<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
Lidak Pharmaceuticals
---------------------
(Name of Issuer)
Class A Common Stock and Class B Common Stock
-----------------------------------------------
(Title of Class of Securities)
531707107
-------------------------------------
(CUSIP Number of Class of Securities)
Michael D. Donahue, Esq.
Asher M. Leids, Esq.
Donahue, Mesereau & Leids LLP
1900 Avenue of the Stars
Suite 2700
Los Angeles, California 90067
(310) 277-1441
--------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 25, 1998
---------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Statement because of
Rule 13d-1(b)(3) or (4), check the following / /
Check the following box if a fee is being paid with this Statement: / /
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: HealthMed, Inc.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON: 91-1878972
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a)/X/
(b)/ /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00 HealthMed, Inc. Is obligated to pay an aggregate of $1,791,238.98
in promissory notes for the shares purchased from Dr. Katz and Medical
Biology Institute
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: 2,200,424
:
NUMBER OF -----------------------------------------------------
SHARES : (8) SHARED VOTING POWER
BENEFICIALLY : -0-
OWNED BY :
EACH -----------------------------------------------------
REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : 1,165,821
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
2,200,424
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 /X/
EXCLUDES CERTAIN SHARES*
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.4%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: Mitchell J. Stein
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
00 HealthMed, Inc. Is obligated to pay an aggregate of $1,791,238.98
in promissory notes for the shares purchased from Dr. Katz and Medical
Biology Institute
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: -0-
NUMBER OF SHARES :
-----------------------------------------------------
: (8) SHARED VOTING POWER
BENEFICIALLY : -0-
OWNED BY :
EACH -----------------------------------------------------
REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : -0-
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
2,200,424
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.4%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: National Trust Properties, Inc
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not Applicable
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: -0-
NUMBER OF SHARES :
-----------------------------------------------------
: (8) SHARED VOTING POWER
BENEFICIALLY : -0-
OWNED BY :
EACH -----------------------------------------------------
REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : -0-
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
2,200,424
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.4%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: The Trammel Trust
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
Not Applicable
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: -0-
NUMBER OF SHARES :
-----------------------------------------------------
: (8) SHARED VOTING POWER
BENEFICIALLY : -0-
OWNED BY :
EACH -----------------------------------------------------
REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : -0-
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
2,200,424
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
5.4%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: Edward L. Hennessy, Jr.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*
PF
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS / /
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: 50,000
NUMBER OF SHARES :
-----------------------------------------------------
: (8) SHARED VOTING POWER
BENEFICIALLY : -0-
OWNED BY :
EACH -----------------------------------------------------
REPORTING : (9) SOLE DISPOSITIVE POWER
PERSON WITH : 50,000
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
50,000
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.1%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
6
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: Wallace O. Raubenheimer
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS* PF
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: 144,134
NUMBER OF :
SHARES -----------------------------------------------------
BENEFICIALLY : (8) SHARED VOTING POWER
OWNED BY : -0-
EACH :
REPORTING -----------------------------------------------------
PERSON WITH : (9) SOLE DISPOSITIVE POWER
: 144,134
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: -0-
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
618,702
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
1.6%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
7
<PAGE>
- ------------------------------------------------------------------------------
CUSIP No. 531707107
- ------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON: George P. Rutland
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON:
- ------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) /X/
(b) / /
- ------------------------------------------------------------------------------
(3) SEC USE ONLY
- ------------------------------------------------------------------------------
(4) SOURCE OF FUNDS* PF
- ------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- ------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------------------------------------------------------------------
: (7) SOLE VOTING POWER
: 88,000
NUMBER OF :
SHARES -----------------------------------------------------
BENEFICIALLY : (8) SHARED VOTING POWER
OWNED BY : 12,000
EACH :
REPORTING -----------------------------------------------------
PERSON WITH : (9) SOLE DISPOSITIVE POWER
: 88,000
:
-----------------------------------------------------
:(10) SHARED DISPOSITIVE POWER
: 12,000
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
100,000
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES* /X/
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.2%
- ------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
8
<PAGE>
This Amendment No. 2 amends and supplements the statement on
Schedule 13D, dated January 12, 1998, and Amendment No. 1 of Schedule 13D,
dated March 6, 1998 relating to the Class A Common Stock, no par value (the
"Class A Common Stock") and the Class B Common Stock, no par value (the
"Class B Common Stock") (the Class A Common Stock and the Class B Common
Stock may hereinafter be referred to collectively as, the "Shares"), issued
by Lidak Pharmaceuticals, a California corporation (the "Company"), and is
being filed pursuant to Rule 13d-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
The information set forth in the Exhibits attached hereto is hereby
expressly incorporated herein by reference and the response to each item of
this Schedule 13D is qualified in its entirety by the provisions of such
exhibits.
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Schedule 13D") relates to the
Shares of the Company. The principal executive offices of the Company are
located at 11077 N. Torrey Pines Road, La Jolla, California 92037.
ITEM 2. IDENTITY AND BACKGROUND
(a) This Schedule 13D is being filed by HealthMed, Inc., a Nevada
Corporation, National Trust Properties, Inc., an Arizona corporation
("National"), The Trammel Trust, a trust formed under the laws of the state
of California (the "Trust") and the following natural persons: Mitchell J.
Stein, Edward L. Hennessy, Jr., Wallace O. Raubenheimer and George P. Rutland
(collectively, the "Reporting Persons"). The name, address, citizenship and
present principal occupation or employment of each executive officer,
director and each person controlling Healthmed, Inc. and National are set
forth in Annex I hereto, which Annex I is hereby incorporated herein by this
reference.
(b) HealthMed, Inc.'s principal business and principal office
address is 8306 Wilshire Boulevard, Suite 7056, Beverly Hills, California
90211. National's principal business address is c/o HealthMed, Inc., 8306
Wilshire Boulevard, Suite 7056, Beverly Hills, California 90211. The Trust's
principal business address is 233 Wilshire Blvd, Suite 960, Santa Monica,
California 90401. Mr. Stein's address is 8306 Wilshire Boulevard, Suite 7056,
Beverly Hills, California 90211. Mr. Hennessy's address is 500 Island Drive,
Palm Beach, Florida 33480. Mr. Raubenheimer's address is c/o Folsom's Air
Service, Burnt Jacket Road, Greenville, Maine 04441. Mr. Rutland's address is
2625 Acuna Court, Carlsbad, California 92009.
(c) The present principal business of HealthMed, Inc. is providing
consulting services to healthcare companies. The present principal business
of National is serving as a holding Company. The Trust is an irrevocable
trust created under the laws of California on January 16, 1998. The Trust was
formed with the stock of National. The present principal occupation of Mr.
Stein is President and Chief Executive Officer of HealthMed, Inc. The present
principal occupation of Mr. Hennessy is investments. The present principal
occupation of Mr. Raubenheimer is investments. The present principal
occupation of Mr. Rutland is serving as Chairman of the Board of Directors
and Chief Executive Officer of Taipan Corporation and serving as a member of
the Board of Directors of Hemet Federal Bank.
(d) During the past five years none of the Reporting Persons and,
to the best knowledge of the Reporting Persons, none of the executive
officers, directors, trustees or controlling persons of HealthMed, Inc. has
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) None of the Reporting Persons, and, to the best knowledge of
the Reporting Persons, none of the executive officers, directors, trustees or
control persons of HealthMed, Inc. has, during the last five years, been a
party to a civil proceeding or subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to Federal or state securities laws or finding any violation with
respect to such laws.
9
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the terms of a Stock Purchase Agreement dated January 12,
1998 by and between David H. Katz, M.D. ("Dr. Katz") and HealthMed, Inc. (the
"Katz Stock Purchase Agreement"), Dr. Katz sold 308,100 shares of Class A
Common Stock and 70,200 shares of Class B Common Stock, no par value of the
Company (the "Class B Common Stock")to HealthMed, Inc. for a total purchase
price of $1,528,234.98 (the "Katz Promissory Note"). The purchase price was
paid by the HealthMed, Inc. in the form of a promissory note in the principal
amount of $1,528,234.98. Said promissory note matures on January 12, 2000.
Pursuant to the terms of a Stock Purchase Agreement dated January 12,
1998 by and between Medical Biology Institute, a California nonprofit public
benefit corporation ("MBI") and HealthMed, Inc. (the "MBI Stock Purchase
Agreement"), MBI sold 65,100 shares of Class A Common Stock to HealthMed,
Inc. for a total purchase price of $263,004. The purchase price was paid by
HealthMed, Inc. in the form of a promissory note in the principal amount of
$263,004 (the "MBI Promissory Note"). Said promissory note matures on
January 12, 2000.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons purchased the Shares owned by each of them for
purposes of investment and for the purposes otherwise specified hereinbelow
in this Item 4. Subject to applicable legal and contractual requirements,
and depending upon their respective evaluations of the Company's business and
prospects, future developments, market conditions and other factors, any of
the Reporting Persons may, from time to time, purchase additional Shares or
sell or cause to be sold, all or a portion of these Shares for which the
Reporting Person exercises voting or dispositive power, either in open market
or privately negotiated transactions or otherwise.
Subject to the foregoing, the Reporting Persons have no plans or
proposals which relate to Items 4(a) through (j) of Schedule 13D except as
follows:
(a)-(c) Pursuant to the terms of a Settlement Agreement (the
"Settlement Agreement") dated as of March 24, 1998 (the "Effective Date") by
and among the Company, on the one hand, and all of the Reporting Persons,
other than National and the Trust, on the other hand (collectively, the
"HealthMed Parties"), each of the HealthMed Parties agreed, among other
things, that they would not engage in any of the following activities at any
time on or prior to the Company's annual meeting of shareholders in 2001:
(I) acquire, offer to acquire or agree to acquire additional
securities issued by the Company or any of its direct or indirect
subsidiaries, including Shares and any other debt or equity securities of the
Company or any direct or indirect subsidiaries that are outstanding as of the
Effective Date or may thereafter be issued ("LIDAK Securities"), other than
LIDAK Securities that such person beneficially owns as of the Effective Date,
or encourage any person to acquire, or advise any person with respect to the
acquisition or proposed acquisition of LIDAK Securities other than attempts
to dispose of such aforementioned LIDAK Securities that such person
beneficially owns as of the Effective Date. The above prohibitions do not
apply to (A) acquisitions resulting from stock splits, reverse stocks splits
or other reclassifications affecting outstanding LIDAK Securities or stock
dividends or other pro rata distributions by the Company, (B) Messrs.
Rutland, Hennessy and Raubenheimer; (C) HealthMed, Inc. if the Company
approves a financing proposal by HealthMed, Inc.; (D) the ability of
HealthMed, Inc. to acquire additional LIDAK Securities to maintain its
percentage ownership interest in the Company and (E) the ability of
HealthMed, Inc. to acquire shares pursuant to the Purchase Rights Agreement
(as hereinafter defined);
(II) sell or otherwise convey (either singly or collectively)
more than 5% of the Company's then current outstanding securities to a single
person or group unless such person or group agrees in writing to be bound by
the provisions of the Settlement Agreement;
(III) deposit any LIDAK Securities in a voting trust or subject
them to a voting agreement or other agreement or arrangement of similar
effect; and
(IV) engage in, or offer, agree or propose to engage in any
business combination involving the Company, including without limitation an
acquisition, merger, sign-off, consolidation, tender offer, share exchange or
exchange offer (collectively, a "Transaction"); or arrange, or in any way
participate in any financing for any Transaction or for the purchase by any
person of any LIDAK Securities or any assets of the Company; PROVIDED,
HOWEVER, that the above provision does not prevent any of the HealthMed
Parties from making nonpublicly disclosed financing or investment proposals
to the Company's Board of Directors or tendering LIDAK Securities
beneficially owned by such person to any person who may make a tender offer
for all outstanding LIDAK Securities of such class.
(d) and (g) Pursuant to the terms of the Settlement Agreement, the
Company agreed to nominate Edward L. Hennessy, Jr. and George P. Rutland to
its Board of Directors at the Company's 1998 Annual Shareholders Meeting (the
"Annual Meeting"). In addition, the Company agreed to appoint a search
committee (the "Search Committee") consisting of Ken Olson (or his nominee)
and George P. Rutland to identify and recruit within 20 calendar days from
the Effective Date, three independent directors (each, an "Independent
Nominee") willing to join the Company's Board of Directors, at least one of
whom has significant experience within the pharmaceutical industry.
Further, the Company has agreed to submit for action at the Company's
Annual Meeting the following proposals:
(I) the adoption of an amendment to Article III of the Company's
Bylaws expanding the authorized number of directors to a minimum of 5 and
maximum of 9.
(II) the adoption of an amendment to Article III of the Company's
Bylaws creating three classes of directors, with Class I serving an initial
term until the 1999 Annual Meeting, Class II serving an initial term until
the 2000 Annual Meeting and Class III serving an initial term until the 2001
Annual Meeting with the initial terms for all classes to be followed by full
three year terms for each such class.
(III) the reconstitution of the existing Board of Directors and the
election of the following persons, as necessary, into the following Classes:
Class I: David H. Katz; 1 incumbent director; and 1 Independent
Nominee;
Class II: Edward L. Hennessy, Jr.; 1 incumbent director; and 1
Independent Nominee;
Class III: George P. Rutland; 1 incumbent director; and 1
Independent Nominee.
Pursuant to the Settlement Agreement the parties thereto also agreed to
vote all Shares beneficially owned by them or as to which they have the right
to vote in favor of the bylaw amendments and board nominees referred to
above. In addition, the HealthMed Parties have agreed to withdraw the Proxy
Statement previously filed by them immediately upon the filing by the Company
of its Supplemental Proxy.
(e) On January 13, 1998, HealthMed, Inc. submitted a financing
proposal to the Company. On March 3, 1998, as a result of the Company's
unwillingness to seriously pursue such proposal, HealthMed, Inc. withdrew its
proposal.
(f) Not Applicable.
10
<PAGE>
(h) Not Applicable.
(i) Not Applicable.
(j) Not Applicable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) HealthMed, Inc. is the direct beneficial owner of 443,400
Shares. Further, HealthMed, Inc. has voting power over an additional
1,034,603 Shares pursuant to the terms of Voting Trust Agreements with Dr.
Katz and MBI (see below). Further, HealthMed, Inc. has the right to acquire
between 709,380 and 722,421 Shares from Dr. Katz pursuant to the terms of the
Purchase Rights Agreement (as hereinafter defined). (For purposes hereof, as
described hereinbelow, HealthMed, Inc. is utilizing the 722,421 Shares in
calculating its beneficial ownership). Accordingly, HealthMed, Inc. may be
deemed to beneficially own approximately 2,200,424 Shares (the "HealthMed
Shares") (utilizing 722,421 Shares), representing approximately 5.4% of the
Shares outstanding. Mr. Stein, as president, chief executive officer and a
director of HealthMed, Inc. may be deemed to be beneficial owner of the
HealthMed Shares, although he disclaims beneficial ownership of such shares.
National, as the sole shareholder of HealthMed, Inc. may be deemed to be
beneficial owner of the HealthMed Shares, although it disclaims beneficial
ownership of such shares. The Trust, as the sole shareholder of National, may
be deemed to be beneficial owner of the HealthMed Shares, although it
disclaims beneficial ownership of such shares. Moreover, HealthMed, Inc. may
be deemed to have an interest in the following (i) 1,918,400 shares
(according to the Purchase Rights Agreement, or 1,877,000 according to
information subsequently provided by, or on behalf of, Dr. Katz) issuable to
Dr. Katz upon the exercise of currently exercisable stock options for which
HealthMed, Inc. will have the right to vote pursuant to the Katz Voting Trust
Agreement (as hereinafter defined), (ii) 386,190 shares issuable to Dr. Katz
upon the exercise of Class D warrants that are currently exercisable for
which HealthMed, Inc. will have the right to vote pursuant to the Katz Voting
Trust Agreement; and (iii) 375,000 shares of Class B Common Stock issuable
upon exercise of currently exercisable stock options (which automatically
convert into 375,000 shares of Class A Common Stock among, other things, any
transfer of such shares) for which HealthMed, Inc. will have the right to
vote pursuant to the Katz Voting Trust Agreement. HealthMed, Inc. is not
currently deemed to be the beneficial owner of such shares because HealthMed,
Inc. has no control over whether Dr. Katz will exercise the above-described
options and warrants. However, if Dr. Katz does exercise such options and
warrants, HealthMed, Inc. will be deemed to be the beneficial owner of such
shares.
The percentage of Shares outstanding reported as beneficially owned
by HealthMed, Inc. on the date hereof is based upon information contained in
the Company's definitive Proxy Statement dated March 13, 1998 so that
HealthMed, Inc.'s information is that the total shares of Class A Common
Stock issued and outstanding as of February 20, 1998 was 39,805,850 shares of
Class A Common Stock. The calculation as to percentage ownership gives
effect to (i) the automatic conversion of the 234,000 shares of Class B
Common Stock of the Company into 234,000 Shares of Class A Common Stock upon
the transfer of such Shares as required by the Company's Restated Articles of
Incorporation (the "Articles") and (ii) the exercise by Dr. Katz of options
to acquire up to 1,918,400 shares of Class A Common Stock and 375,000 shares
of Class B Common Stock, aggregating 2,293,400, HealthMed, Inc.'s right to
acquire 31.5% of such shares representing an aggregate of 591,255 shares of
Class A Common Stock and 118,125 shares of Class B Common Stock, aggregating
722,421 Shares and the automatic conversion of the 118,125 shares of Class B
Common Stock into 118,125 shares of Class A Common Stock, and results, for
purposes of calculating the percent of class owned by HealthMed, Inc., in
there being 40,762,271 shares of Class A Common Stock issued and outstanding.
11
<PAGE>
Mr. Hennessy is the beneficial owner of 50,000 Shares. Mr. Hennessy
has sole voting and investment power over all such Shares. Accordingly, Mr.
Hennessy may be deemed to beneficially own approximately 0.1% of the Shares
outstanding.
Mr. Raubenheimer is the beneficial owner of 618,702 Shares. Mr.
Raubenheimer has sole voting and investment power over 144,134 Shares. Mr.
Raubenheimer's wife is the beneficial owner of 367,900 Shares. Mr.
Raubenheimer disclaims beneficial ownership of such shares. Further, Mr.
Raubenheimer is the beneficial owner of Class D warrants exercisable into
106,668 Shares. Accordingly, Mr. Raubenheimer may be deemed to beneficially
own approximately 1.6% of the Shares outstanding.
Mr. Rutland is the beneficial owner of 100,000 Shares, of which he
has sole voting and investment power over 88,000 shares and shared voting and
investment power, with his wife, over 12,000 Shares. Accordingly, Mr.
Rutland may be deemed to beneficially own approximately 0.2% of the Shares
outstanding.
The percentage of Shares outstanding reported as beneficially owned
by Messrs. Raubenheimer and Rutland on the date hereof is based upon the
Company's Form 10-K for the Fiscal Year Ended September 30, 1997 which
reported that the total shares of Class A Common Stock issued and outstanding
as of December 29, 1997 was 38,742,511 Shares. The calculation as to
percentage ownership for Mr. Raubenheimer gives effect to the exercise by Mr.
Raubenheimer of the Class D warrants owned to him.
As described in detail in response to Item 6, below, the Reporting
Persons may be regarded as a group and that group may be deemed to have
acquired beneficial ownership for purposes of Sections 13(d) and 13(g) of the
Exchange Act, of all Shares beneficially owned by the Reporting Persons.
(b) HealthMed, Inc. has sole voting and dispositive power with
respect to the 443,400 Shares of Class A Common Stock purchased pursuant to
the Katz Stock Purchase Agreement and the MBI Stock Purchase Agreement.
Pursuant to the terms of a Voting Trust Agreement dated January 12,
1998 by and between Dr. Katz and HealthMed, Inc. (the "Katz Voting Trust
Agreement"), Dr. Katz transferred 718,903 shares of Class A Common Stock and
163,800 shares of Class B Common Stock (which automatically converted into
163,800 shares of Class A Common Stock) into a voting trust with HealthMed,
Inc. HealthMed, Inc. is the trustee of such voting trust and has the sole
power to vote the 1,034,603 Shares transferred into such voting trust. The
term of the Katz Voting Trust Agreement is ten (10) years. Under the terms
of the Katz Voting Trust Agreement, Dr. Katz has retained the power to
dispose of all of the Shares held in such trust; PROVIDED, HOWEVER, Dr. Katz
may not dispose of more than twenty percent (20%) of such Shares within any
thirty (30) day period. Further, pursuant to the Katz Voting Trust Agreement,
Dr. Katz is obligated to transfer into such voting trust other or additional
Shares that are issued by the Company to Dr. Katz, including, without
limitation, through the exercise of stock options or warrants (including the
stock options and warrants described in Item 5(a) above).
Pursuant to the terms of a Voting Trust Agreement dated January 12,
1998 by and between MBI and HealthMed, Inc. (the "MBI Voting Trust
Agreement"), MBI transferred 151,900 Shares of Class A Common Stock into a
voting trust with HealthMed, Inc. HealthMed, Inc. is the trustee of such
voting trust and has the sole power to vote the 151,900 Shares of Class A
Common Stock transferred into such voting trust. The term of the MBI Voting
Trust Agreement is ten (10) years. Under the terms of the MBI Voting Trust
Agreement, MBI has retained the power
12
<PAGE>
to dispose of all of the Shares held in such trust; PROVIDED, HOWEVER, MBI
may not dispose of more than twenty percent (20%) of such Shares within any
thirty (30) day period. Further, pursuant to the MBI Voting Trust Agreement,
MBI is obligated to transfer into such voting trust other or additional
shares that are issued by the Company to MBI, including, without limitation,
through the exercise of stock options or warrants. Dr. Katz may be deemed to
be the beneficial owner of the 151,900 shares of Class A Common Stock
transferred into this voting trust.
Dr. Katz and HealthMed, Inc. have also entered into a Purchase
Rights Agreement (the "Purchase Rights Agreement") dated January 12, 1998
pursuant to which Dr. Katz has granted to HealthMed, Inc. the irrevocable
right to receive either (i) 31.5% of the shares received by Dr. Katz upon the
exercise of his stock options (the "Options") to purchase 1,918,400 shares of
Class A Common Stock and 375,000 shares of Class B Common Stock or (ii) 31.5%
of the net proceeds from the sale of the shares received upon exercise of the
Options. The Purchase Rights Agreement expires on June 21, 2007. The Options
are exercisable within 60 days. Accordingly, HealthMed, Inc. may be deemed
to beneficially own 722,421 shares of Class A Common Stock.
(c) Edward L. Hennessy, Jr. purchased 50,000 Shares in the open
market on March 18, 1998. Mr. Hennessy paid an aggregate of $97,882.98
(inclusive of commissions) for such Shares or approximately $1.96 per Share.
Such purchase was effected in the open market on the NASDAQ National Market
System through a broker.
(d) Pursuant to the terms of the Purchase Rights Agreement, Dr.
Katz has the right to exercise the Options, to sell the shares of stock
received upon such exercise and either (i) to retain 68.5% of the net
proceeds from the sale of such shares or (ii) to retain 68.5% of the shares
received upon exercise of the Options.
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<PAGE>
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The discussion contained in each of Item 3, Item 4, Item 5(a) and Item
5(b) of this Schedule 13D is hereby incorporated herein by this reference.
On March 6, 1998, the Reporting Persons (other than Mr. Hennessy)
orally agreed to act together with respect to the Shares as and to the extent
set forth below. Pursuant to the Settlement Agreement, Mr. Hennessy may also
be deemed to act together with the other Reporting Persons with respect to
the Shares beneficially owned by him. Moreover, pursuant to the terms of a
Joint Filing Agreement, the Reporting Persons have agreed to the joint filing
of this Statement on Schedule 13D (including any and all amendments) with
respect to the Shares. A copy of the Joint Filing Agreement is attached
hereto as Exhibit 10. Consequently, the Reporting Persons may be regarded as
a group and that group may be deemed to have acquired beneficial ownership,
for purposes of Sections 13(d) and 13(g) of the Exchange Act, of all Shares
owned by any of the Reporting Persons.
Except as set forth in Item 5(a) and Item 5(b) of this Schedule
13D, HealthMed, Inc. has no power to vote or direct the voting of, nor any
power to dispose of or direct the disposition of, the Shares owned by any
other Reporting Person. Consequently, HealthMed, Inc. disclaims any
beneficial interest in the Shares owned by any other Reporting Person.
Except as set forth in Item 5(a) and Item 5(b) of this Schedule
13D, neither Mr. Stein, National or the Trust has the power to vote or direct
the voting of, nor any power to dispose of or direct the disposition of, the
Shares owned by any other Reporting Person. Consequently, each of Mr. Stein,
National and the Trust disclaims any beneficial interest in the Shares owned
by any other Reporting Person.
Mr. Hennessy has no power to vote or direct the voting of, nor any
power to dispose of or direct the disposition of, the Shares owned by any
other Reporting Person. Consequently, Mr. Hennessy disclaims any beneficial
interest in the Shares owned by any other Reporting Person.
Mr. Raubenheimer has no power to vote or direct the voting of, nor
any power to dispose of or direct the disposition of the Shares owned by any
other Reporting Person. Consequently, Mr. Raubenheimer disclaims any
beneficial interest in the Shares owned by any other Reporting Person.
Mr. Rutland has no power to vote or direct the voting of, nor any
power to dispose of or direct the disposition of, the Shares owned by any
other Reporting Person. Consequently, Mr. Rutland disclaims any beneficial
interest in the Shares owned by any other Reporting Person.
Pursuant to the Settlement Agreement, the Company has agreed to
reimburse HealthMed, Inc. for certain third party expenses, not to exceed
$150,000, in connection with the proxy statement previously filed by the
Reporting Persons.
As previously reported in earlier filings, and referred to herein,
HealthMed Inc. entered into various agreements with Dr. Katz and MBI on
January 12, 1998 regarding purchase of shares and voting trust. It has come
to HealthMed's attention that Dr. Katz has asserted that the purpose of those
agreements was to induce HealthMed, Inc. to invest $130 million dollars into
Lidak. Said statement of purpose is erroneous, and is nowhere reflected in
the written documents which created the purchase and sale and the voting
trust. It is also contrary to the facts surrounding the entering into of
these agreements. Dr. Katz is not a Reporting Person pursuant to this
Schedule 13D, and is not a member of any group with HealthMed, Inc. except as
evidenced by the written agreements of January 12, 1998.
Except as set forth above, the Reporting Persons disclaim the
existence of any group, in which any of them may be deemed to be a member,
relative to the ownership of any securities of the Company. Moreover, except
as set forth in this Schedule 13D (particularly in response to Item 4, which
discussion is hereby incorporated herein by this reference), none of the
Reporting Persons has any contracts, arrangements, understandings, or
relationships (legal or otherwise) with any other person with respect to any
securities of the Company, including without limitation, transfer or voting
of any securities of the Company; finder's fees; joint ventures; loan or
option arrangements; puts or calls; guarantees of profits; divisions of
profits or losses; or the giving or withholding of proxies.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 10: Joint Filing Agreement among the Reporting Persons pursuant
to Rule 3d-1(f)(1)(iii).
Exhibit 11: Settlement Agreement
Exhibit 12: Press Release
15
<PAGE>
ANNEX I
The name and principal occupation and employment of each executive
officer and director of HealthMed, Inc., each person controlling HealthMed,
Inc. and each executive officer and director of each person controlling
HealthMed, Inc. is set forth below. The address of each such person is c/o
HealthMed, Inc., 8306 Wilshire Boulevard, Suite 7056, Beverly Hills,
California 90211. Each person listed below is a citizen of the United States
of America.
The executive officers and directors of HealthMed, Inc. are as follows:
Name Present Principal Occupation and Employer
- ----- -----------------------------------------
Mitchell J. Stein (1) President, Chief Executive Officer, Chief
Financial Officer, Secretary and Director
T. Daniel Neveau Vice President-Development and Director
The outstanding capital stock of HealthMed, Inc. is held by National
Trust Properties, Inc., an Arizona corporation ("National"). The executive
officers and directors of National are as follows:
Name Present Principal Occupation and Employer
- ----- -----------------------------------------
Mitchell J. Stein (1) President, Secretary and Director
Tracey Hampton Chief Financial Officer
Dennis Hawk (1) Director
The outstanding capital stock of National is owned by The Trammel Trust
(the "Trust") which was formed in the State of California on January 16,
1998. The sole trustee of the Trust is Emanuel Barling, Jr.
- ----------------------------
(1) Messrs. Stein and Hawk are also partners in the law firm of
Stein, Perlman & Hawk which is located at 9000 Sunset Boulevard, Suite 500, Los
Angeles, California 90069.
16
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 31, 1998
HEALTHMED, INC.
By: /s/ Mitchell J. Stein
---------------------------------
Name: Mitchell J. Stein
Title: President
17
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 31, 1998
NATIONAL TRUST PROPERTIES, INC.
By: /s/ Mitchell J. Stein
---------------------------------
Name: Mitchell J. Stein
Title: President
18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 31, 1998
THE TRAMMEL TRUST
By: /s/ Emanuel Barling, Jr.
---------------------------------
Name: Emanuel Barling, Jr.
Title: Trustee
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 31, 1998
/s/ Mitchell J. Stein
----------------------------------------
Mitchell J. Stein
20
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 29, 1998
/s/ Edward L. Hennessy, Jr.
----------------------------------------
Edward L. Hennessy, Jr.
21
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 28, 1998
/s/ Wallace O. Raubenheimer
----------------------------------------
Wallace O. Raubenheimer
22
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 29, 1998
/s/ George P. Rutland
----------------------------------------
George P. Rutland
23
<PAGE>
EXHIBIT 10
JOINT FILING AGREEMENT
Agreement among HealthMed, Inc., National Trust Properties, Inc.,
Mitchell J. Stein, The Trammel Trust, Edward L. Hennessy, Jr., Wallace O.
Raubenheimer and George P. Rutland, whereby in accordance with Rule 13d-1(f)
under the Securities Exchange Act of 1934, as amended, each of the persons
named below agrees to the joint filing on behalf of each of them of a
Statement on Schedule 13D with respect to the equity securities of Lidak
Pharmaceuticals and further agrees that this Joint Filing Agreement be
included as an exhibit to such joint filings provided that, as contemplated
by section 13D-1(f)(2)(ii), no person shall be responsible for the
completeness or accuracy of the information concerning the other persons
making the filing, unless such person knows or has reason to believe that
such information is inaccurate.
In evidence thereof the undersigned, being duly authorized, hereby
execute this Agreement in counterpart as of this 31st day of March, 1998.
HEALTHMED, INC.
By: /s/ Mitchell J. Stein
-----------------------------------------
Name: Mitchell J. Stein
Title: President
NATIONAL TRUST PROPERTIES, INC.
By: /s/ Mitchell J. Stein
-----------------------------------------
Name: Mitchell J. Stein
Title: President
THE TRAMMEL TRUST
By: /s/ Emanuel Barling, Jr.
-----------------------------------------
Name: Emanuel Barling, Jr.
Title: Trustee
/s/ Mitchell J. Stein
-----------------------------------------
Mitchell J. Stein
/s/ Edward L. Hennessy, Jr.
-----------------------------------------
Edward L. Hennessy, Jr.
/s/ Wallace O. Raubenheimer
-----------------------------------------
Wallace O. Raubenheimer
/s/ George P. Rutland
-----------------------------------------
George P. Rutland
20
<PAGE>
AGREEMENT OF COMPROMISE AND SETTLEMENT
This AGREEMENT OF COMPROMISE AND SETTLEMENT dated as of March 24,
1998 (this "Settlement Agreement") is entered into by and among LIDAK
Pharmaceuticals ("LIDAK"), a California corporation, on the one hand, and
HealthMed, Inc., a Nevada Corporation ("HealthMed"), Mitchell J. Stein
("Stein"), George P. Rutland ("Rutland"), Edward L. Hennessy, Jr.
("Hennessy"), and Wallace O. Raubenheimer ("Raubenheimer") (collectively the
"HealthMed Parties") on the other hand. The foregoing parties are sometimes
collectively referred to herein as the "Parties."
WHEREAS, LIDAK has scheduled its 1998 Annual Meeting of
Shareholders for April 18, 1998;
WHEREAS, LIDAK has issued a Proxy Statement presenting for action
at the 1998 Annual Meeting the election of Messrs. William N. Jenkins, Helmer
P.K. Agersborg and Stuart A. Samuels as directors;
WHEREAS, the HealthMed Parties have filed a Schedule 13D and Proxy
Statement announcing their intent to contest the election of the LIDAK slate
of directors and have nominated a slate consisting of Edward L. Hennessy,
Jr., George P. Rutland and Wallace O. Raubenheimer;
WHEREAS, the Parties desire to avoid the costs and expenses of a
protracted and divisive proxy contest and related litigation; and
<PAGE>
WHEREAS, LIDAK has determined that the agreements set forth herein
are in the best interests of LIDAK and its shareholders.
FOR AND IN CONSIDERATION of the mutual covenants contained herein,
the Parties, intending to be legally bound hereby, agree as follows:
1. CERTAIN DEFINED TERMS. As used in this Settlement agreement,
the following terms (whether or not capitalized) shall have the following
meanings:
"1998 ANNUAL MEETING" means the 1998 annual meeting of
shareholders of LIDAK at which the election of directors shall be considered.
"BOARD" means the Board of Directors of LIDAK.
"COMMON STOCK" means the Class A and Class B common stock, no par
value per share, of LIDAK.
"EFFECTIVE DATE" means March 24, 1998.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"LIDAK SECURITIES" means any securities issued by LIDAK or any
of its direct or indirect subsidiaries, including the Common Stock and any
other debt or equity securities of LIDAK or any of its direct or indirect
subsidiaries that are outstanding as of the date hereof or may hereafter be
issued.
"PERSON" means any individual, corporation, association,
general or limited partnership, limited liability company, limited liability
partnership, joint venture, trust, estate, other entity or organization or
group.
2
<PAGE>
"SCHEDULE 13D" means the Statements on Schedule 13D related to
LIDAK Securities and filed with the SEC on or about January 13, 1998 by any
or all of the HealthMed Parties, and amendments thereto filed prior to the
Effective Date.
"SEC" means the United States Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SOLICITATION ACTION" with respect to a shareholders' meeting
means any of the following: (i) giving notice pursuant to LIDAK's Bylaws of
an intention to nominate directors at such meeting; (ii) filing with the SEC
any proxy solicitation materials (whether preliminary, definitive or as
described in Rule 14a-11 or 14a-12 under the Exchange Act) with respect to
such meeting; (iii) mailing or otherwise disseminating to shareholders any
such solicitation materials; (iv) otherwise engaging in a solicitation of
proxies with respect to such meeting; (v) nominating at such meeting
candidates for election as directors except as provided herein; or (vi)
casting votes or ballots at such meeting pursuant to proxies so solicited
(but the term "Solicitation Action" shall not include the casting of votes or
ballots by the Parties with respect to shares of Common Stock beneficially
owned by them or which are the subject of voting trusts over which they have
control).
"TRANSACTION" means any business combination involving LIDAK,
including without limitation an acquisition, merger, spin-off, spin-out,
consolidation, tender offer, share exchange or exchange offer.
"VOTING SECURITIES" means any securities issued by LIDAK or
any of its direct or indirect subsidiaries, including the Common Stock and
any other equity securities or
3
<PAGE>
debt convertible into equity securities of LIDAK or any of its direct or
indirect subsidiaries that are outstanding as of the date hereof or may
hereafter be issued.
The terms "PARTICIPANT," "PROXY" and "SOLICITATION" shall be
used as defined in Regulation 14A under the Exchange Act (whether or not the
pertinent securities are subject to Regulation 14A). The terms "BENEFICIAL
OWNERSHIP" and "GROUP" shall be used as defined in Regulation 13D-G under the
Exchange Act. The terms "AFFILIATE" and "ASSOCIATE" shall be used as defined
in Rule 12b-2 under the Exchange Act.
2. REPRESENTATIONS AND WARRANTIES OF THE HEALTHMED PARTIES. Each
of the HealthMed Parties severally and not jointly, represents and warrants
to LIDAK as follows:
(a) Such HealthMed Party has the requisite legal power and
authority to execute, deliver and carryout this Settlement Agreement and has
taken all necessary legal action to authorize the execution, delivery and
performance of this Settlement Agreement and the transactions contemplated
hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by such HealthMed Party and constitutes a
valid and binding obligation, enforceable against such HealthMed Party in
accordance with its terms.
(c) Neither such HealthMed Party nor any of its affiliates
beneficially owns, or has any direct, indirect or contingent pecuniary
interest in, any LIDAK Securities other than as disclosed in the Schedule
13D, except for 50,000 shares owned by Hennessy which were purchased on or
about March 18, 1998. Except for the aforementioned purchase of 50,000 shares
by Hennessy, none of the HealthMed Parties, individually or in the aggregate,
have filed any amendment or taken any action that requires filing an
amendment to the Schedule 13D
4
<PAGE>
during the period from March 6, 1998 (the last amendment date) to and
including the Effective Date.
(d) Neither such HealthMed Party nor any of its affiliates is
a member of any group with respect to LIDAK Securities and there are no other
persons who are part of such a group with it or any of its affiliates except
as disclosed in the Schedule 13D.
(e) Such HealthMed Party is not committed to or intending to
take any action designed to restore David Katz as an officer, consultant or
employee of LIDAK nor to nominate or elect David Katz as a director of LIDAK.
(f) No action or proceeding has been filed by any of the
HealthMed Parties in any court or with any administrative body relating to
any action by LIDAK or its affiliates.
(g) There are, and have been, no undisclosed agreements or
undertakings regarding compensation or remuneration of any kind to Messrs.
Rutland, Raubenheimer or Hennessy.
(h) There have been no commitments by Messrs. Rutland,
Raubenheimer or Hennessy to any HealthMed financing or investment proposal
concerning LIDAK.
(i) There are no undisclosed agreements between the HealthMed
Parties and David H. Katz.
(j) None of the expenses incurred by the HealthMed Parties
have been funded or reimbursed by David H. Katz.
5
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF LIDAK. LIDAK represents and
warrants to the HealthMed Parties as follows:
(a) LIDAK is duly organized and validly existing and in good
standing under the laws of the State of California, has the requisite
corporate power and authority to execute, deliver and carry out this
Settlement Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Settlement
Agreement and the transactions contemplated hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by LIDAK and constitutes a valid and
binding obligation, enforceable against LIDAK in accordance with its terms.
(c) No action or proceeding has been filed by LIDAK or any of
its affiliates in any court or with any administrative body relating to any
action by any of the HealthMed Parties.
(d) During the period from the Effective Date until the
conclusion of the 1998 Annual Meeting, subject to the fiduciary duties of the
members of the LIDAK Board, LIDAK shall not engage in any extraordinary
Transaction. During that period, Rutland shall be given notice of all LIDAK
Board meetings and invited to attend such meetings as an observer and to make
his views known on any matters which come before the Board provided that
Rutland signs a confidentiality agreement limiting the disclosure and use of
any information obtained at such meetings. During that period LIDAK shall not
enter into any employee retention agreements other than in the ordinary
course of business and other than those agreements with certain executive
management of LIDAK listed on Exhibit A, and the election of directors
6
<PAGE>
contemplated by paragraph 5(c) of this Agreement will not constitute a
"change of control" as defined under such agreements. Nothing contained
herein shall preclude LIDAK from adopting a shareholder rights plan or
indemnification agreements for its officers or directors.
4. RESTRICTIONS ON PURCHASE AND SALE OF LIDAK SECURITIES AND
CERTAIN OTHER ACTIONS. Each of the HealthMed Parties agrees that it and its
respective affiliates shall not, without the prior written consent of LIDAK
at any time on or prior to the LIDAK's annual meeting of shareholders in 2001:
(a) acquire, offer to acquire or agree to acquire, directly
or indirectly, by purchase or otherwise, beneficial ownership of LIDAK
Securities (or any direct or indirect rights, options or warrants for any
LIDAK Securities), other than the LIDAK Securities that such Person
beneficially owns as of the date hereof as referenced in Section 2(c) of this
Settlement Agreement, or encourage any Person to acquire, or advise any
Person with respect to the acquisition or proposed acquisition of LIDAK
Securities other than attempts to dispose of such aforementioned LIDAK
Securities that such Person beneficially owns as of the date hereof; provided
however, that this paragraph 4(a) shall not apply to acquisitions resulting
from stock splits, reverse stock splits or other reclassifications affecting
outstanding LIDAK Securities or stock dividends or other pro rata
distributions by LIDAK or its direct or indirect subsidiaries to holders of
LIDAK Securities (or a class or classes thereof) or from exercise of any
rights so distributed, nor shall it prohibit the HealthMed Parties or their
affiliates from acquiring LIDAK Securities from LIDAK on terms generally
available to all LIDAK shareholders; and provided further that this paragraph
(a) shall not apply to Rutland, Hennessy and Raubenheimer; and provided
further that in the event the LIDAK Board approves a financing proposal by
7
<PAGE>
HealthMed, HealthMed shall be entitled to purchase additional LIDAK
Securities in an amount to be negotiated in connection with the approval of
such financing proposal. This paragraph 4(a) shall not preclude HealthMed
from (i) acquiring additional LIDAK Securities subsequent to the Effective
Date, but solely to the extent necessary to maintain the same percentage
ownership interest in the outstanding Class A Common Stock of LIDAK at the
time of such additional acquisition, as the percentage which HealthMed owns
at the Effective Date or (ii) acquiring up to 709,380 shares of LIDAK Class A
Common Stock upon the exercise of certain stock options by Dr. Katz, pursuant
to the Purchase Rights Agreement dated January 12, 1998 between HealthMed and
Katz, as described as of the date hereof in the Schedule 13D.
(b) sell or otherwise convey (either singly or collectively)
more than 5% of LIDAK's then current outstanding Securities to a single
Person or group unless such Person or group, and every member thereof, agrees
in writing to be bound by the provisions of this Settlement Agreement;
(c) solicit, or encourage any other Person to solicit, or
advise any Person with respect to the solicitation of proxies or consents
with respect to any LIDAK Securities, or become a participant or otherwise
engage in any solicitation of proxies or consents (A) with respect to any
matter submitted or to be submitted to the vote of the holders of any LIDAK
Securities at any annual or special meeting or by written consent, including,
without limitation, with respect to the election of directors of LIDAK in
opposition to the nominees recommended by the Board or otherwise for the
purpose of acquiring control of the Board or management of LIDAK, or (B) for
the purpose of calling a special meeting of LIDAK's shareholders or the
holders of any LIDAK Securities; or advise or seek to advise any Person
8
<PAGE>
with respect to the voting of any LIDAK Securities; or submit, or encourage
any other Person to submit, or advise or assist any Person with respect to
the submission of, any nominations or proposals to LIDAK or to the holders of
LIDAK Securities for consideration by its shareholders or the holders of any
LIDAK Securities at any annual or special meeting of such holders or in any
action to be taken by written consent pursuant to LIDAK charter or bylaws,
Rule 14a-8 under the Exchange Act, the provisions of any document governing
the terms of any such LIDAK Securities or governing the rights of the holders
thereof, or otherwise; engage in any Solicitation Action; or otherwise take
any action to request a special meeting of the holders of any LIDAK
Securities;
(d) deposit any LIDAK Securities in a voting trust or subject
them to a voting agreement or other agreement or arrangement of similar
effect or otherwise join or form a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding, voting or
disposing of any LIDAK Securities, except as to those LIDAK Securities held
in voting trust as disclosed in the Schedule 13D and Amendment No. 1 thereto
dated March 6, 1998;
(e) engage in, or offer, agree or propose to engage in, any
Transaction (other than to participate therein as a shareholder on terms
generally available to all of LIDAK's shareholders); or arrange, or in any
way participate, directly or indirectly, in any financing for any Transaction
or for the purchase by any person of any LIDAK Securities or any assets of
LIDAK; PROVIDED, HOWEVER, that nothing herein shall prevent any of the
HealthMed Parties from making nonpublicly disclosed financing or investment
proposals to the LIDAK Board or tendering LIDAK securities beneficially owned
by it to any person who may make a tender offer for all outstanding LIDAK
securities of such class;
9
<PAGE>
(f) otherwise act alone or in concert with others to seek
representation on the Board or to acquire control of LIDAK or any of its
securities or assets;
(g) publicly request any amendment of any of the terms of
this Section;
(h) support, encourage, or assist, directly or indirectly,
LIDAK's employment, in any capacity, of David H. Katz or his appointment as
an officer of LIDAK, or, except as otherwise provided herein, the nomination
or election of David H. Katz as a director of LIDAK, subject to the fiduciary
duties of any HealthMed Party who is a member of the LIDAK Board.
(i) assist or advise, or enter into any agreement or
arrangement to assist or advise any other person in taking any action
referenced in any of paragraphs (a) through (h) above.
(j) If the LIDAK Board invites offers from third parties for
a Transaction that would result in a change of control of LIDAK, the
HealthMed Parties shall not be restricted by the provisions of paragraph 4(a)
and 4(e) hereof insofar as is necessary to permit the HealthMed Parties to
compete on equal terms with any such third party.
5. ADDITIONAL AGREEMENTS.
(a) PRESS RELEASE. Upon the effectiveness of this Agreement,
LIDAK shall issue the press release attached hereto as Exhibit B. No Party
to this Settlement Agreement nor any of their respective affiliates,
associates or representatives shall issue any other press release or other
publicly available document concerning this Settlement Agreement that is
inconsistent with, or is otherwise contrary to, the statements in such press
release. None of the
10
<PAGE>
Parties shall publicly make any negative statements regarding any other
Party, the Board, the process by which LIDAK seeks to enhance shareholder
value, or any proposed, pending or consummated Transaction.
(b) NON-INTERFERENCE. Each of the Parties hereto agrees
that, subject to his or its absolute right to pursue his or its own
legitimate business objectives independently and in good faith, he or it will
not, and will not permit any related party controlled by him or it, directly
or indirectly to, take any action or encourage any other Person to take any
action, the intent or direct foreseeable result of which is to interfere with
or adversely affect the business activities, contractual relationships or
business opportunities of any other Party or such other Party's affiliates
and associates.
(c) BOARD COMPOSITION.
i. Within 5 days after the Effective Date, LIDAK shall take
all necessary action to (1) postpone the 1998 Annual Meeting in accordance
with this Section 5(c), and (2) appoint and direct Ken Olson or his nominee
and George P. Rutland as members of an AD HOC search committee (the "Search
Committee") to identify and recruit within 20 calendar days three independent
directors willing to join the LIDAK Board, at least one of whom has
significant experience within the pharmaceutical industry (each, an
"Independent Nominee"), although the Search Committee shall use its best
efforts to identify and recruit Independent Nominees who have significant
experience within the pharmaceutical industry. If the Search Committee is
unable to reach agreement on three nominees to be reported to the LIDAK Board
within the time period specified, within 3 business days after the expiration
of such 20 day period the Parties shall jointly retain the Honorable Howard
B. Wiener, retired, who shall select
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however many nominees to the LIDAK Board are necessary in order that three
nominees are reported to the LIDAK Board. Judge Wiener shall select nominees
consistent with the Search Committee criteria set forth above in this Section
5(c)(i) and shall not select nominees with familial or material, personal or
business relationships with the parties, other directors or nominees, or
their respective counsel. Judge Wiener shall, as soon as practicable, after
his retention, select and report to the LIDAK Board his nominees. The cost
of retaining Judge Wiener shall be borne equally by LIDAK, on the one hand,
and HealthMed, on the other hand. Any of the Parties may nominate persons to
be considered by Judge Wiener for selection but Judge Wiener may disregard
any such nomination and make his selection in any way he chooses. Judge
Wiener's decision shall be final and binding on the Parties.
ii. Within 3 business days after the Search Committee and/or
Judge Wiener reports to the LIDAK Board that it has obtained the consent of
three qualified Independent Nominees to serve on the LIDAK Board and LIDAK
has received all information about these individuals and Rutland and Hennessy
which is required for inclusion in the LIDAK supplemental Proxy Statement,
LIDAK shall file with the SEC and, as promptly as practicable after the SEC
has cleared such materials, distribute to its shareholders a supplemental
Proxy Statement and proxy presenting for action at the 1998 Annual Meeting
containing, along with any other proposals presented by the Board, the
following proposals:
(A) The adoption of an amendment to Article III of LIDAK's
Bylaws expanding the authorized number of directors to a minimum of 5 and
maximum of 9.
(B) The adoption of an amendment to Article III of
LIDAK's
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Bylaws creating three classes of directors, with Class I serving an initial
term until the 1999 Annual Meeting, Class II serving an initial term until
the 2000 Annual Meeting and Class III serving an initial term until the 2001
Annual Meeting, with the initial terms for all classes to be followed by full
three year terms for each such Class.
(C) The reconstitution of the existing Board of
Directors and the election of the following persons, as necessary, into the
following Classes:
Class I: David H. Katz; 1 incumbent director; and 1
Independent Nominee;
Class II: Edward L. Hennessy, Jr.; 1 incumbent director
and 1 Independent Nominee; and
Class III: George P. Rutland; 1 incumbent director
and 1 Independent Nominee.
iii. Promptly after the Search Committee and/or
Judge Wiener has delivered its determination of the three Independent
Nominees to the LIDAK Board, LIDAK will set a new record date and meeting
date for the 1998 Annual Meeting, which meeting date shall be not later than
60 days after the date the Search Committee and/or Judge Wiener reports its
determination and provides the required information as described in clause
5(c)(ii) above to the LIDAK Board.
iv. The Parties hereto agree to vote all shares
beneficially owned by them or as to which they have the right to vote
pursuant to the provisions
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of any voting trusts or proxies at the 1998 Annual Meeting in favor of the
bylaw amendments and the board nominees referred to in this paragraph 5(c).
(d) WITHDRAWAL OF HEALTHMED PROXY. Immediately upon the
filing by LIDAK of the Supplemental Proxy described above, the HealthMed
Parties shall withdraw their Proxy Statement.
(e) IF PROPOSALS REJECTED. In the event that the LIDAK
Shareholders do not approve the proposals set forth in paragraph 5(c)(ii),
the Parties are relieved of all of their obligations hereunder except that
the Mutual Releases set forth in paragraph 6 shall continue to be effective
and the amount paid by LIDAK to Diamond & Ostrow pursuant to paragraph 5(f)
shall be returned to LIDAK.
(f) EXPENSE REIMBURSEMENT. Within three days of the
Effective Date, the HealthMed Parties shall submit to LIDAK a declaration
under oath of Rex Beaber itemizing the third party out of pocket expenses
incurred by the HealthMed Parties in connection with the filing of the
HealthMed Proxy Statement and preparing to wage a proxy contest. Within
three days of receipt of such declaration, LIDAK shall pay an amount equal to
75 percent of such expenses, with such payment not to exceed the amount of
$150,000 to the law firm of Diamond & Ostrow who will hold such funds in
trust until the conclusion of the 1998 Annual Meeting. If the proposals set
forth in paragraph 5(c)(ii) are adopted by the LIDAK Shareholders, such funds
may be disbursed to HealthMed. The HealthMed Parties represent and warrant
that none of such reimbursement will be paid to Katz or his counsel. If the
proposals set forth in paragraph 5(c)(ii) are not adopted, such funds will be
returned to LIDAK.
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(g) NO EMPLOYMENT OF KATZ. Each of the HealthMed Parties
agrees not to propose, encourage others to propose, or support in any way,
directly or indirectly, the employment or appointment of David H. Katz by
LIDAK, in any capacity, as an officer, employee or consultant of LIDAK, and
agrees to vote against any such employment or appointment subject to the
fiduciary duties of any such party who may be a member of the LIDAK Board.
(h) NO NOMINATION OF KATZ. Except as otherwise set forth
herein, each of the HealthMed Parties agrees not to nominate, encourage
others to nominate, vote for the nomination of, or support in any way the
nomination of, directly or indirectly, David H. Katz as a director of LIDAK,
from the Effective Date until after the completion of the LIDAK annual
meeting of shareholders in 2001, subject to any fiduciary duties of any such
party who may be a member of the LIDAK Board.
6. MUTUAL RELEASES. For and in consideration of the agreements
contained herein, the Parties hereto release one another as follows:
(a) HEALTHMED PARTIES. Each of the HealthMed Parties, on
behalf of itself and of all its affiliates, successors and assigns other than
David H. Katz ("related parties"), hereby releases, acquits and forever
discharges LIDAK, together with its present and former affiliates, officers,
directors, employees, agents, advisors, attorneys, successors and assigns
(the "Released Parties"), of and from any and all claims, causes of action
(whether at law or equity), demands, expenses and damages which such
HealthMed Parties or its related parties may have had, or may now have, or
may hereafter have (whether through operation of law, assignment or
subrogation), from the beginning of time to the Effective Date, real or
suspected, known or
15
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unknown, actual or contingent, direct or derivative, including but not
limited to any such claims, cause of action, demands, expenses and damages
relating to or arising out of any actions or inactions by LIDAK, its Board of
Directors, its Executive Committee, its Special Committee or any of its
officers, directors, employees, attorneys relating to consideration of the
HealthMed proposal, the conduct of LIDAK's business, the submission of
matters for consideration at the Annual Meeting, the filing of proxy
materials with the SEC, or any other action or inaction relating thereto,
excepting only any action, cause of action or suit arising by virtue of the
breach of this Settlement Agreement.
(b) LIDAK. LIDAK, on behalf of itself and all of its
affiliates, successors and assigns ("related parties"), hereby releases,
acquit and forever discharges the HealthMed Parties, together with their
respective present and former affiliates, officers, directors, employees,
agents, attorneys, successors and assigns, excluding David H. Katz, of and
from any and all claims, causes of action (whether at law or equity),
demands, expenses and damages which LIDAK may have had, or may now have, or
may hereafter have (whether through operation of law, assignment or
subrogation), from the beginning of time to the Effective Date, real or
suspected, known or unknown, actual or contingent, direct or derivative,
including but not limited to any such claims, causes of action, demands,
expenses and damages relating to or arising out of any matters relating to
the proposed HealthMed financing transaction, the filing of the Schedule 13D,
the filing of the Proxy Statement or any other action or inaction related
thereto excepting only any action, causes of action or suit arising by virtue
of the breach of this Settlement Agreement.
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With respect to each of the releases set forth above, each person or entity
granting or receiving such a release (i) agrees that such releases do not
preclude any Party hereto from seeking to enforce any undertaking or promise
contained in this Settlement Agreement or from seeking redress for the breach
of any representation or warranty contained in this Settlement Agreement;
(ii) agrees not to challenge, and shall use its best efforts to cause each of
its affiliates, associates and representatives not to challenge, the validity
of any provisions of this Settlement Agreement; and (iii) expressly waives
all rights and benefits each may have under and by virtue of the terms of
Section 1542 of the California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Except as may be otherwise required by law, the HealthMed Parties will not
encourage or cooperate with plaintiffs in any derivative, class action or
shareholder litigation related to the Released Parties. Except as may be
otherwise required by law, LIDAK will not encourage or cooperate with
plaintiffs in any derivative, class action or shareholder litigation related
to LIDAK to which any of the HealthMed Parties is a party. In the event that
any part of this Settlement Agreement is temporarily, preliminarily or
permanently enjoined or restrained by a court of competent jurisdiction, the
Parties hereto shall use their reasonable best efforts to cause
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any such injunction or restraining order to be vacated or dissolved or
otherwise declared or determined to be of no further force or effect.
7. MISCELLANEOUS.
(a) NO ADMISSION OF LIABILITY OR WRONGDOING. This Settlement
Agreement and any proceedings taken hereunder are not and shall not in any
way be construed as or deemed to be evidence of (i) any admission or
concession on the part of any Party of the merits or lack of merits of any
claim or counterclaim that any of the Parties may have or which they have
threatened to assert, or (ii) any admission or concession on the part of any
Party of any liability or wrongdoing whatsoever, which liability and
wrongdoing are hereby expressly denied and disclaimed by each of the Parties.
(b) NO DURESS, ETC. The Parties agree that this Settlement
Agreement is entered into without duress, in good faith and for sufficient
consideration, and that it is fair, just and reasonable to all Parties.
(c) FULL KNOWLEDGE, INDEPENDENT ADVICE, ETC. This Settlement
Agreement is entered into with full knowledge of any and all rights which the
Parties may have. All Parties have received or have had made available to
them all financial and other information they or their counsel considered
necessary to make an informed judgment concerning the Settlement Agreement.
Each Party has received independent legal advice, has conducted such
investigation as he or his counsel thought appropriate, and has consulted
with such other independent advisors as each of them and their counsel deemed
appropriate, regarding this Settlement Agreement and their rights and
asserted rights in connection therewith. None of the Parties is relying upon
any representations or statements made by any other Party, or such other
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<PAGE>
Party's employees, agents, representatives or attorneys, regarding this
Settlement Agreement or its preparation except to the extent such
representations are expressly set forth herein.
(d) REASONABLE EFFORTS. All Parties hereto agree to exercise
all reasonable efforts and to take all reasonable steps necessary to
effectuate the settlement set forth in this Settlement Agreement.
(e) SUCCESSORS. This Settlement Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
heirs, successors and assigns, and upon any corporation or other entity into
or with which any Party hereto may merge, combine or consolidate (provided
that the Party is the survivor in such merger, combination or consolidation).
(f) GOVERNING LAW. This Settlement Agreement shall be
governed by and construed and enforced in accordance with the laws of the
State of California, without reference to the conflict of laws principles
thereof.
(g) AMENDMENT AND WAIVER. Any provision of Section 4 of this
Settlement Agreement, may be waived by an instrument in writing signed by
LIDAK and any such waiver shall be binding on all Parties. No waiver or
amendment of any other provision hereof shall be effective as against any
Party unless such Party agrees to such amendment or waiver in writing.
(h) AUTHORITY. Each person executing this Settlement
Agreement represents that he or it has read and fully understands this
Settlement Agreement and that he or it has the authority to execute this
Settlement Agreement in his individual capacity or in the capacity identified
on the signature page below.
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(i) NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by telecopy or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses set forth on Exhibit C (or at such other address for
a party as shall be specified in a notice given in accordance with this
paragraph). Each such notice, request, claim, demand or other communication
shall be effective (i) if given by telecopy transmission, when such
transmission to the telecopy number specified in Exhibit C has been made and
the appropriate electronic confirmation that the entire communication has
been received by the recipient equipment has been received by the sender or
(ii) if given by any other. means, when actually received at the address
specified in this paragraph; provided, in each case, that a notice given
other than during normal business hours or on a day other than on a business
day at the place of receipt shall not be effective until the opening of
business on the next business day at the place of receipt.
(j) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that irreparable harm would occur if any provision of this Settlement
Agreement were not performed in accordance with the terms thereof, or were
otherwise breached, and that such harm could not be remedied by an award of
money damages. Accordingly, the Parties hereto agree that any non-breaching
party shall be entitled to an injunction to prevent breaches of this Settlement
Agreement and to enforce specifically the terms and provisions hereof. More
specifically, each of the Parties hereto hereby agrees that any action or
proceeding brought under or to enforce any provision of this Settlement
Agreement shall be commenced in the United
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States District Court for the Southern District of California and each Party
hereto hereby consents to the personal jurisdiction of and venue in such
United States District Court and agrees further that service of process or
notice in any such action or proceeding shall be effective if given in the
manner set forth in Section 9(i) hereof.
(k) COUNTERPARTS. This Settlement Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
(l) EFFECTIVENESS. This Settlement Agreement shall become
effective on the Effective Date.
(m) CONSTRUCTION. This Settlement Agreement shall be
construed as a whole in accordance with its fair meaning and in accordance
with the laws of the State of California. The language of the Settlement
Agreement shall not be construed for or against any particular Party. The
headings used herein are for reference only and shall not affect the
construction of this Settlement Agreement.
(n) INTEGRATION. This Settlement Agreement is the complete
and exclusive agreement of the parties with respect to the subject matter
hereof. There are no restrictions, promises, warranties or undertakings other
than those set forth herein. This Agreement supersedes all prior agreements
and undertakings between or among the parties or any persons related to the
parties. There are not any other agreements, direct or collateral, written or
oral, between the parties hereto. All prior negotiations, agreements,
undertakings and statements made between the parties hereto which have
occurred on any subject at any time prior to the execution of this Agreement
with regard to the subject matter of this Agreement are hereby
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superseded and merged into this integrated Agreement. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated, except
by a subsequent amendment in writing signed by the party against whom such
provision operates. No such change, waiver, discharge or termination of this
Agreement shall be binding upon any party hereto unless and until it is
signed by that party.
[SIGNATURE PAGE FOLLOWS]
22
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IN WITNESS WHEREOF, the Parties hereto have caused this Settlement
Agreement to be executed as of the date first above written.
LIDAK PHARMACEUTICALS,
a California Corporation
By:
---------------------------------
HEALTHMED, INC.,
a Nevada Corporation,
By:
---------------------------------
-------------------------------------
Mitchell J. Stein
-------------------------------------
George P. Rutland
-------------------------------------
Wallace O. Raubenheimer
-------------------------------------
Edward L. Hennessy, Jr.
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<PAGE>
LIDAK PHARMACEUTICALS AND SHAREHOLDERS COMMITTEE
REACH SETTLEMENT AGREEMENT,
POSTPONE ANNUAL SHAREHOLDERS' MEETING
La Jolla, and Beverly Hills, California - March 25, 1998 -- LIDAK
Pharmaceuticals (Nasdaq NM:LDAKA) and a Shareholders Committee today
announced that they have entered into a settlement agreement whereby the
Shareholders Committee will withdraw a previously filed proxy statement in
support of an alternative slate of directors for LIDAK. Parties to the
agreement include LIDAK, HealthMed, Inc. and Wallace O Raubenheimer on behalf
of the Shareholders Committee, as well as Mitchell J. Stein, George P.
Rutland and Edward L. Hennessy, Jr.
The settlement agreement provides for a new LIDAK Board comprised of
four existing LIDAK directors, three additional independent nominees to be
mutually agreed upon, and two of the Committee's nominees, Mr. Rutland and
Mr. Hennessy. Additionally, the LIDAK Board has agreed to two by-law
amendments, expanding the number of directors to a maximum of nine, and
creating three classes of directors with staggered three year terms. The
director nominees and by-law amendments will be voted upon at the 1998 annual
shareholders' meeting, which will be postponed to allow adequate time to
conduct an expeditious search for the additional independent nominees and to
amend LIDAK's proxy materials. A date for the meeting will be set after the
additional independent nominees have been selected. Information with respect
to the postponement will be mailed to all shareholders.
The agreement also provides that the Committee and its nominees will not
conduct any proxy or other shareholder solicitations through the annual
meeting of shareholders to occur in 2001, limits additional stock purchases
or control of voting shares by the parties, and provides that LIDAK will
reimburse HealthMed for certain third party expenses, not to exceed $150,000.
The agreement does not contemplate any changes to the Company's current
executive management.
Gerald J. Yakatan, president, chief executive officer and a director of
LIDAK, stated, "We are
<PAGE>
pleased that this potentially contentious situation had such a positive
outcome for the Company. The Company was able to avoid the disruption and
potentially substantial costs associated with a proxy contest by reaching
this settlement agreement. We look forward to working with the new Board
members in determining LIDAK's future, with the mutual ultimate goal of
significantly enhancing shareholder value."
Rex Julian Beaber, General Counsel of HealthMed, commented, "As a large
shareholder of LIDAK, HealthMed believes this agreement will create a Board
of Directors who will work together in the interests of all shareholders and
guide LIDAK through successful exploitation of its product into the next
millennium."
LIDAK Pharmaceuticals is developing therapeutic products designed to
treat virally caused diseases, allergies and asthma, inflammatory disorders
and cancer. LIDAK's topical drug for the treatment of recurrent oral facial
herpes, LIDAKOL, was recently submitted to the United States Food and Drug
Administration for marketing approval.
CONTACT: Jeffery B. Weinress, Vice President & CFO of LIDAK Pharmaceuticals,
619-558-0364, ext. 242, or Rex Julian Beaber, General Counsel of
HealthMed, 310-448-1331.
# # #
The information contained in this press release, including any forward
looking statements contained herein, should be reviewed in conjunction with
the Company's Annual Report on Form 10-K and other publicly available
information regarding the Company, copies of which are available from the
Company upon request. Such publicly available information sets forth many
risks and uncertainties related to the Company's business and such
statements, including risks and uncertainties related to drug development and
clinical trials. Final review decisions made by the FDA and other regulatory
agencies concerning clinical trial results are unpredictable and outside of
the influence and/or control of the company.
