DEF 14A: Definitive proxy statements
Published on April 15, 2003
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
EXEGENICS INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No:
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3) Filing party:
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4) Date Filed:
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eXegenics INC.
2110 RESEARCH ROW
DALLAS, TEXAS 75235
April 15, 2003
Dear Stockholder,
We cordially invite you to attend our 2003 annual meeting of stockholders
to be held at 9:00 a.m. on Monday, May 19, 2003 at 2110 Research Row, Dallas,
Texas. The attached notice of annual meeting and proxy statement describe the
business we will conduct at the meeting and provide information about eXegenics
that you should consider when you vote your shares.
We have prepared this proxy statement in a format that we hope is easy to
understand. The Securities and Exchange Commission is encouraging companies to
write documents for investors in plain English, and we support this effort. We
hope that you like the new format and welcome your comments.
When you have finished reading the proxy statement, please promptly vote
your shares by marking, signing, dating and returning the proxy card in the
enclosed envelope, or according to the instructions on your proxy card. We
encourage you to vote by proxy so that your shares will be represented and voted
at the meeting, whether or not you can attend.
Sincerely,
/s/ RONALD L. GOODE, PH.D.
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Ronald L. Goode, Ph.D.
Chairman, President and
Chief Executive Officer
eXegenics INC.
2110 RESEARCH ROW
DALLAS, TEXAS 75235
April 15, 2003
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TIME: 9:00 a.m.
DATE: May 19, 2003
PLACE: Our Office (2110 Research Row, Dallas, Texas)
PURPOSES:
1. To elect six directors to serve one-year terms expiring in 2004.
2. To ratify the appointment of Ernst & Young LLP as the company's
independent public accountants for the fiscal year ending December 31, 2003.
3. To consider any other business that is properly presented at the
meeting.
WHO MAY VOTE:
You may vote if you were a record owner of eXegenics stock at the close of
business on April 8, 2003.
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 May 19,
2003.
By Order of the Board of Directors
/s/ DAVID E. RIGGS
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David E. Riggs
Secretary
eXegenics INC.
2110 RESEARCH ROW
DALLAS, TEXAS 75235
(214) 358-2000
PROXY STATEMENT FOR THE EXEGENICS INC.
2003 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
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 2003 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 April 15, 2003 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 or
series A preferred stock at the close of business on April 8, 2003 are entitled
to vote at the annual meeting. On this record date, there were 16,184,486 shares
of our common stock outstanding and 910,822 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 2003 annual report, which includes our financial statements for the fiscal
year ended December 31, 2002.
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" (one of the individuals 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, 2003.
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If any other matter is presented, your proxyholder will vote your shares in
accordance with his or her 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 April 8, 2003, the record date for voting.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1: ELECT DIRECTORS The six 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.
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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. We have engaged Georgeson Shareholder Communications, Inc. to assist
with the solicitation of proxies for an estimated fee of $5,000, plus reasonable
out-of-pocket 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 May 19, 2003 at our office,
located at 2110 Research Row, Dallas, Texas 75235. When you arrive at the 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. Most
stockholders have three options for submitting their vote: (1) via the Internet
at the Web site address listed on your proxy card, (2) by phone (please see your
proxy card for instructions) and (3) by mail, using the paper proxy card. When
you vote via the Internet or by phone, your vote is recorded immediately. We
encourage our stockholders to vote using these methods whenever possible. If you
attend the annual meeting, you may also submit your vote in person, and any
previous votes that you submitted, whether by Internet, phone or mail, 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 the Office of the Secretary, eXegenics Inc., 2110 Research Row, Dallas, TX
75235, and our telephone number at such office is 214-358-2000. You may also
contact our transfer agent, American Stock Transfer & Trust Company, by calling
their toll free number, 1-800-937-5449.
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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 March 31, 2003 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, 2002, 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.
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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
March 31, 2003 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.
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* Less than 1%
Except as otherwise indicated, each of the persons named has sole voting and
investment power with respect to the shares shown below.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
eXegenics Inc., 2110 Research Row, Dallas, Texas 75235.
(2) Calculated on the basis of 16,184,486 shares of common stock outstanding as
of March 31, 2003 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 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 910,822 shares of series A preferred stock
outstanding.
(4) Calculated on the basis of an aggregate of 16,184,486 shares of common
stock and 910,822 shares of series A preferred stock outstanding as of
March 31, 2003, 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.
(5) Mr. Meyers' address is c/o Roan/Meyers Associates, L.P., 45 Broadway, New
York, New York 10004. Mr. Meyers is the sole stockholder, officer and
director of the corporate general partner of Roan/Meyers Associates, L.P.,
or RMA (formerly, Janssen-Meyers Associates, L.P.). Mr. Meyers' beneficial
ownership consists of 35,800 shares of common stock held by The Meyers
Foundation, of which Mr. Meyers has voting control, and the following
securities owned by RMA: (i) 1,444,470 shares of common stock, (ii) 33,987
shares of common stock issuable upon the exercise of a currently
exercisable unit purchase option and underlying class E warrants granted to
RMA for placement agent services in connection with our April 1998 private
placement, (iii) 1,510 shares of common stock issuable upon the exercise of
377.5 unit purchase options and underlying class C and D warrants
originally granted to
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RMA for underwriting services in connection with our initial public
offering, (iv) 30,563 shares of common stock issuable upon the exercise of
currently exercisable class E warrants, (v) 81,529 shares of common stock
issuable upon the exercise of a unit purchase option and underlying class E
warrants granted to RMA for placement agent services in connection with our
April 1998 private placement, (vi) 125,000 shares of common stock issuable
upon the exercise of currently exercisable two-year warrants issued in 2001
to RMA, and (vii) 250,000 shares of common stock issuable upon the exercise
of currently exercisable five-year warrants issued in 2002 to RMA. Does not
include 35,433 shares of common stock issuable upon the conversion of
35,433 shares of series A preferred stock. Except with respect to the
warrants issued in 2001 and 2002, this information was obtained from the
last Schedule 13D filed by Mr. Meyers, which was filed with the SEC on June
1, 2000.
(6) Does not include options to purchase 50,000 shares of common stock not
exercisable within 60 days of the date hereof.
(7) Ownership consists of options to purchase 70,835 shares of common stock
currently exercisable or exercisable within 60 days of the date hereof.
Does not include options to purchase 54,165 shares of common stock not
exercisable within 60 days of the date hereof.
(8) Ownership consists of options to purchase 256,000 shares of common stock
currently exercisable or exercisable within 60 days of the date hereof.
Does not include options to purchase 34,000 shares of common stock not
exercisable within 60 days of the date hereof.
(9) Ownership consists of options to purchase 177,500 shares of common stock
that are currently exercisable or exercisable within 60 days of the date
hereof. Does not include options to purchase 31,500 shares of common stock
not exercisable within 60 days of the date hereof.
(10) Ownership consists of 1,000 shares of common stock and options to purchase
173,500 shares of common stock that are currently exercisable or
exercisable within 60 days of the date hereof. Does not include options to
purchase 31,500 shares of common stock not exercisable within 60 days of
the date hereof.
(11) Ownership consists of 1,000 shares of common stock and options to purchase
60,000 shares of common stock that are currently exercisable or exercisable
within 60 days of the date hereof. Does not include options to purchase
10,000 shares of common stock not exercisable within 60 days of the date
hereof.
(12) Ownership consists of 111,700 shares of common stock and options to
purchase 633,330 shares of common stock that are currently exercisable or
exercisable within 60 days of the date hereof. Does not include options to
purchase 66,670 shares of common stock not exercisable within 60 days of
the date hereof.
(13) Ownership consists of 4,500 shares of common stock and options to purchase
173,500 shares of common stock currently exercisable or exercisable within
60 days of the date hereof. Does not include options to purchase 31,500
shares of common stock not exercisable within 60 days of the date hereof.
(14) 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 150,000
shares of common stock not exercisable within 60 days of the date hereof.
(15) Ownership consists of 125,400 shares of common stock and options to
purchase an aggregate of 1,619,665 shares of common stock which are
currently exercisable or exercisable within 60 days of the date hereof.
Does not include options to purchase 459,335 shares of common stock not
exercisable within 60 days of the date hereof.
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MANAGEMENT
THE 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 March 10, 2003, our Board of Directors voted to set
the size of the Board of Directors at six and to nominate Joseph M. Davie,
Robert J. Easton, Ira J. Gelb, Irwin C. Gerson, Ronald L. Goode and Walter M.
Lovenberg for election at the Meeting. Mr. Gary E. Frashier, one of our
directors since June 1999, has determined not to stand for re-election and
accordingly, will not continue as a director after the annual meeting.
Set forth below are the names of the persons nominated to serve 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:
Joseph M. Davie, M.D., Ph.D., was elected a director in 2003. He has held
key management positions at Biogen (Vice President and then Senior Vice
President of Research 1993-2000), and G.D. Searle (Senior Vice President of
Research, 1987-1989; President of Research and Development, 1987-1992, Corporate
Senior Vice President of Science and Technology, 1993). Prior to that, he was a
professor at Washington University School of Medicine, St. Louis, first as
Associate Professor of Pathology (1972-1975), then as Professor and Head of the
Department of Microbiology and Immunology (1975-1987). His training includes a
Ph.D. from Indiana University (1966), an M.D. from Washington University (1968),
internship and residency training in pathology from Barnes Hospital, St. Louis,
and the National Cancer Institute, Bethesda, MD, and post-doctoral training at
Washington University and the National Institutes of Health. He has served on a
variety of advisory panels and councils and was elected to the Institute of
Medicine in 1987. He currently serves on the boards of one Nasdaq-listed
company, Targeted Genetics Corporation, and several private companies.
Robert J. Easton was elected to the Board of Directors in December 2000.
Mr. Easton is Chairman of Easton Associates LLC. Prior to this latest venture,
he spent 19 years as a management consultant, most recently as Managing Director
with IBM Healthcare Consulting ("IBM"). Prior to IBM, Mr. Easton served as
President of the Wilkerson Group, also a health care consulting concern. Mr.
Easton has executed proprietary studies in a wide variety of medical products
and service fields. His areas of expertise include pharmaceuticals,
biotechnology and in vitro diagnostics. Mr. Easton is a frequent speaker for
medical industry and investment groups in the U.S. and Europe. He is a director
of CollaGenex Pharmaceuticals and Cepheid, Inc., Nasdaq-listed companies and one
private company, the former President of the Biomedical Marketing Association,
and Special Limited Partner of Advanced Technology Ventures. Mr. Easton received
an M.B.A. from Harvard Graduate School of Business Administration and
undergraduate degrees in Chemical Engineering from Rice University.
Ira J. Gelb, M.D., has been a director of the Company since April 1994. Dr.
Gelb received his M.D. from New York University School of Medicine in 1951.
After finishing his training in cardiology at the Mount Sinai
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Hospital in New York City in 1957, Dr. Gelb continued his association with that
institution until his retirement from private practice in 1992. During this
period, he was appointed Attending Cardiologist and Associate Clinical Professor
at the Mount Sinai School of Medicine. Other appointments included Adjunct
Associate Clinical Professor of Cardiology at Cornell Medical School, Adjunct
Clinical Professor of Cardiology at New York Medical College, Cardiology
Consultant at Lawrence Hospital in Bronxville, New York and United Hospital,
Portchester, New York. Dr. Gelb is a former President of the American Heart
Association, Westchester-Putnam Chapter, and was a Senior Assistant Editor with
the American Journal of Cardiology from 1968 to 1983, when he became a founding
editor of the Journal of the American College of Cardiology ("JACC"). Dr. Gelb
continued as a Senior Assistant Editor of JACC until his retirement in 1992.
Since that time, he has served on the boards of various pharmaceutical
companies. He was appointed Adjunct Clinical Professor of Medicine at the Mount
Sinai School of Medicine in 2002 where he had been an Honorary Lecturer since
1992. Dr. Gelb has also served as the Clinical Coordinator of Biomedical
Programs and Professor of Chemistry & Biochemistry at Florida Atlantic
University ("FAU") since 1998, an Adjunct Professor and a member of FAU's
Foundation Board since October 1996 and of FAU's Steering Committee since 1997.
Dr. Gelb has served as a member of the Board of Directors of the American Heart
Association, Boca Raton Division, since December 1996 and was appointed
President in June 1999 for a two-year term. In 1998, Boca Raton Community
Hospital added Dr. Gelb as a member to its Foundation Board. In November 1998,
Dr Gelb was appointed Voluntary Professor of Medicine at the University of Miami
School of Medicine. At present he is Director of Clinical Programs and Clinical
Professor, Biomedical Science, Charles E. Schmidt College of Science, Florida
Atlantic University. He was appointed to the advisory board of Cleveland Clinic,
Florida in 1999.
Irwin C. Gerson has been a director of the Company since March 1995. From
1995 until December 1998, Mr. Gerson served as Chairman of Lowe McAdams
Healthcare, a division of the Interpublic Group, and prior thereto had been,
since 1986, Chairman and Chief Executive Officer of William Douglas McAdams,
Inc., one of the largest advertising agencies in the U.S. specializing in
pharmaceutical marketing and communications to healthcare professionals. In
February 2000, he was inducted into the Medical Advertising Hall of Fame. Mr.
Gerson has a B.S. in Pharmacy from Fordham University and an MBA from the NYU
Graduate School of Business Administration. He is a director of Andrx
Corporation, a Nasdaq listed public company, and ENZO Biochem, an NYSE listed
company. In 1992, Mr. Gerson received an honorary Doctor of Humane Letters from
the Albany College of Pharmacy and in 2001, an honorary Doctor of Human Letters
from Long Island University. Mr. Gerson served as a Trustee of Long Island
University, Chairman of The Council of Overseers -- Arnold and Marie Schwartz
College of Pharmacy, member of the Board of Trustees of the Albany College of
Pharmacy and, from 1967 through 1974, was a lecturer on sales management and
pharmaceutical marketing at the Columbia College of Pharmacy. He is currently
Vice-President of the Lifetime Learning Society of Florida Atlantic University.
Mr. Gerson also has served as a Member of the Board of Governors, American
Association of Advertising Agencies, a Director and Chairman of Business
Publications Audit, a Director of the Connecticut Grand Opera, and a Director of
the Stamford Chamber Orchestra. Mr. Gerson previously served as a director of
the foundation of Pharmacists and Corporate Americans for AIDS Education, the
Pharmaceutical Advertising Council, the Nutrition Research Foundation and as a
Trustee of the Chemotherapy Foundation.
Ronald L. Goode, Ph.D., was named President and Chief Executive Officer and
elected to the Board of Directors on March 21, 2001. On December 9, 2002, Dr.
Goode was elected as Chairman of the Board of Directors. Dr. Goode has held key
management positions at G.D. Searle & Co. (Corporate Senior Vice President and
President of Asia/Pacific World Area from 1995 to 1997, President of Searle
International from 1991 to 1995, and Senior Vice President of Commercial
Development from 1986 to 1989) and before that at Pfizer Pharmaceuticals (Vice
President of Clinical Research and Scientific Affairs from 1985 to 1986 and
Director of Marketing Research in 1980). He has an extensive record of success
in business development, having been responsible for many of Searle's
acquisitions, including DayPro(R), which became Searle's largest selling drug.
Dr. Goode has supervised clinical development programs that led to the filing of
over a dozen New Drug Approval applications, including Procardia XL(R) and
Ambien(R). From 1997 to 1999, Dr. Goode was President and CEO of Unimed
Pharmaceuticals, Inc., positioning the company for sale to Solvay Et Cie, the
Belgium-based conglomerate. He formed the consulting company Pharma-Links in
1999 with the mission of
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being the "link" between pharmaceutical companies to help them create alliances,
form joint ventures and effect various transactions. In 2000, Dr. Goode and his
wife spent a sabbatical with his "charity of choice", Mercy Ships. Dr. Goode
also serves on the Board of Directors of Vitro Diagnostics and several
not-for-profit organizations. Dr. Goode received his Ph.D. in Microbiology from
the University of Georgia.
Walter M. Lovenberg, Ph.D., has been one of our directors since August
1995. From 1989 to 1993, Dr. Lovenberg served as Executive Vice President and
member of the Board of Directors of Marion Merrell Dow Inc. Dr. Lovenberg also
served as the President of the Marion Merrell Dow Research Institute from 1989
to 1993 and Vice President from 1986 through 1989. Prior to joining Marion
Merrell Dow in 1958, Dr. Lovenberg was a Senior Scientist and Chief of
Biochemical Pharmacology at the National Institutes of Health. Dr. Lovenberg has
served as President of Lovenberg Associates, Inc. since 1993. From 1997 to 2000,
Dr. Lovenberg served as Chief Executive Officer of Helicon Therapeutics Inc., a
private company. Dr. Lovenberg currently serves as a director of the following
public companies: OSI Pharmaceuticals, Inc., and Inflazyme, Inc. Dr. Lovenberg
serves on the Scientific Advisory Board of Guilford Pharmaceuticals, Inc., a
Nasdaq listed company. Dr. Lovenberg is also a director of several private
biotechnology companies including Helicon Therapeutics, Inc., Proquest
Pharmaceuticals, Inc., and Merrimack Pharmaceuticals, Inc. Dr. Lovenberg
received a Ph.D. in Biochemistry from George Washington University in 1962, and
prior to that, a B.S. in Biochemistry and a M.S. in Agriculture from Rutgers
University. Dr. Lovenberg, who serves as Executive Editor of Analytical
Biochemistry, is a consulting editor to several other scientific journals. Dr.
Lovenberg has been the recipient of many awards, including a Fulbright-Hays
Senior Scholar Award and a Public Health Service Superior Service Award. Dr.
Lovenberg is a member of the American College of Neuropsychopharmacology, the
American Society of Neurochemistry and the American Society of Biochemistry and
Molecular Biology.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Committee Structure: During fiscal 2002, our Board had three permanent
committees (Audit Committee, Compensation and Organization Committee and
Nominating Committee) and one ad hoc committee (Business Development Task
Force). Subsequent to the enactment of the Sarbanes-Oxley Act of 2002, our Board
determined it to be in the best interest of our shareholders to begin
reorganizing the Board's committee structure in anticipation of implementation
of provisions of Sarbanes-Oxley that will address said committees. It is
anticipated that effective immediately after the Annual Meeting, the Board's
committee structure will be reorganized such that the Compensation and
Organization Committee and the Nominating Committee will be eliminated and
replaced, respectively, with a new Compensation Committee and a Nominating and
Governance Committee. The Audit Committee and the Business Development Task
Force were unaffected by this reorganization.
Meeting Attendance. During the fiscal year ended December 31, 2002, there
were 14 meetings of our Board of Directors, and the various committees of the
Board met a total of 13 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 2002.
Audit Committee. Our Audit Committee met five times during fiscal 2002.
This committee has three members, Irwin C. Gerson (Chairman), Ira J. Gelb and
Walter Lovenberg. 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.
Please also see the report of the Audit Committee set forth elsewhere in this
proxy statement. Mr. Gerson, Dr. Lovenberg and Dr. Gelb are "independent" as
defined by current National Association of Securities Dealers' listing
standards. 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 and Organization Committee. Our Compensation and Organization
Committee met three times during fiscal 2002, and had three members: Gary E.
Frashier (Chairman), Robert J. Easton and Irwin C. Gerson. The Compensation and
Organization Committee reviews, approves and makes recommenda-
10
tions 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.
Please see the report of the Compensation Committee set forth elsewhere in this
proxy statement. The Board anticipates that immediately following the Annual
Meeting, a new Compensation Committee will replace the existing Compensation and
Organization Committee.
Nominating Committee. During the last fiscal year, we had a Nominating
Committee, which consisted of Gary E. Frashier (Chairman), Ira J. Gelb and
Walter Lovenberg. The Committee held no meetings during fiscal 2002. The
committee's role, following consultation with all other members of the Board of
Directors, is to make recommendations to the full Board as to the size and
composition of the Board and to make recommendations as to particular nominees.
Immediately following the Annual Meeting, the Board expects the Nominating
Committee to be replaced by a Nominating and Governance Committee. Our
Nominating and Governance Committee will consider nominees recommended by
stockholders. Stockholders may submit recommendations with regard to nominees
for election to the Board of Directors by notice in writing, received by our
Secretary at least 55 days prior to the anniversary date of the date in the
prior year on which we first mailed our proxy materials for the prior year's
annual meeting of shareholders, but not earlier than 75 days prior to that date.
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.
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. Please see the section entitled "Certain Relationships and Related
Transactions" set forth elsewhere in this proxy statement for a description of
transactions between us and Messrs. Gary E. Frashier and Robert J. Easton.
Business Development Task Force. Our Business Development Task Force met
five times during fiscal 2002. The committee has five members, Ronald L. Goode,
Gary E. Frashier, Robert J. Easton, Walter Lovenberg and Ira J. Gelb. This
committee reviews potential business alliances.
COMPENSATION OF DIRECTORS
In December, 2002, the Directors agreed to a reduction of approximately 33%
in their compensation for the monthly service fee and the meeting fees, from
$1,500 a month to $1,000. We currently pay each non-employee director a monthly
fee of $1,000 for service as a director, plus $1,000 for each day of a Board of
Directors meeting attended, $1,000 for each Board of Directors conference call
meeting in which he participated, $750 for each committee meeting attended and
$750 for each committee conference call meeting in which he participated. We
reimburse directors for all expenses incurred for attending our Board of
Director meetings and committee meetings.
Directors are eligible to participate in our Amended and Restated 2000
Stock Option Plan, or the Plan. The Board of Directors 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 in
which it was granted. 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
11
non-employee directors are immediately exercisable on the date of grant. Options
to purchase a total of 90,000 shares were granted under this formula during
fiscal 2002 to Robert J. Easton, Gary E. Frashier, Ira J. Gelb, Irwin C. Gerson
and Walter M. Lovenberg. Options granted during fiscal 2002 to Arthur P. Bollon
and Ronald L. Goode, Ph.D. are reported under "Executive Compensation -- Option
Grants in Last Fiscal Year" set forth elsewhere in this proxy statement.
We paid Easton Associates L.L.C., of which Robert J. Easton, one of our
directors, is the Chairman, $62,500 during fiscal 2002 for consulting services
for strategy and market planning services. This payment is in addition to the
remuneration Mr. Easton receives as a director.
Gary E. Frashier is also employed as a consultant by us in addition to his
responsibilities as a director. Mr. Frashier's total remuneration for consulting
services during fiscal 2002 was $67,500. This payment is in addition to the
remuneration Mr. Frashier received as a director. The agreement continues until
terminated by either party. Mr. Frashier is not a candidate for re-election as a
Director.
EXECUTIVE OFFICERS
Joan H. Gillett, age 53, our Vice President and Controller, and David E.
Riggs, age 51, our Vice President, Chief Business Officer and Chief Financial
Officer, are presently our only executive officers who are not also directors.
Joan H. Gillett, CPA joined us in October 2000 as Vice President,
Controller and Principal Accounting Officer. From 1997 to August 2000, Ms.
Gillett served as the Chief Financial Officer for International Isotopes Inc., a
publicly held radiopharmaceutical development and manufacturing company, where
she was responsible for all accounting, financial reporting, and investment
activities. From 1986 to 1996, she held various positions for Life Savings Bank
in Austin, Texas. Those positions included Director, Chief Financial Officer and
President. Ms. Gillett has tendered her resignation as Vice President,
Controller and Principal Accounting Officer effective April 30, 2003.
David E. Riggs joined us in March 2003 as Vice President, Chief Business
Officer and Chief Financial Officer. Mr. Riggs most recently was Founder and
President of EMLIN Bioscience. From 2000 to 2001 he was Senior Vice President
and Chief Financial Officer of Celera Genomics Group (previously Axys
Pharmaceuticals, Inc. -- Nasdaq: AXPH). From 1992 to 2000 he was with Unimed
Pharmaceuticals, Inc. (previously Nasdaq: UMED) where he was Senior Vice
President of Business Operations and prior to that, Chief Financial Officer and
Secretary. Mr. Riggs also served as Chief Financial Officer of NeoPharm, Inc.
(Nasdaq: NEOL) and VideoCart, Inc. (formerly Nasdaq: VCRT). He has held
financial management positions at Fujisawa Healthcare, Inc. and GATX
Corporation. He is a certified public accountant having earned a B.S. from the
University of Illinois and an M.B.A. from DePaul University.
12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth summary information as
to compensation received by our Chief Executive Officer and each of our other
most highly compensated executive officers who were employed by us at the end of
fiscal 2002 for services rendered to us in all capacities during the three
fiscal years ended December 31, 2000, 2001 and 2002, and who earned in excess of
$100,000 for services rendered to us during fiscal 2002.
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(1) Other annual compensation for Dr. Goode during fiscal 2001 consisted of
$70,812 toward relocation expenses and $10,500 toward car expenses.
(2) Other annual compensation for these named executive officers consisted of a
car allowance.
(3) Dr. Bollon served as our Executive Vice President and a Director until his
resignation on January 10, 2003.
(4) Ms. Gillett has tendered her resignation as Vice President, Controller and
Principal Accounting Officer effective April 30, 2003.
(5) Dr. Rousseau served as our Vice President of Business Development and
Licensing until his resignation on January 31, 2003.
(6) Other annual compensation for Dr. Rousseau for fiscal 2001 consisted of
$22,691 toward relocation expenses and $4,977 toward car expenses.
13
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, 2002 to each of our executive officers named in
the Summary Compensation Table, above.
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(1)(*) The options are non-qualified stock options, granted pursuant to the
Company's Amended and Restated 2000 Stock Option Plan. Options to
purchase 100,000 shares of Common Stock, at an exercise price of $1.93
per share, vest annually in three equal installments commencing one year
from the date of grant, which was March 4, 2002, and expire on March 3,
2012. Options to purchase 200,000 shares of Common Stock, at an exercise
price of $0.54 per share, vested at the time of the grant and expire on
December 9, 2012.
(2) The options are non-qualified stock options, granted pursuant to the
Company's Amended and Restated 2000 Stock Option Plan. Options to
purchase 25,000 shares of Common Stock, at an exercise price of $1.77 per
share, vest annually in three equal installments commencing one year from
the date of grant.
(3)(*) The options are non-qualified stock options, granted pursuant to the
Company's Amended and Restated 2000 Stock Option Plan. Options to
purchase 15,000 shares of Common Stock, at an exercise price of $1.77 per
share, vest annually in three equal installments commencing one year from
the date of grant, which was March 4, 2002, and expire on March 3, 2012.
Options to purchase 20,000 shares of Common Stock, at an exercise price
of $0.54 per share, vested at the time of the grant and expire on
December 9, 2012.
(4) The options are non-qualified stock options, granted pursuant to the
Company's Amended and Restated 2000 Stock Option Plan. Options to
purchase 15,000 shares of Common Stock, at an exercise price of $1.77 per
share, vest annually in three equal installments commencing one year from
the date of grant.
(5) 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, 2002. The table
also shows the aggregate value of options held by each executive officer named
in the Summary Compensation Table as of December 31, 2002. The value of the
unexercised in-the-money options at fiscal year end is based on a value of $0.35
per share, the closing price of our stock on the Nasdaq SmallCap
14
Market on December 31, 2002 (the last trading day prior to the fiscal year end),
less the per share exercise price.
- ---------------
(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.
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
20, 2004. The employment agreement provides 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, 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. The employment agreement contains a two-year post-termination
non-compete, non-solicitation and non-disclosure agreement.
Arthur P. Bollon, Ph.D. was employed by us under an employment agreement
that provided for payment of his salary through November 6, 2003, which was
automatically renewable absent notice from us of our intent not to renew; Dr.
Bollon and we mutually agreed as to the termination of his employment on January
10, 2003. The employment agreement provided for the payment to Dr. Bollon of a
base salary of $250,000 per year. In addition, in the event Dr. Bollon was
terminated without cause or due to a disability, the employment agreement
provided that Dr. Bollon would have received severance payments of equal monthly
installments at his base rate until the expiration of the term. Dr. Bollon also
received a car expense allowance of approximately $600 per month under the
employment agreement. The employment agreement contained a one year
post-termination non-compete and non-solicitation agreement.
David E. Riggs, entered into an employment agreement with us on March 10,
2003 to serve as our Vice President, Chief Business Officer and Chief Financial
Officer 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.
15
PERFORMANCE GRAPH
The following graph compares the annual percentage change in our cumulative
total stockholder return on our common stock during a period commencing on
December 31, 1997 and ending on December 31, 2002 (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(1) 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 GRAPH)
(1) Our "peer group" consists of companies with an SIC Code of 2834
(Pharmaceutical Preparations).
16
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 Gary E. Frashier,
Robert J. Easton, Joseph M. Davie and Irwin C. Gerson, none of whom is an
employee of ours. This report addresses the compensation policies for the fiscal
year ended December 31, 2002 as they affected Ronald L. Goode, Ph.D., in his
capacity as 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, 2002, Dr. Ronald L.
Goode received compensation consisting of a salary of $373,333, a bonus of
$105,000 payable in January 2003, $12,000 for a car allowance, and stock options
to purchase 300,000 shares of the Company's common stock at a weighted average
exercise price of $1.00 per share. As the Company's President and Chief
Executive Officer, Dr. Goode's scientific expertise, managerial efforts,
ingenuity and leadership are a vital factor to the Company's future success.
During fiscal 2002, Dr. Goode was instrumental in the Company's efforts to
install systematic approaches to all Company processes, including R&D, to
develop a new business strategy and to explore potential merger candidates. The
Compensation Committee believes Dr. Goode has managed the Company exceptionally
well in a challenging business climate and has continued to move the Company
toward its long-term objectives. Dr. Goode's compensation is consistent with the
range of salary levels received by his counterparts at comparable companies.
The Compensation and Organization
Committee:
Gary E. Frashier
Robert J. Easton
Irwin C. Gerson
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which consists entirely of
directors who meet the independence and experience requirements of the Nasdaq
SmallCap Market, has furnished the following report:
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
17
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, 2002, the Audit
Committee took the following actions:
- Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2002 with management and Ernst & Young LLP, our
independent auditors;
- Discussed with Ernst & Young 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 Ernst & Young LLP
regarding its independence as required by Independence Standards Board
Standard No. 1. The Audit Committee further discussed with Ernst & Young
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 Ernst & Young 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, 2002 for
filing with the SEC.
The Audit Committee:
Irwin Gerson
Walter M. Lovenberg
Ira J. Gelb
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, 2002, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with, except that two reports filed by Ronald L.
Goode each covering one stock option grant were filed late and two reports, each
covering one stock option grant, were not timely filed by Joan Gillett. Reports,
each covering one stock option grant, were also filed late by Arthur P. Bollon,
Robert J. Easton, Gary M. Frashier, Ira J. Gelb, Irwin C. Gerson, and Walter M.
Lovenberg. Robert J. Rousseau has not filed one report covering one stock option
grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EASTON ASSOCIATES L.L.C.
In December 2000, we entered into an agreement with Easton Associates
L.L.C. for strategy and market planning services. Under this agreement, Easton
Associates was paid $62,500 for services rendered in 2002. Mr. Easton, one of
our directors, is the chairman of Easton Associates.
18
GARY E. FRASHIER
In December 2000, we entered into an agreement with Gary E. Frashier,
chairman of our Board of Directors, for consulting services. Mr. Frashier was
paid $67,500 for his consulting services during fiscal 2002.
RONALD L. GOODE, PH.D.
In May 2001, we sold 100,000 shares of common stock to our 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 $300,000 by issuing a
five-year promissory note to us bearing interest at a rate of 4.71% per annum,
payable semi-annually. To date, Dr. Goode is current on all loan payments and
has made $22,325 in interest payments as of December 31, 2002.
ROAN/MEYERS ASSOCIATES, L.P.
On August 13, 2002 we entered into an agreement with Roan/Meyers
Associates, L.P. for financial advisory services. Pursuant to the terms of this
agreement, we paid Roan/Meyers Associates a retainer of $50,000 and must pay
them $6,500 per month through July 2003. In addition, we issued them warrants to
purchase 125,000 shares of our common stock at a purchase price of $1.00 per
share, with an expiration date of August 13, 2007, and additional warrants to
purchase 125,000 shares of our common stock at a purchase price of $0.55 per
share, with an expiration date of August 13, 2007. Roan/Meyers Associates is
also entitled to reimbursement for reasonable out-of-pocket expenses.
PROPOSAL 1:
ELECTION OF DIRECTORS
On March 10, 2003 the Board of Directors nominated Joseph M. Davie, Robert
J. Easton, Ira J. Gelb, Irwin C. Gerson, Ronald L. Goode and Walter M. Lovenberg
for election at the Annual Meeting. If they are elected, they will serve on our
Board of Directors until the 2004 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
Joseph M. Davie, Robert J. Easton, Ira J. Gelb, Irwin C. Gerson, Ronald L. Goode
and Walter M. Lovenberg. 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 six nominees receiving the most votes will be elected.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF JOSEPH M. DAVIE, ROBERT
J. EASTON, IRA J. GELB, IRWIN C. GERSON, RONALD L. GOODE AND WALTER M. LOVENBERG
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 Ernst & Young LLP, independent public
accountants, to audit our financial statements for the fiscal year ending
December 31, 2003. The Board proposes that the stockholders ratify this
appointment. Ernst & Young LLP audited our financial statements for the fiscal
year ended December 31, 2002. We expect that representatives of Ernst & Young
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.
19
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered
by Ernst & Young LLP for the audit of our annual financial statements for the
years ended December 31, 2002, and December 31, 2001, and fees billed for other
services rendered by Eisner LLP during those periods. Certain amounts for 2001
have been reclassified to conform to the 2002 presentation.
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(1) Audit fees consisted of audit work performed in the preparation and review
of our annual financial statements and review of financial statements
included in our quarterly reports filed with the Securities and Exchange
Commission (SEC), as well as work generally only the independent auditor can
reasonably be expected to provide, including comfort letters, statutory
audits and attest services and consultation regarding financial accounting
and/or reporting standards. Audit fees were $88,000 and $95,000 for the
fiscal years ended December 31, 2001 and 2002, respectively.
(2) Audit related fees consisted principally of $49,000 and $131,000 for due
diligence for the fiscal years ended December 31, 2001 and 2002,
respectively.
(3) Tax fees consisted principally of $10,000 for tax compliance, tax advice,
and tax planning for the fiscal years ended December 31, 2001 and 2002,
respectively.
In the event the stockholders do not ratify the appointment of Ernst &
Young 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 ERNST
& YOUNG 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
To be considered for inclusion in the proxy statement relating to our
Annual Meeting of Stockholders to be held in 2004, stockholder proposals must
have been received not later than February 18, 2004 nor earlier than January 29,
2004. Proposals received after February 18, 2004 will not be voted on at the
2004 Annual Meeting. If a proposal is received before that date, the proxies
that management solicits for the meeting may still exercise discretionary voting
authority on the proposal under circumstances consistent with the proxy rules of
the SEC. All stockholder proposals should be marked for the attention of
Secretary, eXegenics Inc., 2110 Research Row, Dallas, Texas 75235.
OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
FILED WITH THE SEC, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT US, IS AVAILABLE
ON THE INTERNET AT WWW.EXEGENICSINC.COM AND IS AVAILABLE IN PAPER FORM TO
BENEFICIAL OWNERS OF OUR COMMON STOCK WITHOUT CHARGE UPON WRITTEN REQUEST TO
SECRETARY, EXEGENICS INC., 2110 RESEARCH ROW, DALLAS, TEXAS 75235.
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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/ RONALD L. GOODE
--------------------------------------
Ronald L. Goode
Chairman, Chief Executive Officer and
President
April 15, 2003
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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.
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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.
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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.
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eXegenics INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 2003
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of eXegenics Inc. (the "Company") hereby
constitutes and appoints Ronald L. Goode, Ph.D., and David E. Riggs, and each of
them, his or her true and lawful attorneys and proxies, with full power of
substitution in and for each of them, to vote all shares of the Company which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the offices of the Company, 2110 Research Row, Dallas, Texas at 9:00
a.m. on May 19, 2003 or at any postponement or adjournment thereof, on any and
all of the proposals contained in the Notice of 2003 Annual Meeting of
Stockholders, with all the powers the undersigned would possess if present
personally at said meeting, or at any postponement or adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)