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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant. / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
/X/ Definitive Proxy Statement BY RULE 14A-6(E)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BIOMUNE SYSTEMS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[LOGO]
BIOMUNE SYSTEMS, INC.
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(801) 466-3441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 14, 1997
To the Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of
BIOMUNE SYSTEMS, INC., a Nevada corporation (the "Company") will be held at
the Marriott Hotel, 75 South West Temple, Salt Lake City, Utah 84101, on
Tuesday, October 14, 1997, at 10:00 a.m., Mountain Daylight Time, for the
following purposes:
1. To elect seven directors to serve as the Board of Directors until the
next annual meeting of shareholders or until successors are duly elected and
qualified;
2. To approve the Board of Directors' selection of Arthur Andersen LLP,
as the Company's independent public accountants to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending September 30, 1997; and
3. To consider and act upon any other matters that properly may come
before the meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
September 5, 1997 as the record date for the determination of shareholders
having the right to receive notice of, and to vote at, the Annual Meeting of
Shareholders and any adjournment thereof. A list of such shareholders will be
available for examination by a shareholder for any purpose germane to the
meeting during ordinary business hours at the offices of the Company at 2401
South Foothill Drive, Salt Lake City, Utah, during the ten days prior to the
meeting.
You are requested to date, sign and return the enclosed proxy which is
solicited by the Board of Directors of the Company and will be voted as
indicated in the accompanying proxy statement and proxy. Your vote is
important. Please sign and date the enclosed proxy and return it promptly in
the enclosed return envelope whether or not you expect to attend the meeting.
The giving of your proxy as requested hereby will not affect your right to
vote in person should you decide to attend the Annual Meeting. The return
envelope requires no postage if mailed in the United States. If mailed
elsewhere, sufficient postage must be affixed. Your proxy is revocable at any
time before the meeting.
By Order of the Board of Directors,
/s/ David G. Derrick
---------------------------------------
David G. Derrick, Chairman of the Board
and Chief Executive Officer
Salt Lake City, Utah
September 5, 1997
<PAGE>
[LOGO]
BIOMUNE SYSTEMS, INC.
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(801) 466-3441
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 14, 1997
General
The enclosed proxy is solicited by and on behalf of the Board of Directors of
BIOMUNE SYSTEMS, INC. ("Biomune" or the "Company") for use in voting at the
Annual Meeting of Shareholders to be held at the Marriott Hotel, 75 South West
Temple, Salt Lake City, Utah 84101, on Tuesday, October 14, 1997, at 10:00
a.m., mountain daylight time, and at any postponement or adjournment thereof,
for the purposes set forth in the attached notice.
Record Date and Share Ownership
The close of business on September 5, 1997 (the "Record Date"), has been fixed
as the record date for determining the shareholders entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date there are 27,418,349
shares of the Company's Common Stock, par value $.0001 per share, outstanding
and entitled to vote. Also at the Record Date there are 36,050 shares of the
Company's Series A 10% Cumulative Convertible Preferred Stock ("Series A
Preferred") and shares of the Company's Series C 8% Cumulative Convertible
Non-Voting Preferred Stock ("Series C Preferred") issued and outstanding. The
Series C Preferred are non-voting securities and, therefore, the holders of
shares of Series C Preferred will not be entitled to vote at the Annual
Meeting. Shareholders holding at least a majority of the outstanding shares
of Common Stock and Series A Preferred represented in person or by proxy,
shall constitute a quorum for the transaction of business at the Annual
Meeting.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person. An appointment of proxy is
revoked upon the death or incapacity of the shareholder if the Secretary or
other officer of the Company who is authorized to tabulate votes receives
notice of such death or incapacity before the proxy exercises his authority
under the appointment. For a description of the principal holders of such
stock, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"
below.
This Proxy Statement and the enclosed Proxy are being furnished to
shareholders on or about September 5, 1997.
Voting and Solicitation
Each outstanding share of Common Stock as of the Record Date will be entitled
to one (1) vote on each matter submitted to a vote at the Annual Meeting.
Each outstanding share of Series A Preferred will be entitled to one (1) vote
for each whole share of Common Stock into which each such share of Series A
Preferred may be converted as of the Record Date on each matter submitted to a
vote at the Annual Meeting.
Assuming a quorum is present, a plurality of votes cast at the meeting in
person or by proxy by the shares of Common Stock and the Series A Preferred
(as described above) entitled to vote in the election of directors will be
required to elect each director and to ratify the selection of independent
public accountants.
The Company will bear the cost of solicitation of proxies.
Matters to be Brought Before the Annual Meeting
The matters to be brought before the Annual Meeting include: (1) the election
of a Board of Directors consisting of seven directors; (2) ratification of the
appointment of Arthur Andersen LLP, independent public accountants, to audit
the consolidated financial statements of the Company for the fiscal year
ending September 30, 1997; and (3) the transaction of such other business as
may properly come before the Annual Meeting or any adjournment thereof.
Additional Matters
The Board of Directors has announced the spin-off of the Company's wholly
owned subsidiary, Volu-Sol, Inc. ("Volu-Sol"), in a distribution of 100% of
the issued and outstanding shares of Volu-Sol Common Stock to the shareholders
of the Company as of March 5, 1997, at the rate of one share of Volu-Sol
Common Stock for every 10 shares of the Company's Common Stock held by such
shareholders. The distribution is expected to occur on or about September 30,
1997 or as soon thereafter as practicable. A separate Information Statement
relating to the spin-off of Volu-Sol will be sent to those shareholders of the
Company who are to receive shares in the distribution. YOUR VOTE IS NOT
REQUIRED AND THE BOARD DOES NOT SOLICIT YOUR VOTE CONCERNING THE SPIN-OFF.
INFORMATION CONCERNING THE SPIN-OFF AND VOLU-SOL IS PROVIDED FOR YOUR
INFORMATION ONLY.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be determined
from time to time by the shareholders or the Board of Directors, but that
there shall be no less than three. Presently the Company's Board of Directors
consists of seven members, all of whom are nominees for election at the Annual
meeting. Each director elected at the Annual meeting will hold office until a
successor is elected and qualified, or until the director resigns, is removed
or becomes disqualified. A plurality of votes cast by the shares entitled to
vote in the election of directors will be required to elect each director.
Unless marked otherwise, proxies received will be voted for the election of
each of the nominees named below. If any such person is unable or unwilling to
serve as a director at the date of the Annual Meeting or any postponement or
adjournment thereof, the proxies will be voted for a substitute nominee,
designated by the proxy holders or by the present Board of Directors to fill
such vacancy, or for the balance of those nominees named without nomination of
a substitute, or the Board may be reduced accordingly. The Board of Directors
has no reason to believe that any of such nominees will be unwilling or unable
to serve if elected as a director. The nominees are as follows:
David G. Derrick
James J. Dalton
Milton G. Adair
Aaron Gold, D.D.
Charles J. Quantz, Esq.
Thomas Q. Garvey, III, M.D.
Christopher D. Illick
All of the nominees are currently serving as directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE TO THE BOARD OF
DIRECTORS.
The following information is furnished with respect to the nominees. Stock
ownership information is shown under the heading "Security Ownership of
Certain Beneficial Owners and Management" and is based upon information
furnished by the respective individuals.
AS OF THE DATE OF THIS STATEMENT, THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY WERE AS FOLLOWS:
NAME AGE POSITION
- ------------------------ ----- ---------------------------------
David G. Derrick 44 Chief Executive Officer,
Director and Chairman of the Board
James J. Dalton 55 Director and Vice-Chairman of
the Board and Sr. Vice President
of Investor Relations
Milton G. Adair 64 Director
Thomas Q. Garvey, III, M.D. 54 Director
Aaron Gold, D.D. 69 Director
Charles J. Quantz, Esq. 69 Director
Christopher D. Illick 57 Director, Secretary
Ira E. Ritter 48 President
Frank A. Eldredge, Ph.D. 57 Executive Vice-President -- New
Product Development
Michael G. Acton, C.P.A. 34 Chief Financial Officer and
Controller
_______________________
* Mr. Adair resigned as President of the Company in March 1997. Mr. Derrick
served as President in the interim from March 1997 until July 1997. Mr.
Ritter was elected President on July 9, 1997.
David G. Derrick
Mr. Derrick served as the Company's President from May 1989, through December
1995 and again from March 1997 until July 1997. He has been the Chief
Executive Officer of the Company since January 1996. Mr. Derrick also serves
as a Director and as the Chief Executive Officer of Optim Nutrition, Inc., a
wholly owned subsidiary of the Company ("Optim"). From April 1980 until
September 1988, Mr. Derrick was the managing partner of Derrick Enterprises
Real Estate Development & Management Services Company ("Derrick
Enterprises"). Prior to organizing Derrick Enterprises, Mr. Derrick was a
partner in Kirton Land Company, an investment and real estate development
company, from September 1976 until April 1980. Mr. Derrick currently serves
as President of Derrick Properties Corporation, a private investment company,
and has served in that capacity since 1986. From September 1979 until June
1983 Mr. Derrick was a faculty member at the University of Utah College of
Business, Department of Finance. Mr. Derrick graduated from the University of
Utah College of Business with a Bachelor of Science Degree in Economics in
1975, and a Masters in Business Administration Degree with an emphasis in
finance in 1976.
James J. Dalton
Mr. Dalton has served as a Director of the Company and as the Vice-Chairman of
the Board and Sr. Vice President - Investor Relations since February 1996. He
also serves as a Director of Optim and as the Vice Chairman of its Board since
May 1996. From April 1993 through October 1996, Mr. Dalton was a consultant
to the Company. Since October 1996, Mr. Dalton has been an employee of the
Company. Mr. Dalton was general manager of the Company's Volu-Sol Medical
Division (now known as Volu-Sol, Inc.) from April 1993 until January 1996.
From 1987 to the present, Mr. Dalton has been the owner and President of
Dalton Development, a real estate development company.
Milton G. Adair
Mr. Adair is a Director and the President and CEO of Medizone International,
Inc. since June 1997. He is also on the Board of Directors of Ion Laser
Technology, Inc., a corporation listed on the American Stock Exchange
("AMEX"), engaged in the manufacture and distribution of lasers used in
dental, medical, scientific, industrial and research industries, and H.P.
Diagnostics, a research and development entity in Salt Lake City, Utah. Mr.
Adair was the Company's President from January 1996 until March 1997, and has
served as a Director of the Company since February 1996. He also serves as a
Director of Optim. From October 1990 until June 1996, Mr. Adair was President
and Chief Executive Officer of Gull Laboratories, Inc., a medical diagnostic
company listed on the AMEX. From 1984 until 1991, Mr. Adair was President and
Chief Executive Officer of Mountain Medical Equipment, Inc., a home healthcare
medical equipment company. In addition, Mr. Adair has fifteen years of
pharmaceutical sales and marketing experience with Pfizer, Inc. and seven
years of immunoassay and medical products experience with Becton-Dickinson and
Orbit Medical. Mr. Adair graduated from the College of the Pacific in 1955.
Thomas Q. Garvey, III, M.D.
Dr. Garvey has been a Director of the Company since April 1994 and a member of
the Company's scientific advisory board and a scientific and regulatory
consultant to the Company since November 1992. Dr. Garvey has also served as
a Director of Optim since May 1, 1996. Dr. Garvey is a gastroenterologist in
private medical and scientific consulting practice with Garvey Associates,
Inc. in Potomac, Maryland, since 1981. Prior to that time, Dr. Garvey was the
supervisory medical officer of the Cardio-Renal Drug Products Center of Drug
Evaluation at the FDA for approximately five years. Prior to that time, he
was in private practice with the Massachusetts General Hospital in Boston,
Massachusetts, and with the National Cancer Institute at the National
Institutes of Health. As a consultant to various pharmaceutical companies,
Dr. Garvey has developed, written and consulted on many new drug applications
and has assisted the Company in preparing its investigational new drug
applications and the development of protocols for clinical trials of the
Company's proposed drug products.
Aaron Gold, D.D.
Dr. Gold has been a Director of the Company since April 1984 and a Director of
Optim since May 1, 1996. Dr. Gold has been a businessman and religious leader
in San Diego, California, since 1974. Between July 1974 and September 1992,
Dr. Gold was a Rabbi with the Tiferth Israel Synagogue in San Diego,
California. From July 1994 to the present he has been a Rabbi with the
Nertamid Synagogue in Rancho Bernardo, California. He holds a Doctor of
Divinity Degree from the Jewish Theological Seminary of America and a
Doctorate in Philosophy from Columbia University.
Charles J. Quantz
Mr. Quantz has been a Director of the Company since April 1984 and a Director
of Optim since May 1, 1996. Mr. Quantz was a practicing attorney in
California for twenty-six years prior to his retirement in 1981. In 1991, Mr.
Quantz filed bankruptcy under Chapter 7 of the United States Bankruptcy Code
and was discharged in bankruptcy that same year.
Christopher D. Illick
Mr. Illick has been a Director of the Company since February 1995 and a
Director of Optim since May 1, 1996. He is also the Company's Corporate
Secretary. Mr. Illick is Sr. Vice President of Brean Murry & Co., Inc., an
investment banking firm. Since March 1995, Mr. Illick has been a limited
partner in the investment banking firm of Oaks Fitzwilliams & Co., L.P. in New
York City, New York. He has also been a general partner of Illick Brothers, a
real estate and management concern since 1965, and was the founder and
President of the U.S. subsidiary of Robert Fleming Holding, Ltd. of London,
England, from 1973 to 1983. Mr. Illick is also a member of the board of
directors of National Transaction Network, Inc.
No family relationships exist between or among any of the Company's officers
and directors.
BOARD OF DIRECTORS MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Company's Board of Directors took action at seven duly noticed meetings of
the Board during fiscal year 1996. Each Director attended (or otherwise
participated in) at least 75% of the Company's special and regular meetings of
the Board of Directors. The Board of Directors has a Compensation Committee
comprising David G. Derrick, Thomas Q. Garvey, III, M.D., and Christopher D.
Illick. Mr. Derrick is chairman of this committee. The Board also has an
Audit Committee comprised of Messrs. Illick, Derrick and Quantz. Mr. Derrick
is the chairman of the Audit Committee.
The Board of Directors has an Executive Committee comprised of Messrs.
Derrick, Dalton and Adair. Mr. Derrick, CEO of the Company, is also the
chairman of the Executive Committee. Under the bylaws of the Company, the
Executive Committee has the authority to exercise all powers of the Board of
Directors of the Company except the power to declare dividends, issue stock,
recommend to shareholders any matter requiring shareholder approval, change
the membership of the Executive Committee, fill vacancies on the committee or
discharge any committee member. The Executive Committee is appointed by the
Board of Directors to facilitate company management between regularly
scheduled and special meetings of the full Board.
EXECUTIVE OFFICERS
In addition to the previously named directors and executive officers, the
Company expects the following individuals to make significant contributions to
the Company's business in the positions indicated below:
Ira E. Ritter. Mr. Ritter was elected President of the Company on July
9, 1997. Prior to joining the Company, Mr. Ritter was the Vice Chairman of
Quality King Distributors, a wholesale distributor of health and beauty care,
grocery and pharmaceutical products. Mr. Ritter provides his services to the
Company on a part time basis and continues to be active in other business,
community and personal pursuits. Among other things, Mr. Ritter is the
Chairman and President of Rockwood Investments, Inc., a California company
that markets and distributes personal care and health products. For the past
ten years, Mr. Ritter has been the Chief Executive Officer of Andela Group,
Inc., a California venture capital company. From 1983 to 1985, Mr. Ritter was
active in the publishing business, founder or co-founder of several successful
magazines and the executive publisher of best-selling books. He has also been
active in civic and political circles. Mr. Ritter attended California State
University at Northridge and founded his first successful magazine,
Environmental Quality Magazine at the age of 21.
Frank A. Eldredge, Ph.D. Dr. Eldredge has been the Company's Executive
Vice-President -- New Product Development since October 1994. From April 15,
1993 to October 1994, Dr. Eldredge was one of the primary scientific
consultants to the Company. Prior to serving as scientific consultant to the
Company, Dr. Eldredge spent fourteen years in the medical products development
field. Between 1991 and 1993, Dr. Eldredge was an independent scientific
consultant in the medical and health video industry. Dr. Eldredge received a
Ph.D. degree in Genetics and Applied Sciences from the University of Utah in
1972.
Michael G. Acton, C.P.A. Mr. Acton has been Chief Financial Officer and
Controller of the Company since October 1994. He was the President of
Volu-Sol from March 15, 1996 until March 1997 and has been Chief Executive
Officer of Volu-Sol since March 1997. From June 1989 through October 1994,
Mr. Acton was employed by Arthur Andersen LLP in Salt Lake City, Utah, where
he performed various tax, audit and business advisory services. Mr. Acton
received a Bachelor of Science Degree in Accounting in 1988 and a Master of
Professional Accountancy Degree in 1989, both from the University of Utah. He
is a Certified Public Accountant in the State of Utah.
EXECUTIVE COMPENSATION
The Company believes that shareholders should be provided information about
director and executive officer compensation consistent with the rules of the
Securities and Exchange Commission (the "SEC"). As a result, this Proxy
Statement contains the following four sections of information regarding
executive compensation: Summary Compensation Table; Option/SAR Grants in the
Last Fiscal Year; Executive Compensation Report of the Compensation Committee;
and Stock Performance Graph.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company of David G. Derrick, the Chief
Executive Officer, and Allan H. Barker, M.D., the former Executive
Vice-President -- Research and Clinical Trials, the only executive officers of
the Company whose total annual salary and bonuses exceeded $100,000 during the
relevant period (collectively the "Named Officers"), for the fiscal years
ended September 30, 1996, 1995, and 1994. No other current or former
executive officer of the Company received salary or bonus compensation
exceeding $100,000 in any of the referenced periods. No options or long-term
incentive plan awards were granted or made to the referenced executive
officers during the referenced periods, except as provided below:
SUMMARY COMPENSATION TABLE
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LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
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(A) (B) (C) (D) (E) (F) (G) (H) (I)
Other Securities LTP All
Name Annual Restricted Underlying Pay Other
and Principal Year Compen- Stock Options/ Outs Compen-
Position (1) Salary Bonus sation Awards SARs (#) ($) sation
- --------------------------------------------------------------------------------------------------------------------------
David G. Derrick
Chief Executive
Officer and
Chairman (3) 1996 $200,000(2) 0 0 0 600,000 0 0
1995 $150,000 0 0 0 580,000 0 0
1994 $120,000 0 0 0 0 0 0
Allan H. Barker, M.D.
Former Executive Vice-
President -- Research
and Clinical Trials (5) 1996 $126,625 0 0 0 21,622(4) 0 0
</TABLE>
____________________
1/ As of September 30th of each of the fiscal years indicated.
2/ Represents salary pursuant to the June 15, 1996 Employment and
Non-Competition Agreement, plus $3,000 in director's fees paid between October
1, 1995 and June 15, 1996, during which time Mr. Derrick was the Chairman of
the Board, but not an employee of the Company.
3/ Pursuant to the Management Agreement between the Company and ADP
Management Corporation ("ADP"), during fiscal year 1994 and fiscal year 1995,
as well as through June 15, 1996, ADP provided the Company with the management
and administrative services necessary to manage the daily business operations
and affairs of the Company and, in addition, furnished the Company with a
president or chief executive officer (i.e., David G. Derrick). The Management
Agreement with ADP was terminated effective as of June 15, 1996. While that
Management Agreement was in force, the Company's Board of Directors determined
the dollar amount of compensation that was paid to Mr. Derrick (through ADP).
Mr. Derrick and his wife own ADP. See "Certain Business Relationships,"
subheading, "ADP Management Corporation and David G. Derrick," below. Mr.
Derrick resigned as the Company's President effective December 31, 1995, but
continued in the capacity as the Company's Chief Executive Officer and as
Chairman of the Board of Directors. In March 1997, Mr. Derrick again assumed
the position of President upon the resignation of Milton G. Adair and
continued until July 9, 1997 when Ira Ritter was appointed President by the
Board.
4/ Represents 21,622 shares of the Company's Common Stock granted to Dr.
Barker by Letter Agreement dated effective as of October 1, 1995 that were
issued for medical consultation services to be provided through May 31, 1996.
5/ Dr. Barker resigned as Executive Vice-President -- Research and
Clinical Trials effective as of February 12, 1996, but continued as a
consultant to the Company after that date. He did not receive any income from
the Company during fiscal years 1994 or 1995.
STOCK OPTION AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning the grant of stock
options made under the Company's Stock Option Plans for the fiscal year ended
September 30, 1996 to the Named Officers (the Company has not granted any
stock appreciation rights -- SAR's):
OPTION / SAR GRANTS IN LAST FISCAL YEAR
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INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM /1
- ----------------------------------------------------------------------------------------------------------------------
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(a) (b) (c) (d) (e) (f) (g) (h)
Number of % of Total
Securities Options/SARs
Underlying Granted to Market
Options/ Employees Exercise Price
SARs In fiscal Or base On date of
Granted Year Price Grant Expiration 5% 10% 0%
Name (#) (%) ($/share) ($/share) Date ($) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------
David G. Derrick 100,000 75.6% $1.16 /2 $2.31 12/20/2000 $5,800 $11,600 $0
Allan H. Barker, M.D. -0- -- -- -- -- -- -- --
</TABLE>
/1 The aggregate dollar value of the in-the-money unexercised options
held at September 30, 1996 is calculated as the difference between the fair
market value of the securities underlying such options at such date and the
exercise price of $1.16 per share in column (h), and a 5% and 10% increase in
such fair market value in columns (f) and (g), respectively. In October 1996,
the Compensation Committee repriced the exercise of all outstanding options,
including those held by Mr. Derrick, from the prices originally set upon the
grant of such options to $1.16 per share.
/2 The options were subsequently repriced to the amount shown, which was
the market value of the Common Stock on the date of such repricing.
EXECUTIVE COMPENSATION REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the previous
filings made by the Company under the 1933 Act or the Securities Act of 1934,
as amended, that might incorporate future filings, in whole or in part, the
following Executive Compensation Report and the performance graph appearing
herein shall not be deemed to be incorporated by reference into any such
future filings.
This Executive Compensation Report discusses the Company's executive
compensation policies and the basis for the compensation paid to the Company's
executive officers, including its Chief Executive Officer, David G. Derrick,
during the fiscal year that ended September 30, 1996.
Compensation Policy
The Company's policy with respect to executive compensation has been designed
to:
* Adequately and fairly compensate executive officers in relation to
their responsibilities, capabilities and contributions to the Company and in a
manner that is commensurate with compensation paid by companies of comparable
size or within the Company's industry;
* Reward executive officers for the achievement of short-term operating
goals and for the enhancement of the long-term value of the Company; and
* Align the interests of the executive officers with those of the
Company's shareholders with respect to short-term operating goals and
long-term increases in the price of the Company's Common Stock
The components of compensation paid to executive officers are (1) base salary;
(2) incentive compensation in the form of annual bonus payments and stock
options awarded by the Company under the Company's Stock Incentive Plans; and
(3) certain other benefits provided to the Company's executive officers. The
Company's Compensation Committee is responsible for reviewing and approving
cash compensation paid by the Company to its executive officers and members of
the Company's senior management team, including annual bonuses and stock
options awarded under the Company's Stock Incentive Plans, selecting the
individuals who will be awarded bonuses and stock options under the Stock
Incentive Plans, and for determining the timing, pricing and amount of all
stock options granted thereunder, each within the terms of the Company's Stock
Incentive Plans.
The Company's executive compensation program has historically emphasized the
use of incentive-based compensation to reward the Company's executive officers
and members of senior management for the achievement of goals established by
the Board of Directors. The Company uses stock options to provide an
incentive for a substantial number of its officers and employees, including
selected members of management, and to reward such officers and employees for
achieving goals that have been established for the Company. The Company
believes its incentive compensation plan rewards management when the Company
and its shareholders have benefitted from achieving the Company's goals and
targeted research and development objectives, all of which the Compensation
Committee feels will dictate, in large part, the Company's future operating
results. The Compensation Committee believes that its policy of compensating
officers and employees with incentive-based compensation fairly and adequately
compensates those individuals in relation to their responsibilities,
capabilities and contribution to the Company, and in a manner that is
commensurate with compensation paid by companies of comparable size or within
the Company's industry.
Components of Compensation
The primary components of compensation paid by the Company to its executive
officers and senior management personnel, and the relationship of such
components of compensation to the Company's performance, are discussed below:
Base Salary. Each year the Compensation Committee reviews and approves
the base salary paid by the Company to its executive officers and members of
the senior management team. Annual adjustments to base salaries are
determined based upon a number of factors, including the Company's performance
(to the extent such performance can fairly be attributed or related to each
executive's performance), as well as the nature of each executive's
responsibilities, capabilities and contributions. In addition, the
Compensation Committee periodically reviews the base salaries of its senior
management personnel in an attempt to ascertain whether those salaries fairly
reflect job responsibilities and prevailing market conditions and rates of
pay. The Compensation Committee believes that base salaries for the Company's
executive officers have historically been reasonable in relation to the
Company's size and performance in comparison with the compensation paid by
similarly sized companies or companies within the Company's industry.
Incentive Compensation. As discussed above, a substantial portion of
each executive officer's compensation package is in the form of incentive
compensation designed to reward the achievement of short-term operating goals
and long-term increases in shareholder value. The Company's Stock Incentive
Plans allow the Board of Directors or the Compensation Committee to grant
stock options to executive officers and employees for the purchase of shares
of the Company's Common Stock. Under the terms of the Stock Incentive Plans,
the Board of Directors and the Compensation Committee have authority, within
the terms of the Stock Incentive Plans, to select the executive officers and
employees who will be granted stock options and to determine the timing,
pricing and number of stock options to be awarded. The Compensation Committee
believes that the stock options granted under the Stock Incentive Plans reward
executive officers only to the extent that shareholders have benefitted from
increases in the value of the Company's Common Stock.
Other Benefits. The Company maintains certain other plans and
arrangements for the benefit of its executive officers and members of senior
management. The Company believes these benefits are reasonable in relation to
the executive compensation practices of other similarly sized companies or
companies within the Company's industry.
Compensation of the Chief Executive Officer
The Company had a Management Agreement with ADP, pursuant to which ADP agreed
to manage the Company and provide it with a president or chief executive
officer for a two-year period beginning October 1, 1995. The Company was
obligated to pay ADP $16,667 per month and reimburse ADP for all direct
expenses incurred on the Company's behalf. The Management Agreement with ADP
was terminated effective as of June 15, 1996 and at that time David G.
Derrick, the Company's Chief Executive Officer, became an employee of the
Company pursuant to an Employment and Non-Competition Agreement dated
effective as of June 15, 1996. Prior to June 15, 1996, the services of David
G. Derrick were made available to the Company by ADP pursuant to the
Management Agreement with ADP. ADP is owned 10% by Mr. Derrick and 90% by Mr.
Derrick's wife. The Employment and Non-Competition Agreement with Mr. Derrick
has an initial term that expires on September 30, 1997 and provides for a
monthly base salary of $16,667 (or $200,000 per year). The Compensation
Committee believes that Mr. Derrick's monthly compensation adequately and
fairly compensates Mr. Derrick in relation to his responsibilities,
capabilities, contributions and dedication to the Company and secures for the
Company the benefit of Mr. Derrick's leadership, management and financial and
fund raising skills and capabilities. Moreover, the Compensation Committee
believes that Mr. Derrick's monthly base salary under his Employment and
Non-Competition Agreement with the Company is reasonable to Mr. Derrick's
responsibilities, capabilities, contributions and dedication to the Company
and is warranted to keep Mr. Derrick's annual salary in line with the
compensation earned by chief executive officers employed by companies of
comparable size or within the Company's industry.
Mr. Derrick did not receive a cash bonus during fiscal year 1996. However, in
December 1995, Mr. Derrick was granted stock options under the 1996 Stock
Incentive Plan for a total of 600,000 shares of Common Stock at $2.00 per
share, subsequently repriced at $1.16 per share.
Conclusion
The Compensation Committee believes that the concepts discussed above further
the shareholders' interests because a significant part of executive
compensation is based upon the Company achieving its research and development
goals and other specific goals set by the Board of Directors. At the same
time, the Compensation Committee believes that the program encourages
responsible management of the Company in the short-term. The Compensation
Committee regularly considers plan design so that the total program is as
effective as possible in furthering shareholder interests. The Compensation
Committee bases its review on the experience of its own members, on
information requested from management personnel, and on discussions with and
information compiled by various independent consultants retained by the
Company.
Compensation Committee:
David G. Derrick
Thomas Q. Garvey, III, M.D.
Christopher D. Illick
STOCK PERFORMANCE GRAPH
The following graph compares the yearly cumulative total returns from the
Company's Common Stock during the five fiscal year period ended September 30,
1996, with the cumulative total return on the Media General Index and the
Standard Industrial Classification (SIC) Code Index for that same period. The
comparison assumes $100 was invested on October 1, 1991 in the Company's
Common Stock and in the Common Stock of the companies in the referenced
Indexes and further assumes reinvestments of dividends.
[A graph appears here which compares the cumulative total return of Biomune
Common Stock to SIC Code 8731 Industry Index and a Broad Market Index known as
the Media General Composite, consisting of approximately 60 companies. As
indicated in the chart, the returns were as follows:
Fiscal Year Ended September 30,
1991 1992 1993 1994 1995 1996
Biomune 100 167 167 475 313 197
Industry Index 100 82 80 60 94 89
Broad Market 100 107 126 132 160 188
End of Explanation of Graph] This section is not "soliciting material" and is
not deemed "filed" with the SEC and is not to be incorporated by reference in
any filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
Compensation of Directors. Members of the Board of Directors who are not
employed by the Company are paid $500 for each board meeting attended, in
addition to being reimbursed for their expenses incurred in connection with
attending meetings of the Board of Directors. The total number of stock
options each director was granted during fiscal year 1996 is as follows: David
G. Derrick -- 600,000; James J. Dalton -- 100,000; and Milton G. Adair --
75,000. Each of those stock options was granted pursuant to the Company's
Amended 1995 Stock Incentive Plan and all are exercisable for five years from
the date of grant (or the date of repricing)at an exercise price of $1.16 per
share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who beneficially own more than 10% of a registered class of the
Company's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of the Company's Common Stock and other
equity securities. Officers, directors and greater than 10% shareholders are
required by SEC Regulations to furnish the Company with copies of all Section
16(a) reports they file.
Based solely upon a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended September
30, 1996 with all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than 10% beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, the following table sets forth information
regarding ownership of the Company's outstanding Common Stock on July 15, 1997
by (i) beneficial owners of more than 5% of the outstanding shares of Common
Stock; (ii) each director and each executive officer; and (iii) all directors
and executive officers as a group. Except as otherwise indicated below and
subject to applicable community property laws, each owner has sole voting and
sole investment powers with respect to the stock listed.
Name and Address(1) Shares of Common Stock Beneficially Owned (2)
- --------------------------- --------------------------------------------
Number Percent
Officers and Directors:
David G. Derrick (3) 1,698,503 6.8%
Ira E. Ritter - -
James J. Dalton (4) 535,000 2.2%
Aaron Gold, D.D. (5) 204,612 *
4363 Sheldon Drive
La Mesa, CA 92401
Charles J. Quantz (6) 87,150 *
Post Office Box 8186
Emeryville, CA 94662
Milton G. Adair - -
Frank A. Eldredge (7) 112,832 *
Michael G. Acton (8) 235,438 *
Thomas Q. Garvey, III, M.D. (9) 105,000 *
10125 Gary Road
Potomac, MD 20854
Christopher D. Illick (10) 132,000 *
22 Mountain Avenue
Princeton, NJ 08540
5% Beneficial Owners:
Leviticus Trust (11) 2,107,553 8.9%
821 Northpoint Drive
Salt Lake City, Utah 84103
All Directors and Officers
As a Group (10 persons) (12) 3,005,535 11.5%
___________________________
1/ Unless otherwise indicated, such person's address is the same as the
Company's address.
2/ A person is deemed to be the beneficial owner of securities that can
be acquired by such person within sixty (60) days from the date of this Proxy
Statement upon the exercise of options or warrants or otherwise. Each
beneficial owner's percentage of ownership is determined by assuming that
options, warrants, or other rights to acquire shares, held by such person (but
not those held by any other person) and exercisable within sixty (60) days
from the date hereof have been fully exercised.
3/ Mr. Derrick owns 458,503 shares of Common Stock directly and owns
directly or indirectly options to purchase 1,240,000 shares of Common Stock.
4/ Mr. Dalton owns 100,000 shares of Common Stock directly and options to
purchase 435,000 shares of Common Stock.
5/ Dr. Gold owns 69,612 shares of Common Stock directly and options to
purchase 135,000 shares of Common Stock.
6/ Mr. Quantz owns 12,150 shares of Common Stock directly and options to
purchase 75,000 shares of Common Stock.
7/ Dr. Eldredge owns 7,832 shares of Common Stock directly and options to
purchase 95,000 shares of Common Stock.
8/ Mr. Acton owns 438 shares of Common Stock directly and options to
purchase 235,000 shares of Common Stock.
9/ Dr. Garvey owns 5,331 shares of Common Stock directly and options to
purchase 99,669 shares of Common Stock.
10/ Mr. Illick owns 27,000 shares of Common Stock directly and options to
purchase 105,000 shares of Common Stock.
11/ The Leviticus Trust owns 2,107,553 shares of Common Stock directly.
12/ Based on a total of 26,107,640 shares of Common Stock, assuming the
exercise of all options held by such person and exercisable within 60 days of
the date of this statement.
Approximately 12% of the issued and outstanding shares of the Company's Common
Stock are beneficially owned by current directors and executive officers of
the Company. There are no arrangements known to the Company, the operation of
which may, at a subsequent date, result in a change of ownership or control of
the Company.
CERTAIN BUSINESS RELATIONSHIPS
Transactions With Management and Others
David G. Derrick. The Company entered into an Employment and
Non-Competition Agreement with David G. Derrick, the Company's Chief Executive
Officer and Chairman of the board, effective as of June 15, 1996. The initial
term of that Employment and Non-Competition Agreement expires on September 30,
1997. The Employment and Non-Competition Agreement employs Mr. Derrick as the
Company's Chief Executive Officer and requires him to provide specific
services to the Company, including, but not limited to, negotiating all
business and financial transactions, investment banking agreements, secondary
stock offerings, and private placement transactions. Pursuant to the
Employment and Non-Competition Agreement, the Company has agreed to pay Mr.
Derrick a base salary of $200,000 per year. In addition, subsequent to fiscal
year end 1996, the Company granted Mr. Derrick options in the amount of
100,000 shares of Common Stock conditioned upon Mr. Derrick's raising capital
for the Company. Subsequent to September 30, 1996, Mr. Derrick was successful
in raising the desired capital and was issued those options at the fair market
value of the Company's Common Stock on that date.
James J. Dalton. The Company entered into a Consulting Agreement with
James J. Dalton, the Vice-Chairman of the Board, effective as of February 1,
1996 and expiring on January 31, 1997. That Consulting Agreement provided for
Mr. Dalton's services as a Director of the Company and as Vice-Chairman of the
Board of Directors. Pursuant to that Consulting Agreement, the Company agreed
to pay Mr. Dalton a fee of $5,000 per month and to issue Mr. Dalton 6,000
shares of Common Stock each month during the term of the Consulting Agreement
(for a total of 72,000 shares). On October 15, 1996, Mr. Dalton became an
employee with the title Senior Vice-President of Investor Relations, and the
Consulting Agreement was terminated. 18,000 shares previously issued under
the Consulting Agreement were canceled. Effective as of February 1, 1996, Mr.
Dalton was also granted a five-year warrant exercisable for 100,000 shares of
the Company's Common Stock at an exercise price of $2.31 per share. In
addition, subsequent to fiscal year end 1996, the Company granted options to
Mr. Dalton in the amount of 100,000 shares of Common Stock conditioned upon
Mr. Dalton raising capital for the Company. Subsequent to September 30, 1996,
Mr. Dalton was successful in raising the desired capital and was issued those
options at the fair market value of the Company's Common Stock on that date.
Pursuant to the February 1, 1996, Consulting Agreement, the Company also
amended the terms of certain indebtedness of Mr. Dalton to the Company (see
"Indebtedness of Related Parties," below). In addition, prior to entering
into the Consulting Agreement, on March 15,1994, the Company entered into an
Agreement with Mr. Dalton, who at that time was a consultant to the Company
but not a member of the Board of Directors. Mr. Dalton subsequently became a
Director of the Company and the Vice-Chairman of the Board on February 1,
1996. That agreement required Mr. Dalton to provide management and financial
consulting services to Volu-Sol for the period March 15, 1994 through March
14, 1995. The Company issued warrants to purchase a total of 75,000 shares of
the Company's Common Stock at an exercise price of $4.00 per share as
compensation for the services to be performed by Mr. Dalton under that
agreement. Those warrants were valued at a price determined to be equal to
the trading price of the Company's Common Stock on the date they were granted
and expire if not exercised within two (2) years from the date of grant.
Those warrants expired on March 15, 1996. In addition, the Company committed
to pay Mr. Dalton $3,000 per month, reimburse him for expenses incurred, and
pay him 50% of the net profits of Volu-Sol (after the Company had been repaid
a $100,000 advance made to Volu-Sol) for a period of three (3) years after the
expiration of that agreement and any extension thereof. On April 1, 1995, the
Company entered into an agreement with Mr. Dalton that extended through March
31, 1996, pursuant to which Mr. Dalton provided services to Volu-Sol in
exchange for a total of 72,000 shares of the Company's Common Stock. The
Company recorded $216,000 of consulting expense associated with the April 1,
1995 Agreement, of which $90,000 was deferred as of September 30, 1995 and
recognized as expense in fiscal year 1996. As indicated elsewhere herein, all
options held by Mr. Dalton were repriced at $1.16 per share.
Christopher D. Illick. The Company entered into a Consulting Agreement
with Christopher D. Illick, one of the Company's directors and a member of its
Compensation and Audit Committees, effective March 1, 1996 and expiring on
February 28, 1997 (the agreement was subsequently extended for an additional
year). That Consulting Agreement provides for Mr. Illick's services as a
Director of the Company and as a member of the Company's Compensation and
Audit Committees. Pursuant to that Consulting Agreement, the Company agreed
to issue Mr. Illick 2,250 shares of Common Stock each month during the term of
the Consulting Agreement.
Thomas Q. Garvey, III, M.D. Dr. Garvey is paid on an hourly basis for
his services to the Company. During fiscal year 1996, the Company paid Dr.
Garvey $89,192.
ADP Management Corporation. Effective May 1, 1989, the Company entered
into a Management Agreement with ADP to manage the Company, as well as to
provide the Company with an individual who would serve as the Company's
president or chief executive officer. ADP is owned by David G. Derrick, the
Company's Chief Executive Officer and Chairman of the Board, and his wife.
Under that Management Agreement, as amended as of the beginning of fiscal year
1996, the Company was required to pay ADP a management fee of $16,667 per
month or $200,000 per year. David G. Derrick was made available to the
Company by ADP pursuant to that Management Agreement through June 15, 1996,
during which time Mr. Derrick devoted substantially all of his time to the
management and operation of the Company. Under the Management Agreement with
ADP, the Company recorded management fees of $141,667 and reimbursed no
expenses during fiscal year 1996. The Company's Board of Directors determined
the dollar compensation paid to Mr. Derrick under the Management Agreement
with ADP. ADP holds options to purchase 400,000 shares of the Company's
common stock at a price of $1.16 per share.
Genesis Investment Corporation. In August 1991, the Company entered into
a Consulting Agreement with Genesis Investment Corporation ("Genesis") whereby
Genesis would receive $10,000 per month plus reimbursement of any
out-of-pocket expenses incurred by Genesis on behalf of the Company in
connection with the consulting services provided thereunder. This agreement
was renewed in August 1992. The Company recorded consulting fees of $120,000
in fiscal year 1996 related to the agreement. The services provided to the
Company by Genesis include primarily financial and general business consulting
services and introductions to the scientific, medical and financial and
business communities.
Ira E. Ritter. In July 1997, the Company entered into a consulting
agreement with Andela Group, Inc., to provide the services of the Company's
president, Ira E. Ritter, in such capacity, at a monthly fee of $15,000.
Under the consulting agreement, Mr. Ritter is free to pursue other business
ventures and to fulfill commitments to other entities during the term of the
agreement while he also provides services to the Company on a part time
basis. It is not contemplated at this time that Mr. Ritter will devote his
full time to the business of the Company or that a full-time engagement is
necessary in order for Mr. Ritter to provide the services anticipated by the
consulting agreement. In addition, the Company entered into an option
agreement pursuant to which it acquired the option to purchase Mr. Ritter's
ownership interest of 100% of the issued and outstanding stock of Rockwood
Investments, Inc., d/b/a Rockwood Cosmetics, Inc., for $5,000,000. The option
payments, which may total $420,000 if the option is not exercised until the
end of the one-year term of the agreement, will be credited against the
purchase price of the stock. The Company also has agreed to pay Mr. Ritter a
royalty of 5% of the gross revenues of certain products and new business
generated through his efforts.
Indebtedness of Related Parties
James J. Dalton. During fiscal years 1995 and 1994, the Company made
loans aggregating $175,000 and $90,000, respectively, to James J. Dalton, a
Director of the Company and Vice-Chairman of the Board of Directors. These
loans were unsecured, bore interest at an annual rate of 12% and were due on
demand. During fiscal years 1996, 1995 and 1994, Mr. Dalton made principal
and interest payments totaling $60,000, $16,605 and $90,000, respectively, on
those loans. On January 29, 1996, the Company agreed to eliminate the
remaining principal and interest balances on these loans, which totaled
approximately $126,000, in exchange for Mr. Dalton relinquishing his right to
receive 50% of the future net profits of Volu-Sol, if any, for three (3) years
following the expiration of his agreement with the Company (or any extension
thereof). See "Certain Business Relationships," subheading "James J. Dalton,"
above. Mr. Dalton was a consultant to the Company through fiscal year 1996
and, during fiscal year 1996, became a Director of the Company and the
Vice-Chairman of the Company's Board of Directors. Effective October 15,
1996, Mr. Dalton became an employee of the Company with the title of Senior
Executive Vice-President -- Investor Relations.
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP, as the
independent public accountants for the Company to audit its consolidated
financial statements for the fiscal year ending September 30, 1997. Arthur
Andersen LLP served as the Company's independent public accountants for the
fiscal year ended September 30, 1996.
At the Annual Meeting, shareholders will be asked to ratify the selection by
the Board of Directors of Arthur Andersen LLP as the Company's independent
public accountants. The vote of a majority of the shares entitled to vote at
the Annual Meeting will ratify this selection.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP, are expected to attend the Annual
Meeting and will have an opportunity to make a statement if they desire, and
they will be available to respond to appropriate questions from shareholders.
ADDITIONAL DEVELOPMENTS -- SPIN-OFF OF VOLU-SOL
The Board of Directors of the Company has authorized the distribution
("Distribution") to the shareholders of the Company as of March 5, 1997 of all
of the outstanding shares of Common Stock of Volu-Sol, which is currently a
wholly owned subsidiary of the Company. The Distribution is expected to occur
on or about September 30, 1997. THE BOARD IS NOT SOLICITING YOUR PROXY ON
THIS MATTER AND YOUR VOTE IS NOT REQUIRED. THE FOLLOWING IS FOR YOUR
INFORMATION ONLY.
If you were a shareholder of the Company at the close of business on March 5,
1997, the record date for the Distribution ("Distribution Record Date"), you
will receive one (1) share of Volu-Sol Common Stock, par value $.0001 per
share for each ten (10) shares of Biomune Common Stock you owned on the
Distribution Record Date. No fractional shares will be issued. All
fractional shares will be rounded to the nearest whole share. The Company
expects that Volu-Sol stock certificates will be mailed beginning on or about
September 30, 1997 to those shareholders entitled to receive them. A separate
Information Statement relating to the Distribution will be sent to the
shareholders who will be receiving shares in the Distribution.
American Stock Transfer & Trust is acting as distribution agent and will be
responsible for mailing Volu-Sol share certificates to holders of record. No
further action will be required by the Company's shareholders in order to
receive Volu-Sol shares. No payment of any kind is required for the Volu-Sol
shares. Questions concerning Volu-Sol and other matters relating to the
distribution should be addressed to Michael G. Acton at (801) 466-3441.
Available Information
Volu-Sol will file with the SEC a Registration Statement on Form 10-SB (the
"Registration Statement") under the Exchange Act with respect to the
Distribution. An Information Statement will be mailed to the shareholders
concerning the Distribution ("Information Statement"). The Information
Statement does not contain all of the information set forth in the
Registration Statement or the exhibits and schedules thereto. Copies of these
documents may be inspected without charge at the principal office of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices
of the SEC at 7 World Trade Center, Suite 1300, New York City, New York 10048;
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661;
and 5670 Wilshire Boulevard, Suite 1100, Los Angeles, California 90036; and
copies of all or any part thereof may be obtained from the SEC upon payment of
the charges prescribed by the SEC. Copies of such material may also be
obtained from the SEC's website on the Internet at (http:\\www.sec.gov).
Following the Distribution, Volu-Sol will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the SEC. Volu-Sol will also be subject to the proxy
solicitation requirements of the Exchange Act and, accordingly, will furnish
audited financial statements to its shareholders in connection with its Annual
Meetings of Shareholders. If the stock of Volu-Sol is listed on any exchange,
Volu-Sol will be required to file with such exchange copies of such reports,
proxy statements and other information which can then be inspected at the
offices of the exchange.
NO PERSON IS AUTHORIZED BY BIOMUNE OR VOLU-SOL TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED.
_____________________________________
OTHER MATTERS
Management knows of no other matters to be submitted to the Annual Meeting. If
any other matters properly come before the Annual Meeting, it is intended that
the person named in the enclosed form of Proxy will vote such Proxy in
accordance with his judgment.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, as filed with the SEC, may be obtained by shareholders
without charge by written request to Michael G. Acton, Chief Financial
Officer, Biomune Systems, Inc., 2401 South Foothill Drive, Salt Lake City,
Utah 84109-1405.
By Order of the Board of Directors
/s/ David G. Derrick
David G. Derrick, Chairman of the Board
and Chief Executive Officer
Dated: September 5, 1997.
