr. Frost from time to time in the open market, and timing
and expense considerations associated with various alternative
financing strategies, as well as other alternatives available to
obtain financing, if any. Upon consideration of the foregoing,
our audit committee approved the Issuance in exchange for the
substantial investment in our Company by the members of the
Frost Group. This capital inflow will provide additional
financial resources to support our ongoing efforts to bring our
ophthalmic drugs and products to the market. The Issuance is
solely a reasonable means of obtaining financing and is not
compensatory. Notwithstanding the foregoing, AMEX interprets any
issuance of shares below market to be compensatory under
Section 711 of the AMEX Company Guide and requires
stockholder approval of such issuances. Accordingly, we have
obtained stockholder approval of the Issuance and we are
delivering this Information Statement to stockholders.
Subject to the prior rights of the holders of any shares of
preferred stock currently outstanding or which may be issued in
the future, the holders of the common stock are entitled to
receive dividends from our funds legally available therefor
when, as and if declared by our board of directors, and are
entitled to share ratably in all of our assets available for
distribution to holders of common stock upon the liquidation,
dissolution or
winding-up
of our affairs subject to the liquidation preference, if any, of
any then outstanding shares of preferred stock. Holders of our
common stock do not have any preemptive, subscription,
redemption or conversion rights. Holders of our common stock are
entitled to one vote per share on all matters which they are
entitled to vote upon at meetings of stockholders or upon
actions taken by written consent pursuant to Delaware corporate
law. The holders of our common stock do not have cumulative
voting rights, which means that the holders of a plurality of
the outstanding shares can elect all of our directors. All of
the shares of our common stock currently issued and outstanding
are fully-paid and nonassessable. No dividends have been paid to
holders of our common stock since our incorporation, and no cash
dividends are anticipated to be declared or paid in the
reasonably foreseeable future.
WHERE YOU
CAN OBTAIN ADDITIONAL INFORMATION
We are required to file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may
read and copy any document we file at the SECs public
reference rooms at 100 F Street, N.E,
Washington, D.C. 20549. You may also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the SEC at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for more information on the operation of the public reference
rooms. Copies of our SEC filings are also available to the
public from the SECs web site at www.sec.gov.
10