As filed, via EDGAR, with the Securities and Exchange Commission on May 24,
2002.
File No.:________
ICA No.: _________
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant |_|
Filed by a party other than the registrant |X|
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 pursuant to
Rule 14a-11(c) or Rule 14a-12
DOR BIOPHARMA, INC.
(Name of Registrant as Specified in Its Charter)
STEVE H. KANZER
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
CONSENT STATEMENT
OF
STEVE H. KANZER
FOR
DOR BIOPHARMA, INC.
This Consent Solicitation Statement (this "Consent Statement") is
furnished to you by Steve H. Kanzer (the "Solicitor") in connection with a
solicitation of written consents from the holders of common stock, par value
$0.001 per share (the "Common Stock"), and Series B convertible preferred stock,
par value $0.05 per share (the "Preferred Stock"; together with the Common
Stock, the "Stock"), of DOR Biopharma, Inc., a Delaware corporation ("DOR" or
the "Company"), to take the following actions without a meeting of DOR's
stockholders, as permitted by the Delaware General Corporation Law (the "DGCL"):
1. Remove (i) all current members of DOR's Board of Directors (the
"Board of Directors") other than Steve H. Kanzer, Paul Rubin, M.D., Richard
Dunning, Peter Kleim, Guy Rico, and Steven Thornton (the "Remaining Directors"),
and (ii) any other person or persons (other than the persons elected pursuant to
this consent) elected or appointed to the Board of Directors prior to the
effective time of this stockholder action in addition to or in lieu of any of
such current members (including any persons elected or appointed in lieu of the
Remaining Directors) to fill any newly-created directorship or vacancy on the
Board of Directors or otherwise (the "Director Removal Proposal").
2. Elect Gilbert Goldstein, Larry J. Kessel, M.D. and Peter
Salomon, M.D., FACG (collectively, the "Nominees") as directors of DOR to serve
until their respective successors are duly elected and qualified (the "Director
Election Proposal").
3. Repeal any By-Laws adopted by the Board of Directors subsequent
to May 23, 2002, and prior to the effectiveness of the Solicitor Proposals (as
defined below), other than the amendment to the By-Laws contemplated by this
Consent Statement (the "By-Laws Proposal"; collectively with the Director
Removal Proposal, and the Director Election Proposal, the "Solicitor
Proposals").
The effectiveness of any one Solicitor Proposal is not conditioned upon
the adoption of the other Solicitor Proposals.
The Solicitor asks that stockholders of DOR consent to each of the
Solicitor Proposals by marking the enclosed white consent form appropriately,
signing and dating it, and returning it promptly in accordance with the
instructions set forth below.
This Consent Statement and the enclosed consent form are first being
furnished to DOR's stockholders on or about May __, 2002.
SUMMARY OF CONSENT PROCEDURE
The Solicitor Proposals will become effective on the date when the
written consents of holders of a majority of the shares of Stock outstanding on
the record date as determined in accordance with Delaware law (the "Record
Date") are delivered to DOR, so long as each of those consents is delivered to
DOR within 60 days of the earliest dated consent delivered to DOR. Section
213(b) of the DGCL provides that a corporation's board of directors may fix a
record date for a consent
solicitation, but that the date selected may not be more than ten days after the
date upon which the resolution fixing the record date is adopted by the board.
Section 213(b) also provides that if the board does not fix a record date, the
record date will be the first date on which a signed written consent is
delivered to the corporation. Steve H. Kanzer delivered a signed written consent
to DOR on May 24, 2002. Accordingly, the Solicitor believes that the Record Date
will be May 24, 2002, the date Mr. Kanzer's written consent was received by DOR.
The solicitation period will terminate after 60 days from the Record Date; in
other words, it will run through July 22, 2002.
To the Solicitor' knowledge, there were at the close of business on the
Record Date approximately 20,825,710 shares of Common Stock and 108,442 shares
of Preferred Stock outstanding and entitled to vote. Each holder of Common Stock
is entitled to one vote for each share of Common Stock held by it as of the
Record Date. Each holder of Preferred Stock is entitled to one vote for each
share of Common Stock into which a share of Preferred Stock was convertible as
of the Record Date. As of the record date, the Solicitor believe each share of
Preferred Stock is convertible into 13.55 shares of Common Stock. Consequently,
the Preferred Stock was as of the Record Date entitled to an aggregate of
1,469,404 votes. The total voting power represented by the Common Stock and the
Preferred Stock as of the Record Date is 22,295,114, with 11,147,557 votes
constituting the majority required for adoption of the Solicitor Proposals.
As of the Record Date, Mr. Kanzer owned 391,674 shares of Common Stock,
and options exercisable within 60 days for 416,800 shares of Common Stock,
representing in the aggregate approximately 3.62% of the voting power of the
outstanding Stock as of the Record Date. As of the Record Date, Mr. Goldstein
owned 50,423 shares of Common Stock representing in the aggregate approximately
0.23% of the voting power of the outstanding Stock as of the Record Date. Mr.
Goldstein's three adult children own approximately 16,807 shares of Common
Stock, as to which Mr. Goldstein disclaims beneficial ownership. As of the
Record Date, Dr. Kessel owned no shares of Common Stock, although his wife owns
12,500 shares of Common Stock as to which Dr. Kessel disclaims beneficial
ownership. As of the Record Date, Dr. Salomon does not own any shares of Common
Stock. Accordingly, taken together the Solicitor and the Nominees own a total of
442,097 shares of Common Stock and options exercisable within 60 days,
representing in the aggregate approximately 3.85% of the outstanding Stock as of
the Record Date.
The Solicitor recommends that you consent to each of the Solicitor
Proposals by marking the enclosed white consent form appropriately, signing and
dating it, and returning it promptly in the postage-paid envelope provided.
Failure to sign and return your consent will have the same effect as voting
against the Solicitor Proposals.
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, you should contact the person responsible for your account
and give instructions for the consent form representing your shares to be
marked, dated, signed and mailed. Only that institution can execute a consent
form with respect to your shares held in the name of that institution and only
upon receipt of specific instructions from you. The Solicitor urges you to
confirm in writing your instructions to the person responsible for your account
and to provide a copy of those instructions to the Solicitor the address set
forth below so that the Solicitor are aware of all instructions given and can
attempt to ensure that those instructions are followed.
The Solicitor currently intends to cease the solicitation of consents
once he has determined that valid and unrevoked consents representing a majority
of the
voting power represented by issued and outstanding shares of Stock as of the
Record Date have been obtained and to deliver those consents to DOR in the
manner required by Section 228 of the DGCL as soon as practicable thereafter.
When the Solicitor Proposals for which consents are given become effective, a
stockholder will be unable to revoke his or her consent.
If the Solicitor Proposals become effective, DOR will as required by the
DGCL promptly notify by mail the stockholders who have not consented to the
Solicitor Proposals.
Please return your completed consent form (or institution
instructions), and direct any questions, to Steve H. Kanzer at the following
coordinates:
Steve H. Kanzer
801 Brickell Ave., Suite 900
Miami, FL 33139
Phone: (305) 789-6691
Facsimile: (305) 789-6664
WHY YOU SHOULD CONSENT TO THE SOLICITOR PROPOSALS
The Solicitor is concerned about the Company's current rate of spending and
headcount relative to its available working capital. According to the Company's
most recent 10QSB filing, the Company had $4.7 million in working capital, with
a quarterly loss of $1.9 million (an increase of 61% from a loss of $1.2 million
for the first quarter 2001). The Solicitor disagrees in particular to the
Company's rate of spending in the areas of management salaries, headcount, legal
and accounting expenditures, and research and development relating to early
stage, as opposed to late stage, pharmaceutical product opportunities. In
addition, according to the Company's most recent 10QSB filing, "the Company may
also seek to obtain funds from possible future public or private sales of our
securities". The Solicitor would consider such a sale to be presently
inadvisable given the company's low stock price.
The Solicitor believes that DOR has substantial inherent value, has sufficient
working capital to meet its objectives, if properly focused. The Solicitor is
proposing an alternative slate of directors that is independent of the Company's
current or former management. If the consent solicitation is successful, the
Solicitor is hopeful that the reconstituted board will direct management to: (i)
institute a significant cost cutting program, reduction of Company management
and reduction in headcount from its current level of 22 full-time employees;
(ii) preserve the Company's existing capital ($4.7 million as of the most recent
10QSB filing); (iii) focus the Company's remaining existing financial and human
resources on completing the ongoing pivotal phase III clinical trial of orBecTM1
for Intestinal Graft-Vs-Host Disease (IGVHD) and Phase II trial for Crohn's
disease; and (iv) as a consequence, hopefully avoid the need for any immediate
dilutive financing until after completion of such trials.
RESULTS OF THE DOR 2002 ANNUAL MEETING OF SHAREHOLDERS
At DOR's Annual Meeting of Stockholders held on May 23, 2002 (the
"2002 Annual Meeting"), Mr. Kanzer nominated three individuals to be considered
for election to the board of directors of DOR, Mr. Goldstein, Dr. Kessel and a
third individual, Mr. Nicholas Stergis. At the 2002 Annual Meeting, Mr. Kanzer
voted his 380,258 shares of Common Stock and voting proxies from eight (8)
additional stockholders of record
representing an additional approximately 7,948,850 shares of Common Stock and
shares of Common Stock into which the Preferred Stock is convertible in favor of
election of Mr. Goldstein, Dr. Kessel and Mr. Stergis. At the 2002 Annual
Meeting, the approximately 8,099,621 total votes cast in favor of Mr. Goldstein,
Dr. Kessel and Mr. Stergis were not sufficient to successfully elected these
individuals to the board of directors due to the approximately 11,500,000
majority of votes cast in favor of the reelection of Mr. Colin Bier, the current
Chairman and Chief Executive Officer of DOR, Mr. Michael Rosen, the current
President and Chief Operating Officer of DOR and Kenneth Tempero, M.D., Ph.D.,
the former Chairman of DOR, whom this Consent seeks to remove from the board of
directors. Of the 11,500,000 shares voting in favor of Messrs. Bier, Rosen and
Dr. Tempero, approximately 8,400,000 shares were voted by transfer agents and
various brokerage firms holding shares of Common Stock in "street name" on
behalf of other beneficial owners. The Solicitor believes that most of these
transfer agents and brokerage firms have standing instructions to vote such
"street name" shares for which the beneficial owners fail to respond to a
company proxy in a so-called "uncontested election" in favor of the slate of
directors recommended by the company absent alternative instructions received
from the beneficial owners. The true number of votes cast under standing
instructions as described is not known by the Solicitor.
THE SOLICITOR PROPOSALS
The Solicitor is seeking written consents from the holders of shares of
Stock to elect the Nominees and adopt the other Solicitor Proposals and to take
the following actions without a stockholders meeting, as permitted by the DGCL.
The effectiveness of each of the Solicitor Proposals is subject to, and
conditioned upon, the adoption of each of the other Solicitor Proposals by the
holders of record, as of the close of business on the Record Date, of a majority
of the voting power of the shares of Stock then outstanding. If, however, the
By-Laws Proposal is not so adopted, the Solicitor reserves the right to waive
this condition, but only with respect to the By-Laws Proposal.
Board Removal Proposal
This proposal would remove each of the current members of the Board of
directors other than the Remaining Directors (as defined below) and the persons
elected pursuant to this consent. The text of the resolution is as follows:
RESOLVED, that (1) each current member of the Board of Directors of DOR,
other than Steve H. Kanzer, Paul Rubin, M.D., Richard Dunning, Peter Kleim, Guy
Rico, and Steven Thornton (those current members, the "Remaining Directors"),
and (2) any other person or persons (other than the persons elected pursuant to
this consent) elected or appointed to the Board of Directors of DOR prior to the
effective time of this resolution, in addition to or in lieu of any of such
current members (including any persons elected or appointed in lieu of the
Remaining Directors) to fill any newly created directorship or vacancy on the
Board of Directors of DOR, or otherwise, is hereby removed and the office of
each such member of the Board of Directors of DOR is hereby declared vacant.
Delaware law provides that directors of DOR may be removed, with or without
cause, by the holders of a majority of the shares of stock then entitled to vote
at an election of the directors. This Solicitor Proposal would remove three (3)
of the current nine (9) directors (other than the Remaining Directors) so that
the three (3) Nominees would, if elected, constitute, along with the six (6)
Remaining Directors all of the nine (9) members of the Board of Directors. Each
member of the Board of Directors would then serve until a successor is elected
and qualified or until he resigns or is removed.
Director Election Proposal
This proposal would elect Gilbert Goldstein and Drs. Larry J. Kessel
and Peter Salomon as directors of DOR. The text of the resolution is as follows:
RESOLVED, that Gilbert Goldstein, Larry J. Kessel, M.D. and Peter
Salomon, M.D. are hereby elected as directors of DOR, to serve until their
respective successors are duly elected and qualified.
The Solicitor seeks to replace Messrs. Bier, Rosen and Dr. Tempero with
the three (3) Nominees. Pursuant to this Solicitor Proposal, the three (3)
Nominees would, if elected, constitute, along with the six (6) Remaining
Directors all of the nine (9) members of the Board of Directors. The Solicitor
proposes that the Nominees named above, once elected, serve until the next
annual meeting of the stockholders and until their successors have been duly
elected and qualified. Each of the Nominees has consented to serve as a director
of DOR if elected. See "Certain Information Regarding the Solicitor and the
Nominees" for more information about the Nominees.
By-Laws Proposal
This proposal would repeal each provision of any amendment to the
By-Laws adopted subsequent to May 24, 2002 (the day Mr. Kanzer delivered his own
Consent to DOR and initailly filed his consent solicitation documents for review
by the Securities and Exchange Commission ("SEC")), and prior to the
effectiveness of the Solicitor Proposals, other than the amendment to the
By-Laws contemplated by this Consent Statement. This proposal is designed to
prevent the existing Board of Directors from taking actions to amend the By-Laws
which might prevent the stockholders from accomplishing the objectives described
in this Consent Statement. The Solicitor is not currently aware of any
amendments to the by-Laws that would be repealed upon effectiveness of the
Solicitor Proposals. If the current Board of Directors adopts any material
amendments they would be repealed upon effectiveness of the Solicitor Proposals.
The Solicitor will provide stockholders with additional materials regarding
those amendments. The text of the resolution is set forth below.
RESOLVED, that all By-Laws adopted subsequent to May 24, 2002, and
prior to the effectiveness of this resolution are null and void and of no force
and effect.
Section 109 of the DGCL provides that "the power to adopt, amend or
repeal bylaws shall be in the stockholders entitled to vote ...; provided,
however, any corporation may, in its certificate of incorporation, confer the
power to adopt, amend or repeal bylaws upon the directors .... The fact that
such power has been so conferred upon the directors ... shall not divest the
stockholders ... of the power, nor limit their power to adopt, amend or repeal
bylaws." The Solicitor believes that such an unequivocal statement makes it
clear that the stockholders of DOR have the power under Delaware law to repeal
By-Laws as provided by the By-Laws Proposal, whether or not the By-Laws so
amended or repealed are known to the stockholders. To the knowledge of the
Solicitor, the Delaware courts have not addressed the validity of a proposal in
the form of the By-Laws Proposal. Based upon a review of the By-Laws on file
with the Commission as of May 24, 2002, the Solicitor does not believe that the
invalidity of this proposal would have an adverse effect on the stockholders or
this consent solicitation. Upon effectiveness of this proposal, all By-Laws
adopted subsequent to May 24, 2002, whether they could be considered as
beneficial or detrimental to the stockholders, will be repealed. If prior to the
effectiveness of the Solicitor Proposals the Board of Directors adopts any
material amendments to the By-Laws that are relevant to the Solicitor Proposals,
the Solicitor will forward additional solicitation materials to DOR's
stockholders regarding those actions.
CERTAIN INFORMATION REGARDING THE SOLICITOR AND THE NOMINEES
Set forth below are the name, age, present principal occupation and
employment history of each of the Nominees for at least the past five years. The
information regarding each Nominee has been furnished to the Solicitor by that
Nominee. Each of the Nominees has consented to serve as a director of DOR, and
is at least 18 years of age.
Larry J. Kessel, M.D., 47, a Nominee, currently is in private practice in
internal and geriatric medicine since 1985. He has served as medical director at
Integrated Health Services, a conglomerate involved in geriatric care. He has
been a clinical instructor at Jefferson Medical College since 1984. Dr. Kessel
holds a position on the Board of Directors of Genta, Inc. and Cypress
Biosciences, Inc. both public biotechnology companies.
Peter Salomon, M.D, FACG., 48, a Nominee, is a Board Certified
Gastroenterologist in private practice with Gastroenterology Associates of South
Florida. Dr. Salomon is an active clinical researcher in the treatment of
Crohn's disease and has seen several thousand patients suffering from
inflammatory bowel disease. He has been the author of numerous peer reviewed
publications on the subject of Crohn's disease and is co-author of the chapter
of the leading gastroentorology textbook, Sleisinger & Fordtran's,
Gastrointestinal & Liver Diseases. Dr. Salomon received his undergraduate degree
from New York University in 1981 and his Medical Degree from New York University
in 1985. Dr. Saloman received his training in Internal Medicine and
Gastroenterology at The Mount Sinai Hospital in New York where he also held a
grant from the Crohn's and Colitis Foundation to perform research in
inflammatory bowel disease.
Gilbert Goldstein, 72, a Nominee, has been self-employed in the field of real
estate investment and development of shopping centers, office buildings,
industrial parks, condominium projects, and land development. Mr. Goldstein is
also actively involved in venture capital investments. Mr. Goldstein was an
officer in the U.S. Air Force and is a graduate of Pennsylvania State
University.
Set forth below are the name, age, present principal occupation and
employment history for at least the past five years of the Solicitor.
Steve H. Kanzer, C.P.A., Esq., 38, has served as a member of the Board of
Directors since June 1996. From December 1997 until November 29, 2001, Mr.
Kanzer was President and Chief Executive Officer of Corporate Technology
Development, Inc., which was acquired by DOR in November 2001. Since December
2000, Mr. Kanzer has also been Chairman, Chief Executive Officer and President
of Accredited Equities, Inc., ("Accredited") a NASD member investment banking
firm specializing in the biopharmaceutical industries that is based in Miami,
Florida. Since January 2001, Mr. Kanzer is also Chairman and Chief Executive
Officer of Accredited Ventures, Inc., a venture capital group specializing in
the biopharmaceutical industry. Since December 2000, Mr. Kanzer is the President
and Chief Executive Officer of Vertical Memories, Inc. and General Fiber, both
private medical technology companies. Since January 2001, Mr. Kanzer is the
President and Chief Executive Officer of CD4 Biosciences, Inc., Developmental
Therapeutics, Inc., Pipex, Inc. and Solovax, Inc., all private biotechnology
companies. Mr. Kanzer is also President and Chief Executive Officer of several
other private biotechnology companies. From 1992 until December 1998, Mr. Kanzer
was a founder and Senior Managing Director of Paramount Capital, Inc., an
investment bank specializing in the biotechnology and biopharmaceutical
industries, and Senior Managing Director--Head of Venture Capital of Paramount
Capital Investments, LLC, a biotechnology and biopharmaceutical venture capital
and merchant banking firm
that is affiliated with Paramount Capital, Inc. From 1994 until June 2000, Mr.
Kanzer was a founder and Chairman of Discovery Laboratories, Inc., a publicly
traded pharmaceutical research and development company. Mr. Kanzer is a member
of the board of directors of Atlantic Technology Ventures, Inc., a publicly
traded pharmaceutical research and development company. Prior to joining
Paramount Capital, Inc., Mr. Kanzer was an attorney with Skadden, Arps, Slate,
Meagher & Flom LLP in New York, New York from September 1988 to October 1991. He
received his J.D. from New York University School of Law in 1988 and a B.B.A. in
Accounting from Baruch College in 1985. Mr. Kanzer is currently the designated
nominee of Aries Select, Ltd. and Aries Select I LLC to the board of directors
of DOR. See "Certain Relationships and Transactions", below.
The Solicitor has, during the past 10 years, not been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors).
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Steve H. Kanzer is a director of DOR and the former President and Chief
Executive Officer and a director of CTD, a biotechnology company that DOR
acquired on November 29, 2001. As of May 24, 2002, Mr. Kanzer beneficially owned
808,434 common stock or options to purchase common stock comprising
approximately 3.62% of DOR's common stock. Mr. Kanzer serves on the board of
directors of DOR as a nominee of the Aries Master Fund II and the Aries Domestic
Fund, who subsequently transferred their right to nominate a member to the board
of directors of DOR to Aries Select, Ltd., or Aries, and Aries Select I LLC, or
Aries I, each of which is a principal stockholder of DOR. Aries Select II LLC,
or Aries II, is also a stockholder of DOR. From February 1992 until December
1998, Steve H. Kanzer was a Senior Managing Director of Paramount. Paramount
Capital Asset Management, Inc., or PCAM, is the investment manager of Aries and
the managing member of each of Aries I and Aries II. Lindsay A. Rosenwald, M.D.
is the Chairman and sole stockholder of PCAM and Paramount Capital, Inc., or
Paramount. As of May 25, 2002, Dr. Rosenwald beneficially owned 25% of DOR's
common stock. Paramount has acted as a placement agent in connection with
certain private placements of DOR's common stock, as a finder in connection with
a private placement of DOR's common stock and warrants, and as a financial
advisor to DOR. In addition, certain officers, employees and associates of
Paramount and its affiliates own securities of DOR and a subsidiary of DOR. Dr.
Rosenwald is also the Chairman and sole stockholder of Huntington Street
Company, or Huntington Street, and June Street Company, or June Street, and is
the sole member of Paramount Capital Drug Development Holdings LLC, or Paramount
Holdings.
On June 13, 1996, Dominion Resources, Inc. entered into an agreement with The
Aries Fund and the Aries Domestic Fund, L.P., collectively referred to herein as
the Aries Funds, with the Company as a party to the agreement, whereby the Aries
Funds purchased an aggregate of 266,667 shares of the Company's common stock
from Dominion Resources. As part of the transaction, Dominion Resources
transferred to the Aries Funds certain of its rights under an existing agreement
with the Company, including the right to designate one of the directors of the
Company and the right to have the shares registered under the Securities Act.
Upon completion of the transaction, Steve H. Kanzer, also the Solicitor, was
elected to the Board of Directors as a designee of the Aries Funds. On June 26,
1996, the Aries Funds purchased from the Company an additional 333,334 shares of
common stock. The purchase agreements relating to such shares contains various
representations and warranties concerning the Company and its activities and
also various affirmations and negative covenants. The agreements grant to the
Aries Funds the right to have the shares registered under the Securities Act and
restrict the Company from entering into mergers, acquisitions, or sales of the
Company's assets without the prior approval of the Aries Funds and the Aries
Fund nominee on the Board. In 2001, the Aries Funds transferred the shares of
the Company's common stock and the rights under the purchase agreements to Aries
Select, Ltd. and
Aries Select I LLC. Aries Select, Ltd. and Aries Select I LLC each beneficially
own in excess of 5% of the Company's common stock, based upon the shares of
common stock and shares of common stock issuable upon exercise of warrants
beneficially owned by each of them.
In connection with a credit agreement entered into by the Company and the Aries
Funds on May 19,1997, the Company issued to the Aries Funds warrants to purchase
an aggregate of 66,668 shares of common stock. Paramount Capital Asset
Management, Inc., or PCAM, is the investment manager of the Aries Funds and the
general partner of the Aries Domestic Fund, L.P. In 2001, the Aries Funds
transferred their Company warrants to Aries Select, Ltd. and Aries Select I LLC,
both of which are affiliates of PCAM, Paramount Capital, Inc., or Paramount, and
Lindsay Rosenwald, M.D. Dr. Rosenwald is the President and sole stockholder of
PCAM and Paramount. PCAM and Dr. Rosenwald each beneficially own in excess of 5%
of the Company's outstanding common stock, based upon the shares of common stock
and shares of common stock issuable upon exercise of warrants beneficially owned
by each of them.
On January 21, 1998, the Company established a joint venture, InnoVaccines
Corporation, with Elan Corporation, PLC for the exclusive research, development
and commercialization of oral and mucosal prophylactic and therapeutic vaccines.
As part of the transaction, Elan International Services, Ltd., or, Elan
International, a wholly owned subsidiary of Elan, made a $2.0 million investment
in the Company by purchasing 307,692 shares of common stock and warrants to
acquire 230,770 shares of common stock.
In addition, in connection with the joint venture and the execution of a license
agreement, the Company issued $8.0 million of Series B preferred stock to Elan
International. Upon completion of the transaction, Steven Thornton was elected
to the Board of Directors as a designee of Elan International. As of December
31, 2001, Elan has paid approximately $1,788,580 of the Company's funding
obligations for InnoVaccines. Based upon the shares of common stock and shares
of common stock issuable upon conversion of the Series B preferred stock and
Series C preferred stock beneficially owned, Elan International beneficially
owns in excess of 5% of the common stock of the Company.
On October 21, 1998, the Company established a second joint venture, Endorex
Newco, Ltd., with Elan for the exclusive research, development and
commercialization of the MEDIPAD(R)'s disposable drug delivery system for an
iron chelation therapy. In connection with the joint venture and the execution
of a license agreement, the Company issued $8.4 million of Series C preferred
stock to Elan International.
Pursuant to a Financial Advisory Agreement dated as of October 18, 2001 between
Paramount and the Company, Paramount provided to the Company financial advisory
services regarding the merger between the Company and CTD. Paramount received as
compensation for these services, options to purchase 46,000 shares of the
Company's common stock at an exercise price of 1.25 per share. These options
vested immediately upon issuance and expire on February 21, 2011. Additionally
on November 29, 2001, the closing date of the CTD merger, the Company issued
Paramount additional "success fee" options to purchase 54,000 shares of the
Company's common stock at an exercise price of $0.90 per share. These options
vested immediately upon issuance and expire on November 29, 2011.
Except as set forth in this Consent Statement, to the best knowledge of the
Solicitor, none of the Solicitor or Nominees (i) owns beneficially, directly or
indirectly any securities of DOR, (ii) owns beneficially, directly or indirectly
any securities of any parent or subsidiary of DOR, (iii) owns any securities of
DOR of record but not beneficially, (iv) has purchased or sold any securities of
DOR within the past two years, (v) has incurred indebtedness for the purpose of
acquiring or
holding securities of DOR, (vi) is or has within the past year been a party to
any contract, arrangement or understanding with respect to any securities of
DOR, (vii) since the beginning of DOR's last fiscal year has been indebted to
DOR or any of its subsidiaries in excess of $60,000 or (viii) has any
arrangement or understanding with respect to future employment by DOR or with
respect to any future transactions to which DOR or any of its affiliates will or
may be a party. In addition, to the best knowledge of the Solicitor, except as
set forth in this Consent Statement, since the beginning of DOR's last fiscal
year, none of the Solicitor or Nominees has had or is to have a direct or
indirect material interest in any transaction or proposed transaction with DOR
in which the amount involved exceeds $60,000.
Except as set forth in this Consent Statement, to the best knowledge of
the Solicitor, none of the Nominees, since the beginning of DOR's last fiscal
year, has been affiliated with (i) any entity that made or received, or during
DOR's current fiscal year proposes to make or receive, payments to or from DOR
or its subsidiaries for property or services in excess of 5% of either DOR's or
that entity's consolidated gross revenues for its last full fiscal year, or (ii)
any entity to which DOR or its subsidiaries was indebted at the end of DOR's
last full fiscal year in an aggregate amount exceeding 5% of DOR's total
consolidated assets at the end of such year. Except as set forth in this Consent
Statement, none of the Nominees is or during DOR's last fiscal year has been
affiliated with any law or investment banking firm that has performed or
proposes to perform services for DOR.
To the best knowledge of the Solicitor, except for Mr. Kanzer, in the
case of CTD, none of the corporations or organizations in which each of the
Nominees has conducted his principal occupation or employment was a parent,
subsidiary or other affiliate of DOR, and no Nominee holds any position or
office with DOR or has any family relationship with any executive officer or
director of DOR or has been involved in any proceedings, legal or otherwise, of
the type required to be disclosed by the rules governing this solicitation.
THE CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided in a
corporation's certificate of incorporation, any action that may be taken at any
annual or special meeting of stockholders may be taken without a meeting,
without prior notice, and without a vote if consents in writing, setting forth
the action so taken, are signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, and those consents are delivered to the corporation by
delivery to its registered office in Delaware, its principal place of business
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. In the case of this
consent solicitation, written, unrevoked consents of the holders of a majority
of the outstanding shares of Stock as of the Record Date must be delivered to
DOR as described above to effect the actions as to which consents are being
solicited hereunder. Section 228 of the DGCL further provides that no written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the earliest dated consent delivered in the manner
required by Section 228, written consents signed by a sufficient number of
holders to take such action are delivered to the corporation in the manner
required by Section 228.
The Solicitor currently intend to cease the solicitation of consents
once they have determined that valid and unrevoked consents representing a
majority of the voting power represented by issued and outstanding shares of
Stock as of the Record Date have been obtained and to deliver those consents to
DOR
in the manner required by Section 228 of the DGCL as soon as practicable
thereafter. When the Solicitor Proposals for which consents are given become
effective, a stockholder will be unable to revoke his or her consent.
If the Solicitor Proposals become effective, DOR will as required by
the DGCL promptly notify by mail the stockholders who have not consented to the
Solicitor Proposals.
Consents may only be executed by stockholders of record at the close of
business on the Record Date. To the best knowledge of the Solicitor, as of the
close of business on the Record Date there were outstanding approximately
20,825,710 shares of Common Stock and 1,469,404 shares of Preferred Stock. Given
that the Solicitor owns in the aggregate shares accounting for less than 4% of
the voting power of the Stock, consents of stockholders owning approximately 47%
of the voting power of the outstanding shares of Stock other than those owned by
the Solicitor on the Record Date are still required to adopt the Solicitor
Proposals. Since the Solicitor must receive consents from the holders of a
majority of the voting power represented by DOR's outstanding shares in order
for the Solicitor Proposals to be adopted, a broker non-vote or direction to
withhold authority to vote on the consent form will have the same effect as a
"no" vote with respect to the Solicitor' solicitation.
Consent Form Special Instructions
If you were a record holder as of the close of business on the Record
ate, you may elect to consent to, withhold consent or abstain with respect to
each Solicitor Proposal by marking the "CONSENT," "WITHHOLD CONSENT," or
"ABSTAIN" box, as applicable, underneath EACH Solicitor Proposal on the
accompanying white consent form and signing, dating and returning it promptly in
the enclosed postage-paid envelope. Each consent form will be voted in
accordance with the stockholder's instruction on that consent form. As to the
Solicitor Proposals set forth herein, stockholders may consent to an individual
Solicitor Proposal or may withhold their consent by marking the proper box in
the consent form. If the enclosed consent form is signed and returned and no
direction is given, it will be voted in favor of all of the Solicitor Proposals
and if the consent form is signed and returned and not dated, it will be dated
on or about the date it is received.
If any stockholder who has executed and returned the white consent form
has failed to check a box marked "CONSENT," "WITHHOLD CONSENT," or "ABSTAIN" for
any or all of the Solicitor Proposals, that stockholder's consent form will be
voted in favor of that Solicitor Proposal or those Solicitor Proposals.
The Solicitor recommend that you consent to each of the Solicitor
Proposals. Your consent is important. Please mark, sign and date the enclosed
white consent form and return it promptly in the enclosed postage-paid envelope
to the address set forth under "Summary of Consent Procedure." Failure to return
your consent form will have the same effect as withholding consent to the
Solicitor Proposals.
If your shares are held in the name of a brokerage firm, bank nominee
or other institution, you should contact the person responsible for your account
and give instructions for the consent form representing your shares to be
marked, dated, signed and mailed. Only that institution can execute a consent
form with respect to your shares held in the name of the institution and only
upon receipt of specific instructions from you. The Solicitor urge you to
confirm in writing your instructions to the person responsible for your account
and to provide a copy of those instructions to Steve H. Kanzer at the address
set forth under "Summary of Consent
Procedure" so that the Solicitor are aware of all instructions given and can
attempt to ensure that such instructions are followed.
Broker non-votes, abstentions, or failure to return a signed consent
will have the same effect as withholding consent to the Solicitor Proposals. The
Solicitor urge each stockholder to ensure that the record holder of his or her
shares marks, signs, dates and returns the enclosed white consent form as soon
as possible.
REVOCATION; COSTS OF CONSENT SOLICITATION
A consent executed by a stockholder may be revoked at any time before
its exercise by submitting (i) a written, dated revocation of that consent or
(ii) a later dated consent covering the same shares. A revocation may be in any
written form validly signed by the record holder as long as it clearly states
that the consent previously given is no longer effective and must be executed
and delivered prior to the time that the action authorized by the executed
consent is taken. The revocation may be delivered to Steve H. Kanzer, 801
Brickell Avenue, Suite 900, Miami, FL 33131.
The purpose of the Solicitor Proposals being made by the Solicitor in
this Consent Statement is to advance the interests of all of DOR's stockholders.
Therefore, the Solicitor believe that their expenses in connection with the
consent solicitation, which are being paid by Mr. Kanzer, should be reimbursed
by DOR. The cost of the solicitation of consents to the Solicitor Proposals will
be initially borne by the Solicitor. The Solicitor intend to seek reimbursement
of their expenses from DOR if the Solicitor Proposals become effective. This
request will not be submitted to a stockholder vote. Costs related to the
solicitation of consents to the Solicitor Proposals include expenditures for
attorneys and postage and are expected to aggregate approximately $20,000. To
date, the Solicitor have incurred costs of approximately $5,000. The actual
costs and expenses could be materially different than the estimate set for
above, and, in particular, could be substantially higher if for any reason
litigation is instituted in connection with the matters related to this Consent
Statement.
Your consent is important. No matter how many or how few shares you
own, please consent to the Solicitor Proposals by marking, sign, dating, and
mailing the enclosed white consent form promptly.
Steve H. Kanzer
May 24, 2002
ANNEX 1
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The table below sets forth information regarding the
beneficial ownership of the Company's common stock and Series B preferred stock
as of March 25, 2002, by the following individuals or groups:
- each person or entity who is known by the Company to own
beneficially more than 5.0% of the Company's outstanding
common stock or Series B preferred stock;
- each of the Named Executive Officers;
- each of the Company's directors and nominees for director; and
- all of the Company's directors and executive officers as a
group.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. Shares
of the Company's common stock that are subject to warrants, options or other
convertible securities that are presently exercisable or exercisable within 60
days of May 24, 2002 are deemed to be outstanding and beneficially owned by the
person holding the warrants or stock options for the purpose of computing the
percentage of ownership of that person, but are not treated as outstanding for
the purpose of computing the percentage of any other person. Unless otherwise
indicated, each person has sole investment and voting power with respect to the
shares shown below, and the address of each of the Named Executive Officers and
directors is c/o DOR BioPharma, Inc., 28101 Ballard, Lake Forest, IL 60045. As
of May 24, 2002, the Company had 20,825,710 shares of common stock outstanding.
Common Stock Series B Convertible
Beneficially Percent Preferred Stock Percent
Name and Address of Beneficial Owner Owned of Class Beneficially Owned of Class
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Aries Select, Ltd.(1) 2,369,986 11.30%
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
New York, NY 10019
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Nomura Bank
Kasamaristrasse I
CH 8021
Zurich, Switzerland 1,390,358 6.68%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
TVM Techno Venture Management
101 Arch Street
Suite 1950
Boston, MA 02110 1,286,997 6.18%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Aries Select I LLC(2)
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
New York, NY 10019 1,076,081 5.15%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Elan International Services, Ltd.(3)
102 St. James Court
Flatts Smith, SL 04
Bermuda 3,186,591 14.15% 108,442 100 %
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Lindsay A. Rosenwald, M.D.(4)
787 Seventh Avenue,
New York, NY 10019 5,737,844 25.41%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Paramount Capital Asset Management, Inc.(5)
787 Seventh Avenue,
New York, NY 10019 4,058,024 19.27%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Colin Bier (6) 217,072 1.03%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Richard Dunning(7) 104,000 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Steve H. Kanzer(6) 808,434 3.75%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Peter Kliem(6) 83,572 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Steve Koulogeorge(6) 13,500 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
John McCracken(7) 75,000 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Guy Rico(7) -- *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Michael S. Rosen(6) 721,510 3.35%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Paul Rubin(7) 104,000 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
H. Lawrence Shaw(7) 104,000 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Kenneth Tempero(7) 153,000 1.22%
----------------------------------------------- ---------------- ---------- ----------------------- ---------
Steven Thornton(7) 85,500 *
----------------------------------------------- ---------------- ---------- ----------------------- ---------
All directors and officers as a group (12
persons)(8) 2,406,526 12.18 %
----------------------------------------------- ---------------- ---------- ----------------------- ---------
* Represents less than 1% of outstanding common stock or voting power.
(1) Number of shares beneficially owned includes 23,334 shares of common stock
issuable upon exercise of warrants exercisable until May 19, 2002, and 56,533
shares of common stock issuable upon exercise of warrants exercisable until
April 16, 2003.
(2) Number of shares beneficially owned includes 43,334 shares of common stock
issuable upon exercise of warrants exercisable until May 19, 2002, and 112,159
shares of common stock issuable upon exercise of warrants exercisable until
April 16, 2003.
(3) Number of shares beneficially owned includes 1,469,404 shares of common
stock issuable upon conversion of Series B preferred stock, 1,178,725 shares of
common stock issuable upon conversion of Series C preferred stock and 230,770
shares of common stock issuable upon exercise of warrants exercisable until
January 21, 2004.
(4) Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of
Paramount Capital Asset Management, Inc. ("PCAM"). PCAM is the investment
manager of Aries Select, Ltd and is the managing member of Aries Select I LLC.
Dr. Rosenwald and PCAM share the power to vote and/or dispose of the shares held
by Aries Select, Ltd. And Aries Select I LLC. The securities beneficially owned
by Dr. Rosenwald include 1,434,032 shares of common stock issuable upon exercise
of warrants exercisable until April 16, 2003, 2,369,986 shares beneficially
owned by Aries Select I LLC, 1,076,081 shares beneficially owned by Aries
Select, Ltd. and 20,284 shares beneficially owned by Aries Select II LLC.
(5) Includes the 2,369,986 shares beneficially owned by Aries Select, Ltd. and
the 1,076,081 shares beneficially owned by Aries Select I LLC.
(6) Consists of stock held and shares issuable upon exercise of options that are
exercisable within the 60-day period following May 24, 2002 as follows: Colin
Bier 3,500 shares and 708,750 option shares, Steve Kanzer, 391,674 shares and
416,800 option shares, Peter Kliem, 20,000 shares and 63,573 option shares,
Steve Koulogeorge, 3,000 shares and 10,500 option shares, Michael Rosen, 12,760
shares and 708,750 option shares.
(7) Consists of shares issuable upon exercise of options that are exercisable
within the 60-day period following May 24, 2002.
(8) Includes a total of 2,117,266 shares issuable upon exercise of options which
are exercisable within the 60 day period following May 24, 2002.
DOR BIOPHARMA, INC.
CONSENT OF STOCKHOLDER TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED BY
STEVE H. KANZER (THE "SOLICITOR")
Unless otherwise indicated below, the undersigned, a stockholder on May
25, 2002 (the "Record Date"), of DOR Biopharma, Inc. ("DOR"), hereby consents,
pursuant to Section 228 of the General Corporation Law of the State of Delaware,
with respect to all shares of Common Stock, par value $0.001 per share, of DOR
(the "Common Stock") and Series B Convertible Preferred Stock, par value $0.05
per share, of DOR (the "Preferred Stock," and together with the Common Stock,
the "Stock"), held by the undersigned, to each of the following actions without
a meeting, without prior notice and without a vote.
THE SOLICITOR RECOMMENDS THAT YOU CONSENT TO THE FOLLOWING PROPOSALS.
1. Resolved, that (1) each current member of the Board of Directors of DOR,
other than Steve H. Kanzer, Paul Rubin, M.D., Richard Dunning, Peter
Kleim, Guy Rico, and Steven Thornton (the "Remaining Directors"), and
(ii) any other person or persons (other than the persons elected
pursuant to this consent) elected or appointed to the Board of Directors
prior to the effective time of this stockholder action in addition to or
in lieu of any of such current members (including any persons elected or
appointed in lieu of the Remaining Directors) to fill any newly-created
directorship or vacancy on the Board of Directors or otherwise (the
"Director Removal Proposal").
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
2. Elect Gilbert Goldstein, Larry J. Kessel, M.D. and Peter Salomon, M.D.
(collectively, the "Nominees") are hereby elected as directors of DOR
to serve until their respective successors are duly elected and
qualified (the "Director Election Proposal").
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
(To withhold consent to the election of either Dr. Kessel, or Dr. Salomon, or
Mr. Goldstein, write his name in the following space:________________________.)
3. Repeal any By-Laws adopted by the Board of Directors subsequent to May
24, 2002, and prior to the effectiveness of the Solicitor Proposals (as
defined below), other than the amendment to the By-Laws contemplated by
this Consent Statement (the "By-Laws Proposal"; collectively with the
Director Removal Proposal, and the Director Election Proposal, the
"Solicitor Proposals").
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
To consent, withhold consent or abstain from consenting to the proposals
set forth above (the "Proposals"), check the appropriate boxes above. If no box
is marked above with respect to any Proposal, you will be deemed to have
consented to that Proposal.
The effectiveness of any one Solicitor Proposal is not conditioned upon the
adoption of the other Solicitor Proposals .
Dated:______________________, 1999
--------------------------------
(Signature)
--------------------------------
(Title or authority, if applicable)
--------------------------------
(Signature if held jointly)
Please sign your name exactly as it appears on this consent. If the shares are
registered in more than one name, the signature of each person in whose name the
shares are registered is required. A corporation should sign in its full
corporate name, with a duly authorized officer signing on behalf of the
corporation and stating his or her title. Trustees, guardians, executors, and
administrators should sign in their official capacity, giving their full title
as such. A partnership should sign in its partnership name, with an authorized
person signing on behalf of the partnership. This consent serves to vote all
shares to which the signatory is entitled.
PLEASE DATE, SIGN AND MAIL THE CONSENT PROMPTLY, USING THE ENCLOSED ENVELOPE.