DEF 14A: Definitive proxy statements
Published on December 13, 2005
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
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o |
Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only
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(as permitted by Rule 14a-6(e)(2)) |
x |
Definitive
Proxy Statement
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o |
Definitive
Additional Materials
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o |
Soliciting
Material Under Rule 14a-12
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EXEGENICS
INC.
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1)
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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______________________________________________
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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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o
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Fee
paid previously with preliminary materials.
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o
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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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______________________________________________
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2)
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Form,
Schedule or Registration Statement No:
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______________________________________________
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3)
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Filing
party:
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______________________________________________
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4)
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Date
Filed:
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______________________________________________
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eXegenics
Inc.
1250
Pittsford-Victor Road
Building
200, Suite 280
Pittsford,
New York 14534
December
9, 2005
Dear
Stockholder,
We
cordially invite you to attend our 2005 annual meeting of stockholders to
be
held at 9:00 a.m. on Friday, January 6, 2006 at 1250 Pittsford-Victor Road,
Building 200, Suite 280, Pittsford, New York 14534. The attached notice
of
annual meeting and proxy statement describe the business we will conduct
at the
meeting and provide information about eXegenics, Inc. that you should consider
when you vote your shares.
If
you do
not plan to attend the Annual Meeting, please sign, date and return the enclosed
proxy promptly in the accompanying reply envelope. If you decide to attend
the
Annual Meeting and wish to change your proxy vote, you may do so by voting
in
person at the Annual Meeting.
We
look
forward to seeing you at the Annual Meeting.
Sincerely, | ||
/s/ JOHN A. PAGANELLI | ||
John A. Paganelli | ||
Interim Chief Executive Officer | ||
Chairman of the Board |
YOUR
VOTE IS IMPORTANT
In
order
to assure your representation at the Annual Meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return
it
in the enclosed envelope (to which no postage need be affixed if mailed in
the
United States).
eXegenics
Inc.
1250
Pittsford-Victor Road
Building
200, Suite 280
Pittsford,
New York 14534
December
9, 2005
NOTICE
OF 2005 ANNUAL MEETING OF STOCKHOLDERS
TIME:
9:00 a.m.
DATE:
January 6, 2006
PLACE:
Our Office (1250 Pittsford-Victor Road, Building 200, Suite 280, Pittsford,
New York 14534)
PURPOSES:
1.
To
elect four directors to serve one-year terms expiring in 2006.
2.
To
ratify the appointment of Rotenberg & Company, LLP as
the
company’s independent auditors for the fiscal year ending December 31,
2005.
3.
To
transact such other business as may properly come before the Annual Meeting
or
any adjournment or postponement thereof.
The
foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. All stockholders of record at the close of business
on
December 5, 2005 will be entitled to vote at the Annual Meeting and at any
adjournment or postponement thereof. A list of stockholders entitled to vote
at
the Annual Meeting will be available for inspection at the Annual Meeting
and,
while the transfer books remain open prior thereto, at eXegenic’s offices during
regular business hours.
By Order of the Board of Directors | ||
/s/ JOHN A. PAGANELLI | ||
John A. Paganelli | ||
Chairman |
YOUR
VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ
THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
eXegenics
Inc.
1250
Pittsford-Victor Road
Building
200, Suite 280
Pittsford,
New York 14534
(585)
218-4368
PROXY
STATEMENT FOR THE EXEGENICS INC.
2005
ANNUAL MEETING OF STOCKHOLDERS
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING
WHO
MAY
VOTE:
You
may
vote if you were a record owner of our stock (common and/or preferred) at
the
close of business on December 5, 2005.
STOCKHOLDERS’
LIST:
A
list of
stockholders of record will be available during the 10 days prior to the
meeting
for examination by shareholders for any purpose germane to the meeting during
normal business hours at our offices at the address above. This list will
also
be available at and for the duration of the meeting on January 6,
2006.
WHY
DID
YOU SEND ME THIS PROXY STATEMENT?
We
sent
you this proxy statement and the enclosed proxy card because our Board of
Directors is soliciting your proxy to vote at the 2005 annual meeting of
stockholders and any adjournments of the meeting. This proxy statement
summarizes the information you need to know to vote at the annual meeting.
You
do not need to attend the annual meeting to vote your shares. Instead, you
may
vote your shares by marking, signing, dating and returning the enclosed proxy
card. In addition, certain of you may be able to vote your shares either
via the
Internet or by telephone.
On
approximately December 12, 2005 we began sending this proxy statement, the
attached notice of annual meeting and the enclosed proxy card to all
stockholders entitled to vote at the meeting. Only stockholders who owned
our
common stock and/or series A preferred stock at the close of business on
December 5, 2005 are entitled to vote at the annual meeting. On this record
date, there were 16,877,818 shares of our common stock outstanding and 1,020,047
shares of our series A preferred stock outstanding. Our common stock and
series
A preferred stock are our only classes of voting stock. We are also sending,
along with this proxy statement, our 2004 annual report, which includes our
financial statements for the fiscal year ended December 31, 2004.
HOW
MANY
VOTES DO I HAVE?
Each
share of our common stock and series A preferred stock that you own entitles
you
to one vote.
HOW
DO I
VOTE?
You
may
vote by signing and mailing your proxy card, or according to the instructions
on
your proxy card.
HOW
DO I
VOTE BY PROXY?
Whether
you plan to attend the annual meeting or not, we urge you to complete, sign
and
date the enclosed proxy card and to return it promptly in the envelope provided.
Returning the proxy card will not affect your right to attend the annual
meeting
and vote.
If
you
properly fill in your proxy card and send it to us in time, your “proxy” (the
individual named on your proxy card) will vote your shares as you have directed.
If you sign the proxy card but do not make specific choices, your proxy will
vote your shares as recommended by the Board of Directors.
HOW
DOES
THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
The
Board
of Directors recommends that you vote as follows:
-
“FOR”
the election of the nominees for director; and
-
“FOR”
the ratification of the selection of independent auditors for our fiscal
year
ending December 31, 2005.
If
any
other matter is presented, your proxyholder will vote your shares in accordance
with his best judgment. At the time this proxy statement was printed, we
knew of
no matters that needed to be acted on at the annual meeting, other than those
discussed in this proxy statement.
MAY
I
REVOKE MY PROXY?
If
you
give us your proxy, you may revoke it at any time before it is exercised.
You
may revoke your proxy in any one of the following ways:
-
You may
send in another proxy at a later date;
-
If
telephone or Internet voting instructions are included with your proxy card,
you
may vote either via the Internet or by telephone at a later date;
-
You may
notify our Secretary in writing before the annual meeting that you have revoked
your proxy; or
-
You may
vote in person at the annual meeting.
HOW
DO I
VOTE IN PERSON?
If
you
plan to attend the annual meeting and vote in person, we will give you a
ballot
when you arrive. However, if your shares are held in the name of your broker,
bank or other nominee, you must bring an account statement or letter from
the
nominee indicating that you were the beneficial owner of the shares on December
5, 2005, the record date for voting.
WHAT
VOTE
IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL
1: ELECT DIRECTORS: The four nominees for director who receive the most votes
(also known as a “plurality” of the votes) will be elected.
PROPOSAL
2: RATIFY SELECTION OF AUDITORS: The affirmative vote of a majority of the
votes
present or represented by proxy and entitled to vote at the annual meeting
is
required to ratify the selection of independent auditors.
WHAT
IS
THE EFFECT OF BROKER NON-VOTES, WITHHOLDINGS AND ABSTENTIONS?
-
Broker
Non-Votes: If a broker that is a record holder of stock returns a signed
proxy,
the shares of stock held by such broker will be considered present at the
meeting and will be counted toward establishing a quorum, whether or not
the
broker has discretionary authority to vote on each matter. If a signed proxy
is
received from a broker that does not have discretionary authority to vote
on one
or more matters, the proxy will be considered a “broker non-vote” for that
matter. Broker non-votes will have no effect on the outcome of the election
of
directors and the ratification of the appointment of the auditors for the
current fiscal year.
-
Withholdings: Withholding authority to vote for a nominee for director will
have
no effect on the outcome of the vote.
-
Abstentions: Because abstentions are treated as shares present or represented
and entitled to vote at the annual meeting, abstentions will have the same
effect as votes against the proposal.
IS
VOTING
CONFIDENTIAL?
We
will
keep all the proxies, ballots and voting tabulations private. We only let
our
Inspector of Election examine these documents. We will not disclose your
vote to
management unless it is necessary to meet legal requirements. We will, however,
forward to management any written comments you make, on the proxy card or
elsewhere.
WHAT
ARE
THE COSTS OF SOLICITING THESE PROXIES?
We
will
pay all of the costs of soliciting these proxies. Our directors, officers
and
employees may solicit proxies by mail, telephone, telegram, telex, fax, email
and in person. No additional compensation will be paid for such solicitation.
We
will also ask banks, brokers and other institutions, nominees and fiduciaries
to
forward these proxy materials to their principals and to obtain authority
to
execute proxies. We will then reimburse them for their expenses.
WHAT
CONSTITUTES A QUORUM FOR THE MEETING?
The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of our common stock is necessary to constitute a quorum at the meeting.
Votes of stockholders of record who are present at the meeting in person
or by
proxy, abstentions, and broker non-votes are counted for purposes of determining
whether a quorum exists.
ATTENDING
THE ANNUAL MEETING
The
annual meeting will be held at 9:00 a.m. on Friday, January 6, 2006 at our
office, located at 1250 Pittsford-Victor Road, Building 200, Suite 280,
Pittsford, New York 14534. When you arrive at our office, signs will direct
you
to the appropriate meeting room. You need not attend the annual meeting in
order
to vote.
VOTING
To
ensure
that your vote is recorded promptly, please vote as soon as possible, even
if
you plan to attend the annual meeting in person. 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.
DISSENTERS’
RIGHTS
Under
Delaware law, stockholders are not entitled to dissenters’ rights of appraisal
on any proposal referred to herein.
HOUSEHOLDING
OF ANNUAL DISCLOSURE DOCUMENTS
In
December 2000, the Securities and Exchange Commission adopted a rule concerning
the delivery of annual disclosure documents. The rule allows us or your broker
to send a single set of our annual report and proxy statement to any household
at which two or more of our shareholders reside, if we or your broker believe
that the shareholders are members of the same family. This practice, referred
to
as “householding,” benefits both you and us. It reduces the volume of duplicate
information received at your household and helps to reduce our expenses.
The
rule applies to our annual reports, proxy statements and information statements.
Once you receive notice from your broker or from us that communications to
your
address will be “householded,” the practice will continue until you are
otherwise notified or until you revoke your consent to the practice. Each
shareholder will continue to receive a separate proxy card or voting instruction
card.
If
your
household received a single set of disclosure documents this year, but you
would
prefer to receive your own copy, such requests should be addressed to eXegenics
Inc., 1250 Pittsford-Victor Road, Building 200, Suite 280, Pittsford,
New
York 14534, and our telephone number at such office is (585) 218-4368. You
may
also contact our transfer agent, American Stock Transfer & Trust Company, by
calling their toll free number, 1-800-937-5449.
If
you do
not wish to participate in “householding” and would like to receive your own set
of our annual disclosure documents in future years, follow the instructions
described below. Conversely, if you share an address with another eXegenics
shareholder and, together, both of you would like to receive only a single
set
of our annual disclosure documents, follow these instructions:
-
If your
eXegenics shares are registered in your own name, please contact our transfer
agent, American Stock Transfer & Trust Company, and inform them of your
request by calling them at 1-800-937-5449 or writing them at 59 Maiden Lane,
Plaza Level, New York, New York 10038, Attention: Shareholder
Services.
-
If a
broker or other nominee holds your eXegenics shares, please contact the broker
or other nominee directly and inform them of your request. Be sure to include
your name, the name of your brokerage firm and your account number.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
table
below shows the number of shares of our common stock and series A preferred
stock beneficially owned as of December 5, 2005 by the following
persons:
-
each
stockholder known by us to beneficially own more than 5% of the outstanding
shares of either the common stock or series A preferred stock;
-
each
current member of the Board of Directors;
-
our
President and Chief Executive Officer and each of our next most highly
compensated executive officers who earned more than $100,000 during the fiscal
year ended December 31, 2004, collectively referred to below as our named
executive officers; and
-
and all
directors and named executive officers as a group.
To
our
knowledge and unless otherwise indicated, each person in the table has sole
voting power and investment power, or shares such power with his or her spouse,
with respect to all shares of capital stock listed as owned by such
person.
The
number of shares beneficially owned by each stockholder is determined under
the
rules promulgated by the SEC. The information is not necessarily indicative
of
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and any shares as to which the individual
has
the right to acquire beneficial ownership within 60 days after December 5,
2005
through the exercise of any option, warrant or other right. The inclusion
in the
following table of those shares, however, does not constitute an admission
that
the named stockholder is a direct or indirect beneficial owner of those
shares.
Common
Stock
|
Series
A Preferred
Stock
|
|||||||||||||||
Name
and Address of
Beneficial Owner(1)
|
Number
|
Percent
of
Class(2)
|
Number
|
Percent
of
Class(3)
|
Percent
of all
Voting
Securities(4)
|
|||||||||||
Bruce
Meyers (5)(9)
|
1,263,328
|
7.17
|
%
|
39,051
|
3.83
|
%
|
7.00
|
%
|
||||||||
J
Morton Davis (14).
|
892,500
|
5.32
|
%
|
—
|
—
|
5.01
|
%
|
|||||||||
John
A. Paganelli (10).
|
90,000
|
*
|
—
|
—
|
*
|
|||||||||||
Robert
A. Baron (11)
|
109,800
|
*
|
—
|
—
|
*
|
|||||||||||
Robert
Benou (12)
|
65,000
|
*
|
—
|
—
|
*
|
|||||||||||
David
Lee Spencer, M.D (13).
|
839,100
|
4.99
|
%
|
—
|
—
|
4.71
|
%
|
|||||||||
Ronald
L. Goode, Ph.D. (6)
|
311,700
|
1.86
|
%
|
—
|
—
|
1.75
|
%
|
|||||||||
David
E. Riggs (7)
|
82,200
|
*
|
—
|
—
|
*
|
|||||||||||
David
Hostelley
|
—
|
—
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—
|
—
|
—
|
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Directors
and executive officers as a
group
(5 persons)(8)
|
1,111,100
|
6.56
|
%
|
—
|
—
|
6.24
|
%
|
*
Less
than One Percent.
(1)
|
Except
as otherwise indicated, the address of each beneficial owner is
c/o
eXegenics
Inc., 1250 Pittsford-Victor Road, Building 200, Suite 280,
Pittsford,
New York 14534.
|
(2)
|
Calculated
on the basis of 16,777,818 shares of common stock issued and outstanding
as of December 5, 2005 except that shares of common stock underlying
options and warrants exercisable within 60 days of the date hereof
are
deemed to be outstanding for purposes of calculating the beneficial
ownership percentage of securities of the holder of such options
or
warrants. This calculation excludes shares of common stock issuable
upon
the conversion of series A preferred
stock.
|
(3) Calculated
on the basis of 1,020,047 shares of series A preferred stock outstanding
as of
December 5, 2005.
(4)
|
Calculated
on the basis of an aggregate of 16,777,818 shares of common stock
and
1,020,047 shares of series A preferred stock issued and outstanding
as of
December 5, 2005, except that shares of common stock underlying
options
and warrants exercisable within 60 days of the date hereof are
deemed to
be outstanding for purposes of calculating beneficial ownership
of
securities of the holder of such options or warrants. This calculation
excludes shares of common stock issuable upon the conversion of
series A
preferred stock.
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(5)
|
Mr.
Meyers’ address is c/o Meyers Associates, L.P., 45 Broadway, New York,
New
York 10006. The amount shown for Mr. Meyers includes: 859,645 shares
owned
by Mr. Meyers; 4,740 shares owned by the Bruce Meyers Keogh; 33,800
shares
of the Company’s common stock owned by the Joseph Rita and Bruce Meyers
Foundation for Life Inc. (Mr. Meyers is the Chairman of the Board
of the
Joseph Rita and Bruce Meyers Foundation for Life), 39,051 shares
of the
Company’s common stock issuable upon the conversion of 39,051 shares of
preferred stock owned by Bruce Meyers; and the following securities
owned
by Meyers Associates, L.P. of which Mr. Meyers, is an executive
officer,
the sole shareholder and director of the general partner of Meyers
Associates, L.P.; 76,092 shares of common stock, and 250,000 shares
of
common stock issuable upon the exercise of currently exercisable
five-year
warrants issued in 2002 to Meyers Associates, L.P. A portion of
the shares
beneficially owned by Mr. Meyers were obtained for services provided
by
Meyers Associates, L.P. a registered broker dealer. The services
provided
by Meyers Associates, L.P. included acting as financial advisor,
placement
agent and/or underwriter to the Company. The percent of the class
of
common stock of the Company owned by Mr. Meyers is Based on the
Company’s
having 17,066,869 shares of common stock outstanding, which assumes
the
conversion of currently exercisable warrants issued to Meyers Associates,
L.P. into 250,000 shares of the Company’s common stock and the conversion
of Mr. Meyer’s series A preferred stock to common stock.
|
(6)
|
Ownership
consists of 311,700 shares of common stock, 200,000 of which were
acquired
upon Dr. Goode’s exercise of options in May 2004. Dr. Goode’s address is
3701 Cragmont Avenue, Dallas, Texas 75205. Beneficial ownership
information taken from Dr. Goode’s disclosure to the
Company.
|
(7)
|
Ownership
consists of 7,200 shares of common stock and options to purchase
75,000
shares of common stock currently exercisable or exercisable within
60 days
of the date hereof. Does not include options to purchase 125,000
shares of
common stock not exercisable within 60 days of the date
hereof.
|
(8) | Ownership consists of 951,100 shares of common stock and options to purchase an aggregate of 160,000 shares of common stock, which are currently exercisable or exercisable within 60 days of the date hereof. Does not include options to purchase 125,000 shares of common stock not exercisable within 60 days of the date hereof. |
(9) |
Beneficial
ownership information taken from Schedule 14A file number 03896368
filed
September 15, 2003.
|
(10) |
Ownership
consists of 50,000 shares of common stock and options to purchase
40,000
shares of common stock currently exercisable or exercisable within
60 days
of the date hereof.
|
(11)
|
Ownership
consists of 69,800 shares of common stock and options to purchase
40,000
shares of common stock currently exercisable or exercisable within
60 days
of the date hereof.
|
(12)
|
Ownership
consists of 25,000 shares of common stock and options to purchase
40,000
shares of common stock currently exercisable or exercisable within
60 days
of the date hereof.
|
(13) | Ownership consists of 799,100 shares of common stock and options to purchase 40,000 shares of common stock currently exercisable or exercisable within 60 days of the date hereof. |
(14) | Beneficial ownership information and the information under this footnote taken from Schedule 13G file number 005-51671 filed April 7, 2005. Includes 248,000 shares of common stock owned by D.H. Blair Investment Banking Corp. (“Blair Investment”), and (ii) 644,500 shares owned by Rosalind Davidowitz (Mr. Davis’ wife). Mr. Davis’ business address is 44 Wall Street, New York, New York 10005. Mrs. Davidowitz’s address is 7 Sutton Place South, Lawrence, New York 11559. As of April 5, 2005 Rosalind Davidowitz may be deemed to beneficially own 892,500 shares of common stock (644,500 shares owned directly by Rosalind Davidowitz, and 248.000 share of common stock owned by Blair Investment). Mr. David has sole power to vote or to direct the vote, to dispose or to direct the disposition of those shares owned by Blair Investment. Ms. Davidowitz has sole power to vote or to direct the disposition of those shares owned directly by her. Each of Ms. Davidowitz and Mr. Davis do not deem the filing of the aforementioned Schedule 13G as an admission by each of beneficial ownership of the securities owned by the other. |
MANAGEMENT
BOARD
OF DIRECTORS
Under
our
Bylaws, the number of members of our Board of Directors is fixed from time
to
time by the Board of Directors, and directors serve in office until our next
annual meeting of stockholders and until their successors have been elected
and
qualified. On November 28, 2005, our Board of Directors voted to set the
size of
the Board of Directors at four and to nominate John A. Paganelli, Robert
Benou,
Robert Baron, and Dr. David Spencer for election at the Meeting.
Set
forth
below are the names of the persons currently serving as a director, their
ages,
their offices in the Company, if any, their principal occupations or employment
for the past five years, the length of their tenure as directors and the
names
of other public companies in which such persons hold directorships.
The
following information is furnished as to each nominee for election as a director
and each of the current directors:
Name
|
Age
|
Position
with the Company
|
||
John
A. Paganelli
|
71
|
Director,
Chairman of the Board
|
||
Robert
A. Baron
|
65
|
Director
|
||
Robert
Benou
|
71
|
Director
|
||
David
Lee Spencer, M.D.
|
61
|
Director
|
John
A. Paganelli
was
President and Chief Executive Officer of Transamerica Life Insurance Company
of
New York from 1992 to 1997. Since 1987, Mr. Paganelli has been a partner
in RFG
Associates, a financial planning organization. Mr. Paganelli is the Manager
of
Pharos Systems Partners, LLC, a company formed to raise capital to purchase
the
controlling interest in Pharos Systems International, a software development
company. Mr. Paganelli is Chairman of the Board of Pharos Systems International.
He was Vice President and Executive Vice President of PEG Capital Management,
an
investment advisory organization, from 1987 until 2000. From 1980 to January
2003, Mr. Paganelli was an officer and director-shareholder of Mike Barnard
Chevrolet, Inc., an automobile dealership. Mr. Paganelli holds a BA degree
in
English from the Virginia Military Institute.
Robert
A. Baron
has been
the President of Cash City, Inc. since 1999. Cash City is a payday advance
and
check cashing business. From 1997 to 1999 Mr. Baron was the President of
East
Coast Operations for CSS/TSC, Inc., a distributor of blank t-shirts and fleece
and accessories and a subsidiary of Tultex, Inc., a publicly held company.
From
1986 to 1997, Mr. Baron was the chairman of T shirt City, Inc., a privately
held
company. From 1993 to 1997, Mr. Baron was a member of the Board of Directors
of
Suburban Bank Corp. When Mr. Baron was on Suburban’s board, its common stock was
traded on NASDAQ. Mr. Baron has a B.S. in Business from Ohio State
University.
Robert
S. Benou
has been
a director of Conolog Corporation, a publicly held company that provides
engineering technical personnel placement and manufactures a line of digital
signal processing systems, since 1968 and served as its President from 1968
until May 2001 when he was elected Conolog’s Chairman and Chief Executive
Officer. Mr. Benou has also been a member of the Board of Directors of
Diversified Security Solutions, Inc., since June 2001. Diversified Security
Solutions, Inc. is a publicly held company that is a single-source/turn-key
provider of technology-based security solutions for medium and large companies
and government agencies. Mr. Benou is also a member of Diversified Security
Solutions’ audit committee. Mr. Benou is a graduate of Victoria College and
holds a BS degree from Kingston College, England and a BSEE from Newark College
of Engineering, in addition to industrial management courses at Newark College
of Engineering.
David
Lee Spencer, M.D.
has been
an orthopedic surgeon since 1977. Dr. Spencer has been a Clinical Associate
in
orthopedic surgery at the University of Illinois since 1999. Dr. Spencer
is also
an attending surgeon at the University of Illinois Hospital Medical Center
and
Lutheran General Hospital. Dr. Spencer received his B.A. and M.D. degrees
from
the University of Iowa.
Committees
of the Board of Directors and Meetings
Committee
Structure
During
fiscal 2004, our Board had three permanent committees (Audit Committee,
Compensation Committee and Nominating Committee) and one ad hoc committee
(Business Opportunities Search Committee).
Meeting
Attendance
During
the fiscal year ended December 31, 2004, there were 10 meetings of our Board,
and the various committees of the Board met a total of five times. No director
attended fewer than 75% of the total number of meetings of the Board and
of
committees of the Board on which he served during fiscal 2004.
Audit
Committee
Our
Audit
Committee met five times during fiscal 2004. This committee currently consists
of three members, Robert Baron, Robert Benou and Dr. David Spencer. On December
16, 2003, Mr. Benou was appointed Chairman of the Audit Committee. On December
22, 2003 Mr. Baron and Mr. Huntz were appointed to the Audit Committee. Our
Audit Committee reviews the engagement of our independent accountants, reviews
annual financial statements, considers matters relating to accounting policy
and
internal controls and reviews the scope of annual audits. The
Board
has determined that the Company has at least one audit committee financial
expert serving on our Audit Committee. On
June
22, 2004 John J. Huntz resigned as a member of the Company’s Board of Directors
and thus as a member of the Audit Committee. On
September 8, 2004, the board of directors of the Company appointed David
Lee
Spencer to serve as the third member of the audit committee.
Please
also see the report of the Audit Committee set forth elsewhere in this proxy
statement. The Board of Directors has adopted and amended a written charter
for
the Audit Committee, which is attached hereto as Appendix A. The report of
the
Audit Committee is set forth elsewhere in this proxy statement.
Compensation
Committee
Our
Compensation Committee held no formal meetings times during fiscal 2004.
This
committee consisted of three members: Robert Baron (Chairman), David Lee
Spencer, M.D. and John J. Huntz, Jr. On
June
22, 2004 John J. Huntz resigned as a member of the Company’s Board of Directors
and thus as a member of the Compensation Committee. The
Compensation Committee reviews, approves and makes recommendations regarding
our
compensation policies, practices and procedures to ensure that legal and
fiduciary responsibilities of the Board of Directors are carried out and
that
such policies, practices and procedures contribute to our success.
Compensation
Committee Interlocks and Insider Participation
None
of
the members of our current Compensation Committee serve
as
a member of the Board of Directors or Compensation Committee of any entity
that
has one or more executive officers serving as a member of our Board of Directors
or Compensation Committee.
Nominating
Committee
The
Board
did not elect new members to this committee until January 8, 2004 when David
Spencer and John Huntz were named to this committee. The committee’s role,
following consultation with all other members of the Board of Directors,
was to
make recommendations to the full Board as to the size and composition of
the
Board and to make recommendations as to particular nominees. The Nominating
Committee has one sitting member at this time (as John Huntz has resigned
from
the Board of Directors) David Spencer. The Nominating Committee does not
have a
charter. As there is only one member of this committee, and given the current
status of the Company, the entire Board has assumed the role of the Nominating
Committee.
Each
notice of nomination by a shareholder must set forth (i) such information
relating to a nominee that is required by Regulation 14A under the Securities
Exchange Act of 1934, (ii) the nominee’s written consent to being named as a
nominee and to serving as a director, if elected, (iii) the name, address
and
eXegenics stock ownership information of the stockholder giving notice and
the
beneficial owner, if any, on whose behalf the nomination is made, and (iv)
whether such stockholder or beneficial owner intends to deliver proxy materials
to a sufficient number of stockholders required to elect such
nominee.
Code
of Ethics
We
have
adopted a code of ethics that applies to our directors and executive officer.
If
we make any substantive amendment to our code of ethics or grant any waiver
from
a provision of the code of ethics to our Chief Executive Officer or Chief
Financial Officer, including an implicit waiver, we intend to satisfy the
information disclosure requirements under Item 10 of Form 8-K regarding
such amendment or waiver.
Business
Opportunities Search Committee
Our
Business
Opportunities Search Committee
met
informally several times during fiscal 2004. The committee has two members,
Robert Baron and John A. Paganelli. This committee reviews potential business
alliances.
Compensation
of Directors
In
December 2003, the new Directors agreed to a new compensation plan. Directors
receive a flat $6,250 per quarter, due the day after the commencement of
each
calendar quarter for their service. The Chairman of the Board receives an
annual
salary of $75,000.
Directors
are eligible to participate in our Amended and Restated 2000 Stock Option
Plan,
or the Plan. The prior Board previously approved an option grant schedule
for
non-employee directors that provides for an option to purchase 50,000 shares
of
our common stock upon first joining the Board and then annual grants to be
awarded at the beginning of each calendar year as follows: an option to purchase
25,000 shares of our common stock until a total of 150,000 options is reached,
an option to purchase 15,000 shares of our common stock until a total of
200,000
options is reached, and then an option to purchase 10,000 shares of our common
stock every year thereafter. The initial grant of an option to purchase 50,000
shares of our common stock has an exercise price equivalent to the fair market
value of our common stock on the date of issuance, while each annual option
grant has an exercise price equivalent to the fair market value of our common
stock on the second Friday of January of the year, the date of grant. In
addition, directors are eligible to receive other periodic grants of options
from time to time under the Plan. Options granted under the Plan to non-employee
directors are immediately exercisable on the date of grant. The current Board
has approved all members of the Board receive, at the time of joining the
Board
a grant of 25,000 shares of Common
Stock, with the Chairman receiving 50,000 shares; each member of the Board
receives an option to purchase 5,000 shares of Common Stock on the first
day of
each calendar quarter in which such individual is a member of the Board,
with an
exercise price equal to the market price of the Common Stock on the close
of
first trading day of each quarter.
In
March
2005 the Board of Directors approved the grant of 50,000 shares of the Company’s
Common Stock to each of Paganelli and Baron upon the closing of a
transaction which results in a change of control, provided each such recipient
is a member of the Board at such time. Such grants are subject to shareholder
approval.
In
June
2005 the Board of Directors approved the following additional compensation
to the members of the Board of Directors: (i) to Robert Baron for
assuming
the additional responsibilities required as Chairman of the Business
Opportunities Search Committee, (a) $25,000 per annum, payable pro
rata on
a quarterly basis, on the first business day of each quarter (such to commence
as of the calendar quarter commencing July 1, 2005) for which Mr. Baron serves
as Chairman of the Business Opportunities Search Committee, and (b) a grant
of
Twenty Five Thousand (25,000) shares of the Company’s
Common
Stock with standard restrictive legend, upon the closing of a transaction
which
result in a change of control of the Company, provided Mr. Baron is a member
of
the Board at such time. Such grant of Common Stock shall be subject to
shareholder approval; (ii) to David Spencer for assuming the
additional responsibilities required by Dr. Spencer as Chairman of the
Compensation Committee, that Dr. Spencer receive $5,000 per annum, payable
pro
rata on a quarterly basis, on the first business day of each quarter (such
to
commence as of the calendar quarter commencing July 1, 2005) for which Dr.
Spencer serves as the Chairman of the Compensation Committee; (iii) to John
Paganelli for assuming the additional responsibilities of Interim Chief
Executive Officer: (a) $25,000 per annum, payable pro rata on a quarterly
basis,
on the first business day of each quarter (such to commence as of the calendar
quarter commencing July 1, 2005) for which Mr. Paganelli serves as Interim
Chief
Executive Officer, and (b) a grant of Twenty Five Thousand (25,000) shares
of
the Company’s Common Stock with standard restrictive legend, upon the closing of
a transaction which result in a change of control of the Company, provided
Mr.
Paganelli is a member of the Board at such time. Such grant of Common Stock
shall be subject to shareholder approval; and (iv) to Robert Benou for assuming
the additional responsibilities required as Chairman of the Audit Committee,
$5,000 per annum, payable pro rata on a quarterly basis, on the first business
day of each quarter (such to commence as of the calendar quarter commencing
July
1, 2005) for which Mr. Benou serves as the Chairman of the for assuming the
additional responsibilities required as Chairman of the Company’s Audit
Committee.
EXECUTIVE
OFFICERS
On
March
29, 2004, David Riggs
was
named President and Chief Executive Officer of the Company. On June 29, 2005
the
Company and David Riggs mutually agreed that Mr. Riggs would relinquish his
duties as President, Chief Executive and Chief Financial Officer of the Company.
On June 29, 2005 Chairman of the Board, John Paganelli, assumed the role
of
Interim Chief Executive Officer and Interim Chief Financial Officer. For
biographical information on Mr. Paganelli
please see disclosure above.
On
July
1, 2005 David Hostelley
was
named Chief Financial Officer of the Company. Dr. Hostelley is a CPA in the
states of Ohio and New York, USA. In 1984 he earned his Ph.D. in management
while a lecturer in the MBA Program of Baldwin-Wallace College. He currently
serves on the Executive Committee of the Cleveland Chapter of the Muscular
Dystrophy Association. Dr. Hostelley is currently the Chief Financial Officer
for: DSI Direct Sales, Inc. (symbol DSDI.pk), and Rose Group Corporation
of
Nevada (symbol RGPC.pk). Dr. Hostelley is also CEO/President Velocity
International Corp. (symbol VCYI.pk). None of these companies has any
affiliations or dealings with the Company.
EXECUTIVE
COMPENSATION
SUMMARY
COMPENSATION TABLE
The
following Summary Compensation Table sets forth summary information as to
compensation received by our former Chief Executive Officer and each of our
other most highly compensated executive officers who were employed by us
at the
end of fiscal 2004 for services rendered to us in all capacities during the
three fiscal years ended December 31, 2004, 2003 and 2002, and who earned
in
excess of $100,000 for services rendered to us during fiscal 2004.
Long-Term
|
||||||||||||||||
Annual
Compensation
|
Compensation
|
|||||||||||||||
Securities
|
||||||||||||||||
Other
Annual
|
Underlying
|
|||||||||||||||
Name
and Principal Position
|
Year
|
Salary
|
Bonus
(4)
|
Compensation
|
Options(#)
|
|||||||||||
Ronald
L. Goode, Ph.D
|
2004
|
—
|
—
|
—
|
—
|
|||||||||||
former
President, CEO (2)
|
2003
|
$
|
405,000
|
$
|
105,000
|
$
|
12,000(1
|
)
|
—
|
|||||||
|
2002
|
$
|
373,333
|
$
|
105,000
|
$
|
12,000(1
|
)
|
300,000
|
|||||||
|
||||||||||||||||
David
E. Riggs
|
2004
|
$
|
235,000
|
—
|
—
|
75,000
|
||||||||||
Former
President, CFO (4)
|
2003
|
$
|
190,561
|
—
|
—
|
225,000
|
||||||||||
2002
|
—
|
—
|
—
|
—
|
||||||||||||
(1) |
Other
annual compensation for Dr. Goode during fiscal 2003 consisted
of a
$12,000 car allowance.
|
(2) |
Dr.
Goode served as our President and Chief Executive Officer until
February
23, 2004.
|
(3) |
Mr.
Riggs joined the Company March 10, 2003 at an initial annual base
salary
of $235,000. On or about March 2004 Mr. Riggs was named President
and
Chief Financial Officer of the Company. Mr. Riggs served as our
President
and Chief Financial Officer until June 29,
2005.
|
(4) |
Bonuses
paid in the year reported were earned in the previous
year.
|
OPTION
GRANTS IN OUR LAST FISCAL YEAR
The
following table shows grants of stock options that we made during the fiscal
year ended December 31, 2004 to each of our executive officers named in the
Summary Compensation Table, above.
Individual
Grants
|
|||||||||||||||||||
Potential
Realizable
|
|||||||||||||||||||
Number
of
|
Value
at Assumed
|
||||||||||||||||||
Securities
|
%
of Total
|
Annual
Rates of Stock
|
|||||||||||||||||
Underlying
|
Options
|
Price
Appreciation for
|
|||||||||||||||||
Options
|
Granted
to
|
Exercise
or
|
Option
Term(2)
|
||||||||||||||||
Granted
|
Employees
in
|
Base
Price
|
Expiration
|
||||||||||||||||
Name
|
(#)
|
Fiscal
Year
|
($/Share)
|
Date
|
5%
|
10%
|
|||||||||||||
David
E. Riggs (1)
|
75,000
|
100
|
$
|
0.84
|
6/30/07
|
$
|
102,620
|
$
|
163,406
|
(1) |
The
options are non-qualified stock options, granted pursuant to the
Company’s
Amended and Restated 2000 Stock Option Plan. In conjunction with
Mr. Riggs
being named President and Chief Executive Officer of the Company,
in
approximately March 2004 Mr. Riggs was granted, pursuant an amendment
to
Mr. Riggs employment agreement, pursuant to the Company’s Amended and
Restated 2000 Stock Option Plan, options to purchase 75,000 shares
of
Common Stock at an exercise price of $.84 per share. Pursuant to
the
Separation Agreement between the Company and Mr. Riggs these options
expire on June 30, 2007.
|
(2) |
In
accordance with the rules of the SEC, we show in these columns
the
potential realizable value over the term of the option (the period
from
the grant date to the expiration date). We calculate this assuming
that
the fair market value of our common stock on the date of grant
appreciates
at the indicated annual rate, 5% and 10% compounded annually, for
the
entire term of the option and that the option is exercised and
sold on the
last day of its term for the appreciated stock price. These amounts
are
based on assumed rates of appreciation and do not represent an
estimate of
our future stock price. Actual gains, if any, on stock option exercises
will depend on the future performance of our common stock, the
option
holder’s continued employment with us through the option exercise period,
and the date on which the option is
exercised.
|
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The
following table shows information regarding exercises of options to purchase
our
common stock by each executive officer named in the Summary Compensation
Table
during the fiscal year ended December 31, 2004.
The
table
also shows the aggregate value of options held by each executive officer
named
in the Summary Compensation Table as of December 31, 2004. The value of the
unexercised in-the-money options at fiscal year end is based on a value of
$0.34
per share, the closing price of our stock on the OTC Bulletin Board on
December 31, 2004 (the last trading day prior to the fiscal year end), less
the
per share exercise price.
Number
of Securities
|
|||||||||||||||||||
Underlying
Unexercised
|
Value
of the Unexercised
|
||||||||||||||||||
Options
at Fiscal
|
In-The-Money
Options
|
||||||||||||||||||
Shares
|
Year-End
|
at
Fiscal Year-End
|
|||||||||||||||||
Acquired
on
|
Value
|
||||||||||||||||||
Name
|
Exercise
|
Realized(1)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||
Ronald
L. Goode, Ph.D
|
200,000
|
$
|
86,000
|
—
|
—
|
N/A
|
N/A
|
||||||||||||
David
E. Riggs(2)
|
—
|
N/A
|
75,000
|
225,000
|
N/A
|
N/A
|
(1) Amounts
shown in this column do not necessarily represent actual value realized from
the
sale of the shares acquired upon exercise of the option because in many cases
the shares are not sold on exercise but continue to be held by the executive
officer exercising the option. The amounts shown represent the difference
between the option exercise price and the market price on the date of exercise,
which is the amount that would have been realized if the shares had been
sold
immediately upon exercise.
(2) Pursuant
to the Separation Agreement between the Company and Mr. Riggs, the Company
Stock
Options to purchase 225,000 shares of Company Common Stock granted under
the
Nonqualified Stock Option Agreement dated March 10, 2003 terminate
on
September 30, 2005, and the Company Stock Options to purchase 75,000 shares
of
Company Common Stock granted under the Nonqualified Stock Option
Agreement dated March 29, 2004 shall terminate on June 30,
2007.
Ninety
days after the termination of Dr. Goode’s employment with the Company 500,000 of
Dr. Goode’s options expired. On or about May 12, 2004 Dr. Goode exercised
options and purchased 200,000 shares of Common Stock at an exercise price
of
$.54 per share. On May 12, 2004 the closing price of our Common Stock was
$.79.
Thus according to the table above the “Value Realized (1)” was Fifty Thousand
($50,000) Dollars.
EMPLOYMENT
CONTRACTS, TERMINATION OF EMPLOYMENT
AND
CHANGE-IN-CONTROL ARRANGEMENTS
Ronald
L.
Goode, Ph.D. entered into an employment agreement with us on March 21, 2001
to
serve as our President and Chief Executive Officer until March 21, 2004.
The
employment agreement provided for the payment to Dr. Goode of a base salary
of
$375,000 per year with an annual bonus payment of up to 60% of Dr. Goode’s base
salary, at the discretion of the Board of Directors. On December 9, 2002,
Dr.
Goode’s base salary was increased to $405,000 and he was awarded a bonus,
payable in January 2003, of $105,000. The employment agreement provides that
in
the event Dr. Goode’s employment is terminated by us without cause, Dr. Goode
terminates his employment for good reason, or upon a change of control as
defined in the agreement, Dr. Goode shall receive severance payments of equal
monthly installments at the base rate until the expiration of 18 months
following the date of termination, if such date is after March 21, 2003.
Dr.
Goode also receives a car expense allowance of $1,000 per month under the
employment agreement. On December 18, 2003, the New Board notified Dr. Goode
that his employment agreement would not be renewed. The employment agreement
contains a two-year post-termination non-compete, non-solicitation and
non-disclosure agreement. On February 23, 2004, Dr. Goode resigned, thereby
terminating his employment agreement with the Company that was to expire
on
March 21, 2004. Dr. Goode has claimed that he left his positions in part
because
the New Board has created an environment where his ability to perform his
job
functions has been diminished. We wholeheartedly dispute each of Dr. Goode’s
claims.
David
E.
Riggs, entered into an employment agreement with us on March 10, 2003 to
serve
as our Vice President, Chief Business Officer, Chief Financial Officer and
Secretary until March 9, 2006, to be automatically renewed for additional
one-year periods, unless sooner terminated. The employment agreement provides
for the payment to Mr. Riggs of a base salary of $235,000 per year with an
annual bonus payment of up to 30% of Mr. Riggs’s base salary, at the discretion
of the Board of Directors. The employment agreement provides that in the
event
Mr. Riggs’s employment is terminated by us without cause or by Mr. Riggs for
good reason, Mr. Riggs shall receive severance payments of equal monthly
installments at the then current base rate until either (i) the expiration
of 12
months following the date of termination, if such date is prior to March
10,
2004, (ii) the expiration of nine months following the date of termination,
if
such date is before March 10, 2005, (iii) the expiration of six months following
the date of termination, if such date is before March 9, 2006, or (iv) the
expiration of six months following the date of termination, if such date
is
during a renewal period. The employment agreement contains a one-year
post-termination non-compete, non-solicitation and non-disclosure agreement.
On
or about March 2004 Mr. Riggs was named President and Chief Executive Officer
of
the Company. In
conjunction with Mr. Riggs being named President and Chief Executive Officer
of
the Company, in approximately March 2004 Mr. Riggs was granted, pursuant
to the
Company’s Amended and Restated 2000 Stock Option Plan, options to purchase
75,000 shares of Common Stock at an exercise price of $.84 per share. These
options vest annually in three equal installments commencing the date of
grant.
On
June
29, 2005 the Company and David Riggs mutually agreed that Mr. Riggs would
relinquish his duties as President, Chief Executive and Chief Financial Officer
of the Company. Pursuant to the Separation Agreement between the Company
and Mr.
Riggs, the Company Stock Options to purchase 225,000 shares of Company Common
Stock granted under the Nonqualified Stock Option Agreement dated
March 10,
2003 terminate on September 30, 2005, and the Company Stock Options to purchase
75,000 shares of Company Common Stock granted under the Nonqualified Stock
Option Agreement dated March 29, 2004 shall terminate on June 30,
2007.
On
June
29, 2005 Chairman of the Board, John Paganelli, assumed the role of Interim
Chief Executive Officer and Interim Chief Financial Officer. For biographical
information on Mr. Paganelli
please see disclosure above.
On
July
1, 2005 David Hostelley
was
named Chief Financial Officer of the Company. The Company entered into an
agreement with Mr. Hostelley whereby Mr. Hostelley will serve as Chief Financial
Officer of the Company on a month to month basis and receive compensation
of Two
Thousand Five Hundred ($2,500) Dollars per month.
PERFORMANCE
TABLE
The
following table compares the annual percentage change in our cumulative total
stockholder return on our common stock during a period commencing on December
31, 2000 and ending on December 31, 2004 (as measured by dividing (A) the
sum of
the cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and the difference between our share price at the end and the
beginning of the measurement period; by (B) our share price at the beginning
of
the measurement period) with the cumulative total return of the Nasdaq Stock
Market our peer group (Nasdaq Biotech Index) during such period. We have
not
paid any dividends on our common stock, and we do not include dividends in
the
representation of our performance. The stock price performance on the graph
below does not necessarily indicate future price performance.
COMPARE
5-YEAR CUMULATIVE TOTAL RETURN
AMONG
EXEGENICS
INC.
NASDAQ
MARKET INDEX AND SIC CODE INDEX
(PERFORMANCE
TABLE)
2000
|
2001
|
2002
|
2003
|
2004
|
||||||||||||
EXEGENICS
INC
|
$
|
100.00
|
$
|
45.15
|
$
|
4.75
|
$
|
12.20
|
$
|
4.61
|
||||||
NASDAQ
Market Index
|
$
|
100.00
|
$
|
78.95
|
$
|
54.06
|
$
|
81.09
|
$
|
88.06
|
||||||
Nasdaq
Biotech Index
|
$
|
100.00
|
$
|
83.92
|
$
|
45.88
|
$
|
66.87
|
$
|
70.97
|
REPORT
OF COMPENSATION COMMITTEE
ON
EXECUTIVE COMPENSATION
This
report is submitted by the Compensation Committee, which is responsible for
establishing and administering our executive compensation policies and stock
option plans. This committee is composed of David Spencer and Robert Baron
(John
Huntz was a member of this committee until his resignation from the Board),
none
of whom is an employee of ours. This report addresses the compensation policies
for the fiscal year ended December 31, 2004 as they affected our President
and
Chief Executive Officer, and our other executive officers.
The
Company strives to apply a uniform philosophy to compensation for all of
its
employees, including the members of its senior management. This philosophy
is
based on the premise that the achievements of the Company result from the
combined and coordinated efforts of all employees working toward common goals
and objectives.
The
goals
of the Company’s compensation program are to align remuneration with business
objectives and performance, and to enable the Company to retain and
competitively reward officers who contribute to the long-term success of
the
Company. The Company’s compensation program for officers is based on the
following principles, which are applicable to compensation decisions for
all
employees of the Company. The Company attempts to pay its officers competitively
in order to retain the most capable people in the industry. Information with
respect to levels of compensation being paid by comparable companies is obtained
from various publications and surveys.
During
the last fiscal year, the compensation of officers consisted principally
of
salary. Salary levels have been set based upon historical levels, amounts
being
paid by comparable companies and performance.
In
consideration for his services as the Company’s President and Chief Executive
Officer for the fiscal year ended December 31, 2004, Mr. Riggs received
compensation consisting of a salary of $235,000. Mr. Riggs served as President
from March 2004 until June 2005, when the Company entered into a Separation
Agreement with Mr. Riggs. Pursuant to this Separation Agreement, and the
terms
of his Employment Agreement, Mr. Riggs received a payment of $117,500.00
(less
customary payroll deductions), and the Company Stock Options to purchase
225,000
shares of Company Common Stock granted under the Nonqualified Stock Option
Agreement dated March 10, 2003 terminate on September 30, 2005, and
the
Company Stock Options to purchase 75,000 shares of Company Common Stock granted
under the Nonqualified Stock Option Agreement dated March 29, 2004
shall
terminate on June 30, 2007.
Dr.
Goode
was retained by the prior Board and the new Board did not renew Dr. Goode’s
employment agreement. As of February 23, 2004 Dr. Ronald Goode resigned his
position with the Company as CEO and President thereby terminating his
employment agreement with the Company which expires on March 21, 2004. Ninety
days after the termination of Dr. Goode’s employment with the Company 500,000 of
Dr. Goode’s options expired. On or about May 12, 2004 Dr. Goode exercised
options and purchased 200,000 shares of Common Stock at an exercise price
of
$.54 per share.
REPORT
OF AUDIT COMMITTEE
The
Audit
Committee of the Board of Directors has furnished the following
report:
On
September 22, 2005, the Audit Committee recommended to the Board of Directors
that the Company dismiss BDO Seidman, LLP as the Company’s Independent Auditors,
and recommend to the Board that the Company retain Rotenberg & Co. LLP
(“Rotenberg”) as the Company’s Independent Auditors. On September 22, 2005 the
Company dismissed BDO Seidman LLP (“BDO”) as its principal accountants to audit
the Company's financial statements and named Rotenberg as the Company’s
Independent Auditors for the fiscal year ended December 31, 2005.
The
report of BDO on the financial statements of the Company for either of the
past
two years did not contain an adverse opinion, or a disclaimer of opinion,
and
was not qualified or modified as to uncertainty, audit scope or accounting
principles. During the Company’s two most recent fiscal years and the interim
period from January 1, 2005 through the date of dismissal, the Company did
not
have any disagreements with BDO on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreement(s), if not resolved to the satisfaction of BDO, would have caused
it to make reference to the subject matter of the disagreement(s) in connection
with its reports.
During
the fiscal years ended December 31, 2003 and 2004 and the subsequent
interim period through September 29, 2005, Rotenberg was not engaged as the
Company’s principal accountant to audit the Company’s financial statements nor
was it consulted regarding any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of Regulation S-K.
The
Audit
Committee assists the Board in overseeing and monitoring the integrity of
our
financial reporting process, compliance with legal and regulatory requirements
and the quality of internal and external audit processes. This Committee’s role
and responsibilities are set forth in a charter adopted by the Board. This
Committee reviews and reassesses our charter annually and recommends any
changes
to the Board for approval. The Audit Committee is responsible for overseeing
our
overall financial reporting process. In fulfilling its responsibilities for
the
financial statements for the fiscal year ended December 31, 2004, the Audit
Committee took the following actions:
-
Reviewed and discussed the audited financial statements for the fiscal year
ended December 31, 2004 with management and BDO Seidman LLP our former
independent auditors;
-
Discussed with BDO Seidman LLP the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit;
and
-
Received written disclosures and the letter from BDO Seidman LLP, regarding
its
independence as required by Independence Standards Board Standard No. 1.
The
Audit Committee further discussed with BDO Seidman LLP their independence.
The
Audit Committee also considered the status of pending litigation, taxation
matters and other areas of oversight relating to the financial reporting
and
audit process that the committee determined appropriate.
Based
on
the Audit Committee’s review of the audited financial statements and discussions
with management and BDO Seidman LLP, the Audit Committee recommended to the
Board that the audited financial statements be included in our Annual Report
on
Form 10-K for the fiscal year ended December 31, 2004 for filing with the
SEC.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our directors, officers and persons who
own
more than 10% of our common stock, to file with the Securities and Exchange
Commission initial reports of beneficial ownership and reports of changes
in
beneficial ownership of our common stock and other equity securities. Officers,
directors and greater than 10% beneficial owners are required by SEC regulation
to furnish us with copies of all Section 16(a) forms they file.
To
our
knowledge, based solely on review of the copies of such reports furnished
to us
and written representations that no other reports were required, during the
fiscal year ended December 31, 2004, all Section 16(a) filing requirements
applicable to our current officers, directors and greater than 10% beneficial
owners were complied with, with the exception of the following late filings:
Form 3 by David Riggs, our former President, Chief Executive Officer and
Chief
Financial Officer; two Form 4’s by each of Messrs. Paganelli, Benou, and
Spencer; and three Form 4’s by Mr. Baron. Otherwise, the Company believes all
Section 16(a) filing requirements applicable to all such persons were complied
with during the fiscal year covered by this report.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Ronald
L. Goode, Ph.D.
In
May
2001, we sold 100,000 shares of common stock to our former President and
Chief
Executive Officer, Ronald L. Goode, Ph.D., for a purchase price of $3.25
per
share, the fair market value at the time of the transaction. Dr. Goode paid
the
purchase price of $325,000 with $25,000 in cash and issued a $300,000 five-year
promissory note to us bearing interest at a rate of 4.71% per annum, with
interest payable semi-annually. The 100,000 shares sold to Dr. Goode, serve
as
collateral to secure the note. Through December 31, 2003, Dr. Goode has made
$36,000 in interest payments. A stock certificate for these shares was not
issued to Dr. Goode until September 2003. In February 2004, Dr. Goode resigned,
thereby terminating his employment agreement with the company that was set
to
expire on March 21, 2004. Dr. Goode has claimed that he left his positions
in
part because the Board has created an environment where his ability to perform
his job functions has been diminished. We wholeheartedly dispute each of
Dr.
Goode’s claims. Dr. Goode has failed to make the semi annual interest payments
due May and November 2005, and the Company is contemplating its remedies
available under the note.
PROPOSAL
1:
ELECTION
OF DIRECTORS
On
November 28, 2005 the Board of Directors nominated John A. Paganelli, Robert
Benou, Robert Baron, and David Spencer for election at the Annual Meeting.
If
they are elected, they will serve on our Board of Directors until the 2005
Annual Meeting of Stockholders and until their respective successors have
been
elected and qualified.
Unless
authority to vote for any of these nominees is withheld, the shares represented
by the enclosed proxy will be voted FOR the election as directors of John
A.
Paganelli, Robert Benou, Robert Baron, and David Spencer. In the event that
any
nominee becomes unable or unwilling to serve, the shares represented by the
enclosed proxy will be voted for the election of such other person as the
Board
of Directors may recommend in his place. We have no reason to believe that
any
nominee will be unable or unwilling to serve as a director.
The
approval by a plurality of votes cast is required for the election of directors;
therefore, the four nominees receiving the most votes will be
elected.
THE
BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF JOHN A. PAGANELLI, ROBERT BENOU,
ROBERT BARON, AND DAVID SPENCER AS DIRECTORS, AND PROXIES SOLICITED BY THE
BOARD
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE
ON
THE PROXY.
PROPOSAL
2:
RATIFICATION
OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The
Board
of Directors has appointed Rotenberg & Company, LLP, independent public
accountants, to audit our financial statements for the fiscal year ending
December 31, 2005. The Board proposes that the stockholders ratify this
appointment. BDO
Seidman, LLP audited
our financial statements for the fiscal year ended December 31, 2004.
On
September 22, 2005, the Audit Committee recommended to the Board of Directors
that the Company dismiss BDO Seidman, LLP as the Company’s Independent Auditors,
and recommend to the Board that the Company retain Rotenberg & Co. LLP
(“Rotenberg”) as the Company’s Independent Auditors. On September 22, 2005 the
Company dismissed BDO Seidman LLP (“BDO”) as our principal accountants to audit
the Company's financial statements and named Rotenberg as the Company’s
Independent Auditors for the fiscal year ended December 31, 2005.
We
expect
that representatives of Rotenberg & Company, LLP will
be
present at the meeting, will be able to make a statement if they so desire,
and
will be available to respond to appropriate questions. The following represents
fees for professional audit services rendered by BDO Seidman, LLP (“our
principal accountants”) for the audit of our annual financial statements for the
years ended December 31, 2004 and December 31, 2003.
Audit
Fees
Our
principal accountants billed us an aggregate of $62,000 and $113,000 in fees
and
expenses for professional services rendered in connection with the audits
of our
financial statements for the calendar years ended December 31, 2004 and 2003,
respectively, and reviews of the financial statements included in our quarterly
reports on Form 10-Q during such calendar years.
Audit
Related Fees
Our
principal accountants billed us an aggregate of $31,000 and $48,000 in audit
related fees for due diligence for the calendar years ended December 31,
2004
and 2003, respectively.
Tax
Fees
Our
principal accountants billed us an aggregate of $20,000 and $15,000 in fees
and
expenses for tax compliance, tax advice and tax planning during calendar
years
ended December 31, 2004 and 2003, respectively.
All
Other Fees
Our
principal accountants did not bill us any additional fees that are not disclosed
under audit fees, audit related fees or tax fees in each of the last two
calendar years.
Audit
Committee Pre-Approval Process, Policies and Procedures
The
Audit
Committee of the Board approved the appointment of Rotenberg & Company,
LLP
as the
replacement auditors to BDO
Seidman, LLP. Our principal auditors have performed their audit procedures
in
accordance with pre-approved policies and procedures established by our Audit
Committee. Our principal auditors have informed our Audit Committee
of the
scope and nature of each service provided. With respect to the provisions
of services other than audit, review, or attest services, our principal
accountants brought such services to the attention of our Audit Committee,
or
one or more members of our Audit Committee for the members of our Board of
Directors to whom authority to grant such approval had been delegated by
the
Audit Committee, prior to commencing such services. Such services
primarily consisted of due diligence and tax related services.
In
the
event the stockholders do not ratify the appointment of Rotenberg & Company,
LLP as
our
independent public accountants, the Board of Directors will reconsider its
appointment.
The
affirmative vote of a majority of the shares present or represented and entitled
to vote at the Meeting is required to ratify the appointment of the independent
public accountants.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF
ROTENBERG
& COMPANY, LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES SOLICITED BY THE BOARD WILL BE
VOTED
IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON
THE
PROXY.
OTHER
MATTERS
The
Board
of Directors knows of no other business which will be presented to the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
proxies in the enclosed form will be voted in accordance with the judgment
of
the persons voting the proxies.
STOCKHOLDER
PROPOSALS
Stockholder
proposals that are intended to be presented at the Company’s annual meeting of
stockholders to be held in 2006 must be received by the Company no later
than
March 1, 2006, if such proposals are to be included in the proxy statement
and
related proxy materials relating to that meeting. The proxy solicited by
the
Board for the annual meeting of stockholders to be held in 2006 will confer
discretionary authority to vote as the proxy holders deem advisable on any
stockholder proposal which is considered untimely. All stockholder proposals
should be marked for the attention of Secretary, eXegenics Inc., 1250
Pittsford-Victor Road, Building 200, Suite 280, Pittsford, New York
14534.
WHETHER
OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By Order of the Board of Directors | ||
/s/ JOHN A. PAGANELLI | ||
John A. Paganelli | ||
Chairman of the Board | ||
December 9, 2005 |
APPENDIX
A
CHARTER
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
Audit
Committee Charter, as approved by the Board of Directors on March 9, 2003
and as
set forth herein, amends and restates the Audit Committee Charter previously
adopted on March 4, 2002.
The
members of the Audit Committee shall be appointed by the Board of Directors
to
provide an avenue of communication among the independent auditors, management
and the Board of Directors and to assist the Board in monitoring (i) the
integrity of the Company’s financial reporting process including its internal
controls regarding financial reporting, (ii) the compliance by the Company
with
legal and regulatory requirements and (iii) the independence and performance
of
the Company’s external auditors.
The
Audit
Committee’s responsibility is oversight. Management of the Company has the
responsibility for the Company’s financial statements as well as the Company’s
financial reporting process, principles, and internal controls. The independent
auditor is responsible for performing an audit of the Company’s annual financial
statements, expressing an opinion as to the conformity of such annual financial
statements with generally accepted accounting principles, reviewing the
Company’s quarterly financial statements and other procedures. It is recognized
that the members of the Audit Committee are not engaged in the accounting
or
auditing profession and, consequently, are not experts in matters involving
auditing or accounting including auditor independence. As such, it is not
the
duty of the Audit Committee to plan or conduct audits to determine that the
Company’s financial statements fairly present the Company’s financial position
and results of operation and are in accordance with generally accepted
accounting principles and applicable laws and regulations. Each member of
the
Audit Committee shall be entitled to rely on (i) the integrity of those persons
within the Company and of the professionals and experts (such as the independent
auditor) from which it receives information, (ii) the accuracy of the financial
and other information provided to the Audit Committee by such persons,
professionals or experts absent actual knowledge to the contrary and (iii)
representation made by management of the independent auditor as to any
information technology services of the type describes in Rule 2-01(c)(4)(ii)
of
Regulation S-X and other non-audit services provided by the independent auditor
to the Company.
The
number of members of the Audit Committee and their independence and experience
requirements shall meet the National Association of Securities Dealers, Inc.
(“NASD”) requirements.
The
Audit
Committee shall have the authority to retain special legal, accounting or
other
consultants to advise the Audit Committee. The Audit Committee may request
any
officer or employee of the Company or the Company’s outside counsel or
independent auditor to attend a meeting of the Audit Committee or to meet
with
any members of, or consultants to, the Audit Committee.
The
Audit
Committee shall:
1.
Review
and reassess the adequacy of this Charter annually and submit it to the Board
for approval.
2.
Review
the annual audited financial statements with management, including major
issues
regarding accounting and auditing principles and practices as well as the
adequacy of internal controls that could significantly affect the Company’s
financial statements.
3.
Review
an analysis prepared by management and the independent auditor of significant
financial reporting issues and judgments made in connection with the preparation
of the Company’s financial statements, including an analysis of the effect of
alternative GAAP methods on the Company’s financial statements and a description
of any transactions as to which management obtained Statement on Auditing
Standards No. 50 letters.
4.
Review
with management and the independent auditor the effect of regulatory and
accounting initiatives as well as off-balance sheet structures on the Company’s
financial statements.
5.
Review
with management and the independent auditor the Company’s quarterly statements
prior to the filing of its Form 10-Q, including the results of the independent
auditors’ reviews of the quarterly financial statements.
6.
Meet
with management to review the Company’s major financial risk exposures and the
steps management has taken to monitor and control such exposures.
7.
Review
major changes to the Company’s accounting principles and practices taking into
consideration the views of the independent auditor, internal auditors or
management.
8.
Recommend to the Board the appointment of the independent auditor, which
firm is
ultimately accountable to the Audit Committee and the Board.
9.
Review
the experience and qualifications of the senior members of the independent
auditor team and the quality control procedures of the independent
auditor.
10.
Approve the fees paid to the independent auditor.
11.
Approve the retention of the independent auditor for any non-audit service
and
the fee for such service.
12.
Receive periodic reports from the independent auditor regarding the auditor’s
independence, discuss such reports with the auditor, consider whether the
provision of non-audit services is compatible with maintaining the auditor’s
independence, and if so determined by the Audit Committee, recommend that
the
Board take appropriate action to assure the independence of the
auditor.
13.
Evaluate the performance of the independent auditor and, whether it is
appropriate to adopt a policy of rotating independent auditors on a regular
basis. If so determined by the Audit Committee, recommend that the Board
replace
the independent auditor.
14.
Recommend to the Board guidelines for the Company’s hiring of employees of the
independent auditor who are engaged on the Company’s account.
15.
Discuss with the national office of the independent auditor issues on which
it
was consulted by the Company’s audit team and matters of audit quality and
consistency.
16.
Review the appointment and replacement of the senior internal auditing
executive.
17.
Review the significant reports to management prepared by the internal auditing
department and management’s responses.
18.
Meet
with the independent auditor prior to the audit to review the planning and
staffing of the audit.
19.
Obtain from the independent auditor an understanding of whether there are
any
indications that Section 10A of the Private Securities Litigation Reform
Act of
1995 is applicable and consult counsel if necessary.
20.
Discuss with the independent auditor the matters required to be discussed
by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
21.
Review with management and the independent auditor any correspondence with
regulators or governmental agencies and any employee complaints or published
reports that raise material issues regarding the Company’s financial statements
or accounting policies.
22.
Review with the independent auditor any problems or difficulties the auditor
may
have encountered and any management letter provided by the auditor and the
Company’s response to that letter. Such review should include:
a.
A
discussion of any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to require
information, and any disagreements with management.
b.
Any
changes required in the planned scope of the internal audit.
c.
The
internal audit department responsibilities, budget and staffing.
23.
Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company’s annual proxy statement.
24.
Advise the Board with respect to the Company’s policies and procedures regarding
compliance with applicable laws and regulations.
25.
Review with the Company’s General Counsel legal matters that may have a material
impact on the financial statements, the Company’s compliance policies and any
material reports or inquiries received from regulators
or governmental agencies.
26.
Meet
at least quarterly with the Company’s principal accounting officer and the
independent auditor and annually in separate executive sessions.
27.
Annually review policies and procedures as well as audit results associated
with
directors’ and officers expense accounts and perquisites.
28.
Annually review director and officer related party transactions and potential
conflicts of interest.
29.
Perform any other activities consistent with this Charter, as the Audit
Committee or Board deems necessary or appropriate.