<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LIDAK PHARMACEUTICALS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
HealthMed, Inc. on behalf of:
LIDAK Pharmaceuticals Shareholders Committee
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
Class A Common Stock, Class B Common Stock
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE>
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
<PAGE>
PROXY STATEMENT
OF
THE LIDAK PHARMACEUTICALS
SHAREHOLDERS COMMITTEE
PRELIMINARY COPY
------------------------------------
LIDAK PHARMACEUTICALS
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1998
------------------------------------
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TO FELLOW SHAREHOLDERS OF LIDAK PHARMACEUTICALS:
This Proxy Statement is being furnished to you by the LIDAK
Pharmaceuticals Shareholders Committee (the "Shareholders Committee") in
connection with the solicitation by the Shareholders Committee of proxies
from the holders of shares of Class A Common Stock (the "Class A Shares") and
shares of Class B Common Stock (the "Class B Shares"; the Class A Shares and
the Class B Shares are hereinafter collectively referred to as the "Common
Stock") of LIDAK Pharmaceuticals (the "Company") to be used at the 1998
annual meeting of shareholders of the Company and any adjournments or
postponements thereof ("Annual Meeting"). The Shareholders Committee
includes shareholders of the Company who are dissatisfied with the actions of
the Board of Directors and believe that a change in the Board of Directors is
now necessary. The Shareholders Committee was formed to solicit your proxy
to remove the incumbent nominees of the Company and replace all of them with
the Shareholders Committee's nominees named in this Proxy Statement. The
Shareholders Committee is more fully described below.
At the Annual Meeting three directors of the Company will be elected for
a two-year term expiring at the Year 2000 Annual Meeting of Shareholders.
For the reasons stated below, the Shareholders Committee is soliciting your
proxy in support of the election of the Shareholders Committee's nominees for
directors of the Company named below (the "Nominees"). The Shareholders
Committee understands that the Company has selected February 20, 1998 as the
record date ("Record Date") for determining shareholders entitled to notice
of and to vote at the Annual Meeting and plans to hold the Annual Meeting on
Saturday, April 18, 1998, at 9:00 a.m. local time at the Company's
headquarters located at 11077 North Torrey Pines Road, La Jolla, California
92037.
The Shareholders Committee Nominees are Edward L. Hennessy, Jr.,
George P. Rutland and Wallace O. Raubenheimer. Biographical information
with respect to each of the Nominees is set forth below.
As of the Record Date, Mr. Rutland and his wife beneficially own
100,000 shares of Class A Common Stock and Mr. Raubenheimer, his wife and
family trusts beneficially own 512,034 shares of Class A Common Stock
(excluding 106,668 shares of Class A Common Stock that Mr. Raubenheimer can
acquire upon the exercise of Class D warrants beneficially owned by him).
The nominees of the incumbent Board of Directors are Helmer P.K. Agersborg,
William N. Jenkins and Stuart A. Samuels. According to documents recently
filed with the Securities and Exchange Commission by the Company, not
including exercisable stock options, AS OF JANUARY 20, 1998, MR. AGERSBORG
OWNED 0 SHARES OF COMMON STOCK, MR JENKINS OWNED 0 SHARES OF COMMON STOCK AND
MR. SAMUELS OWNED 0 SHARES OF COMMON STOCK.
BASED ON BOTH THE PERFORMANCE OF THE COMPANY UNDER THE CURRENT BOARD AND
THE FACT THAT NONE OF THEM, EXCEPT FOR DR. DAVID H. KATZ, ARE SIGNIFICANT
SHAREHOLDERS OF THE COMPANY, THE MEMBERS OF THE SHAREHOLDERS COMMITTEE
BELIEVE THAT THE CURRENT BOARD IS NOT QUALIFIED TO LEAD THE COMPANY THROUGH
THE MANY CHALLENGES IT WILL FACE OVER THE NEXT YEAR AND BEYOND. IN
PARTICULAR, IT IS OUR VIEW THAT THE COMPANY MUST VIGOROUSLY ENGAGE IN THE
RESEARCH, DEVELOPMENT, MANUFACTURING AND MARKETING OF LIDAKOL AND OTHER DRUGS
IN DEVELOPMENT AND MOVE AS QUICKLY AS POSSIBLE TO SECURE ADEQUATE FINANCING
FOR THOSE EFFORTS. ALL OF THE NOMINEES PROPOSED BY THE SHAREHOLDERS
COMMITTEE HAVE EITHER SUBSTANTIAL OWNERSHIP POSITIONS IN THE COMPANY OR
SUBSTANTIAL EXPERIENCE MANAGING COMPANIES. THE INCUMBENT MEMBERS OF THE BOARD
OF DIRECTORS OF THE COMPANY WHO HAVE BEEN NOMINATED FOR REELECTION AT THE
ANNUAL MEETING MUST, IN THE OPINION OF THE SHAREHOLDERS COMMITTEE, BE
REPLACED WITH DIRECTORS WHOSE PARAMOUNT CONCERN IS MAXIMIZING SHAREHOLDER
VALUE. ACCORDINGLY, YOU ARE URGED TO VOTE FOR THE ELECTION OF THE NOMINEES
OF THE SHAREHOLDERS COMMITTEE, BY SIGNING, DATING AND PROMPTLY RETURNING THE
ENCLOSED WHITE PROXY CARD.
This Proxy Statement and the WHITE Proxy Card are first being furnished to
Shareholders of the Company
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on or about March __, 1998 to holders of record of Common Stock at the close
of business on the Record Date. The principal executive offices of the
Company are located at 11077 North Torrey Pines Road, La Jolla, California
92037.
IMPORTANT
---------
Carefully review this Proxy Statement and the enclosed WHITE PROXY CARD.
No matter how many or how few shares you own, please vote FOR the Nominees of
the Shareholders Committee to the Board of Directors by so indicating and by
signing, dating and mailing the WHITE Proxy Card promptly.
THE SHAREHOLDERS COMMITTEE REQUESTS THAT YOU DO NOT VOTE ON OR RETURN TO
THE COMPANY ANY PROXY CARD PROVIDED TO YOU BY THE COMPANY, EVEN TO VOTE
AGAINST THE INCUMBENT BOARD'S SLATE OF NOMINEES. RETURNING ANY PROXY CARD
PROVIDED YOU BY THE COMPANY COULD REVOKE THE WHITE PROXY CARD THAT YOU SIGN,
DATE AND SEND TO THE SHAREHOLDERS COMMITTEE. IT IS IMPORTANT THAT YOU IGNORE
THE SOLICITATIONS OF THE CURRENT BOARD AND ITS AGENTS.
Only shareholders of record on the Record Date are entitled to execute
proxies. As of the date of this Proxy Statement, the number of shares of
Common Stock outstanding is unknown. However, according to the Company's
proxy statement, as of the close of business on the Record Date there were
_____________ shares of Class A Common Stock outstanding and
______________shares of Class B Common Stock outstanding.
If you own shares of the Company but your stock certificate is held for
you by a brokerage firm, bank or other institution, it is very likely that
the stock certificate is actually in the name of such brokerage firm, bank or
other institution. If so, only such entity can execute a WHITE Proxy Card
and vote your shares of Common Stock. The brokerage firm, bank, or other
institution holding the shares for you is required to forward proxy materials
to you and solicit your instructions with respect to the granting of proxies;
it cannot vote your shares unless it receives your instructions. Please
contact your brokerage firm, bank or other institution if you have not
received your proxy materials.
If you have any questions about giving your proxy or require assistance in
voting your shares, please call:
[PROXY SOLICITOR]
-----------------
-----------------
-----------------
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<PAGE>
THE LIDAK PHARMACEUTICALS SHAREHOLDERS COMMITTEE
The Shareholders Committee is composed of Wallace O. Raubenheimer and
HealthMed, Inc. It is apparent to the Shareholders Committee that the Company
needs new leadership with directors who have an ownership stake in the Company
and are qualified to lead the Company in its plans to develop, manufacture and
market the Company's products.
THE LIDAK PHARMACEUTICALS SHAREHOLDERS COMMITTEE OBJECTIVES
The Nominees of the Shareholders Committee for election to the Company's
Board of Directors are Edward L. Hennessy, George P. Rutland and Wallace O.
Raubenheimer. Biographical data on each of the Nominees is set forth below.
The Shareholders Committee seeks to elect the three Nominees as new
directors to the directorships which are up for election at this year's Annual
Meeting. The Shareholders Committee believes its Nominees will bring to the
Company the leadership, experience and qualifications needed to advance the
Company's objectives. The Company needs new leadership to accelerate
development of the Company's innovative medical technologies and to refocus the
Board on its obligation to maximize shareholder value.
The Nominees have demonstrated business leadership and experience. The
Nominees are comprised of individuals with particular expertise in finance and
operations management.
The Shareholders Committee's purpose in seeking to elect its Nominees
is to change the composition of the Board and elect directors who will maximize
the value of the Common Stock to the Company's shareholders by: (i) refocusing
the Company's management on the Company's business; (ii) seeking out and
diligently evaluate financing proposals which will allow the Company to bring
LIDAKOL to market and to continue its research and development efforts in
connection with other drugs that the Company is currently researching; and (iii)
being responsive to the concerns of shareholders.
THE SHAREHOLDERS COMMITTEE RECOMMENDS THAT YOU VOTE FOR THE NOMINEES OF THE
SHAREHOLDERS COMMITTEE SO THAT THE COMPANY CAN BEGIN TO CAPITALIZE ON THE MANY
OPPORTUNITIES FACING THE COMPANY.
BACKGROUND OF NOMINEES
The following information has been furnished to the Shareholders Committee
by the respective Nominees. Annex A to this Proxy Statement sets forth
additional information for each Nominee as required by Federal securities laws
governing the use and distribution of this Proxy Statement. The Shareholders
Committee proposes the following slate of three candidates as the Nominees for
election to the Board of Directors of the Company at the Annual Meeting:
EDWARD L. HENNESSY, JR. (70). Mr. Hennessy is one of the Shareholders
Committee's Nominees for Director. Mr. Hennessy served as Chairman of the Board
and Chief Executive Officer of Allied-Signal Inc. from 1979 to 1991. He was
previously Executive Vice President and a member of the Board of Directors and
Executive Committee of United Technologies Corporation, Senior Vice President
for Administration and Finance for Heublein, Inc. and Controller with IT&T
Corporation. He is a member of the Board of Directors of Lockheed Martin, The
Bank of New York, Wackenhut Corporation and NAI Technologies, Inc. He is a
Trustee of The
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<PAGE>
Catholic University of America, a Director of The Coast Guard Academy
Foundation, Inc., founding President of the Tri-County Scholarship Fund and
Treasurer of the March of Dimes. He was a member of The President's Private
Sector Survey on Cost Control, The (New Jersey) Governor's Management
Improvement Plan, Inc., and the Tender Offer Advisory Committee of the
Securities & Exchange Commission. He also is a member of The Conference
Board, Inc. and the Economic Club of New York. He has numerous honorary
degrees and is a graduate of Fairleigh Dickison University in New Jersey,
where he is a Trustee and Chairman of the University's Board.
GEORGE P. RUTLAND (65). Mr. Rutland is one of the Shareholders
Committee's Nominees for Director. Since 1995, Mr. Rutland has served as
Chairman, Chief Executive Officer and a Director of Taipan Corporation, a
management consulting and investment company. He also currently serves as a
Director of Hemet Federal Bank. A retired senior banking executive with over
40 years experience in managing and restructuring financial institutions, Mr.
Rutland served as the Chairman, President and Chief Executive Officer of
Northeast Federal Corp. and Northeast Savings Bank in Hartford, Connecticut
from 1988 until 1994, when they were purchased by Shawmut National Corp.
From 1993 to 1994, he also served as Chairman and Chief Executive Officer and
as a Director of American Custody Corp. Mr. Rutland has also served as
President and Chief Executive Officer and a Director of CalFed, Inc. and Vice
Chairman and a Director of California Federal Bank; as Senior Executive Vice
President of Crocker National Bank; and as Senior Vice President of Citibank.
In 1987, Mr. Rutland was elected a Trustee of Pace University. In 1993, Mr.
Rutland received the Outstanding Business Leader Award from Northwood
University, Midland, Michigan. Mr. Rutland received a B.B.A. in Accounting
and Business from Pace University and studied at the Rutgers University
Graduate School of Banking.
WALLACE O. RAUBENHEIMER (72). Mr. Raubenheimer is one of the Shareholders
Committee's Nominees for Director. Mr. Raubenheimer has been a private investor
since 1991. Mr. Raubenheimer most recently served from 1992 until 1996 as the
President of Protective Packaging Corp. He served as President and Chief
Executive Officer of Cardinal Paper Box Co., located in Clinton, New Jersey
from 1949 to 1982 and as President and Chief Executive Officer of Quality
Packaging Materials, Inc., located in Flemington, New Jersey from 1960 to 1982,
when both companies were acquired by the Jefferson Smurfit Corp. Mr.
Raubenheimer served as a consultant to the Jefferson Smurfit Corp. until 1992.
Mr. Raubenheimer has previously served as a Director for First Clinton National
Bank (1966-1972), First National Bank of Central Jersey (1973-1990) and Smiley
Brothers, Inc. (1976-present), a hotel management company. Mr. Raubenheimer
served in the United States Naval Reserve from 1943 to 1946 and later received a
B.A. from Western Maryland College.
Each of the Nominees has consented to serve as a Director of the Company
and, if elected, intends to discharge his duties as a Director in compliance
with all applicable legal requirements, including the general fiduciary
obligations imposed upon corporate directors. The Shareholders Committee has no
reason to believe that any of its Nominees will be disqualified or unable or
unwilling to serve if elected. However, in the event that any Nominee should
become unavailable for any reason, or should it become necessary or appropriate
for the Shareholders Committee to nominate additional persons, the Shareholders
Committee will seek to vote, to the extent permitted by law, the proxies
provided to it for such other person as it nominates. The Nominees, if elected,
would serve as directors for terms expiring at the Year 2000 Annual Meeting.
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<PAGE>
OTHER MATTER TO BE CONSIDERED
AT THE ANNUAL MEETING
According to the Company's proxy statement, the Company will also ask
shareholders to vote upon a proposal to approve the appointment of Deloitte &
Touche LLP as the firm of independent accountants to audit the accounts of the
Company for 1998. The Shareholders Committee is not making any recommendation
with respect to this proposal and, unless instructed to the contrary, the
attorneys-in-fact named on the WHITE Proxy Card will abstain from voting on this
matter.
Except as set forth above, the Shareholders Committee is not aware of any
proposals to be brought before the Annual Meeting. Should other proposals be
brought before the Annual Meeting, the attorneys-in-fact named on the WHITE
Proxy Card will abstain from voting on such proposals unless such proposals
adversely affect the election of the Nominees of the Shareholders Committee as
determined by the Shareholders Committee in its sole discretion, in which event
such persons will vote on such proposals in their discretion.
The WHITE Proxy Card will be voted in accordance with your instructions on
such card. IF YOU SIGN THE WHITE PROXY CARD AND NO MARKING IS MADE, YOU WILL BE
DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES OF COMMON STOCK REPRESENTED
BY THE WHITE PROXY CARD IN FAVOR OF THE ELECTION OF THE SHAREHOLDER COMMITTEE
PROPOSAL AND NOMINEES.
VOTING AND PROXY PROCEDURES
Only holders of shares of Class A Common Stock and Class B Common Stock of
record as of the Record Date are entitled to vote at the Annual Meeting. On the
Record Date, there were issued and outstanding _____ shares of Class A Common
Stock and _______ shares of Class B Common Stock. Each share of Class A Common
Stock is entitled to one vote and each share of Class B Common Stock is
entitled to five votes on all matters properly presented to be voted upon at the
Annual Meeting. The presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding Common Stock will constitute a quorum
for the transaction of business at the Annual Meeting and any continuation or
adjournment thereof. Broker non-votes (i.e. shares held by a broker or nominee
which are represented at the Annual Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular purpose) will be
counted in determining whether a quorum is present at the Annual Meeting.
Directors are elected by a plurality of votes of the Common Stock present in
person or represented by proxy at the Annual Meeting. A plurality means that
the nominees with the largest number of votes are elected as directors up to the
maximum number of directors to be chosen at the meeting. Consequently, election
of the Nominees requires the affirmative vote of a plurality of the votes cast
in the election at the Annual Meeting, assuming a quorum is present or otherwise
represented at the Annual Meeting. Any shares not voted (whether by abstention,
broker non-votes or otherwise) will have no impact on the election of directors,
except to the extent that the failure to vote for an individual results in
another individual receiving a larger portion of votes. All other matters
submitted to the shareholders must be approved by the vote of the holders of a
majority of the outstanding Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. In determining whether such other
proposals have been approved, abstentions and broker non-votes are not counted
as votes for or against the proposal.
Shares represented by proxies that withhold authority with respect to the
election of one or more nominees for election as director and proxies which are
marked "abstain" on other proposals, will not be counted in determining whether
a plurality or majority vote was obtained on such matters. If no directions are
given and the signed WHITE Proxy Card is returned, the proxies appointed in the
proxy will vote the shares of Common
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Stock represented by that WHITE Proxy Card FOR the election of the
Shareholder Committee's Nominees and will abstain from voting on the approval
of Deloitte & Touche LLP as auditors for the Company. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned proxies to the brokers ("broker non-votes"),
those shares will not be included in the vote totals, will be counted as
present for purposes of determining whether a quorum exists, and will have no
effect on the outcome of the vote.
Only holders of record as of the close of business on the Record Date
will be entitled to vote at the Annual Meeting. If you sold your shares
before the Record Date (or acquired them without voting rights attached after
the Record Date), you may not vote such shares. IF YOU WERE A SHAREHOLDER OF
RECORD ON THE RECORD DATE, YOU WILL RETAIN THE VOTING RIGHTS IN CONNECTION
WITH THE ANNUAL MEETING EVEN IF YOU SELL OR SOLD YOUR SHARES AFTER THE RECORD
DATE. Accordingly, it is important that you vote the shares held by you on
the Record Date or grant a proxy to vote such shares whether or not you still
own such shares.
At the Annual Meeting, three directors are to be elected to hold office
until the 2000 annual meeting of shareholders of the Company and until their
successors have been elected and qualified. The Shareholders Committee is
soliciting your proxy in support of the election of the Nominees named above.
If you wish to vote for the Nominees by proxy, you should submit the WHITE
Proxy Card furnished to you by the Shareholders Committee and should NOT
submit the Company's WHITE Proxy Card. A shareholder should not submit a
proxy card to vote for both the Shareholder Committee's Nominees and the
Company's nominees; if a shareholder submits both a WHITE Proxy Card and the
Board of Director's [color] Proxy Card, only the latest dated proxy will be
counted.
THE SHAREHOLDERS COMMITTEE URGES YOU TO IGNORE THE SOLICITATIONS OF THE
CURRENT BOARD AND ITS AGENTS AND NOT VOTE ON OR RETURN TO THE COMPANY ANY
PROXY CARD PROVIDED TO YOU BY THE COMPANY, EVEN TO VOTE AGAINST THE INCUMBENT
BOARD'S SLATE OF NOMINEES. RETURNING ANY PROXY CARD PROVIDED YOU BY THE
COMPANY COULD REVOKE THE WHITE PROXY CARD THAT YOU SIGN, DATE AND SEND TO THE
SHAREHOLDERS COMMITTEE.
Any shareholder giving a proxy may revoke it at any time before it is
voted by attending the Annual Meeting and voting his or her shares in person,
by giving written notice to the Secretary of the Company at 11077 North
Torrey Pines Road, La Jolla, California 92037, stating that the proxy has
been revoked, or by delivery of a proxy bearing a later date.
An executed proxy card may be revoked at any time by marking, dating,
signing and delivering a written revocation before the time that the action
authorized by the executed proxy becomes effective. A revocation may be in
any written form validly signed by the record holder as long as it clearly
states that the proxy previously given is no longer effective. The delivery
of a subsequently dated proxy card which is properly completed will
constitute a revocation of any earlier proxy. Although a revocation is
effective if delivered to the Company, the Shareholders Committee requests
that either the original or photostatic copies of all revocations of proxies
be mailed or delivered to [Proxy Solicitor] at the address set forth below,
so that it will be aware of all revocations and can more accurately determine
if and when proxies have been received from the holders of record on the
Record Date of a majority of the shares of Common Stock then outstanding.
ONLY HOLDERS OF RECORD ON THE RECORD DATE ARE ELIGIBLE TO VOTE ON THE
MATTERS DISCUSSED ABOVE. ANYONE OWNING SHARES BENEFICIALLY (BUT NOT OF
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RECORD), SUCH AS A PERSON WHOSE OWNERSHIP OF SHARES IS THROUGH A BROKER, BANK
OR OTHER FINANCIAL INSTITUTION, SHOULD CONTACT THAT BROKER, BANK OR FINANCIAL
INSTITUTION WITH INSTRUCTIONS TO EXECUTE THE WHITE PROXY CARD ON HIS OR HER
BEHALF OR TO HAVE THE BROKER, BANK OR FINANCIAL INSTITUTION'S NOMINEE EXECUTE
THE WHITE PROXY CARD.
SOLICITATION EXPENSES
Proxies may be solicited by members of the Shareholders Committee and by
their agents by mail, telephone, advertisement, telegram, facsimile and/or
personal solicitation. No such persons shall receive additional compensation
for such solicitation. Banks, brokerage houses and other custodians, nominees
and fiduciaries will be requested to forward proxy solicitation material to the
beneficial owners of the Common Stock that such institutions hold of record.
The entire expense of preparing and mailing this Proxy Statement and the
total expenditures relating to the solicitation of proxies (including,
without limitation, costs, if any, related to advertising, printing, fees of
attorneys, financial advisors, solicitors, consultants, accountants, public
relations, transportation and litigation) will be borne by HealthMed, Inc.
If the Shareholders Committee Nominees are elected, HealthMed, Inc. intends
to request reimbursement from the Company for these expenses. This request
will not be submitted to a vote of the shareholders. Banks, brokerage houses
and other custodians, nominees and fiduciaries will be required to forward
the Proxy Statement and other solicitation material to the beneficial owners
of the shares they hold of record, and HealthMed, Inc. will reimburse them
for their reasonable out-of-pocket expenses.
The Shareholders Committee has retained [Proxy Solicitor] to assist it
in the solicitation of proxies and for related services. HealthMed, Inc. has
agreed to pay [Proxy Solicitor] an estimated fee of up to $_____________ and
has agreed to reimburse it for its reasonable out-of-pocket expenses.
Approximately ____ persons will be used by [Proxy Solicitor] in its
solicitation efforts, which may also be made by mail, telephone,
advertisement, telegram, facsimile and/or personal solicitation.
The Shareholders Committee estimates that its total expenditures
relating to this proxy solicitation will be approximately $500,000. Actual
expenditures may vary materially from the estimate, however, as many of the
expenditures cannot be readily predicted. Total expenditures to date
relating to this proxy solicitation have been approximately $50,000.
Certain information about the Shareholders Committee, the Nominees and
the other participants, including Dr. David H.. Katz, in the proxy
solicitation (the "Participants") is set forth in the attached Annex A.
YOUR PROXY IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
PLEASE SIGN, MARK, DATE AND PROMPTLY RETURN THE ENCLOSED WHITE PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE TO ELECT THE SHAREHOLDER'S COMMITTEE
NOMINEES.
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ADDITIONAL INFORMATION
Shareholders are referred to the Company's 1998 proxy statement with
respect to the compensation and remuneration paid and payable and other
information related to the Company's officers and directors, beneficial
ownership of the Company's securities and the procedures for submitting
proposals for consideration at the Company's 1999 annual meeting.
March __, 1998 THE LIDAK PHARMACEUTICALS
SHAREHOLDERS COMMITTEE
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IMPORTANT
1. If your shares are registered in your own name, please sign, date and
return the WHITE Proxy Card furnished to you by the Shareholders Committee.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a WHITE Proxy Card with respect to your
shares. Accordingly, please contact the person responsible for your
account and give instructions for a WHITE Proxy Card to be signed
representing your shares.
3. Time is critically short. Only your latest dated proxy Card will count.
Please sign, date and mail the enclosed WHITE Proxy Card today in the
envelope provided.
If you have any questions about giving your proxy or require assistance in
voting your shares, please call:
[Proxy Solicitor]
---------------------
---------------------
---------------------
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ANNEX A
INFORMATION REGARDING SHAREHOLDERS COMMITTEE
MEMBERS, COMMITTEE NOMINEES AND OTHER PARTICIPANTS
Set forth below is certain information about the Shareholders Committee
members, Shareholders Committee Nominees, other participants (as that term is
defined under applicable federal securities laws), and their associates, if
any. Except as otherwise set forth in the Proxy Statement or this Annex A, no
Shareholders Committee member, Shareholders Committee Nominee, or other
participant (or for purposes of clauses (ii), (iv), (v), (vi), (viii), (ix)
and (x), no associate of such person): (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) during the
past ten years (ii) owns beneficially, directly or indirectly, any securities
of the Company or any parent or subsidiary of the Company, (iii) owns any
securities of the Company of record, but not beneficially, (iv) within the
past two years has purchased or sold any securities of the Company, (v) has
current indebtedness incurred for the purpose of acquiring or holding the
securities of the Company referred to in (iv) above, (vi) is or has been
within the past year a party to any contract, arrangement or understanding
with respect to any securities of the Company, (vii) has had since the
beginning of the Company's last fiscal year, or is to have, a direct or
indirect material interest in any transaction or any proposed transaction, to
which the Company or any of its affiliates was or is a party (viii) has any
substantial interest in any matter to be acted upon under this proxy
solicitation, (ix) has any arrangement or understanding with respect to
future employment by the Company or with respect to any future transactions
to which the Company or any of its affiliates will or may be a party or (x)
is involved in any pending legal proceedings as a party adverse (or has a
material interest adverse) to the Company or any subsidiary of the Company.
Except as set forth below, each holder of the Company's shares listed below
has sole voting and investment power over the Company's shares beneficially
owned by such holder.
BACKGROUND INFORMATION
<TABLE>
<CAPTION>
Name, Present Occupation Shares
and Business Address Beneficially Owned Percent of Class
-------------------- ------------------ ----------------
<S> <C> <C>
Edward L. Hennessy, Jr. -0- -0-
500 Island Drive
Palm Beach, Florida 33480
George P. Rutland 100,000(1) *
Chairman & Chief Executive Officer (Class A Common Stock)
Taipan Corporation
1790 La Costa Meadows, Suite 103
San Marcos, CA 92069
Wallace O. Raubenheimer 618,702(2) 1.6%
Private investor
Burnt Jacket Road (Class A Common Stock)
Greenville, ME 04441
</TABLE>
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<TABLE>
<CAPTION>
Name, Present Occupation Shares
and Business Address Beneficially Owned Percent of Class
-------------------- ------------------ ----------------
<S> <C> <C>
David H. Katz, M.D. 3,344,696(3) 8.1%
President & Chief Executive Officer (Class A Common Stock)
Medical Biology Institute 385,000(4) 88.7%
11077 North Torrey Pines Rd. (Class B Common Stock)
La Jolla, CA 92037
HealthMed, Inc. 2,187,383 (5) 5.4%
8306 Wilshire Blvd., Suite 7056
Beverly Hills, CA 90211
Mitchell Stein 2,187,383(6) 5.4%
President & Chief Executive Officer (Class A Common Stock)
HealthMed, Inc.
8306 Wilshire Blvd., Suite 7056
Beverly Hills, CA 90211
</TABLE>
*less than 1%
(1) Includes 88,000 shares for which Mr. Rutland is the direct beneficial owner
and 12,000 shares jointly owned by Mr. Rutland and his wife for which
Mr. Rutland shares voting and investment power with his wife.
(2) Includes 144,134 shares for which Mr. Raubenheimer has sole voting and
investment power; 92,700 shares beneficially owned by Mr. Raubenheimer's
wife for which shares Mr. Raubenheimer disclaims beneficial ownership;
154,700 shares beneficially owned by Kristin Raubenheimer, Trustee of The
Britt Raubenheimer Voluntary Trust for which shares Mr. Raubenheimer has no
voting or investment power and for which he disclaims beneficial ownership;
120,500 shares beneficially owned by Kristin Raubenheimer, Trustee of The
Tor O. Raubenheimer Voluntary Trust for which shares Mr. Raubenheimer has
no voting or investment power and for which he disclaims beneficial
ownership; and 106,668 shares issuable upon the exercise of currently
exercisable Class D Warrants to purchase Class A Common Stock held by
Mr. Raubenheimer.
(3) Includes 882,703 shares currently held in a voting trust by HealthMed,
Inc., a Nevada corporation ("HealthMed"), for which Dr. Katz has sole
investment power and for which HealthMed has sole voting power; 151,900
shares owned by Medical Biology Institute, a non-profit research
organization controlled by Dr. Katz ("MBI") and currently held in a voting
trust by HealthMed for which Dr. Katz has sole investment power and for
which HealthMed has sole voting power; 1,877,000 shares issuable upon
exercise of currently exercisable stock options (the "Options"); 46,903
shares issuable upon exercise of currently exercisable stock options
beneficially owned by Dr. Katz's wife; and 386,190 shares issuable upon
exercise of currently exercisable Class D Warrants to purchase Class A
Common Stock. HealthMed has the right to purchase 31.5% of the shares
issuable upon the exercise of the Options.
(4) Includes of 375,000 shares issuable upon exercise of currently exercisable
stock options and 10,000 shares issuable upon exercise of currently
exercisable options owned by Dr. Katz's wife.
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<PAGE>
(5) Includes 443,400 shares for which HealthMed is the direct beneficial owner;
882,703 shares owned by Dr. Katz and held in a voting trust by HealthMed
for which HealthMed has sole voting power; 151,900 shares owned by MBI and
held in a voting trust by HealthMed for which HealthMed has sole voting
power; and 709,380 shares issuable to Dr. Katz upon the exercise of
currently exercisable stock options for which HealthMed has the right to
acquire. HealthMed has been informed that Mr. Stein disclaims beneficial
ownership of all such shares.
(6) As President and Chief Executive Officer of HealthMed, Mr. Stein may be
deemed to be the beneficial owner of such shares. Mr. Stein disclaims
beneficial ownership of all such shares.
BENEFICIAL OWNERSHIP OF SHARES
As of the Record Date, the Nominees to the Shareholders Committee owned
shares of the Company's Class A Common Stock of record and beneficially as
follows:
<TABLE>
<CAPTION>
Shares
Name Beneficially Owned Percent of Class
---- ------------------ ----------------
<S> <C> <C>
Edward L. Hennessy, Jr. -0- -0-
George P. Rutland 100,000(1) *
Wallace O. Raubenheimer 618,702(1) 1.6%
</TABLE>
(1) See table set forth in "Background Information" of this Annex A above.
*less than 1%
12
<PAGE>
STOCK TRANSACTIONS WITHIN THE PAST TWO YEARS
The following table sets forth information with respect to all purchases
and sales of Common Stock of the Company by each member of the Shareholders
Committee, each Shareholder Committee Nominee and each other participant in this
solicitation and by each of their respective associates during the past two
years. All purchases and sales are in Class A Common Stock unless otherwise
noted. Except as otherwise noted, no part of the purchase price is represented
by borrowed funds.
<TABLE>
<CAPTION>
Name Date Shares Purchased Shares Sold
---- ---- ---------------- -----------
<S> <C> <C> <C>
Edward L. Henssey, Jr. [N/A] [N/A] [N/A]
George P. Rutland February 12, 1996 7,500 N/A
February 13, 1996 12,000 N/A
May 22, 1997 4,300 N/A
August 11, 1997 24,200 N/A
Wallace O. March 20, 1996 N/A 41,000
Raubenheimer March 22, 1996 N/A 14,000(1)
March 25, 1996 N/A 600(2)
August 19, 1996 40,000 N/A
March 7, 1997 15,000(3) N/A
June 24, 1997 N/A 10,000
July 9, 1997 N/A 10,000
December 23, 1997 1,500(3) N/A
January 8, 1998 10,000 N/A
David H. Katz, M.D. January 23, 1997 10,000(4) 10,000
February 12, 1997 30,416(4) 30,416
February 13, 1997 11,000(4) 11,000
February 14, 1997 13,000(4) 13,000
March 12, 1997 10,000(4) 10,000
October 31, 1997 8,000(4) 8,000
November 3, 1997 11,400(4) 11,400
January 12, 1998 N/A 308,100(5)
70,200(5)(6)
HealthMed, Inc. January 12, 1998 308,100(5)
70,200(5)(6)
</TABLE>
(1) Shares sold by The Tor O. Raubenheimer Voluntary Trust.
13
<PAGE>
(2) Shares sold by The Britt Raubenheimer Voluntary Trust.
(3) Shares purchased by Mr. Raubenheimer's wife.
(4) Shares purchased pursuant to exercise of Class D Warrants.
(5) See "Contracts With Respect To Securities of the Company" below for
further details regarding this transaction, including payment of any
part of the purchase price with borrowed funds.
(6) Represents shares of Class B Common Stock.
CONTRACTS WITH RESPECT TO SECURITIES OF THE COMPANY
On January 12, 1998, Dr. Katz sold to HealthMed, Inc., a Nevada corporation
("HealthMed"), 308,100 shares of Class A Common Stock and 70,200 shares of Class
B Common Stock for a total purchase price of $1,528,234.98 pursuant to the terms
of the Stock Purchase Agreement (the "Katz Stock Purchase Agreement") dated
January 12, 1998 by and between Dr. Katz and HealthMed. The purchase price was
paid by HealthMed in the form of a Promissory Note dated January 12, 1998 (the
"Katz Promissory Note") in the principal amount of $1,528,234.98. The maturity
date of the Katz Promissory Note is January 12, 2000.
On January 12, 1998, Medical Biology Institute, a California nonprofit
public benefit corporation ("MBI"), sold to HealthMed 65,100 shares of Class A
Common Stock for a total purchase price of $263,004.00 pursuant to the terms of
the Stock Purchase Agreement ("MBI Stock Purchase Agreement") dated January 12,
1998 by and between MBI and HealthMed. The purchase price was paid by HealthMed
in the form of a Promissory Note (the "MBI Promissory Note") dated January 12,
1998 in the principal amount of $263,004.00. The maturity date of the MBI
Promissory Note is January 12, 2000. Dr. Katz is the President, Chief Executive
Officer and a director of MBI and may be deemed to beneficially own any and all
shares of the Company over which MBI has the power to vote or dispose.
On January 12, 1998, Dr. Katz transferred 718,903 shares of Class A Common
Stock and 163,800 shares of Class B Common Stock into a voting trust controlled
by HealthMed pursuant to the terms of the Voting Trust Agreement (the "Katz
Voting Trust Agreement") dated January 12, 1998 by and between Dr. Katz and
HealthMed. Upon this transfer, the 163,800 shares of Class B Common Stock
automatically converted to 163,800 shares of Class A Common Stock. HealthMed is
the sole trustee of the voting trust and has the sole power to vote the shares
of Class A Common Stock and Class B Common Stock. The term of the Katz Voting
Trust Agreement is ten (10) years. During the term of the Katz Voting Trust
Agreement, Dr. Katz must place in trust all shares of Class A Common Stock and
Class B Common Stock purchased or received by him from any source. Under the
terms of the Katz Voting Trust Agreement, Dr. Katz may dispose of all of the
Class A Common Stock and Class B Common Stock held in trust; provided, however,
Dr. Katz may not dispose of more than twenty percent (20%) of the shares held in
trust within any thirty (30) day period. Dr. Katz is the beneficial owner of
these 882,703 shares of Class A Common Stock.
As part of the same transaction, Dr. Katz and HealthMed entered into a
Purchase Rights Agreement (the "Katz Purchase Rights Agreement") dated
January 12, 1998 pursuant to which Dr. Katz granted HealthMed the irrevocable
right to receive either (i) 31.5% of the shares received by Dr. Katz upon the
exercise of options to purchase 1,918,000 shares of Class A Common Stock and
375,000 shares of Class B Common Stock (collectively, the "Options") or (ii)
31.5% of the net proceeds from the sale of such shares upon the exercise of
14
<PAGE>
the Options. The term of the Katz Purchase Rights Agreement expires on
June 21, 2007.
On January 12, 1998, MBI transferred 151,900 shares of Class A Common Stock
into a voting trust controlled by HealthMed pursuant to the terms of the Voting
Trust Agreement (the "MBI Voting Trust Agreement") dated January 12, 1998 by and
between MBI and HealthMed. HealthMed is the sole trustee of the voting trust
and has the sole power to vote the shares of Class A Common Stock and Class B
Common Stock. The term of the MBI Voting Trust Agreement is ten (10) years.
During the term of the MBI Voting Trust Agreement, MBI must place in trust all
shares of Class A Common Stock and Class B Common Stock purchased or received by
it from any source. Under the terms of the MBI Voting Trust Agreement, MBI may
dispose of all of the Class A Common Stock and Class B Common Stock held in
trust; provided, however, MBI may not dispose of more than twenty percent (20%)
of the shares held in trust within any thirty (30) day period.
15
<PAGE>
LIDAK PHARMACEUTICALS
1998 ANNUAL MEETING OF SHAREHOLDERS
PRELIMINARY COPY
THIS PROXY IS SOLICITED BY THE LIDAK PHARMACEUTICALS SHAREHOLDERS
COMMITTEE IN OPPOSITION TO MANAGEMENT
The undersigned hereby appoints _____________ and ______________ or either
of them as Proxies, each with full power of substitution, to represent and to
vote, as designated herein, all shares of Common Stock of LIDAK Pharmaceuticals
(the "Company") held of record by the undersigned on February 20, 1998 at the
Annual Meeting of Shareholders to be held on April 18, 1998 and any adjournment
or postponement thereof (the "Meeting"), upon such matters as may come before
the meeting. The undersigned hereby revokes any previous proxies with respect
to the matters covered by this Proxy.
1. Election of Directors
FOR the nominees listed below
----
WITHHOLD AUTHORITY to vote for all nominees listed below
----
Edward L. Hennessy, Jr., George P. Rutland and Wallace O. Raubenheimer
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO DIRECTION IS INDICATED AS TO ITEM 1, THEY WILL BE VOTED
"FOR" THE LISTED NOMINEES. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THIS PROXY CARD
USING THE ENCLOSED ENVELOPE.
---------------------------------------
(Date)
---------------------------------------
(Signature)
---------------------------------------
(Title)
---------------------------------------
(Signature if held jointly)
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE VOTING YOUR SHARES, PLEASE
CALL [Proxy Solicitor] TOLL-FREE AT _____________________.
16
