SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SIGA PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
- --------------------------------------------------------------------------------
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): __________________________________
4) Proposed maximum aggregate value of transaction:____________________________
5) Total fee paid:____________________________________________________________
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount previously paid:__________________________________________
2) Form, Schedule or Registration Statement No.:____________________
3) Filing Party:____________________________________________________
4) Date Filed:______________________________________________________
SIGA PHARMACEUTICALS, INC.
420 Lexington Avenue, Suite 620
New York, NY 10170
(212) 672-9100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
We are pleased to announce that the Annual Meeting of the Stockholders
of SIGA Pharmaceuticals, Inc. will be held at 10:00 a.m. on Thursday, January 6,
2000, at the offices of Price Waterhouse LLP, 1301 Avenue of the Americas, 2nd
Floor, New York, NY 10019.
The meeting is being held (i) for the election of Directors to hold
office until the next annual meeting and until their successors are duly elected
and qualified, (ii) to amend our 1996 Incentive and Non-Qualified Stock Option
Plan, (iii) to amend our Certificate of Incorporation to change our name to SIGA
Technologies, Inc., (iv) to further amend our Certificate of Incorporation to
increase our authorized capital to 50,000,000 shares of common stock and (v) to
transact such other business as may properly come before the meeting or any
adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on November 22,
1999 as the record date for the meeting. This means that in order to vote at the
meeting, you must be a stockholder at that time.
If you do not expect to be personally present at the meeting, but wish
your stock to be voted at the meeting, the Board of Directors requests that you
fill in, sign and date the enclosed proxy and promptly return it by mail in the
postage paid envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS
Judson Cooper
Chairman of the Board
December 6, 1999
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
SIGA PHARMACEUTICALS, INC.
420 Lexington Avenue, Suite 620
New York, NY 10170
(212) 672-9100
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held on January 6, 2000
INTRODUCTION
The meeting is called to elect members of the Board of Directors, to
amend our Certificate of Incorporation to change our name to SIGA Technologies,
Inc. and to increase our authorized capital to 50,000,000 shares of common stock
and to amend our stock option plan. The Meeting will be open for the transaction
of any other business that may properly come before it. As of the date of this
proxy statement, management does not know of any other business that will come
before the Meeting. If any other matters do come before the Meeting, the persons
named in the enclosed form of proxy are expected to vote all proxies in
accordance with their judgment on such matters.
This proxy statement and the accompanying proxy card are first being
mailed to stockholders on or about December 20, 1999. A copy of the Annual
Report for the fiscal year ended December 31, 1998, which includes audited
financial statements, is included herewith for those stockholders of record as
of November 22, 1999, the record date for this Meeting.
The solicitation of proxies in the accompanying form is made by, and on
behalf of, the Board of Directors, and no compensation will be paid therefor. We
will only solicit proxies by mail or personal solicitation by our officers and
employees. We will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy material to the beneficial
owners of shares held of record by such persons, and such persons will be
reimbursed for reasonable expenses incurred by them in connection therewith. A
stockholder executing the accompanying proxy has the power to revoke it at any
time prior to the exercise thereof by filing with the Secretary of the Company:
(i) a duly executed proxy bearing a later date; or (ii) a written instrument
revoking the proxy.
An affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote is required for approval of all
matters being submitted to the stockholders for their consideration. All votes
will be tabulated by the inspector of election appointed for the Meeting, who
will separately tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions and broker non-votes are each included for purposes of
determining whether a quorum is present, but do not represent votes cast with
respect to the proposal.
VOTING SECURITIES
The Board of Directors has fixed the close of business on November 22,
1999 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting.
As of September 30, 1999, we had 6,577,712 shares of our common stock
outstanding. Each holder of common stock is entitled to one vote for each share
of common stock held by him or her at the close of business on the record date.
The shares for which the accompanying proxy is solicited will be voted
providing the proxy is executed and returned by you prior to the Meeting.
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 30, 1999, by
(i) each person who we know owns beneficially more than 5% of any class of our
common stock, (ii) each of our Directors, and (iii) all of our current Directors
and executive officers as a group. Except as otherwise noted, each person listed
below has sole voting and dispositive power with respect to the shares listed
next to his name.
Name and Address of Amount of Percentage
Beneficial Owner(1) Beneficial Ownership (2) of Total
- ------------------- ------------------------ --------
Judson Cooper 525,267(3) 7.9%
Joshua D. Schein, Ph.D. 522,267(3) 7.9%
Steven M. Oliveira 421,516 6.6%
129 Post Road East
Westport, CT 06880
Richard B. Stone 414,915 6.3%
135 East 57th St., 11th Fl
New York, NY 10022
Medimune Inc. 335,530 5.1%
All Officers and Directors 1,141,284 16.9%
as a Group (six persons) (4)
- -----------
* Less than 1% of the outstanding shares of Common Stock.
(1) Unless otherwise indicated the address of each beneficial owner
identified is 420 Lexington Avenue, Suite 620, New York, NY 10170.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table,
a person or group of persons is deemed to have "beneficial ownership"
of any shares as of a given date which such person has the right to
acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person or group of
persons named above on a given date, any security which such person or
persons has the right to acquire within 60 days after such date is
deemed to be outstanding for the purpose of computing the percentage
ownership of such person or persons, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person.
(3) Includes currently exercisable options to purchase 50,001 shares of
Common Stock owned directly and 50% beneficial ownership of 12,500
additional options held by Prism Ventures LLC, an entity jointly owned
by Mr. Cooper and Dr. Schein.
(4) Includes an aggregate of 156,252 currently exercisable options to
purchase shares of Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires our officers and directors, and persons who own more than ten
percent of our common stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports that they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations from certain of the Company's executive
officers and directors that no other such reports were required, the Company
believes that during 1998 all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with on a timely basis.
ITEM 1 - ELECTION OF DIRECTORS
Five Directors are to be elected at the Annual Meeting to hold office
until the next annual meeting of stockholders and until their successors have
been duly elected and qualified. It is the intention of the persons named in the
accompanying proxy form to vote FOR the election of the five persons named in
the table below as Directors of the Company, unless authority to do so is
withheld. Proxies cannot be voted for a greater number of persons than the
nominees named. In the event that any of the below listed nominees for Director
should become unavailable for election for any presently unforeseen reason, the
persons named in the accompanying proxy form have the right to use their
discretion to vote for a substitute.
The following table sets forth the name and age of each Director and
each nominee for Director and the positions and offices held by each with the
Company in addition to the position as a director:
Name Age Position
- ------ --- ------
Joshua D. Schein, Ph.D 39 Chief Executive Officer, Secretary and Director
Judson A. Cooper 41 Chairman of the Board, Executive Vice President
Jeffrey Rubin 32 Director
Scott Eagle -- Director
Thomas N. Lanier -- Director
Joshua D. Schein, Ph.D. has served as our Chief Executive Officer since
August 1998 and as acting Chief Executive Officer from April 1998 to August
1998. Dr. Schein has also served as Secretary and a Director since December
1995. Dr. Schein served as Chief Financial Officer from December 1995 until
April 1998. From December 1995 to June 1998, Dr. Schein was a Director of
DepoMed, Inc., a publicly traded biotechnology company. From January 1996 to
August 1998, Dr. Schein was an executive officer and a director (until July
1999) of Virologix Corporation, a private biotechnology company. From June 1996
to September 1998, Dr. Schein was an executive officer and a director (until
September 1999) of Callisto Pharmaceuticals, Inc. From 1994 to 1995, Dr. Schein
served as a Vice President of Investment Banking at Josephthal, Lyon and Ross,
Incorporated, an investment banking firm. From 1991 to 1994, Dr. Schein was a
Vice President at D. Blech & Company, Incorporated, a merchant and investment
banking firm focused on the biopharmaceutical industry. Dr. Schein received a
Ph.D. in neuroscience from the Albert Einstein College of Medicine and an MBA
from the Columbia Graduate School of Business. See "Certain Relationships and
Related Transactions."
Judson A. Cooper has served as our Chairman of the Board of Directors
since August 1998 and as acting Chairman of the Board from April 1998 to August
1998. Mr. Cooper has also served as Director since December 1995 and Executive
Vice President since November 1996. From December 1995 until November 1996 Mr.
Cooper served as President. From August 1995 to June 1998, Mr. Cooper was a
Director of DepoMed, Inc., a publicly traded biotechnology company. From January
1996 to August 1998, Mr. Cooper was an executive officer and a director (until
July 1999) of Virologix Corporation, a private biotechnology company. From June
1996 to September 1998, Mr. Cooper was an executive officer and a director
(until September 1999) of Callisto Pharmaceuticals, Inc. Mr. Cooper had been a
private investor from September 1993 to December 1995. From 1991 to 1993, Mr.
Cooper served as a Vice President of D. Blech & Company, Incorporated. Mr.
Cooper is a graduate of the Kellogg School of Management. See "Certain
Relationships and Related Transactions."
Jeffrey Rubin has been a Director since November 1998. Mr. Rubin is
Principal and Managing Director of The Whitestone Group, an asset management and
investment banking firm he formed in January 1998. From 1994 to 1997, Mr. Rubin
was founder and a director of the Fastcast Corporation, a company specializing
in optical technologies. From 1989 to 1994, Mr. Rubin was a Vice President of
American European Corporation, an import/export company. Mr. Rubin received a
Bachelor of Arts degree in 1989 from the University of Michigan.
Scott Eagle is a nominee for Director. Mr. Eagle is currently the Vice
President of Marketing at Gator.com, where he manages the marketing team and
overseas business development and partnership activities. Before joining
Gator.com, Mr. Eagle was the Vice President of Marketing at Concentric Network
Corporation, where he built the marketing team that enabled both a successful
IPO and an increase in company revenue from a start-up to $85+ million in less
than three years. Prior to Concentric, Mr. Eagle served as Vice President of
Marketing at MFS Communications where he launched regional and national
marketing campaigns for the start-up MFS Intelenet subsidiary, driving revenue
to over $300 million in less than three years. This enabled MFS to capture
substantial market share from telecommunications giants such as AT&T, MCI and
all the local phone carriers. Mr. Eagle began his career at Proctor & Gamble in
marketing and new product development for their consumer package goods, managing
brands such as Formula 44 and Chloraseptic. Mr. Eagle holds a B.S. from the
University of Pennsylvania, Wharton School of Business.
Thomas A. Lanier is a nominee for Director. Since 1996, Mr. Lanier has
been an International Advisor for the US Department of the Treasury during which
time he co-wrote the US Treasury's guide on external debt issuance for emerging
market borrowers. From 1988 until 1996, Mr. Lanier worked for Chemical Bank as a
US Government Bond Trader (1988-1993), Emerging Markets Salesperson (1993-1994)
and Emerging Markets Debt Trader (1994-1996). In 1981, Mr. Lanier graduated from
West Point with a Bachelor of Science Degree and prior to leaving the Army in
1986, also graduated from the US Army Airborne School and the US Army Flight
School as well as planning, organizing and controlling logistical operations on
an international project for the US Army Chief of Staff. In 1988, Mr. Lanier
received a Masters of Business Administration with an emphasis in finance and
marketing from the Fuqua School of Business, Duke University.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the 1998 fiscal year, there were _________ meetings of the Board
of Directors. A quorum of Directors was present, either in person or by
telephonic hookup, for all of the meetings. Actions were also taken during the
year by the unanimous written consent of the Directors.
The members of the Audit Committee during 1998 were Messrs. Eilenberg
and Rubin, neither of whom is an employee of the Company. The Audit Committee
has been delegated the responsibility of reviewing with the independent auditors
the plans and results of the audit engagement, reviewing the adequacy, scope and
results of the internal accounting controls and procedures, reviewing the degree
of independence of the auditors, reviewing the auditor's fees and recommending
the engagement of the auditors to the full Board of Directors.
The members of the Compensation Committee during 1998 were Messrs.
Eilenberg and Rubin. The Compensation Committee administers the Company's stock
option plan and other corporate benefits programs. The Compensation Committee
also reviews and approves bonuses, stock option grants, compensation philosophy
and current competitive status, and executive officer compensation.
The Board of Directors does not have a standing nominating committee.
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the Chief
Executive Officer of the Company for 1998 and the previous year, as well as all
other executive officers of the Company who received compensation in excess of
$100,000 for 1998.
Summary Compensation Table
Annual Compensation Long Term Compensation
Name/ Year Salary Bonuses Other Annual Stock Underlying All Other
Principal Position Compensation(4) Options/ Compensation
Warrants
David H. de Weese, Chairman Chief 1998 $77,050 -- --- --- --
Executive Officer and President (1) 1997 231,923 -- --- 477,683 --
1996 21,635 -- --- 16,667 --
Joshua D. Schein, Ph.D., Executive 1998 170,940(2) -- --- 50,000 --
Vice President, Chief Financial 1997 154,616(2) -- --- 33,334 --
Officer and Director 1996 153,116(2) -- --- 16,667 --
Judson A. Cooper, Executive Vice 1998 170,939(2) -- --- --- --
President and Director 1997 154,616(2) -- --- 33,334 --
1996 153,116(2) -- --- 16,667 --
Dennis E. Hruby, Ph.D., Vice 1998 167,148 -- 27,366 10,000 --
President of Research(3) 1997 78,549 -- --- --- --
1996 50,000 -- --- --- --
Thomas N. Konatich, Vice 1998 120,172 -- --- --- --
President and Chief Financial
Officer
Walter Flamenbaum, M.D. 1998 183,845 -- --- --- --
President (5)
- -----------
(1) Mr. de Weese was Chairman, President (until January 1998) and Chief
Executive Officer of the Company from November 1996 through
April 1998.
(2) Does not include $40,000 share of payments made to CSO Ventures LLC or
$56,250 and 16,667 stock options share of payments to Prism Ventures
LLC. See "Certain Relationships and Related Transactions."
(3) Dr. Hruby became Vice President of Research on April 1, 1997.
He was a consultant to the Company in 1996 and the first
quarter of 1997.
(4) Except as noted, aggregate amount does not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus for
the named officer.
(5) Mr. Flamenbaum was the President from January 1998 through August 1998.
The following tables set forth information with respect to the named
executive officers concerning the grant, repricing and exercise of options
during the last fiscal year and unexercised options held as of the end of the
fiscal year.
Option Grants for the Year Ended December 31, 1998
Name Common Stock % of Total
Underlying Options Granted Exercise Expiration
Options Granted(1) to Employees Price Per Share Date
David H. de Weese .......... 16,667 27.8% $ 4.00 11/18/07
Joshua D. Schein ........... 16,667 6.5% $ 4.00 4/15/08
Judson A. Cooper ........... 16,667 6.5% $ 4.00 4/15/08
- -----------
(1) All options were granted pursuant to the Company's 1996 Stock Option Plan.
Aggregated Option Exercises for the Year Ended December 31, 1998 and Option
Values as of December 31, 1998:
Number of Securities Value of Unexercised In-the-Money
Underlying Unexercised Options (1)
Options at December 31,
1998
Name Shares Value Exercisable Unexercisable Exercisable Unexercisable
Acquired on Realized
Exercise
David H. de --- --- 33,334 --- $27,084 ---
Weese(2)
Joshua D. Schein, --- --- 50,000 --- 0 ---
Ph.D.
Judson A. Cooper --- --- 50,000 --- 0 ---
Dennis E. Hruby --- --- 10,000 30,000 0 0
Thomas Konatch --- --- 0 95,000 --- 0
- -----------
(1) Based upon the closing price on December 31, 1998 as reported on the
Nasdaq SmallCap Market and the exercise price per option.
(2) Excludes warrants, 50% of which were exercisable on December 31, 1997,
to purchase 461,016 shares of Common Stock at an exercise price of
$3.00 per share. All options were terminated when he left the Company
in April 1998.
Employment Contracts and Directors Compensation
Dr. Joshua Schein, our Chief Executive Officer, has an employment
agreement which expires in December 2000 and can be canceled by us only for
cause, as defined in the agreement. Dr. Schein currently receives an annual base
salary of $225,000 and 16,667 stock options per year, exercisable at the fair
market value on the date of grant, and is eligible to receive additional stock
options and bonuses at the discretion of the Board of Directors. In addition,
Dr. Schein will receive a cash payment equal to 1.5% of the total consideration
received by us in a transaction resulting in a change of ownership of at least
50% of our outstanding common stock.
Judson Cooper, our Chairman of the Board of Directors, has an
employment agreement which expires in December 2000 and can be canceled by us
only for cause, as defined in the agreement. Mr. Cooper currently receives an
annual base salary of $225,000 and 16,667 stock options per year, exercisable at
the fair market value on the date of grant, and is eligible to receive
additional stock options and bonuses at the discretion of the Board of
Directors. In addition, Mr. Cooper will receive a cash payment equal to 1.5% of
the total consideration received by us in a transaction resulting in a change of
ownership of at least 50% of our outstanding common stock.
Thomas Konatich became our Chief Financial Officer as of April 1, 1998.
Mr. Konatich's employment agreement expires on April 1, 2000 and can be canceled
by us only for cause, as defined in the agreement. Mr. Konatich receives an
annual base salary of $170,000 and received options to purchase 95,000 shares of
common stock, exercisable at the fair market value on April 1, 1998. The options
vest on a pro rata basis on the first, second, third and fourth anniversaries of
the agreement. Mr. Konatich is also eligible to receive additional stock options
and bonuses at the discretion of the Board of Directors.
Dr. Dennis Hruby, our Vice President of Research, has an employment
agreement which expires on January 1, 2001 and can be canceled by us upon three
months notice. Dr. Hruby received options to purchase 40,000 shares of common
stock at an exercise price of $4.63 per share. The options become exercisable on
a pro rata basis on the first, second, third and fourth anniversaries of the
agreement. Dr. Hruby is eligible to receive additional stock options and bonuses
at the discretion of the Board of Directors.
In November 1999, we entered into 2 year employment agreements with
each of Nathan W. Rosen as Vice President Marketing, David Kaufman as Vice
President Investor Relations and Lawrence R. Nagel as Vice President Business
Development. All agreements are essentially identical. Mr. Rosen receives an
annual salary of $120,000, Mr. Kaufman $100,000 and Mr. Nagel $95,000. Each
received 100,000 options exercisable at the fair market value on the date of
grant, which vest equally over the eight quarters of the agreements, subject to
acceleration upon the occurrence of certain events. All agreements also provide
for bonuses at the discretion of the Board of Directors.
Directors' Compensation
In 1998, outside Directors earned $1,500 for each Board meeting
attended.
Compensation Committee Report
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company, establishes the compensation plans
and specific compensation levels for executive officers, and administers the
Company's 1996 Stock Option Plan. The Compensation Committee is composed of two
independent, non-employee Directors who have no interlocking relationships as
defined by the Securities and Exchange Commission other than as described below
(see "Compensation Committee Interlocks and Insider Participation").
The Compensation Committee, being responsible for overseeing and
approving executive compensation and grants of stock options, is in a position
to appropriately balance the current cash compensation considerations with the
longer-range incentive-oriented growth outlook associated with stock options.
The main objectives of the Company's compensation structure include rewarding
individuals for their respective contributions to the Company's performance,
providing executive officers with a stake in the long-term success of the
Company and providing compensation policies that will attract and retain
qualified executive personnel.
The Compensation Committee believes that the chief executive officer's
(CEO) compensation should be heavily influenced by Company performance. The
Committee determines the appropriate level of bonuses and increases to salary,
if any, based in large part on Company performance. The Committee also considers
the salaries of CEOs of comparably-sized companies and their performance.
Stock options are granted to the CEO, and to other executives,
primarily based on the executive's ability to influence the Company's long-term
growth.
The Compensation Committee has adopted similar policies with respect to
compensation of other officers of the Company. The Committee establishes base
salaries that are within the range of salaries for persons holding similarly
responsible positions at other companies. In addition, the Committee considers
factors such as relative Company performance, the individual's past performance
and future potential in establishing the base salaries of executive officers.
As with the CEO, the number of options granted to the other officers is
determined by the subjective evaluation of the executive's ability to influence
the Company's long-term growth. All options are granted at no less than the
current market price. Since the value of an option bears a direct relationship
to the Company's stock price, it is an effective incentive for managers to
create value for stockholders. The Committee therefore views stock options as an
important component of its long-term, performance-based compensation philosophy.
From the Members of the Compensation Committee: Adam Eilenberg
and Jeffrey Rubin.
- -----------
(1) The material in this report is not "soliciting material," is not deemed
filed with the Securities and Exchange Commission and is not to be incorporated
by reference in any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before
or after the date of this Proxy Statement and irrespective of any general
incorporation language therein.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 1998 were Messrs.
Eilenberg and Rubin. There were no interlocks on the Compensation Committee in
1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into a consulting agreement with CSO Ventures LLC
("CSO") pursuant to which CSO provided certain business services to the Company,
including business development, licensing, strategic alliances and
administrative support. Pursuant to the terms of the agreement, CSO received
$120,000 in 1997. The agreement expired on January 15, 1998. Mr. Cooper, Dr.
Schein and Steven Oliveira are the members of CSO.
Effective January 15, 1998, the Company entered into a consulting
agreement with Prism Ventures LLC ("Prism") pursuant to which Prism has agreed
to provide certain business services to the Company, including business
development, operations and other advisory services, licensing, strategic
alliances, merger and acquisition activity, financings and other corporate
transactions. The parties agreed in September 1998 to suspend the Prism
agreement as long as Mr. Cooper and Dr. Schein are both employed directly by the
Company. Pursuant to the terms of the agreement, Prism receives an annual fee of
$150,000 and 16,667 stock options per year. The agreement expires on January 15,
2001, and is cancelable by the Company only for cause as defined in the
agreement. Mr. Cooper and Dr. Schein are the members of Prism.
ITEM 2 - PROPOSAL TO AMEND THE 1996 INCENTIVE AND NON-QUALIFIED STOCK
OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the 1996 Incentive and Non-Qualified Stock Option Plan authorizing
the issuance of an additional 666,667 shares under such plan, thereby increasing
the aggregate number of shares issuable under such plan from 833,333 to
1,500,000. There are currently 633,061 options outstanding under the plan.
The adoption of the amendment by the Board of Directors reflects a
determination by the Board that ensuring the continued availability of a
sufficient number of options available for grant under the plan is important to
our ongoing and continuing efforts to attract and retain key senior management
personnel and increase the interest of our executive officers in our continuing
success.
Since the granting of options under the plan is discretionary, we
cannot at present determine the number of options that will be granted in the
future to any person or group of persons or the terms of any future grant.
Future option grants and their terms will be determined by the Compensation
Committee in accordance with the terms of the plan.
Set forth below is certain information concerning the plan. A copy of
the plan is available upon written request.
Description of the Plan
The purpose of the plan is to allow our Directors, officers, key
employees and consultants to increase their proprietary interest in, and to
encourage such employees to remain in the employ of, or maintain their
relationship with, us. It is intended that options granted under the plan will
qualify either as incentive stock options under Section 422 of the Internal
Revenue Code or as non-qualified options. Options granted under the plan will
only be exercisable for shares of our common stock.
The plan is administered by a committee appointed by the Board of
Directors. Members of the Compensation Committee are not be eligible to receive
options while they are members except to the extent otherwise permitted under
the requirements of Rule 16b-3 under the Securities Exchange Act of 1934. The
Compensation Committee designates the persons to receive options, the number of
shares subject to the options and the terms of the options, including the option
price and the duration of each option, subject to certain limitations.
The maximum number of shares of common stock available for issuance
under the plan is 833,333 shares (1,500,000 if the amendment is approved)
subject to adjustment in the event of stock splits, stock dividends, mergers,
consolidations and the like. Common stock subject to options granted under the
plan that expire or terminate are available for options to be issued under the
plan.
The price at which shares of common stock may be purchased upon
exercise of an incentive stock option must be at least 100% of the fair market
value of our common stock on the date the option is granted (or at least 110% of
fair market value in the case of a person holding more than 10% of the
outstanding shares of common stock).
The aggregate fair market value (determined at the time the option is
granted) of common stock with respect to which incentive stock options are
exercisable for the first time in any calendar year by an optionee under the
plan or any other plan of ours or of our subsidiary, shall not exceed $100,000.
The Compensation Committee will fix the time or times when, and the extent to
which, an option is exercisable, provided that no option will be exercisable
earlier than one year or later than ten years after the date of grant (or five
years in the case of a 10% stockholder). The option price is payable in cash or
by check. However, the Board of Directors may grant a loan to an employee,
pursuant to the loan provision of the plan, for the purpose of exercising an
option or may permit the option price to be paid in shares of common stock at
the then current fair market value, as defined in the plan.
Upon termination of an optionee's employment or consultancy, all
options held by such optionee will terminate, except that any option that was
exercisable on the date employment or consultancy terminated may, to the extent
then exercisable, be exercised within three months thereafter (or one year
thereafter if the termination is the result of permanent and total disability of
the holder), and except that such three month period may be extended by the
Compensation Committee in its discretion. If an optionee dies while he is an
employee or a consultant or during such three-month period, the option may be
exercised within one year after death by the decedent's estate or his legatees
or distributees, but only to the extent exercisable at the time of death.
The plan provides that outstanding options shall vest and become
immediately exercisable in the event of certain transactions, including (i) the
sale of more than 75% of the voting power represented by our shares of common
stock in a single transaction or a series of transactions, (ii) the sale of
substantially all of our assets, (iii) approval by the stockholders of a
reorganization, merger or consolidation, as a result of which all of you will
own less than 50% of the voting power of the reorganized, merged or consolidated
company.
The Board of Directors may amend, suspend or discontinue the plan, but
it must obtain stockholder approval to (i) increase the number of shares subject
to the plan, (ii) change the designation of the class of persons eligible to
receive options, (iii) decrease the price at which options may be granted,
except that the Board may, without stockholder approval accept the surrender of
outstanding options and authorize the granting of new options in substitution
therefor specifying a lower exercise price that is not less than the fair market
value of common stock on the date the new option is granted, (iv) remove the
administration of the plan from the Compensation Committee, (v) render any
member of the Compensation Committee eligible to receive an option under the
plan while serving thereon, or (vi) amend the plan in such a manner that options
issued under it intend to be incentive stock options, fail to meet the
requirements of Incentive Stock Options as defined in Section 422 of the
Internal Revenue Code.
Under current federal income tax law, the grant of incentive stock
options under the plan will not result in any taxable income to the optionee or
any deduction for us at the time the options are granted. The optionee
recognizes no gain upon the exercise of an option. However the amount by which
the fair market value of common stock at the time the option is exercised
exceeds the option price is an "item of tax preference" of the optionee, which
may cause the optionee to be subject to the alternative minimum tax. If the
optionee holds the shares of common stock received on exercise of the option at
least one year from the date of exercise and two years from the date of grant,
he will be taxed at the time of sale at long-term capital gains rates, if any,
on the amount by which the proceeds of the sale exceed the option price. If the
optionee disposes of the common stock before the required holding period is
satisfied, ordinary income will generally be recognized in an amount equal to
the excess of the fair market value of the shares of common stock at the date of
exercise over the option price, or, if the disposition is a taxable sale or
exchange, the amount of gain realized on such sale or exchange if that is less.
If, as permitted by the plan, the Board of Directors permits an optionee to
exercise an option by delivering already owned shares of common stock valued at
fair market value) the optionee will not recognize gain as a result of the
payment of the option price with such already owned shares. However, if such
shares were acquired pursuant to the previous exercise of an option, and were
held less than one year after acquisition or less than two years from the date
of grant, the exchange will constitute a disqualifying disposition resulting in
immediate taxation of the gain on the already owned shares as ordinary income.
It is not clear how the gain will be computed on the disposition of shares
acquired by payment with already owned shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT
(ITEM 2 ON THE ENCLOSED PROXY CARD) INCREASING THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE UNDER THE 1996 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN BY
666,667 FROM 833,333 TO 1,500,000.
ITEM 3 - PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE THE
CORPORATE NAME TO SIGA TECHNOLOGIES, INC.
The Board of Directors has approved, and recommends to the stockholders
that they approve, a proposal to amend Article (i) of our Certificate of
Incorporation to change our corporate name to SIGA Technologies, Inc. As
previously disclosed, we are currently expanding in a new direction by adding
internet technology to our business plan. Accordingly, the Board of Directors
believes that the name SIGA Technologies, Inc. more accurately reflects the
current nature of our business as a multi-technology company encompassing the
disciplines of biotechnology and internet technology. The Board of Directors and
management deem this change to be in the best interests of the company and its
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT
(ITEM 3 ON THE ENCLOSED PROXY CARD) CHANGING THE CORPORATE NAME TO SIGA
TECHNOLOGIES, INC.
ITEM 4 - PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED CAPITAL BY 25,000,000 SHARES TO 50,000,000 SHARES OF COMMON STOCK
The Certificate of Incorporation currently authorizes us to have
25,000,000 shares of common stock. The Board of Directors has approved the
resolution and proposes amend Article (iv) of our Certificate of Incorporation
to increase the authorized capital to 50,000,000 shares of common stock. As
noted in its public filings, the company is pursuing entry into the field of
internet technology and may require having additional shares available to
finance its new venture. This proposal would not effect the validity or status
of any currently outstanding shares of common stock.
Of the 25,000,000 currently authorized shares of common stock, as of
September 30, 1999, we had 6,577,712 shares of common stock outstanding and if
the amendment to our stock option plan is approved we will have to reserve an
additional 1,500,000 shares for issuance thereunder. The additional shares of
common stock for which authorization is set would be a part of the existing
class of common stock and, if and when issued, would have the same rights and
privileges as the shares of common stock presently outstanding. No holder of
common stock has any preemptive rights. We currently have no plans for the
issuance of any shares of common stock, except pursuant to the exercise of stock
options.
The Board of Directors believes that an increase in the number of
shares of authorized common stock would benefit us and our stockholders by
giving us needed flexibility in our corporate planning in responding to
developments in our business, including possible financing and acquisition
transactions, common stock splits or dividends and other general corporate
purposes, although currently we have no plans to implement any of such
strategies. Having such authorized shares available for issuance in the future
would provide us with greater flexibility and, if necessary allow common stock
to be issued in the future without the expense or delay of a special meeting.
Unless otherwise required by applicable law or regulation, the shares of common
stock to be authorized will be issued without further authorization by vote or
consent of the stockholders and on such terms and for such consideration as may
be determined by the Board of Directors.
The Board of Directors could use the additional shares of common stock
to discourage an attempt to change control of the company, even though a change
in control might be perceived as desirable by some stockholders. The common
stock to be authorized hereby will be available for such purposes. The ability
to issue additional shares of common stock also would allow the Board of
Directors to issue shares only to shareholders supportive of management's
position. This could provide management with the means to block a business
combination considered desirable by some shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT
(ITEM 4 ON THE ENCLOSED PROXY CARD) INCREASING THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE FROM 25,000,000 TO 50,000,000.
STOCKHOLDERS' PROPOSALS FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
Proposals which stockholders intend to present at our 2000 annual
meeting of stockholders must be received by us by August ___, 2000 to be
eligible for inclusion in the proxy material for that meeting.
ANNUAL REPORT ON FORM 10-KSB
Upon sending a written request to Siga Pharmaceuticals, 420 Lexington
Avenue, Suite 620, New York, NY 10170, Attention: President, stockholders may
obtain, free of charge, a copy of the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1998, and any amendments thereto, as filed
with the Securities and Exchange Commission.
OTHER MATTERS
As of the date of this Proxy Statement, the only business which
management expects to be considered at the Annual Meeting is the election of
Directors and the adoption of the amendment to our stock option plan. If any
other matters come before the meeting, the persons named in the enclosed form of
proxy are expected to vote the proxy in accordance with their best judgment on
such matters.
BY ORDER OF THE BOARD OF DIRECTORS
JUDSON COOPER
Chairman of the Board
Dated: December 6, 1999
Siga Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 620
New York, NY 10170
(212) 672-9100
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - January 6, 2000
The undersigned, as stockholder of SIGA PHARMACEUTICALS, INC. (the
"Company"), hereby appoints JOSHUA D. SCHEIN and JUDSON A. COOPER and each of
them, with full power of substitution, the true and lawful proxies and attorneys
in fact of the undersigned to vote, as designated below, the number of shares of
Common Stock of the Company which the undersigned would be entitled to vote, as
fully and with the same effect as the undersigned might do if personally
present, at the Annual Meeting of the Stockholders of the Company to be held on
January 6, 2000 at 10:00 a.m. at the offices of Price Waterhouse LLP, 1301
Avenue of the Americas, 2nd Floor, New York, New York 10019, and any
adjournments thereof on the following matters as set forth in the Proxy
Statement and Notice dated December 6, 1999.
1
(1) ELECTION OF DIRECTORS OF THE COMPANY (ITEM NO. 1 IN THE PROXY STATEMENT)
|_| FOR all nominees listed |_| WITHHOLD AUTHORITY to
below except as marked to vote for all nominees
the contrary: listed below
NOMINEES: Joshua D. Schein
Judson A. Cooper
Thomas N. Lanier
Scott Eagle
Jeffrey Rubin
[INSTRUCTIONS: To withhold authority to vote for any of the individual nominees,
PRINT that nominee's name on the line below].
--------------------------------------------------------------
(2) TO AMEND THE COMPANY'S 1996 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
INCREASING THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE BY 666,667 FROM 833,333
TO 1,500,000. (ITEM NO. 2 IN THE PROXY STATEMENT)
(3) TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S
NAME TO SIGA TECHNOLOGIES, INC. (ITEM NO. 3 IN THE PROXY STATEMENT)
(4) TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED CAPITAL BY 25,000,000 SHARES TO 50,000,000 SHARES OF COMMON STOCK.
(ITEM 4 IN THE PROXY STATEMENT)
(5) IN THE DISCRETION OF SUCH PROXIES UPON ALL OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS IDENTIFIED
ABOVE, FOR THE APPROVAL OF THE AMENDMENT, FOR ADOPTION OF THE OPTION PLAN AND,
IN THE DISCRETION OF THE PROXIES NAMED, ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
This Proxy is revocable at any time, and the undersigned reserves the
right to attend the Annual Meeting and vote in person. The undersigned hereby
revokes any proxy heretofore given in respect of the shares of the Company.
Dated: __________, 1999
----------------------------------
SIGNATURE*
----------------------------------
SIGNATURE*
* NOTE: Please sign exactly as name(s) appear on your Stock Certificate. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If more than one name is shown, as in the case of joint
tenancy, each party must sign. If a corporation, please sign in full corporate
name by the president or other authorized officer.
THE BOARD OF DIRECTORS URGES THAT YOU FILL IN, SIGN AND DATE THE PROXY AND
RETURN IT PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF
MAILED IN THE UNITED STATES.
CORRECT ADDRESS IF NECESSARY