<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Hollis-Eden Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
HOLLIS-EDEN PHARMACEUTICALS, INC.
9333 Genesee Avenue, Suite 200
San Diego, CA 92121
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2000
----------------
TO THE STOCKHOLDERS OF HOLLIS-EDEN PHARMACEUTICALS, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Hollis-
Eden Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be
held on Friday, June 23, 2000 at 2:00 p.m. local time at The Hyatt Regency La
Jolla, 3777 La Jolla Village Drive, San Diego, California 92122 for the
following purposes:
1. To elect two Class III directors to hold office until the 2003 Annual
Meeting of Stockholders.
2. To approve the Company's 1997 Incentive Stock Option Plan, as amended,
to increase the aggregate number of shares of Common Stock reserved for
issuance under such plan by 500,000 shares.
3. To ratify the selection of BDO Seidman, LLP as independent auditors of
the Company for its fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on May 1, 2000, as
the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Richard B. Hollis
Chairman of the Board, President,
Chief Executive Officer
San Diego, California
May 10, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
HOLLIS-EDEN PHARMACEUTICALS, INC.
9333 Genesee Avenue, Suite 200
San Diego, CA 92121
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
June 23, 2000
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders to be held on Friday, June 23, 2000
at 2:00 p.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting. The Annual Meeting will be held at The
Hyatt Regency La Jolla, 3777 La Jolla Village Drive, San Diego, California
92122. The Company intends to mail this proxy statement and accompanying proxy
card on or about May 10, 2000, to all stockholders entitled to vote at the
Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on May 1,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on May 1, 2000, the Company had outstanding and entitled to
vote 11,206,458 shares of Common Stock. Each holder of record of Common Stock
on such date will be entitled to one vote for each share held on all matters
to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter
has been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 9333
Genesee Avenue, Suite 200, San Diego, California 92121, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
1
<PAGE>
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 Annual
Meeting of Stockholder's pursuant to Rule 14a-8 of the Securities and Exchange
Commission is January 10, 2001. Unless a stockholder who wishes to bring a
matter before the stockholders at the Company's 2001 Annual Meeting of
Stockholders notifies the Company of such matter prior to April 24, 2001,
management will have discretionary authority to vote all shares for which it
has proxies in opposition to such matter.
2
<PAGE>
Proposal 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board
may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the size of the Board of Directors) shall
serve for the remainder of the full term of the class of directors in which
the vacancy occurred and until such director's successor is elected and
qualified.
The Board of Directors is presently composed of seven members. There are two
directors in the class whose term of office expires in 2000. Each of the
nominees for election to this class is currently a director of the Company. If
elected at the Annual Meeting, each of the nominees would serve until the 2003
Annual Meeting and until his successor is elected and has qualified, or until
such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
Nominees for Election for a Three-year Term Expiring at the 2003 Annual
Meeting
Richard B. Hollis
Mr. Hollis, age 47, founded Hollis-Eden in August 1994. Mr. Hollis currently
serves as Chairman, President and Chief Executive Officer. Mr. Hollis has over
20 years experience in the health care industry in a variety of senior
management positions. Prior to founding Hollis-Eden Mr. Hollis served as Chief
Operating Officer of Bioject Medical from 1991 to 1994 and as Vice President
Marketing and Sales/General Manager for Instromedix from 1989 to 1991. From
1986 to 1989, Mr. Hollis served as a general manager of the Western business
unit of Genentech, Inc., a manufacturer of biopharmaceuticals. Prior to
joining Genentech, Inc., Mr. Hollis served as a divisional manager of Imed
Corporation, Inc., a manufacturer of drug delivery systems. Mr. Hollis began
his career in the health care industry with Baxter Travenol. Mr. Hollis
received his B.A. in Psychology from San Francisco State University.
Leonard Makowka M.D., Ph.D., FRCS(C), FACS
Dr. Makowka, age 46, has served as a director of the Company since May 1998.
In 1999, Dr. Makowka co-founded and is currently Co-Chairman and President of
Healtheatre.com. From 1995 to 1997, Dr. Makowka was the Executive Director of
the Comprehensive Liver Disease and Treatment Center and Director of the Liver
Transplant Program at St. Vincent's Medical Center in Los Angeles, CA. Between
1989 and 1995, Dr. Makowka was Chairman Department of Surgery and Director of
Transplantation Services at Cedars-Sinai Medical Center in Los Angeles, CA. He
was also Professor of Surgery at the UCLA School of Medicine. Beginning in
1985 until relocating to Los Angeles in 1989, Dr. Makowka trained under Dr.
Thomas Starzl, the pioneer of liver transplantation, and was appointed as
Associate Professor in the Department of Surgery at the University of
Pittsburgh. In 1982, Dr. Makowka began his residency at the University of
Toronto, where in his final year he was appointed Chief Resident of Surgery.
As one of the world's leading authorities in his field, Dr. Makowka has
performed hundreds of hepatobiliary and liver transplant procedures. Dr.
Makowka received his M.D. from the University of Toronto Medical School in
1977, and Masters of Science and Doctorate of Philosophy from the University
of Toronto's Department of Pathology in 1979 and 1982. Dr. Makowka has
published over 400 articles and chapters in both clinical and basic scientific
research and has lectured worldwide.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE
3
<PAGE>
Directors Continuing in Office Until the 2001 Annual Meeting
Salvatore J. Zizza
Mr. Zizza, age 54, has served as a director of the Company since March 1997.
He served as Chairman of the Board, President and Treasurer of Initial
Acquisition Corp., from November 1992 until March 1997, at which time Initial
Acquisition Corp., merged with the Company. Mr. Zizza is presently Chairman of
the Hallmark Electrical Supplies Corp. Mr. Zizza was President and Chief
Financial Officer of NICO Construction Company, Inc. until 1985 when NICO
merged with The LVI Group, Inc. Prior to joining The LVI Group, Inc., Mr.
Zizza was an independent financial consultant and had been a lending officer
of Chemical Bank. Mr. Zizza's current and former directorships include:
Bioenvironmental Technologies, The Gabelli Equity Trust (NYSE), The Gabelli
Asset Fund, The Gabelli Growth Fund, The Gabelli Convertible Securities Fund,
The Gabelli Utility Fund (NYSE) and The Gabelli Global Multimedia Trust
(NYSE). Mr. Zizza received a B.A. in Political Science and an M.B.A. from St.
John's University.
Paul Bagley
Mr. Bagley, age 57, has served as a director of the Company since March
1996. Mr. Bagley is a founding principal of Stone Pine Capital L.L.C., a group
that provides mezzanine capital to fund acquisitions, buyouts, growth and
recapitalizations, and is also associated with Stone Pine Asset Management
L.L.C., and Stone Pine Investment Banking L.L.C. Mr. Bagley was Chief
Executive Officer of Laidlaw Holdings, Inc., an investment services company,
from January 1995 until November 1996. For more than twenty years, Mr. Bagley
was engaged in investment banking activities with Shearson Lehman Hutton Inc.
and its predecessor, E.F. Hutton & Company, Inc. Mr. Bagley served in various
capacities with Shearson and E.F. Hutton, including Executive Vice President
and Director, Managing Director, Head of Direct Investment Origination and
Manager of Corporate Finance. Mr. Bagley controls a United States registered
investment advisor, Fiduciary Capital Management, which provides advisory
services to two United States business development companies. Mr. Bagley
serves as Chairman of the Board of Directors of Silver Screen Management, Inc.
and International Film Investors, Inc., which manage film portfolios. Mr.
Bagley is also a director and officer of Consolidated Capital of North
America, a NASDAQ bulletin board listed company, Hamilton Lane Private Equity
Partners L.L.C., an Irish Stock Exchange listed investment partnership,
American Realty Trust, and an officer of LSC Investment Corp and EEC European
E Commerce. Mr. Bagley graduated from the University of California at Berkeley
in 1965 with a B.Sc. in Business and Economics and from Harvard Business
School in 1968 with a M.B.A. in Finance.
William H. Tilley
Mr. Tilley, age 60 has served as a director of the Company since March 1999.
Mr. Tilley currently serves as Chairman and Chief Executive Officer of The
Jacmar Companies, a holding company that has operations in equity investments,
real estate management and restaurant and wholesale food service. Previously,
Mr. Tilley was a senior partner at Tilley and Roth, Certified Public
Accountatns, which merged with KPMG Peat Marwick. Mr. Tilley holds a B.A. and
an M.B.A. from the University of Southern California. He has taught courses
and lectured on finance-related topics at a wide range of prestigious
universities, including USC and UCLA.
Directors Continuing in Office Until the 2002 Annual Meeting
Thomas Charles Merigan, Jr., M.D.
Dr Merigan, age 66, became Chairman of the Scientific Advisory Board and a
director of Hollis-Eden in March 1996 and acts as the Company's Medical
Director. Dr. Merigan has been George E. and Lucy Becker Professor of Medicine
at Stanford University School of Medicine from 1980 to the present. Dr.
Merigan has also been the Principal Investigator, NIAID Sponsored AIDS
Clinical Trials Unit, from 1986 to the present and has been Director of
Stanford University's Center For AIDS Research from 1988 to the present. Dr.
Merigan is a member of various medical and honorary societies, has lectured
extensively within and outside the United States, and authored numerous books
and articles and has chaired and edited symposia relating to viruses,
infectious
4
<PAGE>
diseases, anti-viral agents, HIV and other retroviruses and AIDS. From 1990 to
the present, Dr. Merigan has been Chairman, Editorial Board of "HIV: Advances
in Research and Therapy". He is also a member of the editorial boards of "
Aids Research and Human Retroviruses" (since 1983), "International Journal of
Anti-Microbial Agents" (since 1990), and "The Aids Reader" (since 1991), among
others. He is a co-recipient of eight patents which, among other things,
relate to synthetic polynucleotides, modification of hepatitis B virus
infection, treatment of HIV infection, purified cytomegalovirus protein and
composition and treatment for herpes simplex. Dr. Merigan has been Chair,
Immunology Advisory Board, Bristol Myers Squibb Corporation (1989--1995) and
Chair, Scientific Advisory Board, Sequel Corp. (1993--1996). In 1994, Stanford
University School of Medicine honored him with the establishment of the Annual
Thomas C. Merigan Jr. Endowed Lectureship in Infectious Diseases, and, in
1996, Dr. Merigan was elected Fellow, American Association for the Advancement
of Science. From 1966 to 1992, Dr. Merigan was Head, Division of Infectious
Diseases, at Stanford School of Medicine. Dr. Merigan received his B.A. (with
honors) from the University of California at Berkeley and his M.D. from the
University of California at San Francisco.
Brendan R. McDonnell
Mr. McDonnell, age 37, has served as a director of the Company since since
August 1996. Since 1997, Mr. McDonnell has been of counsel at Tonkon Torp,
LLP, an Oregon law firm. Mr. McDonnell specializes in representing both
private and public emerging growth companies, with focus on the high
technology industry. Mr. McDonnell joined Tonkon Torp after working
approximately seven years at the law firm of Lane Powell Spears Lubersky and
for approximately three years prior to that at the law firm of Brobeck,
Phleger & Harrison LLP. Mr. McDonnell holds a B.S. in accounting from Loyola
Marymount University and a J.D. from the University of California at Davis. He
is a member of the California and Oregon State Bar Associations.
Board Committees and Meetings
During the fiscal year ended December 31, 1999, the Board of Directors held
ten meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommend to the Board the independent auditors to be retained;
and receive and consider the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Messrs. McDonnell and Zizza. The Audit Committee had one meeting in
1999.
The Compensation Committee makes recommendations to the Board concerning
executive salaries and incentive compensation, administers the Company's 1997
Incentive Stock Option Plan and otherwise determines compensation levels and
policies and performs such other functions regarding compensation as the Board
may delegate. The Compensation Committee is composed of two non-employee
directors: Messrs. McDonnell and Bagley. The Compensation Committee had one
meeting in 1999.
During the fiscal year ended December 31, 1999, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the
committees on which he served, held during the period for which he was a
director or committee member, respectively.
5
<PAGE>
Proposal 2
APPROVAL OF 1997 INCENTIVE STOCK OPTION PLAN, AS AMENDED
In February 1997, the Board of Directors adopted, and the stockholders
subsequently approved, the Company's 1997 Incentive Option Stock Plan (the
"1997 Plan") and reserved an aggregate of 1,000,000 shares of the Company's
Common Stock for issuance thereunder to the Company's employees. The Board
adopted the 1997 Plan so that the Company could grant stock options and other
stock awards to employees, directors and consultants at levels determined
appropriate by the Board and the Compensation Committee, and to allow the
Company more flexibility in attracting and retaining qualified employees and
promoting the success of the Company's business. In March 1998, the Board
approved an amendment to the 1997 Plan to increase the number of shares
authorized for issuance under the 1997 Plan from a total of 1,000,000 shares
to 1,250,000 shares. In February 1999, the Board approved an amendment to the
1997 Plan to increase the number of shares authorized for issuance under the
1997 Plan from a total of 1,250,000 shares to 2,250,000 shares. Each of the
amendments to the 1997 Plan were subsequently approved by the shareholders of
the Company.
At January 31, 2000, options (net of canceled or expired options) covering
an aggregate of 1,511,965 shares of the Company's Common Stock had been
granted under the 1997 Plan, and 737,175 shares (plus any shares that might in
the future be returned to the plans as a result of cancellations or expiration
of options) remained available for future grant under the 1997 Plan. During
the last fiscal year, under the 1997 Plan, the Company granted options to
purchase an aggregate of 450,833 shares at exercise prices ranging from $10.56
to $13.63 to the Company's current officers and options to purchase an
aggregate of 291,332 shares at exercise prices ranging from $10.56 to $16.63
per share to all other Company employees. Options to purchase an aggregate of
37,000 shares at exercise prices ranging from $10.56 to $15.00 were granted to
the Company's consultants. Options to purchase an aggregate of 35,000 shares
at exercise prices ranging from $13.13 to $16.63 per share were granted to
directors (excluding executive officers).
In March 2000, the Board approved an amendment to the 1997 Plan to increase
the number of shares authorized for issuance under the 1997 Plan from a total
of 2,250,000 shares to 2,750,000 shares. The Board adopted this amendment to
ensure that the Company can continue to grant stock options to employees at
levels determined appropriate by the Board and the Compensation Committee to
allow the Company more flexibility in attracting and retaining qualified
personnel.
Stockholders are requested in this Proposal 2 to approve the 1997 Plan, as
amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the 1997 Plan, as amended. Abstentions will be
counted toward the tabulation of votes cast the proposal and will have the
same effect as negative votes. Broker non-votes will be counted towards a
quorum, but will not be counted in determining whether this matter has been
approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the 1997 Plan are described below.
General
The following description of the 1997 Plan is a summary and is qualified in
its entirety by reference to the 1997 Plan. On February 5, 1997, the Company's
Board of Directors adopted the 1997 Plan, which was subsequently approved by
the Company's stockholders on March 26, 1997. The 1997 Plan was amended by the
Board in March 1998 and February 1999, which amendments were subsequently
approved by the Company's stockholders on May 18, 1998 and May 17, 1999,
respectively.
6
<PAGE>
Purpose
The purpose of the 1997 Plan is to encourage selected management, key
employees, directors and certain other persons associated with the Company
(including any successor) to acquire an equity interest in the Company's
business, thereby strengthening their commitment to remain with, or to join,
the Company. The 1997 Plan contemplates the grant to such persons of
"incentive stock options" ("ISO's") under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and nonqualified stock options
("NSO's").
The 1997 Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended, nor is it qualified or
intended to be qualified under Section 401(a) of the Code.
Administration
Administration of the 1997 Plan was delegated to the Company's the
Compensation Committee, currently consisting of Mr. McDonnell and Mr. Bagley,
each a "disinterested person" within the meaning of Rule 16(b)-3(c)(2)(i) of
the Exchange Act. Subject to the terms of the 1997 Plan and such limitations
as the Board of Directors may impose, the Compensation Committee shall be
responsible for the overall management and administration of the 1997 Plan and
shall have such authority as may be necessary or appropriate to carry out its
responsibilities, including, without limitation, the authority to (i)
determine the persons to whom, and the time or times at which, grants shall be
made as well as the terms of ISO's and NSO's, (ii) interpret and construe the
terms of the 1997 Plan and any instrument thereunder, and (iii) adopt rules
and regulations, prescribe forms and take any other actions not inconsistent
with the 1997 Plan as it may deem necessary or appropriate.
Eligibility
Officers, key employees and directors of the Company, as well as certain
consultants, advisors and other persons who provide services to the Company,
are eligible to participate in the 1997 Plan without regard to length of
employment or service. Any such person who is not an "employee" of the
Company, within the meaning of Section 422 of the Code, is not eligible to
receive ISO's. No options will be granted after February 4, 2007, the date
upon which the 1997 Plan will terminate if it is not terminated earlier by the
Board.
Description of Options
The exercise price of an option granted under the 1997 Plan and the period
during which it may be exercised will be determined by the Compensation
Committee at the time of grant, subject to the terms and conditions of the
1997 Plan. The exercise price of an ISO, however, shall not be less than the
fair market value of the shares subject to such ISO on the date of grant (or
110% of such fair market value in the case of ISO's granted to an individual
who is a 10% or greater stockholder).
In no event will options expire later than the expiration of ten years from
the date of grant (or five years from the date of grant in the case of ISO's
granted to an individual who is a 10% or greater stockholder). Options that
are otherwise exercisable may be exercised in whole or in part.
Upon (i) the merger or consolidation of the Company with or into another
corporation (pursuant to which the Company's stockholders immediately prior to
such merger or consolidation will not, as of the date of such merger or
consolidation, own a beneficial interest in shares of voting securities of the
corporation surviving such merger or consolidation having at least a majority
of the combined voting power of such corporation's then outstanding
securities), if the agreement of merger or consolidation does not provide for
(1) the continuance of the options granted under the 1997 Plan or (2) the
substitution of new options for options granted under the 1997 Plan, or for
the assumption of such options by the surviving corporation, (ii) the
dissolution, liquidation, or sale of all or substantially all the assets of
the Company to a person unrelated to the Company or to a direct or indirect
owner of a majority of the voting power of the Company's then outstanding
voting securities (such sale of assets being referred to as an "Asset Sale")
or (iii) the "change in control" of the Company, the holder of any such option
theretofore granted and still outstanding (and not otherwise expired) shall
have the right immediately prior to the effective date of such merger,
consolidation, dissolution, liquidation, Asset Sale or change in control of
the Company to exercise such option(s) in whole or in part without regard to
any installment provision that may have been made part of the terms and
conditions of such option(s); provided that any conditions precedent to the
exercise of such option(s), other than the passage of time, have occurred.
7
<PAGE>
As used herein, a "change in control of the Company" shall be deemed to have
occurred if any person (including any individual, firm, partnership or other
entity) together with all affiliates and associates (as defined under Rule
12b-2 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act")) of such person (but excluding (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary of
the Company, (ii) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of the Company, (iii) the Company or any subsidiary of the Company
or (iv) a participant together with all affiliates and associates of such
participant) is or becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 40% or more of the combined voting power of the
Company's then outstanding securities.
If the optionee's employment with the Company terminates or if the
optionee's association with the Company terminates (in the case of a
consultant, advisor or other service provider), options that are exercisable
on the optionee's termination date shall remain exercisable until the
expiration of three months from such termination date (extended to 12 months
if such termination occurs due to the optionee's death or disability).
To the extent that the aggregate of (i) the fair market value (determined at
the time an ISO is granted) of the shares of the Company's Common Stock
subject to an ISO and (ii) the fair market value (determined as of the date(s)
of grant of the options(s)) of all other shares of Common Stock subject to
ISO's granted to an optionee which are exercisable for the first time by an
optionee during a calendar year (under all stock option plans of the Company)
exceeds $100,000, such ISO's shall be treated as NSO's.
Payment for Shares
Payment for shares of the Company's Common Stock purchased upon exercise of
an option must be made in full upon exercise, either in cash or check or in
shares of outstanding Common Stock of the Company held for the required time
period to avoid a charge to the Company's reported earnings. The proceeds
received by the Company from the sale of shares of its Common Stock pursuant
to the 1997 Plan shall be used for general corporate purposes.
Transfer Restrictions
Options are not transferable other than by will or the laws of descent and
distribution or pursuant to a domestic relations order. An optionee is
required to notify the Company if he disposes of shares of the Company's
Common Stock acquired pursuant to the exercise of an ISO within two years of
the date the ISO was granted or within one year of the date the ISO was
exercised.
Amendment and Termination
The Board may amend or terminate the 1997 Plan at any time or from time to
time; provided, however, that unless all required stockholder approvals have
been received, no amendment will be made that would (i) increase the maximum
number of shares as to which options may be granted, or (ii) materially modify
the requirements as to eligibility for participation. No amendment is
permitted which would adversely affect the rights of any optionee under an
option granted prior to such amendment, unless the optionee consents thereto.
In addition, no amendment will be made that would result in the
disqualification of any ISO as an "incentive stock option" within the meaning
of Section 422 of the Code.
Federal Income Tax Consequences
The following is a general discussion of the federal income tax consequences
to an optionee and the Company of the grant and exercise of an option pursuant
to the 1997 Plan and the disposition of stock acquired upon exercise of any
option. Because the consequences will vary for any number of reasons, the
Company urges each optionee to consult his own tax advisor with respect to the
tax consequences of such transactions. The following summary does not purport
to be complete and does not take into account state or local tax implications.
8
<PAGE>
Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term
capital gains rate for federal income tax purposes is currently 20% while the
maximum ordinary income rate and short-term capital gains rate is effectively
39.6%. Slightly different rules may apply to optionholders who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of
the Exchange Act.
Incentive Stock Options
Incentive stock options under the 1997 Plan are intended to be eligible for
the favorable federal income tax treatment accorded "incentive stock options"
under the Code. There generally are no federal income tax consequences to the
optionholder or the Company by reason of the grant or exercise of an incentive
stock option. However, the exercise of an incentive stock option may increase
the optionholder's alternative minimum tax liability, if any.
If an optionholder holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is
granted and at least one year from the date on which the shares are
transferred to the optionholder upon exercise of the option, any gain or loss
on a disposition of such stock will be a long-term capital gain or loss if the
optionholder held the stock for more than one year. Generally, if the
optionholder disposes of the stock before the expiration of either of these
holding periods (a "disqualifying disposition"), then at the time of
disposition the optionholder will realize taxable ordinary income equal to the
lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the optionholder's actual gain, if
any, on the purchase and sale. The optionholder's additional gain or any loss
upon the disqualifying disposition will be a capital gain or loss, which will
be long-term or short-term depending on whether the stock was held for more
than one year.
To the extent the optionholder recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a corresponding
business expense deduction in the tax year in which the disqualifying
disposition occurs.
Nonstatutory Stock Options
Nonstatutory stock options granted under the 1997 Plan generally have the
following federal income tax consequences:
There are no tax consequences to the optionholder or the Company by reason
of the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionholder normally will recognize taxable ordinary income
equal to the excess, if any, of the stock's fair market value on the date of
exercise over the option exercise price. However, to the extent the stock is
subject to certain types of vesting restrictions, the taxable event will be
delayed until the vesting restrictions lapse unless the participant elects to
be taxed on receipt of the stock. With respect to employees, the Company is
generally required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation, the Company will generally
be entitled to a business expense deduction equal to the taxable ordinary
income realized by the optionholder.
Upon disposition of the stock, the optionholder will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as ordinary income
upon exercise of the option (or vesting of the stock). Such gain or loss will
be long-term or short-term depending on whether the stock was held for more
than one year. Slightly different rules may apply to optionholders who acquire
stock subject to certain repurchase options or who are subject to Section
16(b) of the Exchange Act.
9
<PAGE>
Potential Limitation on Company Deductions
Section 162(m) of the Code denies a deduction to any publicly held
corporation for compensation paid to certain "covered employees" in a taxable
year to the extent that compensation to such covered employee exceeds $1
million. It is possible that compensation attributable to stock options, when
combined with all other types of compensation received by a covered employee
from the Company, may cause this limitation to be exceeded in any particular
year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation
if the option is granted by a compensation committee comprised solely of
"outside directors" and either (i) the plan contains a per-employee limitation
on the number of shares for which options may be granted during a specified
period, the per-employee limitation is approved by the stockholders, and the
exercise price of the option is no less than the fair market value of the
stock on the date of grant, or (ii) the option is granted (or exercisable)
only upon the achievement (as certified in writing by the compensation
committee) of an objective performance goal established in writing by the
compensation committee while the outcome is substantially uncertain, and the
option is approved by stockholders.
New Plan Benefits
The following table presents certain information with respect to options
granted under the 1997 Plan for the fiscal year ended December 31,1999 to (i)
the Company's Chief Executive Officer and its other most highly compensated
executive officers who received grants under the 1997 Plan, (ii) all executive
officers as a group, (iii) all non-employee directors as a group and (iv) all
non-executive officer employees as a group.
NEW PLAN BENEFITS
1997 Stock Plan
<TABLE>
<CAPTION>
Number of Shares
Name and Position Number of Shares Underlying Options
---------------------------------- ------------------
<S> <C>
Mr. Richard B. Hollis................................... 126,667
Chairman of the Board, President and Chief Executive
Officer
Dr. James M. Frincke.................................... 64,166
Executive Vice President of Research and Development
Mr. Robert L. Marsella.................................. 10,000
Vice President--Business Development
Mr. Robert W. Weber..................................... 20,000
Chief Accounting Officer and Vice President--Controller
Mr. Daniel D. Burgess................................... 165,000
Chief Financial Officer and Chief Operating Officer
All Executive Officers as a Group....................... 450,833
All Non-Employee Directors as a Group................... 35,000
All Non-Executive Officer Employees as a Group.......... 291,332
</TABLE>
10
<PAGE>
Proposal 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. BDO Seidman, LLP
has audited the Company's financial statements since its inception.
Representatives of BDO Seidman, LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
Stockholder ratification of the selection of BDO Seidman, LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of BDO Seidman, LLP
to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board in their discretion
may direct the appointment of different independent auditors at any time
during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of BDO Seidman, LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
11
<PAGE>
EXECUTIVE OFFICERS AND SENIOR MANAGEMENT
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Richard B. Hollis 47 Chairman of the Board, President and Chief
Executive Officer
Daniel D. Burgess 38 Chief Operating Officer and Chief Financial
Officer
James M. Frincke, Ph.D. 49 Executive Vice President, Research and
Development
Candice Byrne 46 Vice President, Human Resources
Eric J. Loumeau 37 Vice President, Corporate General Counsel
Robert L. Marsella 47 Vice President, Business Development and
Marketing
Thomas C. Merigan, Jr., M.D. 66 Chairman of the Scientific Advisory Board
Chris Reading, Ph.D. 52 Vice President, Scientific Development
Dwight R. Stickney, M.D. 57 Medical Director, Oncology
Robert W. Weber 49 Chief Accounting Officer and Vice President--
Controller
</TABLE>
Richard B. Hollis founded Hollis-Eden in August 1994. Mr. Hollis currently
serves as Chairman, President and Chief Executive Officer. Mr. Hollis has over
20 years experience in the health care industry in a variety of senior
management positions. Prior to founding Hollis-Eden Mr. Hollis served as Chief
Operating Officer of Bioject Medical from 1991 to 1994 and as Vice President
Marketing and Sales/General Manager for Instromedix from 1989 to 1991. From
1986 to 1989, Mr. Hollis served as a general manager of the Western business
unit of Genentech, Inc., a manufacturer of biopharmaceuticals. Prior to
joining Genentech, Inc., Mr. Hollis served as a divisional manager of Imed
Corporation, Inc., a manufacturer of drug delivery systems. Mr. Hollis began
his career in the health care industry with Baxter Travenol. Mr. Hollis
received his B.A. in Psychology from San Francisco State University.
Daniel D. Burgess became Chief Operating Officer and Chief Financial Officer
of Hollis-Eden Pharmaceuticals, Inc. in August 1999. Mr. Burgess joined
Hollis-Eden from Nanogen Inc., where he served as Vice President and Chief
Financial Officer. Prior to joining Nanogen, Mr. Burgess spent ten years with
Gensia Sicor, Inc. (now Sicor, Inc.) and Gensia Automedics, Inc., a partially
owned subsidiary of Gensia Sicor. He served as President and a director of
Gensia Automedics, where he was responsible for all functional areas of this
medical products company. In addition, he was Vice President and Chief
Financial Officer of Gensia Sicor, where he was responsible for finance,
investor relations, business development and other administrative functions.
Mr. Burgess was instrumental in helping Gensia raise over $400 million in
various public and private financings and was a key figure in a number of
acquisitions and in-licensing and out-licensing transactions. Prior to joining
Gensia, Mr. Burgess held positions at Castle & Cooke, Inc. and Smith Barney,
Harris Upham and Company. He received a degree in Economics from Stanford
University and a MBA from Harvard Business School.
James M. Frincke, Ph.D. joined Hollis-Eden as Vice President, Research and
Development in November 1997 and was promoted to Executive Vice President in
March 1999. During his 16 years in the biotechnology industry, Dr. Frincke has
managed major development programs including drugs, biologicals, and cellular
and gene therapy products aimed at the treatment of cancer, infectious
diseases and organ transplantation. Since joining the biotechnology industry,
Dr. Frincke has held vice president, research and development positions in top
tier biotechnology companies including Hybritech/Eli Lilly and SyStemix
(acquired by Novartis). In various capacities, he has been responsible for all
aspects of pharmaceutical development including early stage research programs,
product evaluation, pharmacology, manufacturing, and the management of
regulatory and clinical matters of lead product opportunities. Dr. Frincke has
authored or co-authored more than 100 scientific articles, abstracts and
regulatory filings. Dr. Frincke received his B.S. in Chemistry and his Ph.D.
in Chemistry, from the University of California, Davis. Dr. Frincke completed
his postdoctoral work at the University of California, San Diego.
12
<PAGE>
Candice Byrne became Vice President of Human Resources in March 1999. Ms.
Byrne brings extensive experience in business, manpower planning,
organizational development and process improvement to Hollis-Eden. Prior to
joining Hollis-Eden, she served as Vice President of Human Resources in Baxter
International Inc.'s Cardiovascular Surgery group. At Baxter, she provided
human resources leadership for business acquisitions and divestitures,
strategic evaluations of human resource potential and long-range development
opportunities. She was also instrumental in integrating acquired companies
into the parent company. Ms. Byrne has spent more than 20 years of her career
in human resources for medical and technology companies, including American
Hospital Supply Corporation and Partners National Health Plans. She earned her
B.A. in Fine Arts at the University of Arizona and Masters Degree in
Organizational Management at the University of Phoenix.
Eric J. Loumeau became Vice President/Corporate General Counsel in September
1999. Mr. Loumeau came to Hollis-Eden from the law firm of Cooley Godward LLP,
where he had primary responsibility for the Hollis-Eden account for four
years. As a partner at Cooley Godward, Mr. Loumeau represented a number of
private and public companies in corporate and securities law matters. Prior to
joining Cooley Godward in 1995, Mr. Loumeau was an associate for four years at
the law firm of Skadden, Arps, Slate, Meagher and Flom. Mr. Loumeau attended
Harvard Law School and the University of California, Berkeley Boalt Hall
School of Law, where he received a J.D.degree. He holds a B.S. degree in
Business Administration with an emphasis in finance from Brigham Young
University.
Robert L. Marsella joined Hollis-Eden in September 1997 as Vice President of
Business Development and Marketing. Mr. Marsella has over 19 years of medical
sales, marketing, and distribution experience. From 1994 until he joined
Hollis-Eden, Mr. Marsella was President of RLM Cardiac Products an exclusive
distributor in the southwestern United States of various cardiac related
hospital products. From 1990 until 1994 Mr. Marsella marketed and distributed
implantable pacemakers and defibrillators for Telectronics Pacing Systems.
From 1987 to 1990 Mr. Marsella served as Regional Manager for Genentech and
launched ACTIVASE t-PATM (a biopharmaceutical drug) in the Western United
States. From 1983-1987 Mr. Marsella marketed intravenous infusion pumps for
Imed Corporation. Mr. Marsella began his career in 1980, as a field sales
representative and later regional sales manager for U.S. Surgical Corporation,
auto suture division. Mr. Marsella received his B.A. degree from San Diego
State University in 1975
Thomas C. Merigan, Jr., M.D. became Chairman of the Scientific Advisory
Board and a director of Hollis-Eden in March 1996 and acts as the Company's
Medical Director. Dr. Merigan has been George E. and Lucy Becker Professor of
Medicine at Stanford University School of Medicine from 1980 to the present.
Dr. Merigan has also been the Principal Investigator, NIAID Sponsored AIDS
Clinical Trials Unit, from 1986 to the present and has been Director of
Stanford University's Center For AIDS Research from 1988 to the present. Dr.
Merigan is a member of various medical and honorary societies, has lectured
extensively within and outside the United States, and authored numerous books
and articles and has chaired and edited symposia relating to viruses,
infectious diseases, anti-viral agents, HIV and other retroviruses and AIDS.
From 1990 to the present, Dr. Merigan has been Chairman, Editorial Board of
"HIV: Advances in Research and Therapy". He is also a member of the editorial
boards of " Aids Research and Human Retroviruses" (since 1983), "International
Journal of Anti-Microbial Agents" (since 1990), and "The Aids Reader" (since
1991), among others. He is a co-recipient of eight patents which, among other
things, relate to synthetic polynucleotides, modification of hepatitis B virus
infection, treatment of HIV infection, purified cytomegalovirus protein and
composition and treatment for herpes simplex. Dr. Merigan has been Chair,
Immunology Advisory Board, Bristol Myers Squibb Corporation (1989--1995) and
Chair, Scientific Advisory Board, Sequel Corp. (1993--1996). In 1994, Stanford
University School of Medicine honored him with the establishment of the Annual
Thomas C. Merigan Jr. Endowed Lectureship in Infectious Diseases, and, in
1996, Dr. Merigan was elected Fellow, American Association for the Advancement
of Science. From 1966 to 1992, Dr. Merigan was Head, Division of Infectious
Diseases, at Stanford School of Medicine. Dr. Merigan received his B.A. (with
honors) from the University of California at Berkeley and his M.D. from the
University of California at San Francisco.
13
<PAGE>
Chris Reading, Ph.D. became Vice President of Scientific Development in
January 1999. Prior to joining Hollis-Eden, Dr. Reading was Vice President of
Product and Process Development at Novartis Inc.-owned, SyStemix Inc. During
this time, he successfully filed three investigational new drug applications
(INDs) in the areas of stem cell therapy technology and stem cell gene therapy
for HIV/AIDS. Prior to joining SyStemix, Dr. Reading served on the faculty of
the M.D. Anderson Cancer Center in Houston for nearly 13 years. His positions
there included Associate and Assistant Professor of Medicine in the
Departments of Hematology and Tumor Biology. During his career, Dr. Reading
has given more than 25 national and international scientific presentations,
published more than 50 peer-reviewed journal articles and 15 invited journal
articles as well as written nearly 20 book chapters, and has received numerous
grants and contracts which supported his research activities. Dr. Reading has
served on the National Science Foundation Advisory Committee for Small
Business Innovative Research Grants (SBIR) as well as on the editorial boards
of Journal of Biological Response Modifiers and Molecular Biotherapy. He holds
numerous patents for his work with monoclonal antibodies and devices. He
earned his B.A. in Biology at the University of California at San Diego. Dr.
Reading received his Ph.D. in Biochemistry at the University of California at
Berkeley and completed postdoctoral study in tumor biology at The University
of California at Irvine.
Dwight Stickney, M.D. joined Hollis-Eden in May 2000 after serving as
Chairman and as staff physician of the Radiation Oncology Division of
Radiological Associates of Sacramento Medical Group, Inc., in Sacramento,
California. He previously was a member of the Radiation Study Section of the
National Institute of Health's Division of Research Grants, as well as
Director of Radiation Research for Scripps Clinic and Research Foundation in
La Jolla, California. Dr. Stickney has also taught in medical academia as
Associate Professor of Radiation Medicine at Loma Linda University School of
Medicine and has served on the Board of Directors of the American Cancer
Society. Earlier in his career Dr. Stickney held positions with the Wellcome
Research Institute and the Centers for Disease Control. He has also served as
a consultant for a number of biotechnology companies on the design and content
of clinical trials. Dr. Stickney holds a Bachelor of Science in Microbiology,
a Masters of Science in Immunology, and a M.D. from Ohio State University. In
addition, he is certified as a Diplomate of the American Board of Internal
Medicine, and a Diplomate of the American Board of Radiology.
Robert W. Weber joined Hollis-Eden in March 1996 and currently serves as
Chief Accounting Officer and Vice President-Controller. Mr. Weber has over
twenty years of experience in financial management. Mr. Weber has been
employed at executive levels by multiple start-up companies and contributed to
the success of several turnaround situations. Most recently he served as Vice
President of Finance at Prometheus Products, a subsidiary of Sierra
Semiconductor, and Vice President Finance and Chief Financial Officer for
Amercom, (a personal computer telecommunications software publishing company).
From February 1988 to August 1993, Mr. Weber served as Vice President Finance
and Chief Financial Officer of Instromedix, a company which develops and
markets medical devices and software. Mr. Weber brings a broad and expert
knowledge of many aspects of financial management. In various capacities, he
has been responsible for all aspects of finance and accounting including cost
accounting, cash management, SEC filings, investor relations, private and
venture financing, corporate legal matters, acquisitions/divestitures as well
as information services and computer automation. Mr. Weber received a B.S.
from GMI Institute of Technology and a MBA from the Stanford Graduate School
of Business.
14
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 29, 2000 by: (i) each director
and nominee for director; (ii) each of the executive officers named in the
Summary Compensation Table; (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock. Except as otherwise
shown, the address of the each stockholder listed is in care of the Company at
9333 Genesee Ave., Suite 200, San Diego, CA 92121.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
---------------------------
Number of Percent of
Beneficial Owner Shares Total
---------------- -------------- ------------
<S> <C> <C>
Richard B. Hollis(2)........................... 3,522,054 29.6%
Terren S. Peizer(3)............................ 1,200,000 9.7%
723 Palisades Beach Rd. #322
Santa Monica, CA 90402
Robert E. Petersen & Margaret M. Petersen as
Trustees for the
R. E. & M. Petersen Living Trust Dated
1/17/83...................................... 648,649 5.8%
10 Hanover Square, 12th Floor
New York, NY 10005
Kane & Co/Chase Manhattan Bank................. 555,556 5.0%
4 New York Plaza, 11th Floor
New York, NY 10004
William H. Tilley(4)........................... 500,000 4.3%
Salvatore J. Zizza(5).......................... 240,000 2.1%
Thomas Charles Merigan(6)...................... 190,694 1.7%
James M. Frincke(7)............................ 148,598 1.3%
Robert L. Marsella(8).......................... 136,157 1.2%
Robert W. Weber(9)............................. 121,714 1.1%
J. Paul Bagley(10)............................. 118,949 1.1%
Brendan R. McDonnell(11)....................... 30,000 *
Leonard Makowka(12)............................ 15,972 *
Daniel D. Burgess(13).......................... 15,262 *
All executive officers, senior management and
directors as a group (14 persons)(14)......... 5,086,616 38.3%
</TABLE>
- --------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 11,116,437 shares outstanding on February 29,
2000, adjusted as required by rules promulgated by the SEC.
(2) Includes 405,000 shares subject to options and 393,250 shares subject to
warrants exercisable within 60 days of February 29, 2000 and 463 shares
held under the Company's 401(m) plan.
(3) Includes 1,200,000 shares subject to options exercisable within 60 days
of February 29, 2000.
(4) Includes 500,000 shares subject to warrants exercisable within 60 days of
February 29, 2000, held of record by Jacmar/Viking L.L.C. of which Mr.
Tilley is a member.
15
<PAGE>
(5) Includes 10,000 shares subject to options and 100,000 shares subject to
warrants exercisable within 60 days of February 29, 2000.
(6) Includes 190,694 shares subject to options exercisable within 60 days of
February 29, 2000.
(7) Includes 148,125 shares subject to options exercisable within 60 days of
February 29, 2000 and 473 shares held under the Company's 401(m) plan.
(8) Includes 135,694 shares subject to options exercisable within 60 days of
February 29, 2000 and 463 shares held under the Company's 401(m) plan.
(9) Includes 7,000 shares held by Mr. Weber as custodian for his minor
children and 101,111 shares subject to options exercisable within 60 days
of February 29, 2000 and 603 shares held under the Company's 401(m) plan.
(10) Includes 10,000 shares subject to options and 68,849 shares subject to
warrants exercisable within 60 days of February 29, 2000, held of record
by LHIP Acquisition Company L.L.C., of which Mr. Bagley is the manager.
(11) Includes 30,000 shares subject to options exercisable within 60 days of
February 29, 2000.
(12) Includes 15,972 shares subject to options exercisable within 60 days of
February 29, 2000.
(13) Includes 15,000 shares subject to options exercisable within 60 days of
February 29, 2000 and 262 shares held under the Company's 401(m) plan.
(14) Includes 1,105,972 shares subject to options and 1,062,099 shares subject
to warrants exercisable within 60 days of February 29, 2000 and 3,204
shares held under the Company's 401(m) plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
16
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
Beginning with the year 2000, members of the Board of Directors are
compensated $2,500 for attendance at each in-person Board and Committee
meetings. They also are eligible for reimbursement of their expenses incurred
in connection with such attendance in accordance with Company policy.
In 1999, the 1998 consulting arrangement with Dr. Merigan was extended.
Pursuant to the arrangement, Dr. Merigan received $75,000 in consulting fees
for services performed for the Company during 1999.
In 1999, Dr. Makowka received $120,000 in finders fees and $90,000 in
consulting fees for services performed for the Company.
In 1999, Jacmar/Viking L.L.C. of which Mr. Tilley is a principal, entered
into a three-year consulting agreement with the Company, pursuant to which
Jacmar/Viking received warrants to purchase 500,000 shares of the Company's
Common Stock, at an exercise price of $20.50 per share, for consulting
services to be provided to the Company by Mr. Tilley.
Compensation of Executive Officers
Summary of Compensation
The following table shows for the fiscal years ended December 31, 1999, 1998
and 1997, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer, its other four most highly compensated executive officers
at December 31, 1999, and one individual who was not an executive officer as
of December 31, 1999, who earned in excess of $100,000 in salary and bonus
during the last year (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------------
Other Securities
Annual Underlying
Salary Bonus Compensation Options/
Name and Principal Position Year ($) ($) ($) SARs (#)
- --------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Mr. Richard B. Hollis....... 1999 330,000 225,000 -0- 426,667
Chairman of the Board, 1998 250,000 250,000 120,414(1) 80,000
President and Chief
Executive Officer 1997 199,212 -0- 31,921(1) -0-
Mr. Terren S. Peizer(2)..... 1999 300,000 -0- 37,500(3) -0-(4)
Former President 1998 250,000 -0- -0- -0-(4)
1997 172,212 -0- -0- -0-(4)
Mr. James M. Frincke........ 1999 181,500 37,000 -0- 64,166
Executive Vice President of 1998 165,000 35,000 -0- 25,000
Research and Development 1997 27,500(5) -0- 3,233(6) 167,500
Mr. Robert L. Marsella...... 1999 147,000 30,000 -0- 10,000
Vice President--Business 1998 45,796(7) -0- -0- 10,000
Development 1997 -0- -0- -0- 135,000
Mr. Robert W. Weber......... 1999 132,000 27,000 -0- 20,000
Chief Accounting Officer 1998 120,000 45,000 33,174(8) 15,000
and Vice President--
Controller 1997 92,523 -0- 18,005(8) 35,000
Mr. Daniel D. Burgess....... 1999 90,672(9) 20,000 -0- 165,000
Chief Financial Officer and 1998 -0- -0- -0- -0-
Chief Operating Officer 1997 -0- -0- -0- -0-
</TABLE>
- --------
(1) Includes tax gross up amount of $48,212 and $6,906 and moving expenses of
$72,202 and $25,205 for 1998 and 1997, respectively.
(2) Mr. Peizer resigned from the Company in February 1999.
17
<PAGE>
(3) Includes vacation compensation upon the resignation of Mr. Peizer
(4) Does not include options to purchase 2,400,000 shares of the Company's
Common Stock, of which 1,200,000 shares were forfeited upon Mr. Peizer's
resignation, granted by Hollis-Eden, Inc. prior to the 1997 Merger with
Initial Acquisition Corp., which options were assumed by the Company in
accordance with the terms of the Merger Agreement.
(5) Mr. Frincke's employment began in November 1997.
(6) Included moving expenses of $3,233 in 1997.
(7) Mr. Marsella's compensation began in September 1998.
(8) Included tax gross up amount of $14,037 and $4,325 and moving expenses of
$19,137 and $13,680 for 1998 and 1997, respectively.
(9) Mr. Burgess' employment began in August 1999.
STOCK OPTION GRANTS AND EXERCISES
The Company may grant options to its executive officers under its 1997 Plan.
As of February 29, 2000, options to purchase a total of 1,511,965 shares were
outstanding under the 1997 Plan and options to purchase 737,175 shares
remained available for grant thereunder.
The following tables show for the fiscal year ended December 31, 1999,
certain information regarding options granted to, exercised by, and held at
year-end by, the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation
Shares % of Total For Option Term
Underlying Options Granted ($)(2)
Options to Employees in Exercise Expiration ---------------------
Name Granted (#)(1) Fiscal Year (%) Price ($/sh) Date 5% 10%
---- -------------- --------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard B. Hollis....... 126,667 12.6% $10.56 11/14/09 $ 841,353 $2,132,140
300,000 29.8% $16.63 12/31/08 $3,138,081 $7,952,466
James M. Frincke........ 64,166 6.4% $10.56 11/14/09 $ 426,206 $1,080,083
Robert W. Weber......... 20,000 2.0% $10.56 11/14/09 $ 132,845 $ 336,653
Robert L. Marsella...... 10,000 1.0% $10.56 11/14/09 $ 66,422 $ 168,326
Daniel D. Burgess....... 165,000 16.4% $13.63 08/05/09 $1,414,590 $3,584,826
</TABLE>
- --------
(1) Such options vest according to the following schedule: 1/3 of the shares
subject to the option vest one year from the date of grant and the
remainder vest in 24 equal monthly installments thereafter, with the
exception of 15,000 of the shares issued to Mr. Burgess, which vested
immediately.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated assuming that
the stock price on the date of grant appreciates at the indicated annual
rate, compounded annually for the entire term of the option, and that the
option is exercised and sold on the last day of its term for the
appreciated stock price. These amounts represent certain assumed rates of
appreciation only, in accordance with the rules of the SEC, and do not
reflect the Company's estimate or projection of future stock price
performance. Actual gains, if any, are dependent on the actual future
performance of the Company's Common Stock and no gain to the optionee is
possible unless the stock price increases over the option term which will
benefit all stockholders.
18
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(3)
<TABLE>
<CAPTION>
Number Of Securities Value of Unexercised In-
Underlying Options As Of The-Money Options As Of
Fiscal Year-End (#)(1) Fiscal Year-End ($)(2)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard B. Hollis........... 280,000 426,667 1,625,000 -0-
Terren S. Peizer............ 1,200,000 -0- 6,450,000 -0-
James M. Frincke............ 126,736 129,930 421,656 185,531
Robert L. Marsella.......... 126,250 38,750 487,552 83,073
Robert W. Weber............. 95,556 39,444 616,234 38,766
Daniel D. Burgess........... 15,000 150,000 -0- -0-
</TABLE>
- --------
(1) Includes both in-the-money and out-of-the-money options.
(2) The fair market value of the underlying shares on the last day of the
fiscal year ($10.375) less the exercise or base price. Excludes out-of-
the-money options.
(3) None of the named executive officers exercised options during the 1999
fiscal year.
EMPLOYMENT AGREEMENTS
The Company has entered an employment agreement with Mr. Hollis providing
that if Mr. Hollis' employment is terminated without cause, Mr. Hollis shall
be entitled to the following: (i) base salary through the date of termination,
(ii) annual base salary in effect at the time of termination times five, (iii)
an amount equal to the prior calendar year's bonus awarded to Mr. Hollis times
five, (iv) immediate vesting of all unvested stock options of the Company held
by Mr. Hollis, and the continuation of the exercise period of all stock
options held by Mr. Hollis until the final expiration of the original terms of
such stock options, and (v) continued receipt for three years of all employee
benefit plans and programs in which Mr. Hollis and his family were entitled to
participate immediately prior to the date of termination. The employment
agreement further provides that if Mr. Hollis' employment is terminated within
one year of the occurrence of a change in control of the Company, upon
execution by Mr. Hollis of a waiver and release of claims, (i) the new company
shall pay Mr. Hollis' base salary through the date of termination, (ii) the
new company shall pay Mr. Hollis his annual base salary in effect immediately
prior to the event or events resulting in a change in control times five,
(iii) the new company shall pay Mr. Hollis an amount equal to five times the
bonus awarded to Mr. Hollis in the calendar year immediately preceding the
calendar year in which the event or events resulting in a change of control
occurred, (iv) all unvested stock options of the new company held by Mr.
Hollis shall immediately vest, and the period for exercise of all stock
options of the new company held by Mr. Hollis shall be extended until the
final expiration of the original term of such stock option, and (v) Mr. Hollis
shall continue to receive for three years all employee benefit plans and
programs in which Mr. Hollis and his family were entitled to participate
immediately prior to the date of termination.
Mr. Weber's employment arrangement with the Company provides that if Mr.
Weber's employment is terminated without cause, he will receive one year's
severance pay, at his highest salary level, and an amount equal to his prior
year's bonus, plus continuation of benefits for one year. In addition, all
unvested stock options held by Mr. Weber would immediately vest and the
exercise period for such stock options would continue until the final
expiration of the original terms of such stock options.
Mr. Burgess' employment arrangement with the Company provides that if Mr.
Burgess' employment is terminated without cause, he will receive one year's
severance pay, with benefits in place throughout the severance period.
Additionally, his stock options will continue to vest throughout the severance
period, with 90 days beyond that to exercise.
Mr. Loumeau's employment arrangement with the Company provides that if Mr.
Loumeau's employment is terminated without cause within the first twelve
months of employment, he will receive severance pay equal to his remaining
unpaid salary for such twelve month period, plus an additional three months.
In addition, his stock options shall continue to vest for the remainder of
such twelve month period. All medical and other benefit plans shall also
remain in place throughout the severance period.
19
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The following is a report of the Compensation Committee of the Company
describing the compensation policies and rationale applicable to the
Compensation paid to the Company's executive officers. The information
contained in this report shall not be deemed to be "soliciting material" or to
be "filed" with the SEC nor shall such information be incorporated by
reference into any future filing under the Securities Act of 1933, as amended
(the "Securities Act") or the Exchange Act, except to the extent that the
Company specifically incorporates it by reference into any such filing.
The Compensation Committee (the "Committee") of the Board of Directors
reviews and recommends to the Board of Directors for approval the Company's
executive compensation policies. The Committee is responsible for reviewing
the salary and benefits structure of the Company at least annually to insure
its competitiveness within the Company's industry. During 1999, the Committee
was composed of two outside directors, Mr. McDonnell and Mr. Bagley.
Compensation Philosophy
The Company's philosophy in establishing its compensation policy for
executive officers and other employees is to create a structure designed to
attract and retain highly skilled individuals by establishing salaries,
benefits, and incentive compensation which compare favorably with those for
similar positions in other pharmaceutical and biotechnology companies.
Compensation for the Company's executive officers consists of a base salary
and potential incentive cash bonuses, as well as incentive compensation
through stock options and matching contributions by the company into 401(m)
accounts.
Base Salary
The base salary component of compensation is designed to compensate
executive officers competitively at levels necessary to attract and retain
qualified executives in the pharmaceutical and biotechnology industry. In
order to evaluate the Company's competitive position in the industry, the
Committee reviewed and analyzed the compensation packages, including base
salary levels, offered by other biotechnology and pharmaceutical companies.
The competitive information was obtained from a survey prepared by a
consulting company (e.g., the 1999 Report on Executive Compensation in the
Biopharmaceutical Industry). As a general matter, the base salary for each
executive officer is initially established through negotiation at the time the
officer is hired taking into account such officer's qualifications,
experience, prior salary and competitive salary information. Year-to-year
adjustments to each executive officer's base salary are based upon individual
performance for the year, changes in the general level of base salaries of
persons in comparable positions within the industry, and the average merit
salary increase for such year for all employees of the Company, as well as
other factors the Compensation Committee judges to be pertinent during an
assessment period. In making base salary decisions, the Committee exercises
its judgment to determine the appropriate weight to be given to each of these
factors. The Committee believes that its process for determining and adjusting
the base salary of executive officers is consistent with sound personnel
practices.
Bonus Payments
Cash bonus payments are discretionary unless otherwise required pursuant to
an employment agreement. Bonus payments, if any, to executive officers,
including the CEO, or payments above the required annual minimum, are based on
two principal factors: corporate performance as compared to the Company's
goals and objectives and individual performance relative to corporate
performance and individual goals and objectives.
Bonus payment recommendations for executive officers other than the CEO are
initiated by the CEO and submitted to the Committee for review. Bonus payment
recommendations for the CEO are initiated by the Committee.
20
<PAGE>
Long-Term Incentives
To conserve its cash resources, the Company places special emphasis on
equity-based incentives to attract, retain and motivate executive officers as
well as other employees. The Committee provides the Company's executive
officers with long-term incentive compensation through grants of stock options
generally under the 1997 Plan. The Board believes that stock options provide
the Company's executive officers with the opportunity to purchase and maintain
an equity interest in the Company and to share in the appreciation of the
value of the Company's Common Stock. The Board believes that stock options
directly motivate an executive to maximize long-term stockholder value. The
options also utilize vesting periods that encourage key executives to continue
in the employ of the Company. The Board considers the grant of each option
subjectively, considering factors such as the individual performance of the
executive officer and the anticipated contribution of the executive officer to
the attainment of the Company's long-term strategic performance goals. Long-
term incentives granted in prior years are also taken into consideration.
Grants are made to all employees when hired based on salary level and
position. All employees, including executive officers, are eligible for
subsequent, discretionary grants, which are generally based on either
individual or corporate performance. The compensatory and administrative
features of the 1997 Plan conform in all material respects to the design of
standard comparable plans in the industry and are, in the Committee's
estimation, fair and reasonable.
Chief Executive Officer Compensation
The compensation of the Chief Executive Officer is reviewed annually on the
same basis as discussed above for all executive officers. Mr. Hollis' base
salary for 1999 was $330,000. Mr. Hollis' base salary was established in part
by comparing the base salaries of chief executive officers at other
biotechnology and pharmaceutical companies of similar size.
Section 162(M)
The Board has considered the potential future effects of Section 162(m) of
the Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the executive officers named in the proxy statement, unless
compensation is performance-based. The Company has adopted a policy that,
where reasonably practicable, the Company will seek to qualify the variable
compensation paid to its executive officers for an exemption from the
deductibility limitations of Section 162(m).
In approving the amount and form of compensation for the Company's executive
officers, the Committee will continue to consider all elements of the cost to
the Company of providing such compensation, including the potential impact of
Section 162(m).
Respectfully submitted by:
COMPENSATION COMMITTEE
Brendan R. McDonnell, Chairman
J. Paul Bagley
Compensation Committee Interlocks and Insider Participation
As noted above, the Company's Compensation Committee consists of Mr.
McDonnell and Mr. Bagley. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with executive
officers or directors of another entity.
21
<PAGE>
Performance Measurement Comparison(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on June 28, 1995 for (i) the Company's Common Stock, (ii) the
Nasdaq Pharmaceutical Index and (iii) the Total Return index for the Nasdaq
U.S. market. All values assume reinvestment of the full amount of all dividends
as of December 31 of each year.
The Company's Common Stock commenced trading on the OTC Electronic Bulletin
Board on June 28, 1995 and the closing price on such date was $8.875. This
price has been used as the initial share price.
[PERFORMANCE GRAPH APPEARS HERE]
HOLLIS EDEN PEER GROUP INDEX BROAD MARKET INDEX
----------- ---------------- ------------------
6/28/95 100.00 100.00 100.00
12/29/95 100.00 145.56 113.41
12/31/96 112.68 146.11 139.46
12/31/97 70.42 150.87 171.09
12/31/98 208.45 198.12 240.51
12/31/99 116.90 358.50 435.45
- --------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
Certain Transactions
On February 25, 1999, Terren S. Peizer resigned as President, Vice Chairman
and Director of the Company. In connection therewith, the Company entered into
a Separation and Mutual Release Agreement with Mr. Peizer. Pursuant to the
agreement, the Company agreed to (i) continue to provide Mr. Peizer with salary
and benefits through December 31, 1999 and (ii) provide for immediate vesting
of 300,000 of the 2,400,000 options previously granted to him, and the
termination of 1,200,000 unvested options.
On May 22, 1998, the Company entered into a promissory note with Richard B.
Hollis in the amount of $200,000. Interest is at 5.5% per annum. The note is
due and payable in full on May 22, 2003.
22
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Richard B. Hollis
Chairman of the Board, President
Chief Executive Officer
May 10, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, HOLLIS-
EDEN PHARMACEUTICALS, INC., 9333 GENESEE AVENUE, SUITE 200, SAN DIEGO,
CALIFORNIA 92121.
23
<PAGE>
HOLLIS-EDEN PHARMACEUTICALS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 23, 2000
The undersigned hereby appoints Richard B. Hollis, Daniel D. Burgess and
Robert W. Weber, and each of them, as attorneys and proxies of the undersigned,
with full power of substitution, to vote all of the shares of stock of
Hollis-Eden Pharmaceuticals, Inc. ("the Company") which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at the offices of the Company, located at The Hyatt Regency La Jolla, 3777 La
Jolla Village Drive, San Diego, California 92122, on Friday, June 23, 2000, at
2:00 p.m., local time, and at any and all continuations, adjournments or
postponements thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued on other side)
<PAGE>
A [X] Please mark your vote as in this example
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW AND FOR PROPOSALS 2 AND 3.
Proposal 1. To elect two Class III directors to hold office until the 2003
Annual Meeting of Stockholders and until their successors are elected.
[_] FOR all nominees listed at right (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed at right
Nominees: Richard B. Hollis
Leonard Makowka, M.D.
To withhold authority to vote for any nominees(s), write such nominee(s)' name
below:
- ----------------------------
Proposal 2. To approve the Company's 1997 Incentive Stock Option Plan, as
amended.
FOR [_] AGAINST[_] ABSTAIN[_]
Proposal 3. To ratify the selection of BDO Seldman LLP as independent auditors
of the Company for its fiscal year ending December 31, 2000.
FOR [_] AGAINST[_] ABSTAIN[_]
Please vote and promptly return this proxy in the envelope which is postage
prepaid if mailed in the United States.
Signature(s)
------------------
Name of stockholder (if other than individual)-----------------------------
DATED , 2000
--------
NOTE: Please sign exactly as your name appears hereon. If stock is registered in
the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is corporation, please give full corporated name and
have duly authorized officer sign, stating title. If signer is a
partnership, please sign in partnership name by authorized person.
