SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT
NO. _____)
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14a-6(e)(2))
[ ]
Definitive Proxy Statement
[ ]
Definitive Additional Materials
[ ]
Soliciting Material Pursuant to Rule 14a-12
DOR
BioPharma, Inc.
(Name
of
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(Name
of
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previously. Identify the previous filing by registration statement number,
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the form or schedule and the date of its filing.
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Schedule or Registration Statement No.:
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(4)
Date
Filed:
DOR
BIOPHARMA, INC.
1101
Brickell Avenue, Suite 701-S
Miami,
Florida 33131
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
December 29,
2006
To
the
Stockholders:
The
annual meeting of stockholders of DOR BioPharma, Inc., will be held at the
J.W.
Marriott on the 5th
Floor,
1109 Brickell Avenue, Miami, FL 33131, on December 29, 2006, at 10:30 a.m.,
Eastern, for the following purposes, each as more fully described
herein:
1. To
elect
four directors to serve until the next annual meeting of stockholders or until
their respective successors have been duly elected and qualified;
2. To
consider and approve an amendment to our Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of our common stock
from 150,000,000 to 250,000,000;
3. To
ratify
the appointment of Sweeney, Gates & Co. as our independent auditors for the
year ending December 31, 2006; and
4. To
transact such other business as may properly come before the Annual Meeting
or
any adjournment or postponement thereof.
Only
stockholders of record at the close of business on November 3, 2006 are
entitled to notice of and to vote at the Annual Meeting. A list of stockholders
eligible to vote at the meeting will be available for inspection at the meeting
and for a period of 10 days prior to the meeting, during regular business hours,
at our corporate headquarters at the address set forth above.
Information
concerning the matters to be acted upon at the Annual Meeting is included in
the
accompanying proxy statement. Whether or not you expect to attend the Annual
Meeting, your vote is important. Please vote as soon as possible via either
the
internet, telephone or mail.
By
Order
of the Board of Directors
Christopher
J. Schaber, Ph.D.
President
and Chief Executive Officer
Miami,
Florida
December
, 2006
DOR
BioPharma, Inc.
1101
Brickell Avenue, Suite 701-S
Miami,
FL 33131
Phone:
(786) 425-3848
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
We
are
furnishing this Proxy Statement to stockholders of record as of the close of
business on November 3, 2006 in connection with the solicitation of proxies
by our Board of Directors for use at the Annual Meeting of Stockholders to
be
held on December 29, 2006. This Proxy Statement and the accompanying form
of proxy are being mailed to the stockholders on or about December 12, 2006.
Our
Annual Report on Form 10-KSB for the year ended December 31, 2005 (which does
not form a part of the proxy solicitation materials) is being distributed
concurrently herewith to stockholders.
VOTING
SECURITIES; PROXIES; REQUIRED VOTE
Voting
Securities
At
the
annual meeting, each holder of record of Common Stock at the close of business
on November 3, 2006 will be entitled to one vote for each share of Common
Stock owned on that date as to each matter presented at the Annual Meeting.
On
November 3, 2006, 68,778,401 shares of Common Stock were outstanding.
Proxies
You
cannot vote your shares at the meeting unless you are present in person or
represented by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at
the
meeting or any adjournment or postponement thereof in accordance with
instructions thereon, or if no instructions are given, will be voted "FOR"
the
election of all of the named nominees as Directors, "FOR" the ratification
of
Sweeney, Gates & Co. as our independent auditors, and in accordance with the
judgment of the persons appointed as proxies with respect to other matters
which
properly come before the Annual Meeting. You may revoke a proxy by written
notice to us at any time prior to exercise of the proxy. In addition, although
mere attendance at the Annual Meeting will not revoke a proxy, you may withdraw
your proxy by voting in person.
Voting
Your Proxy
Whether
or not you plan to attend the Annual Meeting, you may vote your shares via
Internet, telephone or mail as more fully described below:
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By
Internet: Go to www.voteproxy.com
and follow the instructions. Have your proxy card available when
you
call.
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•
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By
Telephone: Call 1-800-PROXIES (1-800-776-9437) and follow the voice
prompts. Have your proxy card available when you call.
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•
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By
Mail: If you have received a proxy card, mark your vote, sign your
name
exactly as it appears on your proxy card, date your card and return
it in
the envelope provided.
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Required
Vote
At
the
Annual Meeting, (1) a plurality of the votes cast in person or by proxy is
required to elect Directors (meaning that the four nominees receiving the
highest number of "FOR" votes will be elected; and (2) the affirmative vote
of
holders of at least a majority of the voting power of the outstanding shares
of
Common Stock represented in person or by proxy at the meeting is required to
(a)
approve the amendment to the Amended and Restated Certificate of Incorporation
and (b) ratify the appointment of Sweeney, Gates & Co. as the independent
auditors of our financial statements for the year ending December 31, 2006.
Stockholders are not allowed to cumulate their votes in the election of
directors. In voting on the election of directors, abstentions and broker
non-votes (which occur when a broker holding shares for a beneficial owner
does
not vote on a particular proposal because the broker does not have discretionary
voting power with respect to that item and has not received voting instructions
from the beneficial owner) will be disregarded and not treated as votes cast
and, therefore, will not affect the outcome of the election. Abstentions will
have the same effect as votes against the proposals to ratify the appointment
of
Sweeney, Gates & Co., but broker non-votes will not be counted as votes
against such proposal or as shares present or represented at the meeting.
Quorum
The
required quorum for the transaction of business at the Annual Meeting will
be a
majority of the voting power of shares of Common Stock issued and outstanding
on
the record date. Abstentions and broker non-votes will be included in
determining the presence of a quorum.
PROPOSAL
1
ELECTION
OF DIRECTORS
Unless
otherwise directed, the persons appointed in the accompanying form of proxy
intend to vote at the Annual Meeting for the election of the four nominees
named
below as directors to serve until our next annual meeting of stockholders or
until their successors have been duly elected and qualified. If any nominee
is
unable to be a candidate when the election takes place, the shares represented
by valid proxies will be voted in favor of such substitute nominee as the Board
of Directors recommends or to allow the vacancy to remain open until filled
by
the Board of Directors, as the Board of Directors recommends. The Board of
Directors does not currently anticipate that any nominee will be unable to
be a
candidate for election.
The
Board
of Directors currently has four members, all of whom are nominees for
re-election. Each Director will serve until the next annual meeting of
stockholders or until his successor has been duly elected and qualified, unless
he dies, resigns or is removed from office prior to that time. One of the four
nominees was appointed to the Board of Directors since the last election of
directors at our 2005 annual stockholders meeting: Christopher J. Schaber,
Ph.D.
was appointed on August 29, 2006.
|
Name
|
Age
|
Position
|
Director
Since
|
|
James
S. Kuo, M.D., M.B.A.
|
42
|
Chairman
of the Board
|
2004
|
|
Steve
H. Kanzer, C.P.A., J.D.
|
42
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Vice
Chairman of the Board
|
1996
|
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Christopher
J. Schaber, Ph.D.
|
40
|
Director,
President and Chief Executive Officer
|
2006
|
|
Evan
Myrianthopoulos
|
42
|
Director
,
and Chief Financial Officer
|
2002
|
James
S. Kuo, M.D., M.B.A.,
has
been a director since 2004 and currently serves as the non-executive Chairman
of
the Board. Since 2006, he has served as President and Chief Executive Officer
of
Cysteine Pharma, Inc. From 2003 to 2006, he served as founder, Chairman and
Chief Executive Officer of BioMicro Systems, Inc. a private venture-backed,
microfluidics company. From 2001 to 2002, he served as President and Chief
Executive Officer of Microbiotix, Inc., a private, anti-infectives drug
development company. Prior to that time, Dr. Kuo was co-founder, President
and
Chief Executive Officer of Discovery Laboratories, Inc. where he raised over
$22
million in initial private funding and took the company public. He has held
senior licensing and business development positions at Pfizer, Inc., and Myriad
Genetics, Inc. Dr. Kuo has also been the Managing Director of Venture Analysis
at HealthCare Ventures, LLC and Vice President at Paramount Capital Investments,
LLC. Dr. Kuo is further a founder of ArgiNOx Pharmaceuticals, Inc., and
Monarch Labs. LLC. Dr. Kuo simultaneously received his M.D. from the
University of Pennsylvania School of Medicine and his M.B.A. from the Wharton
School of Business.
Steve
H. Kanzer, C.P.A.,
J.D.,
has
been a director since 1996 and currently serves as the non-executive Vice
Chairman of the Board. Mr. Kanzer served as our Interim President from June
30,
2002 through January 4, 2003. Since February 2001, Mr. Kanzer has served as
Chairman and Chief Executive Officer, and from February 2001 until May 2006
also
as President, of Pipex Therapeutics, Inc. (“Pipex”), a specialty pharmaceutical
company in Ann Arbor, Michigan developing oral late stage drug candidates for
CNS and fibrotic diseases. He also serves as President and/or a member of the
board of directors of several of Pipex’s subsidiaries, including CD4
Biosciences, Inc., Effective Pharmaceuticals, Inc., Putney Drug Corp. and
Solovax, Inc. Since December 2000, he has served as Chairman of Accredited
Ventures Inc. and Accredited Equities Inc., respectively, a venture capital
firm
and NASD member investment bank specializing in the biotechnology
industry. Prior to founding Accredited Ventures and Accredited Equities in
December 2000, Mr. Kanzer was a co-founder of Paramount Capital, Inc. in 1992
and served as Senior Managing Director - Head of Venture Capital of Paramount
Capital until December 2000. While at Paramount Capital, Mr. Kanzer was involved
in the formation and financing of a number of biotechnology companies, including
our company as well as a private biopharmaceutical company, Corporate Technology
Development, Inc. ("CTD"). Mr. Kanzer was full-time Chief Executive Officer
of
CTD from March 1998 until December 2000 and part-time Chief Executive Officer
from December 2000 until our company completed its acquisition of CTD in
November 2001. From 1995 until June 1999, Mr. Kanzer was a founder and Chairman
of Discovery Laboratories, Inc., a public biotechnology company. Prior to
joining Paramount Capital in 1992, Mr. Kanzer was an attorney at the law firm
of
Skadden, Arps, Slate, Meagher & Flom in New York. Mr. Kanzer received his
J.D. from New York University School of Law and a B.B.A. in accounting from
Baruch College where he was a Baruch Scholar.
Christopher
J. Schaber, Ph.D.,
has
been a director since August 2006 and is the President and Chief Executive
Officer. Prior to joining, Dr. Schaber served from 1998 to 2006 as Executive
Vice President and Chief Operating Officer of Discovery Laboratories, Inc.
where
he was responsible for their operations including all drug development and
commercial launch activities. From 1996 to 1998, Dr. Schaber was a co-founder
of
Acute Therapeutics, Inc., and served as Vice President of Regulatory Compliance
and Drug Development. From 1994 to 1996, Dr. Schaber was employed by Ohmeda
PPD,
Inc., as Worldwide Director of Regulatory Affairs and Operations. From 1989
to
1994, Dr. Schaber held a variety of regulatory, development and operations
positions with The Liposome Company, Inc., and Elkins-Sinn Inc., a division
of
Wyeth-Ayerst Laboratories. Dr. Schaber received his B.A. from Western Maryland
College, a M.S. in Pharmaceutics from Temple University School of Pharmacy
and a
Ph.D. in Phamaceutical Sciences from The Union Graduate School.
Evan
Myrianthopoulos,
has
been a director since 2002 and is currently the Chief Financial Officer after
joining in November of 2004 as President and Acting Chief Executive Officer.
From
November 2001 to November 2004, he was President and founder of CVL Advisors,
Group, Inc., a financial consulting firm specializing in the biotechnology
sector. Prior to founding CVL Advisors Group, Inc., Mr. Myrianthopoulos was
a
co-founder of Discovery Laboratories, Inc. During his tenure at Discovery from
June 1996 to November 2001, Mr. Myrianthopoulos held the positions of Chief
Financial Officer and Vice President of Finance, where he was responsible for
raising approximately $55 million in four private placements. He also negotiated
and managed Discovery’s mergers with Ansan Pharmaceuticals and Acute
Therapeutics, Inc. prior to co-founding Discovery, Mr. Myrianthopoulos was
a
Technology Associate at Paramount Capital Investments, L.L.C., a New York City
based biotechnology venture capital and investment banking firm. Prior to
joining Paramount Capital, Mr. Myrianthopoulos was a managing partner of S
+ M
Capital Management, a hedge fund which specialized in syndicated stock offerings
and also engaging in arbitrage of municipal and mortgage bonds. Prior to that,
Mr. Myrianthopoulos held senior positions in the treasury department at the
National Australia Bank where he was employed as a spot and derivatives currency
trader. Mr. Myrianthopoulos holds a B.S. in Economics and Psychology from Emory
University.
Recommendation
of the Board of Directors
The
Board
of Directors recommends that you vote "FOR" the election of all of the nominees
listed above.
Section
16(a) Beneficial Ownership Reporting Compliance
We
are
required to identify each person who was an officer, director or beneficial
owner of more than 10% of our registered equity securities during our most
recent fiscal year and who failed to file on a timely basis reports required
by
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act").
To
our
knowledge, based solely on our review of the copies of such reports received
by
us, and representations from certain reporting persons, we believe that, during
the year ended December 31, 2005, our directors, executive officers and
significant stockholders have timely filed the appropriate form under Section
16(a) of the Exchange Act, except Form 4's for Steve Kanzer (one filing);
Alexander P. Haig (one filing); T.J. Madison (one filing); and James Kuo (one
filing), all of which have been subsequently made.
Corporate
Governance
Pursuant
to our Amended and Restated Certificate of Incorporation and By-laws, our
business and affairs are managed under the direction of the Board of Directors.
Members of the Board of Directors are kept informed of our business through
discussions with senior management, by reviewing materials provided to them
and
by participating in meetings of the Board of Directors and its committees.
The
Board
of Directors has determined that Dr. Kuo and Mr. Kanzer are "independent" as
such term is defined by the applicable listing standards of the American Stock
Exchange. The Board of Directors based this determination primarily on a review
of the responses of the directors to questions regarding their employment,
affiliations and family and other relationships.
The
Board
of Directors held sixteen meetings in 2005, and each director who served as
a
director during 2005, except Stuart Sedlack, attended more than 75% of the
meetings of the Board of Directors and each of the committees on which he
served.
We
typically schedule a meeting of the Board of Directors in conjunction with
our
Annual Meeting and expect that all directors will attend, absent a valid reason,
such as a scheduled conflict. Last year, all of the individuals then serving
as
directors attended the Annual Meeting in person or telephonically.
The
Board
of Directors has the following three committees: (1) Compensation,
(2) Audit and (3) Nominating. The Board of Directors has adopted a
written charter for each of these committees. These charters are posted on
our
website: http://www.dorbiopharma.com under the caption "Investors."
The
Board
of Directors has also adopted a Code of Business Conduct and Ethics that applies
to all of our directors, officers (including the Chief Executive Officer and
the
Chief Financial Officer) and employees. Our Code of Business Conduct and Ethics
is posted under the caption "Investors" on our website:
http://www.dorbiopharma.com. If, in the future, the Board of Directors amends
the Code of Business Conduct and Ethics or grants a waiver to our Chief
Executive Officer, Chief Financial Officer or any future principal accounting
officer with respect to the Code of Business Conduct and Ethics, we will post
the amendment or a description of the waiver on our website.
Compensation
Committee
The
Board
of Directors has a Compensation Committee, which is comprised of Dr. Kuo and
Mr.
Kanzer. The Compensation Committee is responsible for reviewing and approving
the executive compensation program, assessing executive performance, making
grants of salary and annual incentive compensation and approving certain
employment agreements. The Board of Directors has determined that all members
of
the Compensation Committee are "independent" directors; as such term is defined
by Section 121(A) of the American Stock Exchange listing standards. The
Compensation Committee met one time during the fiscal year ended December 31,
2005.
Nominating
Committee
The
Board
of Directors has a Nominating Committee, which is comprised of Dr. Kuo and
Mr.
Kanzer. The Nominating Committee makes recommendations to the Board of Directors
regarding the size and composition of the Board of Directors, establishes
procedures for the nomination process, recommends candidates for election to
the
Board of Directors and nominates officers for election by the Board of
Directors. The Board of Directors has determined that all members of the
Nominating Committee are "independent" directors; as such term is defined by
Section 121(A) of the American Stock Exchange listing standards. The
Nominating Committee met one time during the fiscal year ended December 31,
2005.
In
considering candidates for the Board of Directors, the Nominating Committee
considers the entirety of each candidate's credentials and does not have any
specific minimum qualifications that must be met by a nominee. However, the
Nominating Committee does believe that all members of the Board of Directors
should have the highest character and integrity, a reputation for working
constructively with others, sufficient time to devote to Board matters, and
no
conflict of interest that would interfere with performance as a director. In
the
case of current Directors being considered for nomination, the Nominating
Committee also takes into account the director's history of attendance at
meetings of the Board of Directors or its committees, the Director's tenure
as a
member of the Board of Directors, and the Director's preparation for and
participation in such meetings.
Stockholders
who wish to suggest qualified candidates should write to the Office of the
Secretary, DOR BioPharma, Inc., 1101 Brickell Avenue, Suite 701-S, Miami,
Florida 33131, specifying the name of the candidates and stating in detail
the
qualifications of such persons for consideration by the Nominating Committee.
A
written statement from the candidate consenting to be named as a candidate
and,
if nominated and elected, to serve as a director should accompany any such
recommendation. Stockholders who wish to nominate a director for election at
an
annual meeting of the stockholders must otherwise comply with our by-laws
regarding stockholder proposals and nominations. See "Deadline for Stockholder
Proposals" contained herein.
Audit
Committee
The
Board
of Directors has an Audit Committee, which is comprised of
Dr.
Kuo and Mr. Kanzer. The Audit Committee assists the Board of Directors in
monitoring the financial reporting process, the internal control structure
and
the independence and performance of the internal audit department and the
independent public accountants. Its primary duties are to serve as an
independent and objective party to monitor the financial process and internal
control system, to review and appraise the audit effort of the independent
accountants and to provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of Directors. During
the year, the Board of Directors examined the composition of the Audit Committee
in light of the applicable listing standards of the American Stock Exchange
and
the regulations under the Exchange Act applicable to audit committees. Based
upon this examination, the Board of Directors has determined that all members
of
the Audit Committee are "independent" directors within the meaning of such
listing standards and the Exchange Act and the rules and regulations thereunder.
The Board of Directors has determined that Dr. Kuo and Mr. Kanzer each qualify
as an "audit committee financial expert" as that term is defined in the
applicable regulations of the Exchange Act and the regulations thereunder.
The
Audit Committee met four times during the fiscal year ended December 31,
2005.
Report
of the Audit Committee of the Board of Directors
The
Audit
Committee submits the following report for the year ended December 31, 2005:
The
Audit
Committee has reviewed and discussed with both management and the outside
auditors the audited consolidated financial statements as of and for the year
ended December 31, 2005. The Audit Committee's review included discussion with
the outside auditors of matters required to be discussed by Statement on
Auditing Standards No. 61, Communication
with Audit Committees,
as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants.
The
Audit
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees,
as
amended, by the Independence Standards Board, and has discussed with the
independent auditors matters relating to the auditors'
independence.
Based
on
the reviews and discussions referred to above, the Audit Committee recommended
to the Board of Directors that the audited consolidated financial statements
referred to above be included in the Company's Annual Report on Form 10-KSB
for
the fiscal year ended December 31, 2005 for filing with the SEC.
Submitted
by the Audit Committee,
James
S.
Kuo, M.D., M.B.A.
Steve
H.
Kanzer, C.P.A., J.D.
___________________________
Communications
with the Board of Directors
Stockholders
or other interested parties may communicate with the Board of Directors by
sending a letter to DOR BioPharma, Inc. Board of Directors, c/o The Office
of
the Secretary, DOR BioPharma, Inc, 1101 Brickell Avenue, Suite 701-S, Miami,
FL
33131. The Office of the Secretary will receive the correspondence and forward
it to the Director(s) to whom the communication is addressed.
Executive
Compensation
The
following table contains information concerning the compensation paid during
our
fiscal years ended December 31, 2003, 2004 and 2005, to the persons who served
as our Chief Executive Officers, and each of the four other most highly
compensated executive officers during 2005 (collectively, the "Named Executive
Officers").
Summary
Compensation Table
|
Name
|
Position
|
Years
|
Annual
Salary
|
Annual
Bonus
|
Long
term Compensation Awards Securities Underlying
Options
|
|
Evan
Myrianthopoulos (1)
|
CFO
|
2005
|
$185,000
|
$25,000
|
-
|
|
2004
|
$25,694
|
-
|
650,000
|
||
|
Robert
Brey (2)
|
CSO
|
2005
|
$155,000
|
-
|
-
|
|
|
|
2004
|
$155,000
|
-
|
-
|
|
|
|
2003
|
$164,637
|
-
|
-
|
|
James
Clavijo (3)
|
Controller
|
2005
|
$125,375
|
$25,000
|
150,000
|
|
2004
|
$27,500
|
-
|
100,000
|
||
|
Michael
Sember (4)
|
CEO
|
2005
|
$300,000
|
$50,000
|
-
|
|
2004
|
$20,000
|
-
|
2,000,000
|
||
|
Gregory
Davenport (5)
|
President
|
2005
|
$140,000
|
$28,000
|
-
|
|
|
BioDefense
|
2004
|
$124,375
|
$25,000
|
600,000
|
|
2003
|
$9,583
|
-
|
-
|
||
|
Geoff
Green (6)
|
Acting
|
2005
|
-
|
-
|
-
|
|
|
CEO
|
2004
|
$124,490
|
$26,667
|
700,000
|
|
2003
|
$55,464
|
-
|
-
|
||
|
Ralph
Ellison (7)
|
CEO
|
2005
|
-
|
-
|
-
|
|
|
|
2004
|
$323,076
|
$108,333
|
2,000,000
|
|
2003
|
$200,000
|
-
|
-
|
(1) Mr.
Myrianthopoulos joined us in November 2004 as President and Acting Chief
Executive Officer and then in December 2004 he accepted the position of Chief
Financial Officer. Although Mr. Myrianthopoulos had earned his $50,000 bonus
in
December 2005, he deferred payment of $25,000 of the bonus until
2006.
(2) Dr.
Brey
joined us in December 1996.
(3) Mr.
Clavijo joined in October 2004.
(4) Mr.
Sember joined us in December 2004. Mr. Sember ceased to be employed in August
2006.Although Mr. Sember had earned his $100,000 bonus in December 2005, he
deferred payment of $50,000 of the bonus until 2006.
(5) Dr.
Davenport joined us in December 2003. Dr. Davenport ceased to be employed by
us
in January 2006.
(6) Mr.
Green
joined us in July 2003 as Vice President, Clinical Operations and then in July
2004 accepted the position of President and Acting Chief Executive Officer.
Mr.
Green resigned in November 2004.
(7) Dr.
Ellison joined us in March 2003 and resigned in July 2004.
The
following table contains information concerning options granted to the Named
Executive Officers during the fiscal year ended December 31, 2005. We have
never issued Stock Appreciation Rights.
Option
Grants in Last Fiscal Year
|
Named
Executive Officer
|
Number
of Securities Underlying Options Granted (1)
|
Percentage
of Total Options Granted to Employees in Fiscal Year
(2)
|
Exercise
Price ($/share)(3)
|
Expiration
Date
|
|
James
Clavijo (4)
|
150,000
|
33
%
|
$0.45
|
02/22/2015
|
(1) Dr.
Schaber, Mr. Myrianthopoulos, Dr. Brey, Mr. Sember, Dr. Davenport, Dr. Ellison
and Mr. Green did not receive any options during fiscal year 2005.
(2) Based
on
options to purchase an aggregate of 450,000 shares of our common stock granted
to employees and non-employee board members in the fiscal year ended December
31, 2005, including all options granted to the Named Executive Officers in
all
capacities in the fiscal year ended December 31, 2005.
(3) The
exercise price of each grant is equal to the fair market value of the common
stock on the date of the grant.
(4) Mr.
Clavijo's options will vest 50,000 immediately and remainder vest quarterly
on
each three month anniversary of effective date at a rate of 8,333.
Fiscal
Year-End Option
Table
The
following table provides information on the total number of exercisable and
unexercisable stock options held at December 31, 2005 by the Named
Executive Officers. None of the Named Executive Officers exercised any options
during fiscal year 2005.
Fiscal
Year-End Option Values
|
|
Number
of Securities
Underlying
Unexercised
Options
at Fiscal Year-End (#)
|
Value
of Unexercised
In-the-Money
Options
at
Fiscal Year-End(1) ($)
|
||
|
Named
Executive Officer
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|
Evan
Myrianthopoulos
|
566,668
|
333,332
|
-
|
-
|
|
James
Clavijo
|
108,332
|
141,668
|
-
|
-
|
|
Michael
Sember (2)
|
1,120,000
|
880,000
|
-
|
-
|
|
Gregory
Davenport(3)
|
400,000
|
200,000
|
-
|
-
|
|
Robert
Brey
|
115,000
|
-
|
-
|
-
|
| (1) |
Based
on the difference between the option's exercise price and a closing
price
of $0.27 for the underlying common stock on December 30, 2005 as
reported
by the American Stock Exchange. Options with an exercise price greater
than $0.27 were assigned no value.
|
| (2) |
Based
on Mr. Sember’s termination on August 25, 2006 he had not fully vested in
all his options. As of August 25, 2006, Mr. Sember had vested in
1,340,000
options which are exercisable for a period of one year from the date
of
termination. These options have not been
exercised.
|
| (3) |
Based
on Dr. Davenport’s termination on January 15, 2006 he had vested in
400,000 options. As of April 15, 2006 those options had
expired.
|
Employment
and Severance
Agreements
On
August
29, 2006, we entered into a three year employment agreement with Christopher
J.
Schaber, Ph.D. Pursuant to this employment agreement, we agreed to pay Dr.
Schaber a base salary of $300,000 and an annual bonus of at least $100,000
payable at the end of each calendar year. The bonus will be prorated for any
portion of a year in which Dr. Schaber is employed by us. We agreed to issue
Dr.
Schaber options to purchase 2,500,000 shares of our common stock, with one-third
immediately vesting and the remainder of the options vesting quarterly over
a
period of three years. Upon termination without "just
cause"
as
defined in the agreement, we would pay Dr. Schaber six months severance, as
well
as any accrued bonuses and accrued vacation. No unvested options would vest
beyond the termination date.
On
May
10, 2006, the three year employment agreement we entered into on February 7,
2005 with James Clavijo was amended. The amendment included an increase in
the
base salary to $155,000 per year, an increase in the minimum annual bonus to
$35,000 per year and the issuance of 200,000 shares of common stock, of which
50,000 will vest immediately and the remainder vesting over three years. The
original employment agreement agreed to pay Mr. Clavijo a base salary of
$125,000 per year and a minimum annual bonus of $25,000. Also, we agreed to
issue him options to purchase 150,000 shares of our common stock, with one
third
immediately vesting and the remainder vesting over three years. Upon termination
without "just cause" as defined by this agreement, we would pay Mr. Clavijo
three months severance subject to setoff, as well as any unpaid bonuses and
accrued vacation. No unvested options shall vest beyond the termination date.
Mr. Clavijo also received 100,000 options, vesting over three years when he
was
hired on October 18, 2004, as Controller, Treasurer and Corporate
Secretary.
On
May
10, 2006, the three year employment agreement we entered into on December 9,
2004 with Evan Myrianthopoulos was amended. The amendment included an increase
in the base salary to $200,000 per year and the issuance of 400,000 shares
of
common stock, of which 100,000 will vest immediately and the remainder vesting
over three years. The original employment agreement agreed to pay Mr.
Myrianthopoulos a base salary of $185,000 per year and a minimum annual bonus
of
$50,000. Also, we agreed to issue him options to purchase 500,000 shares of
our
common stock, with the options vesting over three years. Upon termination
without "just cause" as defined by this agreement, we would pay Mr.
Myrianthopoulos six months severance subject to setoff, as well as any unpaid
bonuses and accrued vacation. No unvested options shall vest beyond the
termination date. Mr. Myrianthopoulos also received 150,000 options, vested
immediately when he was hired on November 11, 2004 as President and Acting
Chief
Executive Officer.
On
December 7, 2004, we entered into a three year employment agreement with Michael
T. Sember, M.B.A. Pursuant to this employment agreement we agreed to pay Mr.
Sember a base salary of $300,000 per year. After one year of service Mr. Sember
would be entitled to a minimum annual bonus of $100,000. We agreed to issue
him
options to purchase 2,000,000 shares of our common stock, with one third
immediately vesting and the remainder vesting over three years. Upon termination
without "just cause" as defined by this agreement, we would pay Mr. Sember
six
months severance, as well as any unpaid bonuses and accrued vacation. No
unvested options vested beyond the termination date. On August 25, 2006, Mr.
Sember was terminated at which time he was to receive his six months severance
and accrued vacation, which was payable on each of the normal payroll periods.
Mr. Sember had also vested in 1,340,000 of his stock options, which would expire
on August 25, 2007.
On
September 1, 2004, we entered into a one year employment agreement with Gregory
Davenport, Ph.D. Pursuant to this employment agreement we agreed to pay Dr.
Davenport a base salary of $140,000 per year. After one year of service Dr.
Davenport would be entitled to a minimum annual bonus of 20% of his annual
salary. We agreed to issue him options to purchase 600,000 shares of our common
stock, with options vesting based on milestones. Upon termination without "just
cause" as defined by this agreement, we would pay Dr. Davenport three months
severance, as well as any unpaid bonuses and accrued vacation. All options
would
become fully vested and he would have 90 days to exercise those options. On
January 15, 2006, Dr. Davenport was terminated at which time he was to receive
his three months severance and accrued vacation, which was payable on each
of
the normal payroll periods. Dr. Davenport had also vested in 400,000 of his
stock options, which expire on April 15, 2006.
On
July
31, 2003, we entered into a three year employment agreement with Geoff Green.
Pursuant to this employment agreement we agreed to pay Mr. Green a base salary
of $100,000 per year. After one year of service he would be entitled to an
annual bonus of $20,000. We agreed to issue him options to purchase 300,000
shares of our common stock, with one third immediately vesting and the remainder
vesting over two years. Upon termination without "just cause" as defined by
this
agreement, we would pay Mr. Green three months severance, as well as any unpaid
bonuses and accrued vacation. No unvested options shall vest beyond the
termination date. In November 2003, Mr. Green also received options to purchase
400,000 shares of our common stock, with vesting based on milestones. In July
2004, Mr. Green accepted the position of President and Acting Chief Executive
Officer and received an increase in salary to $145,000. On November 9, 2004,
Mr.
Green resigned and all of his unvested options terminated. All
of
his vested options expired on February 7, 2005.
On
March
4, 2003, we entered into a three year employment agreement with Ralph M. Ellison
M.D., M.B.A. Pursuant to this employment agreement we agreed to pay Dr. Ellison
a base salary of $200,000 per year. Upon the completion of the equity financing,
Dr. Ellison received an increase in base salary to $300,000 per year, as well
as
a bonus on his anniversary of 30% of his yearly salary. We agreed to issue
him
options to purchase 2,000,000 shares of our common stock, with one third
immediately vesting and the remainder vesting over two years. Upon termination
without "just cause" as defined by this agreement, we would pay Dr. Ellison
six
months severance, as well as any unpaid bonuses and all of his options would
immediately become vested in full. On July 9, 2004, Dr. Ellison resigned from
and entered into a separation agreement and general release in which we agreed
to pay Dr. Ellison six months' severance and provide him with the right to
exercise his 2,000,000 vested options received pursuant to his employment
agreement for a period of one year from his resignation date. These options
expired on July 9, 2005 without being exercised.
Director
Compensation
Directors
who are compensated as full-time employees receive no additional compensation
for service on our Board of Directors or its committees. Each director who
is
not a full-time employee is paid $2,000 for each board or committee meeting
attended ($1,000 if such meeting was attended telephonically).
We
maintain a stock option grant program pursuant to the nonqualified stock option
plan, whereby members of the our Board of Directors who are not full-time
employees receive an initial grant of fully vested options to purchase 50,000
shares of common stock, and subsequent annual grants of fully vested options
to
purchase 50,000 shares of common stock after re-election to our Board of
Directors.
On
November 10, 2004, we entered into a letter agreement with Alexander P. Haig,
to
serve as the Chairman of the Board of Directors. We agreed to issue to him
options to purchase 1,000,000 shares of our common stock, with 500,000 vesting
immediately and 500,000 vesting in one year. In addition, on November 10, 2004,
we entered into a one year consulting agreement with Worldwide Associates,
Inc.,
for a fee of $16,500 per month. Following his resignation from the Board of
Directors on August 24, 2006, Mr. Haig had three months within which to exercise
his stock options. These options have now expired. Mr. Haig is the managing
director of Worldwide Associates, Inc. and ret. General Alexander M. Haig,
Jr.
is its President.
On
December 23, 2002, we entered into a letter agreement with ret. General
Alexander M. Haig, Jr. to serve as the Chairman of the Board of Directors.
We
agreed to pay General Haig a retainer of $50,000 per year, and issued to him
options to purchase 2,000,000 shares of our common stock. On November 10, 2004,
following his resignation from the Board of Directors, the retainer portion
of
this agreement was terminated and General Haig was given three years in which
to
exercise his options.
Report
of the Compensation Committee of the Board of Directors on Executive
Compensation
The
Compensation Committee of the Board of Directors is comprised of independent
directors. The Compensation Committee provides overall guidance on compensation
and benefits policy. In addition, the Compensation Committee approves and
monitors:
| · |
executive
compensation and benefits programs;
|
| · |
executive
employment agreements
|
| · |
1995
Amended and Restated Omnibus Incentive Plan;
and
|
| · |
2005
Equity Incentive Plan.
|
The
primary objectives of the Compensation Committee are to ensure that the
executive compensation and benefits programs:
| · |
are
competitive with other growing companies of similar size and
business;
|
| · |
are
effective in driving performance to achieve financial goals and create
stockholder value;
|
| · |
are
cost-efficient and fair to employees, management and stockholders;
and
|
| · |
are
designed to attract, motivate, reward, and retain the competent and
talented executives needed.
|
To
achieve these objectives, the Compensation Committee meets at least once and
usually several times during each fiscal year to review the existing
compensation and benefits programs and to consider modifications that seek
to
provide a direct relationship between executive compensation and sustained
corporate performance.
The
Compensation Committee makes executive compensation decisions on the basis
of
total remuneration and seeks to create an integrated total remuneration program
structured to balance short and long term financial goals. A significant amount
of total compensation is comprised of bonus provisions which are specified
in
their contracts and which are intended to align executive interest with
stockholder interest.
The
Compensation Committee recommends to the Board of Directors a salary within
a
designated band for the respective executives which is based on merit,
performance and length of service. Bonus provisions for all executives are
based
on increase (if any) of net incremental profit over prior year highest net
profit.
Non-executive
employees were granted stock options under the 1995 Amended and Restated Omnibus
Incentive Plan and the 2005 Equity Incentive Plan, approved by the stockholders,
also in order to motivate, reward, and retain them while meeting goals and
allowing them to share in the growth.
In
general, under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), we cannot deduct, for federal income tax purposes, compensation
in
excess of $1,000,000 paid to certain executive officers. This deduction limit
does not apply, however, to compensation that constitutes "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code
and the Treasury regulations promulgated thereunder. The Compensation Committee
has considered the limitations on deductions imposed by Section 162(m) of the
Code, and it is the Compensation Committee's present intention that, as long
as
it is consistent with its overall compensation objectives, substantially all
federal income tax deductions attributable to executive compensation should
not
be subject to the deduction limitation of Section 162(m) of the
Code.
Submitted
by the Compensation Committee,
James
S.
Kuo, M.D., M.B.A.
Steve
H.
Kanzer, C.P.A., J.D.
Stock
Performance Graph
The
following graph compares the changes over the last five years in the value
of
$100 invested in (i) our Common Stock, (ii) the Standard & Poor's 500 Stock
Index ("S&P 500 Index") and (iii) the American Stock Exchange Biotech Stocks
indices. The year end values of each investment are based on share price
appreciation and the reinvestment of all dividends.
Historical
stock price performance shown on the performance graph is not necessarily
indicative of future stock price performance.
|
Year
|
DOR
BioPharma, Inc.
|
S&P
500 Index
|
Peer
Group Index: BTK Index - BioTech on Amex
|
|
2001
|
103.00
|
86.96
|
91.53
|
|
2002
|
47.00
|
66.64
|
53.32
|
|
2003
|
78.00
|
84.22
|
77.26
|
|
2004
|
64.00
|
91.79
|
85.80
|
|
2005
|
27.00
|
94.55
|
107.34
|
RELATED
PARTY TRANSACTIONS
In
September 2003, we completed a private placement of our common stock at $0.79
per share realizing gross proceeds of $5,410,348. In addition to common stock,
for each share purchased investors received a warrant to purchase an additional
share of common stock exercisable at $0.8756 per share until the earlier of
an
average closing price of our common stock of $1.68 per share or September 15,
2008. Purchasers in this private placement, on the same terms and conditions
as
the other subscribers, included Steve H. Kanzer, a member of our Board of
Directors, who purchased for $100,000, 125,628 shares of common stock and
warrants exercisable at $0.79 per share to purchase an additional 125,628
shares. Accredited Equities, Inc., a broker-dealer owned solely by Mr. Kanzer
received cash compensation of approximately $38,000, and warrants exercisable
for five years at $0.8756 per share to purchase 150,752 shares of common stock
were issued to an employee of Accredited Equities, Inc. (other than Mr. Kanzer)
in consideration for placement services rendered as a selected dealer to the
placement agent of this private placement.
In
connection with our 2003 private placement, Evan Myrianthopoulos, one of our
Directors acted as a selected dealer to introduce certain investors to our
company. Mr. Myrianthopoulos received cash compensation of approximately $62,000
and 256,314 warrants to purchase shares of common stock exercisable for five
years at $0.8756 per share.
In
connection with our 2003 private placement, Paramount Capital, Inc., an
investment bank associated with a stockholder owning over 5% of our common
stock, acted as our placement agent and was paid cash compensation of
approximately $380,000, was issued warrants to purchase 822,907 shares of our
common stock exercisable for five years at $0.8756 per share and received an
extension for an additional five years on pre-existing warrants to purchase
2,108,708 shares of common stock at $1.82 per share.
In
March
2003, we issued 150,000 options each to Peter Salomon and Larry Kessel, members
of our Board of Directors, as a finder's fee in connection with the hiring
of
Ralph Ellison, M.D. as our CEO and President.
In
January 2003, in connection with our execution of definitive license agreements
for our ricin and botulinum toxin vaccines, we issued to Accredited Ventures,
Inc., a company solely owned by Mr. Kanzer, a member of our board of directors,
150,000 options to purchase our common stock exercisable at $0.58 per share
and
150,000 options to purchase our common stock exercisable at $1.28 per share.
Mr.
Kanzer has requested that half of these options be redirected to an employee
of
Accredited Ventures, Inc.
See
also
the description of our consulting agreement with Worldwide Associates, Inc.
set
forth under "Director Compensation." Mr. Haig is the managing director and
ret.
General Alexander M. Haig, Jr. is the President of Worldwide Associates,
Inc.
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
table
below provides information regarding the beneficial ownership of the Common
Stock as of November 3, 2006. The table reflects ownership by: (1) each
person or entity who owns beneficially 5% or more of the shares of our
outstanding common stock, (2) each of our directors, (3) each of the Named
Executive Officers, and (4) our directors and officers as a group. Except as
otherwise indicated, and subject to applicable community property laws, we
believe the persons named in the table have sole voting and investment power
with respect to all shares of common stock held by them. Except as otherwise
indicated, each stockholder's percentage ownership of our common stock in the
following table is based on 68,778,401 shares of common stock outstanding as
of
November 3, 2006.
|
Name
of Beneficial Owner
|
Shares
of Common Stock Beneficially Owned
|
Percent
of Class
|
|
Elliott
Bossen
|
3,521,000
|
5.00%
|
|
SF
Capital Partners (2)
|
3,817,046
|
5.42%
|
|
Christopher
J. Schaber (3)
|
1,052,223
|
1.51%
|
|
Alexander
P. Haig (4)
|
1,050,000
|
1.5%
|
|
Steve
H. Kanzer (5)
|
2,135,635
|
3.06%
|
|
James
S. Kuo (6)
|
155,000
|
*
|
|
T.
Jerome Madison (7)
|
100,000
|
*
|
|
Evan
Myrianthopoulos (8)
|
1,250,118
|
1.79%
|
|
Michael
T. Sember (9)
|
1,700,880
|
2.42%
|
|
James
Clavijo (10)
|
249,997
|
*
|
|
Robert
Brey (11)
|
340,000
|
*
|
|
All
directors and executive officers as a group (9 persons)
|
8,206,744
|
9.14%
|
*
Indicates less than 1%.
(1)
Includes 1,665,000 shares of common stock issuable upon exercise of warrants
until August 2010. Reference to this was as reported on Schedule 13G filed
with
the SEC on March 21, 2005. According to the Schedule 13G, filed with the SEC
on
October 3, 2006, Elliot Bossen states that he is the beneficial owner of all
these shares. Elliot Bossen is the managing member of Silverback Asset
Management, LLC. The address for Elliot Bossen is 1414 Raleigh Road, Suite
250,
Chapel Hill, NC 27517.
(2)
Includes 1,139,387 shares of common stock beneficially owned by SF Capital
Partners Ltd, 1,012,659 shares of common stock issuable upon exercise of
warrants within 60 days and 1,665,000 shares of common stock issuable upon
exercise of warrants until August 2010. Reference to this was as reported on
Schedule 13G filed with the SEC on February 15, 2005. According to this Schedule
13G, Michael A. Roth and Brian J. Stark may be deemed to be beneficial owners
of
these shares as a result of their acting as managing members of Stark Offshore
Management, LLC, which acts as investment manager and has sole power to direct
the management of SF Capital. The address for SF Capital Partners Ltd. is 3600
South Lake Drive St. Francis, WI 53235.
(3)
Represents 972,223 shares underlying options to purchase common stock within
60
days of November 3, 2006 and 80,000 common stock shares issued for consulting
services prior to joining the Company. The address of Dr. Schaber is c/o DOR
BioPharma, 1101 Brickell Ave., Suite 701-S, Miami, FL 33131.
(4)
Consists of 1,050,000 shares underlying options to purchase common stock within
60 days of November 3, 2006. These stock options expired on November 22,
2006. The address of Mr. Haig is c/o DOR BioPharma, 1101 Brickell Ave., Suite
701-S, Miami, FL 33131.
(5)
Includes 1,069,437 shares of common stock owned by Mr. Kanzer, 349,398 warrants
to purchase shares of common stock and 716,800 shares underlying options to
purchase common stock within 60 days of November 3, 2006. The address of
Mr. Kanzer is c/o DOR BioPharma, 1101 Brickell Ave., Suite 701-S, Miami, FL
33131.
(6)
Includes 150,000 shares underlying options to purchase common stock and 5,000
warrants to purchase shares of common stock within 60 days of November 3,
2006. The address of Dr. Kuo is c/o DOR BioPharma, 1101 Brickell Ave., Suite
701-S, Miami, FL 33131.
(7)
Includes 100,000 shares underlying options to purchase common stock within
60
days of November 3, 2006. These stock options expire on November 23, 2006.
The address of Mr. Madison is c/o DOR BioPharma, 1101 Brickell Ave., Suite
701-S, Miami, FL 33131.
(8)
Includes 90,220 shares of common stock owned by Mr. Myrianthopoulos, 883,336
shares underlying options to purchase common stock and 276,562 warrants to
purchase common stock within 60 days of November 3, 2006. The address of
Mr. Myrianthopoulos is c/o DOR BioPharma, 1101 Brickell Ave., Suite 701-S,
Miami, FL 33131.
(9)
Includes 180,440 shares of common stock owned by Mr. Sember, 1,340,000 shares
underlying options to purchase common stock and 180,440 warrants to purchase
common stock within 60 days of November 3, 2006. The address of Mr. Sember
is c/o DOR BioPharma, 1101 Brickell Ave., Suite 701-S, Miami, FL 33131.
(10)
Includes 249,997 shares underlying options to purchase common stock within
60
days of November 3, 2006. The address of Mr. Clavijo is c/o DOR BioPharma,
1101 Brickell Ave., Suite 701-S, Miami, FL 33131.
(11)
Includes 340,000 shares underlying options to purchase common stock within
60
days of November 3, 2006. The address of Dr. Brey is c/o DOR BioPharma,
1101 Brickell Ave., Suite 701-S, Miami, FL 33131.
Equity
Compensation Plan Information
|
Plan
Category
|
Number
of Securities to be issued upon exercise of outstanding options,
warrants
and rights (a)
|
Weighted-Average
Exercise Price Outstanding options, warrants and rights
(b)
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (excluding securities reflected in column (a)
(c)
|
|
Equity
compensation plans approved by security holders (1)
|
20,000,000
|
$
0.49
|
3,000,644
|
(1)
Includes our 1995 Amended and Restated Omnibus Incentive Plan and our 2005
Equity Incentive Plan.
PROPOSAL
2
AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
General
Our
Amended and Restated Certificate of Incorporation currently provides for
150,000,000 shares of authorized Common Stock. On November 24, 2006, our Board
of Directors adopted a resolution to amend the Amended and Restated Certificate
of Incorporation to increase the authorized number of shares of Common Stock
to
250,000,000, subject to stockholder approval of the amendment. No changes will
be made to the number of authorized shares of our preferred stock.
The
proposed amendment to the Amended and Restated Certificate of Incorporation
will
be effected by amending the first two introductory paragraphs of Article FOURTH
thereof to read in full as follows:
"The
total number of shares of capital stock of all classes which the Corporation
shall have authority to issue is two hundred fifty five million (255,000,000)
shares, of which two hundred fifty million (250,000,000) shares, of par value
of
$.001 per share, shall be of a class designated "Common Stock," four million
six
hundred thousand (4,600,000) shares, of a par value of $.001 per share, shall
be
of a class designated "Preferred Stock," two hundred thousand (200,000) shares,
of a par value of $.05 per share, shall be of a class designated "Series B
Convertible Preferred Stock," and two hundred thousand (200,000) shares, of
a
par value of $.05 per share, shall be of a class designated "Series C
Convertible Preferred Stock."
The
designations, powers, preferences, privileges, and relative, participating,
option, or other special rights and qualifications, limitations, or restrictions
of the above classes of capital stock shall be as follows:"
A
copy of
the proposed amendment to our Amended and Restated Certificate of Incorporation
is set forth in Annex A attached hereto.
Purpose
of Charter Amendment
As
of
November 3, 2006, we had 68,778,401 shares of Common Stock outstanding. In
addition, as of such date, 36.628.789 shares were reserved for issuance upon
exercise of outstanding warrants and 11,649,339 shares were reserved for
issuance upon exercise of presently outstanding options under the 1995 Amended
and Restated Omnibus Incentive Plan and options granted under the 2005 Equity
Incentive Plan. Based upon the foregoing number of outstanding and reserved
shares of Common Stock, we have 32,943,471 shares remaining available for other
purposes. We also have 3,000,644 shares available for future option grants
under
the 2005 Equity Incentive Plan and 0 shares available for future option grants
under the 1995 Amended and Restated Omnibus Incentive Plan.
The
proposed increase in the number of shares available for issuance under the
Certificate is intended to provide the Board of Directors with authority,
without further action of the stockholders, to issue the additional shares
of
Common Stock, from time to time in such amounts as the Board of Directors deems
necessary. Without limitation of the foregoing, the additional shares may be
issued in connection with (1) capital raising transactions through the sale
of
Common Stock and/or securities convertible into or exercisable for Common Stock
in the private and/or public equity markets to support a higher level of growth,
respond to competitive pressures, develop new products and services and support
new strategic partnership expenditures and (2) strategic partnering or
acquisition transactions involving the issuance of our securities.
We
are
currently negotiating various financing alternatives that may involve the
issuance of additional shares of Common Stock. We have not made a determination
or commitment as to whether we will pursue these or any other financing at
this
time.
In
the
absence of a proportionate increase in our earnings and book value, an increase
in the aggregate number of outstanding shares of Common Stock caused by the
issuance of the additional shares would dilute the earnings per share (including
projected future earnings per share) and book value per share of all outstanding
shares of our Common Stock. If such factors were reflected in the price per
share of the Common Stock, the potential realizable value of a stockholder's
investment could be adversely affected. An issuance of additional shares of
Common Stock could therefore have an adverse effect on the potential realizable
value of a stockholder's investment. The holders of outstanding shares of Common
Stock have no preemptive rights to purchase additional shares.
The
proposed increase in the authorized number of shares of Common Stock could
have
other effects on our stockholders. The increase could deter takeovers, in that
additional shares could be issued (within the limits imposed by applicable
law)
in one or more transactions that could make a change in control or takeover
of
us more difficult. For example, additional shares could be issued by us so
as to
dilute the stock ownership or voting rights of persons seeking to obtain
control. Similarly, the issuance of additional shares to certain persons allied
with our management could have the effect of making it more difficult to remove
our current management by diluting the stock ownership or voting rights of
persons seeking to cause such removal.
Recommendation
of the Board of Directors
The
Board
of Directors recommends that you vote "FOR" the approval of the amendment to
our
Amended and Restated Certificate of Incorporation.
PROPOSAL
3
RATIFICATION
OF INDEPENDENT AUDITORS
The
Audit
Committee of the Board of Directors appointed Sweeney, Gates & Co.,
independent certified public accountants, as auditors of our financial
statements for the year ending December 31, 2006, subject to the ratification
of
such appointment by stockholders at the Annual Meeting.
A
representative of Sweeney, Gates & Co. is expected to be available at the
annual meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
Recommendation
of the Board of Directors
The
Board
of Directors recommends that you vote "FOR" ratification of Sweeney, Gates
&
Co. as our independent auditors for the year ending December 31, 2006.
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December
31,
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|
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
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Audit
fees
|
|
$
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91,265
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$
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65,574
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|
|
Audit
related fees
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|
|
4,801
|
|
|
-
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Tax
fees
|
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12,956
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|
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22,488
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|
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Total
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$
|
109,022
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$
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88,062
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Audit
Fees
The
aggregate fees billed during the years ended December 31, 2005 and 2004 by
Sweeney, Gates & Co., our principal accountants in 2005 and 2004, for the
audit of our financial statements for each of those years and the review of
our
financial statements included in our Quarterly Reports on Form 10-QSB during
those fiscal years were $91,265 and $65,574, respectively.
Audit
Related Fees
Neither
of our principal accountants billed us any fees during the years ended December
31, 2005 and 2004 for any assurance and related services.
Tax
Fees
Our
current principal accountants Sweeney, Gates & Co. billed us $12,956 and
$22,488 for tax compliance, tax advice and tax planning for the year ended
December 31, 2005 and 2004.
Other
Fees
Neither
of our principal accountants billed us for any services or products other than
as reported above during our fiscal years ended December 31, 2005 and 2004.
Pre
Approval Policies and Procedures
The
audit
committee has adopted a policy that requires advance approval of all audit
services and permitted non-audit services to be provided by the independent
auditor as required by the Exchange Act. The audit committee must approve the
permitted service before the independent auditor is engaged to perform it.
The
audit
committee approved all of the services described above in accordance with its
pre-approval policies and procedures.
OTHER
MATTERS
Deadline
for Stockholder Proposals
Under
SEC
Rule 14a-8, stockholder proposals for the annual meeting of stockholders to
be
held in 2007 will not be included in the Proxy Statement for that meeting unless
the proposal is proper for inclusion in the Proxy Statement and for
consideration at the next annual meeting of stockholders, and is received by
our
Secretary at our executive offices, no later than
August 31, 2007. Stockholders
must also follow the other procedures prescribed in SEC Rule 14a-8 under the
Exchange Act, as well as our By-Laws, which contain requirements that are
separate and apart from the SEC requirements of Rule 14a-8. Our By-Laws provide
that stockholders desiring to bring business before the 2007 annual meeting,
including nomination of a person for election to our Board of Directors, must
provide written notice to our Secretary at our executive offices no earlier
than
75 days, and no later than 45 days, before the one year anniversary of the
mailing of this Proxy Statement. The written notice must include the information
required by Section 2.4 of the By-Laws: (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director,
all
information relating to such person as would be required to be disclosed in
solicitations of proxies for the election of such nominee as a director pursuant
to Regulation 14A under the Exchange Act, and such person's written consent
to
serve as a director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder,
as
they appear on our books, and of such beneficial owner, (ii) the class and
number of shares of the Company that are owned beneficially and of record by
such stockholder and such beneficial owner, and (iii) whether either such
stockholder or such beneficial owner intends to deliver a proxy statement and
form of proxy to holders of, in the case of a proposal, at least the percentage
of our voting shares required under applicable law to carry the proposal or,
in
the case of a nomination or nominations, a sufficient number of holders of
our
voting shares to elect such nominee or nominees.
Householding
of Annual Meeting Materials
Some
banks, brokers and other nominee record holders may be participating in the
practice of "householding" proxy statements and annual reports. This means
that
only one copy of our proxy statement or annual report may have been sent to
multiple stockholders in your household. We will promptly deliver a separate
copy of either document to you if you notify our Secretary at our executive
offices. If you wish to receive separate copies of the annual report and proxy
statement in the future, or if you are receiving multiple copies and would
like
to receive only one copy for your household, you should contact your bank,
broker, or other nominee record holder, or you may contact us at our executive
offices.
Financial
Statements and Exhibits to Form 10-KSB
Our
financial statements are contained in our Annual Report on Form 10-KSB for
our
fiscal year ended December 31, 2005 that was filed with the Securities and
Exchange Commission on March 31, 2006, a copy of which is included with this
proxy statement. Such report and the financial statements contained therein
are
not to be considered as a part of this soliciting material.
The
Form
10-KSB included with this proxy statement does not include copies of the
exhibits to that filing. We will furnish any such exhibit upon payment of a
reasonable fee by request sent to us, c/o Corporate Secretary, Dor BioPharma,
Inc., 1101 Brickell Avenue, Suite 701-S, Miami, Florida 33131.
Other
Matters
Management
knows of no matters that are to be presented for action at the meeting other
than those set forth above. If any other matters properly come before the
meeting, the persons named in the enclosed form of proxy will vote the shares
represented by proxies in accordance with their judgment on such matters.
The
cost
of this proxy solicitation will be borne by us. In addition to the solicitation
of proxies by mail, our directors, officers and employees may also solicit
proxies by telephone, facsimile, e-mail or other forms of communication, without
special compensation for such activities. We will also request banks, brokers,
fiduciaries, custodians, nominees and certain other record holders to send
proxies, proxy statements and other materials to their principals at our
expense. We will reimburse such banks, brokers, fiduciaries, custodians,
nominees and other record holders for their reasonable out-of-pocket expenses
of
solicitation.
By
order
of the Board of Directors,
James
Clavijo
Secretary
ANNEX
A
CERTIFICATE
OF AMENDMENT
TO
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
DOR
BIOPHARMA, INC.
It
is
hereby certified that:
1. The
name
of the corporation (hereinafter called the “Corporation”) is: DOR BioPharma,
Inc.
2. The
Amended and Restated Certificate of Incorporation, as amended, of the
Corporation is hereby further amended by striking out the first introductory
paragraphs of Article IV thereof, and by substituting in lieu thereof, the
following new introductory paragraphs:
“The
total number of shares of capital stock of all classes which the Corporation
shall have authority to issue is two hundred fifty-five million (255,000,000)
shares, of which two hundred fifty million (250,000,000) shares, of par value
of
$.001 per share, shall be of a class designated “Common Stock,” four million six
hundred thousand (4,600,000) shares, of a par value of $.001 per share, shall
be
of a class designated “Preferred Stock,” two hundred thousand (200,000) shares,
of a par value of $.05 per share, shall be of a class designated “Series B
Convertible Preferred Stock,” and two hundred thousand (200,000) shares, of a
par value of $.05 per share, shall be of a class designated “Series C
Convertible Preferred Stock.”
The
designations, powers, preferences, privileges, and relative, participating,
option, or other special rights and qualifications, limitations or restrictions
of the above classes of capital stock shall be as follows:”
3. The
Amendment of the Certificate of Incorporation herein certified has been duly
adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
Signed
on
December , 2006.
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Name:
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Title:
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THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DOR
BIOPHARMA, INC.
1101
Brickell Avenue, Suite 701-S, Miami, FL 33131
ANNUAL
MEETING OF STOCKHOLDERS - December 29, 2006
The
undersigned hereby appoints Christopher J. Schaber, Ph.D., the Chief Executive
Officer and President of DOR BioPharma, Inc, and Evan Myrianthopoulos, the
Chief
Financial Officer of DOR BioPharma, Inc., or either of them, each with the
power
of substitution, and hereby authorizes each of them to represent and to vote
as
designated on the reverse side of this proxy card, all of the shares of Common
Stock of DOR BioPharma, Inc. that the undersigned is entitled to vote at the
annual meeting of stockholders to be held at 10:30 a.m., Eastern Daylight Time,
on December 29, 2006 at the
J.W.
Marriott on the 5th
Floor,
1109 Brickell Avenue, Miami, FL 33131,
or any
adjournment or postponement thereof.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE OF THIS PROXY CARD FOR
THE
BOARD OF DIRECTORS AND FOR EACH OF THE OTHER PROPOSALS SET FORTH ON THE REVERSE
SIDE.
The
Board
of Directors recommends you vote 'FOR' the nominees listed on the reverse side
of this proxy card for the Board of Directors and 'FOR' the ratification of
the
appointment of Sweeney, Gates & Co. as the independent auditors for the
fiscal year ending December 31, 2006.
CONTINUED
AND TO BE SIGNED ON REVERSE
ANNUAL
MEETING OF STOCKHOLDERS OF
DOR
BIOPHARMA, INC.
December
29, 2006
Proxy
Voting Instructions
MAIL—Date,
sign and mail your proxy card in the envelope provided as soon as
possible
-or-
TELEPHONE—Call
toll-free 1-800-PROXIES (1-800-776-9437) from any touch-tone telephone and
follow the instructions. Have your proxy card available when you
call.
-or-
INTERNET—Access
www.voteproxy.com
and
follow the on-screen instructions. Have your proxy card available when you
access the web page.
You
may
enter your voting instructions at 1-800-PROXIES or www.voteproxy.com
up until
11:59 P.M. Easter Time the day before the cut-off or meeting date.
Company
Number:
Account
Number:
/Please
detach along perforated line and mail in the envelope provided IF you are not
voting via telephone or the Internet/
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR"
PROPOSALS 2, 3 and 4.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE /X/
1.
To
elect six directors to serve until the next annual meeting of stockholders
or
until their respective successors have been duly elected and qualified:
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_FOR
ALL NOMINEES
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_
WITHHOLD AUTHORITY FOR
ALL NOMINEES
_
FOR ALL EXCEPT (See instructions below
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_Steve
H. Kanzer, C.P.A., J.D.
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_James
S. Kuo, M.D., M.B.A.
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_Evan
Myrianthopoulos
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_
Christopher J. Schaber, Ph.D.
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*(INSTRUCTION:
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To
withhold authority to vote for any individual nominee(s), mark "FOR
ALL
EXCEPT" and fill in the circle next to each nominee you wish to withhold,
as shown here: /x/
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2.
To
approve the amendment to the Company’s Amended and Restated Certificate of
Incorporation:
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FOR
_
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AGAINST
_
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ABSTAIN
_
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3.
To
ratify the appointment of Sweeney, Gates & Co. as the independent auditors
for fiscal year ending December 31, 2006:
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FOR
_
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AGAINST
_
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ABSTAIN
_
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4.
To
transact such other business as may properly come before the meeting and any
postponements or adjournments thereof.
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FOR
_
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AGAINST
_
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ABSTAIN
_
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This
proxy when properly signed will be voted in the manner directed herein by the
undersigned stockholder. IF NO DIRECTION IS PROVIDED, THIS PROXY WILL BE VOTED
AS RECOMMENDED BY THE BOARD OF DIRECTORS.
IMPORTANT
- PLEASE SIGN AND RETURN PROMPTLY
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
_
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Signature:
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Date:
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Signature:
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Date:
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Note:
Please
sign exactly as name appears on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title
as
such. If signer is a partnership, please sign in partnership name by authorized
person.