<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
PHARMAPRINT 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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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:
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/ / 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
SEPTEMBER 8, 1998
---------------------
To the Stockholders of PharmaPrint Inc:
On behalf of the Board of Directors, you are hereby notified of and
cordially invited to attend the Annual Meeting of Stockholders of PharmaPrint
Inc. (the "Company") to be held on Tuesday, September 8, 1998 at 9:00 a.m.,
local time, at the Hyatt Regency Hotel, 17900 Jamboree Road, Irvine, California,
92614. At the meeting you are being asked to:
1. Elect seven (7) directors to hold office until the Company's next Annual
Meeting of Stockholders;
2. Approve the amendment of the Company's 1995 Stock Plan, As Amended (the
"Plan"), to increase the number of shares of common stock authorized for
issuance thereunder from 2,200,000 shares to 2,900,000 shares;
3. Approve the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the fiscal year ending March 31, 1999;
and
4. Transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on August 5, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting. Only holders of Common Stock at the close of
business on the record date will be entitled to vote at the Annual Meeting. A
list of the stockholders entitled to vote at the Annual Meeting will be
available for inspection at the offices of the Company.
Whether or not you plan to attend the Annual Meeting in person, please sign,
date, and return your proxy in the enclosed envelope so that your shares may be
voted at the meeting. If the shares are held in more than one name, all holders
of record must sign. If you plan to attend the Annual Meeting, please notify me
so that identification can be prepared for you. Thank you for your interest and
consideration.
By Order of the Board of Directors,
[SIGNATURE]
Tasneem A. Khwaja, Ph.D.
SECRETARY
Irvine, California
August 7, 1998
STOCKHOLDERS OR OMNIBUS PROXIES ARE URGED TO SIGN, DATE, AND PROMPTLY MAIL THE
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING.
<PAGE>
PHARMAPRINT INC.
------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 8, 1998
------------------------
This Proxy Statement is furnished in connection with the solicitation, on
behalf of the Board of Directors of PharmaPrint Inc., a Delaware corporation
("PharmaPrint" or the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company ("Annual Meeting"), to be held at the Hyatt Regency
Hotel, 17900 Jamboree Road, Irvine California, 92614, on Tuesday, September 8,
1998 at 9:00 a.m., and at any and all adjournments thereof. This Proxy Statement
and the enclosed form of proxy are first being mailed on or about August 7,
1998. The mailing address of the principal executive offices of the Company is 4
Park Plaza, Suite 1900, Irvine, California 92614.
RECORD DATE AND VOTING
Only the stockholders of record at the close of business on August 5, 1998
will be entitled to vote at the meeting. At the close of business on July 27,
1998 there were 13,651,589 shares of the Company's Common Stock, par value $.001
("Common Stock") outstanding and entitled to vote, held by 116 stockholders of
record. No shares of the Company's preferred stock are outstanding. Each
stockholder is entitled to one vote for each share of Common Stock held as of
the record date.
If a choice as to matters coming before the Annual Meeting has been
specified by a stockholder in a Proxy, the shares will be voted accordingly. If
no choice has been specified, the shares will be voted FOR the nominees for
director and the proposals described in the Notice of Annual Meeting and in this
Proxy Statement. Abstentions and broker non-votes (i.e., the submission of a
Proxy by a broker or nominee indicating the lack of discretion or authority to
vote on the matter) are each included in the determination of the presence or
absence of a quorum for the transaction of business. An affirmative vote of the
majority of the votes cast at the meeting is required for the election of each
director and for the approval of the other proposals. Abstentions are counted in
all tabulations of the votes cast and will have the same effect as a vote
"against". Broker non-votes are not counted for purposes of determining whether
a proposal has been approved or not.
PLEASE MARK, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
POSTAGE-PAID, RETURN ENVELOPE NO LATER THAN AUGUST 28, 1998 SO THAT, IF YOU ARE
UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE VOTED.
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<PAGE>
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Bylaws provide for the election of all Directors at each
Annual Meeting and for each Director elected to serve until the next Annual
Meeting and until their successors shall have been duly elected and qualified or
until their earlier death, resignation or removal. The Board has selected seven
nominees, all of whom are current directors of the Company. All nominees have
consented to being named herein and to serve if elected.
Shares represented by proxies solicited hereby will be voted FOR the
election of the Board's nominees unless authority to so vote is withheld. If any
or all of the nominees should become unable to or declines to serve as a
director prior to the Annual Meeting, the proxies may be voted for a substitute
nominee designated by the Board of Directors.
The following sets forth, for each of the nominees, their principal
occupation or employment during at least the last five years, and the period
during which they have served as a Director of the Company.
JOHN H. ABELES, MD, age 53, has been a director of the Company since August
1996. Dr. Abeles has served as President of MedVest, Inc., a venture capital and
consulting firm, since 1980. He serves as a director of Encore Medical Inc.,
I-Flow Corporation, DUSA Pharmaceuticals, Inc. and Oryx Technology, Inc.
LYLE ANDERSON, age 43, has been a director of the Company since August 1996.
Mr. Anderson has been a private investor and financial consultant for the past
17 years. He serves as a financial principal in several privately held entities
and provides financial analysis, debt/equity investment due diligence, and
complex and varied financial negotiation assistance as an advisor to a large
number and variety of ventures.
ELLIOT P. FRIEDMAN, age 45, has been a director of the Company since
November 1994. Mr. Friedman has been the Chairman of the Board of Directors and
Chief Executive Officer since April 1997 and was the President and Chief
Executive Officer of the Company from October 1995 to April 1997. He was also
the Chief Financial Officer of the Company from November 1994 to December 1996.
From July 1990 to July 1994, Mr. Friedman was co-founder and Chief Executive
Officer of BioTek Solutions, a provider of systems used by pathologists to
conduct diagnosis of cancer through the use of monoclonal antibodies and DNA
probes.
TASNEEM A. KHWAJA, Ph.D., age 63, has been a director of the Company since
September 1994. Dr. Khwaja has been the Secretary of the Company since September
1994 and the Chief Scientific Officer of the Company since October 1995. From
November 1994 to October 1995, Dr. Khwaja served as the Company's President and
Chief Executive Officer and from September 1994 to April 1997 he served as the
Chairman of the Board of Directors. Dr. Khwaja has been a Professor of Pathology
at the University of Southern California ("USC") School of Medicine for the past
24 years.
ERINCH R. OZADA, age 38, has been a director of the Company since June 1998.
Since 1996, Mr. Ozada has been Chairman of the Board and Chief Executive Officer
of Archery Capital LLC, an investment management company. From 1989 to 1996, Mr.
Ozada was Vice President and from 1984 to 1989, was an associate with Goldman,
Sachs & Co.
PHILLIP G. TRAD, age 49, has been a director of the Company since November
1995 and Senior Vice President and General Counsel of the Company since November
1997. From 1988 until November 1997, Mr. Trad operated his own law practice in
California. Mr. Trad has more than 20 years of experience providing legal
representation to numerous companies including General Electric, RCA and NBC.
2
<PAGE>
NATHAN F. TROUM, MD, age 78, has been a director of the Company since August
1996. Since 1946, Dr. Troum has engaged in private medical practice specializing
in general medicine and rheumatology.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives $2,500 for each meeting
attended in person and $1,750 for any telephone meeting of the Board of
Directors. In addition, pursuant to the Plan, each non-employee director of the
Company annually receives options to purchase 10,000 shares of Common Stock of
the Company, although Dr. Abeles and Mr. Ozada have agreed that in connection
with their initial appointment to the Board of Directors in August 1996 and June
1998, respectively, the Company would issue each of them options to purchase
75,000 shares of Common Stock, such options to vest over three years, in lieu of
an additional grant of options to purchase 10,000 shares pursuant to the Plan in
years two and three of their service, if elected. The options to purchase Common
Stock are granted at the fair market value of the Common Stock on the date of
grant. The options shall vest quarterly over one year and expire ten years from
the date of grant. Additionally, each non-employee director, including Dr.
Abeles and Mr. Ozada, who serves on the Audit or Compensation Committees of the
Board of Directors, and who provides significant services to the Company in such
capacity, shall receive an additional grant of options to purchase 20,000 shares
of Common Stock. Such options shall vest quarterly over one year and expire ten
years from the date of grant.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held nine meetings during fiscal 1998. Mr. Anderson
was not present at one meeting. The Board of Directors currently has an Audit
Committee, an Executive Committee, and a Compensation Committee and does not
have a nominating committee. The Audit Committee makes recommendations to the
Board of Directors as to the engagement or discharge of the independent public
accountants; reviews the scope and results of the Company's internal auditing
procedures; reviews the adequacy of the Company's system of accounting controls;
and directs and supervises investigations into matters within the scope of its
duties. Presently, the Audit Committee is composed of Dr. Abeles and Messrs.
Anderson and Friedman. The Audit Committee met one time during fiscal 1998. The
Executive Committee performs the functions delegated to it by the Board of
Directors acting as a whole. The Executive Committee did not hold any meetings
during fiscal 1998. Presently, the Executive Committee is composed of Messrs.
Friedman and Trad and the Company intends to appoint an additional member
thereto at its next regularly scheduled meeting of the Board of Directors. The
Compensation Committee reviews and approves the compensation for the Company's
executive officers and administers the Plan. The Compensation Committee held six
meetings during fiscal 1998. Presently, this Committee is composed of Mr. Trad
and the Company intends to appoint an additional member thereto at its next
regularly scheduled meeting of the Board of Directors. Other than as noted
above, all Directors attended all Board Meetings held during the period in which
such Director was a Director, and all Committee Meetings of which such Director
is a member.
BOARD RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock present in person or represented by Proxy and voting at the
Annual Meeting (and the affirmative vote of the holders of a majority of the
shares necessary for a quorum at the Annual Meeting) is required for the
election of each Director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL NOMINEES TO
SERVE AS DIRECTORS OF THE COMPANY UNTIL THE NEXT ANNUAL MEETING AND UNTIL THEIR
SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED OR UNTIL THEIR EARLIER DEATH,
RESIGNATION OR REMOVAL.
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<PAGE>
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN, AS AMENDED, TO
INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER FROM 2,200,000
SHARES TO 2,900,000 SHARES
AMENDMENT
The stockholders are being asked to vote on a proposal to amend the
Company's Plan to increase the number of shares of Common Stock reserved for
issuance thereunder from 2,200,000 shares to 2,900,000 shares.
As of June 30, 1998, the Company had outstanding non-qualified options for
the purchase of an aggregate 2,106,304 shares of the Company's Common Stock with
an average exercise price of $5.32 per share granted under the Plan, and
non-qualified options for the purchase of an aggregate 149,000 shares of the
Company's Common Stock with an average exercise price of $9.67 granted outside
the Plan. 15,607 options have been exercised as of August 1, 1998. In order to
provide sufficient shares for future options, on June 23, 1998 the Board of
Directors approved a resolution authorizing an increase of the number of shares
reserved for issuance under the Plan from 2,200,000 to 2,900,000 shares. The
Board believes that granting fairly-priced stock options to employees and
directors is an effective means to promote the future growth and development of
the Company. Such options, among other things, increase employees', directors',
and consultants' proprietary interest in the Company's success and will assist
the Company in attracting and retaining such individuals who can contribute
significantly to the Company's success.
Currently, the Plan provides for automatic option grants to each director
who is not an employee of the Company (a "Non-Employee Director"). Each person,
who has not otherwise received a grant of options upon such person's initial
appointment or election as a Non-Employee Director of the Company, shall
automatically receive nonqualified options to purchase 10,000 shares of Common
Stock upon such person's initial appointment or election as a Non-Employee
Director of the Company and shall automatically receive options to purchase
10,000 shares of Common Stock each time re-elected to the Board of Directors as
a Non-Employee Director. Such options shall have an exercise price equal to 100%
of the fair market value of the Common Stock on the date of grant and shall vest
quarterly over one year. Subject to earlier termination, each option shall
expire ten years from the date of grant, and no option, even if vested, will be
exercisable within six months of the date of grant of such option.
SUMMARY OF 1995 STOCK OPTION PLAN, AS AMENDED
A general description of the basic features of the Plan is presented below.
Such description is qualified in its entirety by reference to the full text of
the Plan, a copy of which may be obtained without charge upon written request to
James R. Wodach, Chief Financial Officer, PharmaPrint Inc., 4 Park Plaza, Suite
1900, Irvine, California 92614.
PURPOSE
The purpose of the Plan is to enable the Company to obtain and retain
competent personnel who will contribute to the Company's success and to provide
incentives to the participating directors, officers, key employees, consultants,
scientific advisors and other personnel working directly or indirectly for the
Company that are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.
TERM
The term of each stock option shall be fixed by the Administrator (either
the Board of Directors or a Committee thereof), but no stock option shall be
exercisable more than ten (10) years after the date such stock option is
granted; provided, however, that if an employee owns or is deemed to own more
than 10%
4
<PAGE>
of the combined voting powers of all classes of stock of the Company and an
incentive stock option is granted to such employee, the term of the Incentive
Stock Option shall be no more than five (5) years from the date of grant.
ADMINISTRATION
The Plan was administered by the Board until November 5, 1996, when the
Board appointed the Compensation Committee and authorized it to administer the
Plan. With the exception of the stock options automatically issued to
Non-Employee Directors as described below, the Plan is administered by the
Compensation Committee of the Board of Directors. The Plan gives broad powers to
the Committee to administer and interpret the Plan, including the authority to
select the individuals to be granted options and to prescribe the particular
form and conditions of each option granted.
ELIGIBILITY
Directors, officers, key employees, consultants, scientific advisors, and
other personnel working directly or indirectly for the benefit of the Company
who are responsible for or contribute to the management, growth and/or
profitability of the business of the Company are eligible to be granted stock
options under the Plan. As of June 30, 1998, the Company had 24 employees, of
which nine are officers, and four directors who are not employees.
OPTIONS
The option price per share of Common Stock purchasable under a stock option
shall be determined by the Compensation Committee at the time of grant but shall
not be less than 100% of the fair market value of the Company's Common Stock on
the date of grant, as that term is defined in the Plan. If an employee owns or
is deemed to own more than 10% of the combined voting power of all classes of
stock of the Company and an incentive stock option is granted to such employee,
the option price of such incentive stock option shall be no less than 110% of
the fair market value on the date of grant.
The term of each stock option shall be fixed by the Compensation Committee,
but no stock option shall be exercisable more than ten years after the date such
stock option is granted; provided, however, that if an employee owns or is
deemed to own more than 10% of the combined voting powers of all classes of
stock of the Company and an incentive stock option is granted to such employee,
the term of such incentive stock option shall be no more than five years from
the date of grant.
Stock options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Compensation Committee at or
after grant. If the Compensation Committee provides, in its discretion, that any
stock option is exercisable only in installments, the Compensation Committee may
waive such installment exercise provisions at any time in whole or in part based
on such factors as the Compensation Committee may determine in its sole
discretion.
Generally, under the form of the option agreement that the Committee is
currently using for options granted under the Plan, if the optionee's
affiliation with the Company terminates before expiration of the option for
reasons other than death, the optionee has a right to exercise the option for
three months after termination of such affiliation or until the option's
original expiration date, whichever is earlier. If the termination is because of
death, the option typically is exercisable until its original stated expiration
or until the 12-month anniversary of the optionee's death, whichever is earlier.
The Committee may impose additional or alternative conditions and restrictions
on the incentive or nonqualified stock options granted under the Plan; however,
each incentive option must contain such limitations and restrictions upon its
exercise as are necessary to ensure that the option will be an incentive stock
option as defined under the Internal Revenue Code.
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<PAGE>
GRANTS TO NON-EMPLOYEE DIRECTORS
Currently the Plan provides for automatic option grants to each director who
is not an employee of the Company (a "Non-Employee Director"). Each person, who
has not otherwise received a grant of options upon such person's initial
appointment or election as a Non-Employee Director of the Company, shall
automatically receive nonqualified options to purchase 10,000 shares of Common
Stock upon such person's initial appointment or election as a Non-Employee
Director of the Company and shall automatically receive options to purchase
10,000 shares of Common Stock each time re-elected to the Board of Directors as
a Non-Employee Director. Such options shall have an exercise price equal to 100%
of the fair market value of the Common Stock on the date of grant and shall vest
quarterly over a one-year period.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend, alter, or discontinue the
Plan, but no amendment, alteration, or discontinuation shall be made that would
impair the rights of the optionee under any award theretofore granted without
such optionee's consent.
The Committee may amend the terms of any award theretofore granted,
prospectively or retroactively, however, no such amendment shall impair the
rights of any optionee without his or her consent.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1995 PLAN
Under present law, an optionee will not realize any taxable income on the
date a nonqualified stock option is granted to the optionee pursuant to the 1995
Plan. Upon exercise of the nonqualified stock option, however, the optionee will
realize, in the year of exercise, ordinary income to the extent of the
difference between the option price and the fair market value of the Company's
Common Stock on the date of exercise. Upon the sale of the shares, any resulting
gain or loss will be treated as capital gain or loss. The Company will be
entitled to a tax deduction in its fiscal year in which nonqualified stock
options are exercised, equal to the amount of compensation required to be
included as ordinary income by those optionee's exercising such options. The
Company is not entitled to any tax deduction with respect to any capital gains
realized by an optionee.
Incentive stock options granted pursuant to the Plan are intended to qualify
for favorable tax treatment to the optionee under Code Section 422. Under Code
Section 422, an employee realizes no taxable income when the incentive stock
option is granted. If the employee has been an employee of the Company at all
times from the date of grant until three months before the date of exercise, the
employee will realize no taxable income when the option is exercised. The
difference between the option exercise price and the fair market value of the
shares issuable upon exercise of the option is an "item of adjustment" for
alternative minimum tax purposes. If the employee does not dispose of the shares
acquired upon exercise for a period of two years from the granting of the
incentive stock option and one year after receipt of the shares, the employee
may sell the shares and report any gain as capital gain. The Company will not be
entitled to a tax deduction in connection with either the grant or exercise of
an incentive stock option. If the employee should dispose of the shares prior to
the expiration of the two-year or one-year periods described above, the employee
will be deemed to have received compensation taxable as ordinary income in the
year of the early sale in an amount equal to the lesser of (i) the difference
between the fair market value of the Company's Common Stock on the date of
exercise and the option price of the shares, or (ii) the difference between the
sale price of the shares and the option price of the shares. In the event of
such an early sale, the Company will be entitled to a tax deduction equal to the
amount recognized by the employee as ordinary income.
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<PAGE>
PLAN BENEFITS
Because future grants of stock options are subject to the discretion of the
Committee, all of the future benefits under the Plan cannot be determined at
this time, except for the automatic grants to Non-Employee Directors as set
forth above.
BOARD RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock present in person or represented by Proxy at the
Annual Meeting (and the affirmative vote of the holders of a majority of the
shares necessary for a quorum at the Annual Meeting) is required for approval of
this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENTS TO
THE PLAN DESCRIBED ABOVE.
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PROPOSAL 3
TO RATIFY THE SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company has selected Arthur Andersen LLP as independent public accountants for
the Company for the fiscal year ending March 31, 1999. A partner of Arthur
Andersen LLP is expected to attend the Annual Meeting. He will have an
opportunity to make a statement if he desires and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THIS PROPOSAL.
OTHER BUSINESS
As of the date of this Proxy Statement, management knows of no other
business that will be presented for consideration at the Annual Meeting.
However, if other proper matters are presented at the meeting, it is the
intention of the proxy holders named in the accompanying proxy to take such
action as shall be in accordance with their judgment on such matters. The quorum
requirement for convening the meeting is a majority of the outstanding shares of
Common Stock.
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth information for services in
all capacities paid or accrued for the fiscal years ended March 31, 1998, 1997
and 1996 by the Company to its Chief Executive Officer and the four other
highest paid executive officers whose total annual compensation exceeded
$100,000 for such fiscal years (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
FISCAL YEAR -------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION ENDED MARCH 31 SALARY ($) BONUS ($) OPTIONS
- ------------------------------ -------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Elliot Friedman .............. 1998 $ 182,000 $ 100,000(1) 150,000
Chairman of the Board of 1997 171,000(2) 50,000(1) --
Directors and Chief 1996 89,000 -- 712,708(3)
Executive Officer
Robert J. Burgess ............ 1998 $ 381,000(4) $ 100,000(1) 150,000
President and Chief 1997 163,000(5) 50,000(1) 712,708(6)
Operating Officer 1996 -- -- --
Tasneem A. Khwaja, Ph.D. ..... 1998 $ 152,000(2) $ -- --
Chief Scientific Officer and 1997 168,000(2)(7) -- --
Secretary 1996 88,000(7) -- --
Michael Tempesta, Ph.D. ...... 1998 $ 150,000 $ 30,000(8) 190,000
Senior Vice President of 1997 -- -- --
Research 1996 -- -- --
Paul Johnston, Ph.D. ......... 1998 $ 142,000 $ 32,000(8) 65,000
Senior Vice President of 1997 -- -- --
Development 1996 -- -- --
</TABLE>
- ------------------------
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(1) Amount represents payments made pursuant to a discretionary bonus.
(2) Pursuant to superceded employment agreements, each of Mr. Friedman and Dr.
Khwaja received deferred salary payments of $40,000. Such payments were made
upon completion of the Company's initial public offering and are included in
the salary amount listed.
(3) Pursuant to an Agreement between the Company, Dr. Khwaja, and Mr. Friedman
dated as of May 8, 1996, these options were canceled in connection with the
issuance of 712,708 shares of Common Stock to Mr. Friedman for services to
be rendered.
(4) Amount represents salary paid to Mr. Burgess in the amount of $94,000,
consulting services of $21,000 paid to Dimension Memory, Inc. ("Dimension")
and $266,000 that relates to an amended personal services agreement between
the Company and Dimension. Such agreement was deemed satisfied as of October
1, 1997. See footnote 5 to this table.
(5) Represents amounts paid by the Company to Dimension which provided the
services of Robert J. Burgess as President and Chief Operating Officer
pursuant to a personal services agreement between the Company and Dimension.
In December 1996, the Company amended its agreement with Dimension. The
amended agreement provided for the accelerated payment by the Company of all
amounts due under the personal services agreement in exchange for Dimension
agreeing to provide additional services to the Company. As a result, the
Company paid Dimension $312,000. Of the $312,000 paid to Dimension, $35,000
relating to services provided by Dimension to the Company for the period
January 1997 through March 1997 are included, and $226,000 payable for
services to be provided for the remaining term of the Agreement are not
included. Amount also includes $50,000 of deferred payments pursuant to such
personal services agreement, which were paid upon consummation of the
Company's initial public offering. See footnote 4 to this table.
(6) These options, which were granted to Dimension pursuant to a consulting
agreement between the Company and Dimension, were canceled in connection
with the issuance of 712,708 shares of Common Stock to Dimension for
services to be rendered by Dimension pursuant to the Personal Service
Agreement between the Company and Dimension.
(7) Does not include $70,000 annual salary paid by USC to Dr. Khwaja as a
professor. Approximately $30,000 of such salary was paid indirectly through
payment by the Company to USC of the amount required by the Research
Agreement. See Certain Relationships.
(8) Amount represents payments made relating to development goals achieved, as
set forth in each individual's employment agreement.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants for the fiscal
year ended March 31, 1998 to the Named Executive Officers. No stock appreciation
rights ("SAR's") were awarded in fiscal 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------
% OF TOTAL
OPTIONS GRANTED
TO EMPLOYEES GRANT DATE
OPTIONS IN FISCAL EXERCISE EXPIRATION PRESENT
NAME GRANTED (#) YEAR PRICE DATE VALUE (1)
- ----------------------------------------- ----------- ----------------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Elliot P. Friedman....................... 150,000 13.1% $ 6.00 June 2007 $ 508,624
Robert J. Burgess........................ 150,000 13.1% 6.00 June 2007 508,624
Michael Tempesta, Ph.D................... 190,000 16.5% 4.31 April 2007 466,158
</TABLE>
- ------------------------
(1) As suggested by the Commission's rules on executive compensation disclosure,
the Company used the Black-Scholes model of option valuation to determine
grant date present value. The Company does not advocate or necessarily agree
that the Black-Scholes model can properly determine the value of an option.
The present value calculation is based upon an option term of ten years and
as regards to Messrs. Friedman and Burgess assumes an interest rate of 6.4%,
no dividend yield and volatility of 58.1% and as regards to Dr. Tempesta
assumes an interest rate of 6.7%, no dividend yield and volatility of 58.1%.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides certain information concerning the exercise of
stock option for the fiscal year ended March 31, 1998 and shows the number of
shares covered by both exercisable and non-exercisable stock options held as of
the end of the Company's fiscal year ended March 31, 1998. Also shown are the
values for in-the-money options, which represent the positive difference between
the exercise price of such options and the fiscal year-end price of the
Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END AT FISCAL YEAR END (1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Elliot P. Friedman......................... -- $ -- 150,000 -- $ 900,000 $ --
Robert J. Burgess.......................... -- -- 150,000 -- 900,000 --
Michael Tempesta, Ph.D..................... -- -- 85,000 105,000 653,650 807,450
Paul Johnston, Ph.D........................ -- -- 25,000 40,000 196,750 314,800
</TABLE>
- ------------------------
(1) At March 31, 1998, the closing price of the Company's Common Stock was
$12.00.
EMPLOYMENT AND PERSONAL SERVICE AGREEMENTS
The Company has entered into an employment agreement with Elliot P.
Friedman, effective September 1, 1997 expiring on August 30, 2000. The agreement
currently provides for an annual base salary of $235,000. If Mr. Friedman's
employment is terminated without cause or if the termination is by Mr. Friedman
on the basis of a breach by the Company, the Company is obligated to pay Mr.
Friedman the salary and benefits earned or accrued through the date of
termination, and within 30 days after termination, a lump sum of the present
value of the salary provided for by the agreement for the 12 months immediately
following termination. In the event of death or disability or if the agreement
is voluntarily terminated by Mr. Friedman, or terminated for cause by the
Company, the Company is obligated to pay only salary and benefits earned or
accrued through the date of termination.
The Company has entered into an employment agreement with Robert J. Burgess,
effective October 1, 1997, that has substantially similar terms as Mr.
Friedman's agreement described above, except that the agreement expires on
October 1, 2000. Prior to entering into such employment agreement, the Company
was party to a personal services agreement with Dimension whereby, Dimension
agreed to provide the services of Robert Burgess as an executive officer of the
Company. Such agreement was deemed satisfied as of October 1, 1997.
The Company has entered into an employment agreement with Tasneem A. Khwaja,
effective September 1, 1997, expiring on August 30, 2000. The agreement
currently provides for an annual base salary of $172,000 and if Dr. Khwaja's
employment is terminated without cause or if the termination is by Dr. Khwaja on
the basis of a breach by the Company, the Company is obligated to pay Dr. Khwaja
the salary and benefits earned or accrued through the date of termination and,
within 30 days after termination, a lump sum of the present value of the salary
provided for by the agreement for the 12 months immediately following
termination. In the event of death or disability or if the agreement is
voluntarily terminated by Dr. Khwaja or terminated for cause by the Company, the
Company is obligated to pay only salary and benefits earned and accrued through
the date of termination.
The Company has entered into employment agreements with each of Drs.
Johnston and Tempesta. The employment agreements provide for a base salary of
$150,000 plus certain benefits for each, and include allowances for bonuses
based upon development goals set forth in each individual's employment
agreement. The agreements have one year terms and provide for three months
severance pay in certain cases of termination.
10
<PAGE>
During the year ended March 31, 1998, the Company loaned Drs. Johnston and
Tempesta $20,000 and $65,000, respectively. Each loan bears interest at a rate
of 9.0%. Dr. Johnson's loan is due in January 1999 and Dr. Tempesta's loan is
due in December 1998.
CERTAIN RELATIONSHIPS
As of March 22, 1996, Mr. Friedman, JadiJo, Inc., a California corporation,
Dr. Khwaja, Mr. Burgess, Dimension, and D-RAM Industries PTY, Ltd., an
Australian company ("D-RAM"), entered into a stockholders agreement pursuant to
which Dr. Khwaja contributed 1,336,978 shares of Common Stock to the Company as
a capital contribution and the Company agreed to issue 624,270 shares of Common
Stock to D-RAM, as nominee of Mr. Burgess, the Company's then Executive Vice
President and Chief Operating Officer, and options to acquire 712,708 shares of
Common Stock to Mr. Friedman, at an exercise price of $0.96 per share.
Subsequently, pursuant to an agreement dated as of May 8, 1996 among the
Company, Dr. Khwaja, and Mr. Friedman, the options granted to Mr. Friedman were
canceled and he was issued 712,708 shares of Common Stock. Mr. Friedman has
agreed that the shares issued to him will be cancelled on August 20, 2001,
unless prior to that date (i) the Company has received approval of the FDA for
the public sale of any pharmaceutical product; (ii) the Company has reported
pretax earnings per share of $.50, exclusive of nonrecurring items for two
consecutive years; (iii) the Company has consummated a merger, tender offer, or
sale of all or substantially all of the shares of Common Stock (in excess of
90%) or sale of all of the assets of the Company or; (iv) the shares of Common
Stock covered by the lock up agreements entered into by each of Mr. Friedman and
Dr. Khwaja with the underwriter of the Company's initial public offering
restricting the resale of shares of Common Stock until August 14, 2001 have been
released. In 1997, the underwriter released Mr. Friedman and Dr. Khwaja from
such Lock-up Agreements.
In December, 1996, the Company amended a personal services agreement with
Dimension. The amended agreement provides for the immediate payment by the
Company of all amounts due under the Personal Services Agreement in exchange for
Dimension agreeing to provide additional services to the Company. As a result of
this amended agreement, the Company paid Dimension $312,000. Effective April 15,
1997, Dimension agreed to provide the services of Mr. Burgess as the Company's
President and Chief Operating Officer and the Company agreed to pay Dimension at
the rate of $36,000 per year, effective March 1, 1997. In October 1997, the
personal services agreement was deemed satisfied. During the year ended March
31, 1998, Dimension also provided various administrative services, including
travel coordination for the Company. The Company paid Dimension $63,000 for such
services.
Mr. Howard R. Asher, a member of the Company's Board of Directors during the
year ended March 31, 1998, is the President, Chief Executive Officer and a
controlling shareholder of ABA. ABA is a clinical research organization that
provides FDA strategic consulting and professional services and provides
guidance to the Company in connection with various clinical, scientific, and
regulatory matters. The Company paid approximately $880,000 and $1,850,000 for
the years ended March 31, 1997 and 1998, respectively, for services rendered by
ABA.
During the fiscal year ended March 31, 1998, Phillip G. Trad, a member of
the Company's Board of Directors, provided various legal and business
development services to the Company. In connection with such services the
Company paid Mr. Trad $121,000. On November 1, 1997, Mr. Trad became an employee
of the Company.
There are no family relationships among the executive officers or directors
of the Company.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of June 30, 1998,
with respect to beneficial ownership of shares of Company Common Stock by any
person who is known by the Company to be the beneficial owner of more than 5% of
Company Common Stock, by directors individually, and by directors and executive
officers of the Company as a group. The information presented is based upon
information furnished to the Company by such beneficial owners.
<TABLE>
<CAPTION>
PHARMAPRINT COMMON STOCK
-------------------------------------
<S> <C> <C>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS
- --------------------------------------------------------------------------- ---------------------- -------------
Tasneem A. Khwaja, Ph.D.................................................... 2,699,822(3) 19.8%
Elliot P. Friedman......................................................... 2,105,248(4) 15.3%
Robert J. Burgess.......................................................... 1,956,248(5) 14.2%
JadiJo, Inc.(6)............................................................ 115,270(7) *
D-RAM Industries Pty Ltd.(8)............................................... 624,270(7) 4.6%
Dimension Memory, Inc.(9).................................................. 557,708(7) 4.1%
Phillip G. Trad............................................................ 373,438(10) 2.7%
John H. Abeles, M.D.(11)................................................... 76,250(12) *
Lyle Anderson(13).......................................................... 60,000(14) *
Erinch R. Ozada(15)........................................................ 101,750(16) *
Nathan F. Troum, M.D.(17).................................................. 20,000(18) *
All directors and executive officers as a group (12 people)................ 7,619,631(17) 51.7%
</TABLE>
The Company had 116 holders of record of its Common Stock as of July 27, 1998.
- ------------------------
* Less than one percent (1%).
(1) The address of each person listed in this table, except as otherwise noted,
is c/o PharmaPrint Inc., 4 Park Plaza, Suite 1900, Irvine, California
92614.
(2) As of June 30, 1998, the Company had 13,651,589 shares of Common Stock
issued and outstanding. Includes the beneficial ownership of shares that
the person has a right to acquire within sixty (60) days of June 30, 1998.
(3) Includes 104,045 shares of Common Stock that Dr. Khwaja has agreed to
transfer to John Kirch on August 14, 1998. Also includes call options
(obligations to sell) granted by Dr. Khwaja in the amount of 200,000,
200,000, and 30,000 to Elliot P. Friedman, Robert J. Burgess, and Dr.
Khwaja's son, respectively.
(4) Includes options to purchase 150,000 shares of Common Stock. Does not
include 200,000 call options (options to purchase) granted to Mr. Friedman
by Dr. Khwaja.
(5) Consists of 509,000, 115,270, 624,270, and 557,708 shares of Common Stock
owned of record by Mr. Burgess, JadiJo, Inc., D-RAM Industries Pty Ltd.,
and Dimension, respectively, also shown separately in this table. Also,
includes options to purchase 150,000 shares of Common Stock. Does not
include 200,000 call options (options to purchase) granted to Mr. Burgess
by Dr. Khwaja.
(6) The address of JadiJo, Inc. is 32, EDIF, J.J. Vallarino, 1st Floor, Office
3, Panama City, Panama.
(7) These shares are also included in the shares shown as beneficially owned by
Robert J. Burgess. These entities are controlled by various of the children
and/or sons-in-law of Mr. Burgess: James R. Burgess, Dione Neilson, Jodi
Perkins, Jon Neilson and Brett Perkins
(8) The address of D-RAM Industries Pty Ltd. Is 98 Edinborough Street, Benowa
Waters, Gold Coast, 4217, Queensland, Australia.
12
<PAGE>
(9) The address of Dimension Memory, Inc. is 17 Baycove Lane, Newport Beach,
California 92661.
(10) Consists solely of options to purchase 373,438 shares of Common Stock.
(11) The address of Dr. Abeles is c/o MedVest, Inc., 2365 N.W. 41st Street,
Boca Raton, Florida 33431.
(12) Consists solely of options to purchase 76,250 shares of Common Stock.
(13) The address of Mr. Anderson is 900 Appolo, Suite 4, Houston, Texas 77058.
(14) Consists solely of options to purchase 60,000 shares of Common Stock.
(15) The address of Mr. Ozada is c/o Archery Capital LLC, 237 Park Avenue,
Suite 801, New York, New York 10017.
(16) Includes options to purchase 18,750 shares of Common Stock.
(17) The address of Dr. Troum is 3878 43rd Street, San Diego, California 92105.
(18) Consists solely of options to purchase 20,000 shares of Common Stock.
(19) Includes beneficial ownership of Company Common Stock as follows: Tasneem
A. Khwaja, Ph. D. 2,699,822 shares; Elliot P. Friedman--1,955,248 shares;
Robert J. Burgess--1,806,248 shares; and Erinch R. Ozada--83,000 shares.
Also includes options held by directors and executive officers of the
Company to purchase the following number of shares of Common Stock: John
H. Abeles, M.D.-- 76,250 shares; Lyle Anderson--60,000 shares; Robert
Burgess--150,000 shares; Elliot P. Friedman-- 150,000 shares; Paul
Johnston, Ph.D.--30,000 shares; Erinch R. Ozada--18,750 shares; Michael
Tempesta, Ph.D.--108,333 shares; Phillip G. Trad--373,438 shares; Nathan
F. Troum--20,000 shares; and James R. Wodach--88,542 shares.
13
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Executive Officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Chairman of the Board of Directors and Chief Executive
Elliot P. Friedman(1) 44 Officer
Robert J. Burgess 49 President and Chief Operating Officer
Tasneem A. Khwaja Ph.D.(1) 63 Chief Scientific Officer and Corporate Secretary
Joel Bresser, Ph.D. 43 Senior Vice President of DSHEA Products
Paul Johnston, Ph.D. 48 Senior Vice President of Development
Michael Tempesta, Ph.D. 45 Senior Vice President of Research
Phillip G. Trad(1) 49 Senior Vice President and General Counsel
James R. Wodach 36 Senior Vice President and Chief Financial Officer
</TABLE>
- ------------------------
(1) Member of the Board of Directors of the Company
ELLIOT P. FRIEDMAN joined the Company as Chief Financial Officer and a
Director in November 1994 and became President and Chief Financial Officer in
October 1995 and Chairman of the Board of Directors in April 1997. From July
1990 to July 1994, Mr. Friedman was co-founder and Chief Executive Officer of
Biotek Solutions, a provider of monoclonal antibody and DNA-based systems used
by pathologists for the diagnosis of cancer. Mr. Friedman received a Science of
Management degree from the Massachusetts Institute of Technology.
ROBERT J. BURGESS joined the Company as Executive Vice President and Chief
Operating Officer in May 1996 and became President and Chief Operating Officer
in April 1997. From April 1995 to April 1996, Mr. Burgess provided full-time
consulting services to the Company. From April 1994 to April 1995, Mr. Burgess
served as Chief Operating Officer of Dimension Memory, Inc. ("Dimension Memory")
a company that trades in computer microchips. From February 1993 to April 1994,
Mr. Burgess served as Chief Executive Officer of J. Micro Trading, an Australian
company that trades in computer microchips. From January 1991 to January 1993,
he was Chief Operating Officer of Integrated Memory Systems, which manufactured
computer memory modules.
TASNEEM A. KHWAJA, Ph.D. is founder of the Company and has served as
Secretary of the Company since its inception in 1994 and Chief Scientific
Officer since October 1995. From September 1994 to April 1997, Dr. Khwaja served
as Chairman of the Board of Directors and from November 1994 to October 1995
served as President and Chief Executive Officer of the Company. Dr. Khwaja has
been an Associate Professor of Pathology at the USC School of Medicine since
1973. Dr. Khwaja received a Ph.D. in Organic Chemistry and Chemistry of Nucleic
Acids from Cambridge University.
JOEL BRESSER, Ph.D. joined the Company as Senior Vice President of DSHEA
Products in October 1997. From October 1995 to October 1997, Dr. Bresser was the
founder and owner of Intellihance, Inc., a consulting company that provides
strategic, marketing and technical services to healthcare and biotechnology
companies. From January 1989 to October 1995, Dr. Bresser served in various
executive capacities at Aprogenex, Inc. including President and Chief Executive
Officer from April 1992 to October 1995. Dr. Bresser received a Ph.D. in
Molecular Biology from Rice University.
PAUL JOHNSTON, Ph.D. joined the Company as Vice President of Development in
March 1997. From February 1995 to March 1997, Dr. Johnston was an independent
consultant to a number of biotechnology start-up companies. From July 1993 to
February 1995, Dr. Johnston served as the Vice President of the Product
Development Division of NeXstar Pharmaceuticals, Inc. from September 1990 to
July 1993, he was Senior Director of Pharmaceutical Development of Amylin
Pharmaceutical, Inc. and
14
<PAGE>
prior to that held senior positions at Molecular Devices Corporation and
Genentech Incorporated. Dr. Johnston received a Ph.D. in Biochemistry from
Brandeis University.
MICHAEL TEMPESTA, Ph.D. joined the Company as Senior Vice President of
Research in March 1997. Immediately prior to joining the Company, Dr. Tempesta
was the Chief Scientific Officer of Larex, Inc., a biotechnology company, from
February 1995 to February 1997. From 1990 to 1994, Dr. Tempesta served as Chief
Scientific Officer and in various executive positions at Shaman Pharmaceuticals,
Inc. Dr. Tempesta received his Ph.D. in Organic Chemistry from the University of
Arizona.
PHILLIP G. TRAD, has been a director of the Company since November 1995 and
Senior Vice President and General Counsel of the Company since November 1997.
From 1988 until November 1997, Mr. Trad operated his own law practice in
California. Mr. Trad has more than 20 years of experience providing legal
representation to numerous companies including General Electric, RCA and NBC.
JAMES R. WODACH, CPA joined the Company as Senior Vice President and Chief
Financial Officer in December 1996. From April 1996 to December 1996, Mr. Wodach
was Director of Finance for Paragon Biomedical, Inc. From October 1995 to April
1996, he was an independent consultant. From April 1994 to October 1995, Mr.
Wodach was Senior Vice President of Finance, from April 1993 to April 1994
Senior Vice President and Chief Financial Officer, from July 1992 to April 1993
Vice President of Finance, and from November 1989 to July 1992, Controller for
Regency Health Services, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and executive officers of the Company and persons who hold more than
10% of a registered class of the Company's equity securities ("Reporting
Persons") to file with the Securities and Exchange Commission (the "Commission")
initial reports of ownership and reports of changes in ownership of equity
securities of the Company. Reporting Persons are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the year ended March 31, 1998, all Section 16(a)
filing requirements applicable to the Reporting Persons were complied with
except that Messrs. Anderson and Asher filed late one report covering one
transaction and Mr. Trad filed late two reports covering three transactions.
GENERAL INFORMATION
REVOCABILITY OF PROXIES
Any proxy solicited hereby by the person giving it at any time before it has
been exercised at the Annual Meeting may be revoked by giving notice of
revocation to the Secretary of the Company in writing, submitting a later-dated
proxy or by voting the shares in person at the 1998 Annual Meeting. Holders
whose shares are in street name should consult with their brokers concerning
procedures for revocation. Subject to such revocation, all shares represented by
a properly executed proxy will be voted as directed by the holder on the proxy
card. If no choice is specified, proxies will be voted FOR (i) election of the
named directors to the Board of Directors, and (ii) all such other proposals
listed in this Proxy Statement.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this proxy statement
and other costs of the proxy solicitation made by the Company's Board of
Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional reimbursement will be
paid by the Company for the solicitation of those proxies. Such solicitation may
by made by personal interview, telephone, and telegram. Arrangements have also
been made with brokerage firms and others for the forwarding of proxy
15
<PAGE>
solicitation materials to the beneficial owners of Common Stock, and the Company
will reimburse them for reasonable out-of-pocket expenses incurred in connection
therewith.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 1999 ANNUAL MEETING
The Company's 1999 Annual Meeting is anticipated to occur on or about
September 8, 1999. A stockholder desiring to submit a proposal for inclusion in
the Company's Proxy Statement for the 1999 Annual Meeting must deliver the
proposal so that it is received by the Company no later than April 1, 1999. The
Company requests that all such proposals be addressed to Corporate Secretary,
PharmaPrint Inc., 4 Park Plaza, Irvine, California 92614, and mailed certified
mail, return receipt requested.
By order of the Board of Directors
[SIGNATURE]
Tasneem A. Khwaja, Ph.D.
SECRETARY
Irvine, California
July 29, 1998
THE COMPANY HAS MAILED A COPY OF ITS 1998 ANNUAL REPORT TO EACH STOCKHOLDER
ENTITLED TO VOTE AT THE ANNUAL MEETING. INCLUDED IN THE 1998 ANNUAL REPORT ARE
THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 1998. THE
COMPANY'S 1998 ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIAL FOR
SOLICITATION OF PROXIES.
16
<PAGE>
PHARMAPRINT INC.
FOR THE HOLDERS OF COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
1998 ANNUAL MEETING OF THE STOCKHOLDERS--SEPTEMBER 8, 1998
The undersigned stockholder of PHARMAPRINT INC. (the "Company"), revoking
all previous proxies, hereby appoints ELLIOT P. FRIEDMAN AND JAMES R. WODACH and
each of them acting individually, as proxies of the undersigned and authorizes
either or both of them to vote all shares of the Company's Common Stock held of
record by the undersigned as of the close of business on August 5, 1998 at the
1998 Annual Meeting of Stockholders of the Company to be held on September 8,
1998, at 9:00 a.m., local time, at the Hyatt Regency Hotel, 17900 Jamboree Road,
Irvine, California, 92614, and at any adjournment(s) or postponement(s) thereof
(the "Annual Meeting"), according to the votes the undersigned would be entitled
to cast if then personally present.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL I, "FOR" THE ITEM
LISTED IN PROPOSAL II, "FOR" THE ITEM LISTED IN PROPOSAL III, AND "FOR" ANY
FOURTH MATTER SET FORTH BELOW. IN PROPOSAL I, AUTHORITY TO VOTE FOR PARTICULAR
NOMINEE(S) MAY BE WITHHELD BY LINING THROUGH THE NAME(S) OF THE PARTICULAR
NOMINEE(S).
PROPOSAL I
<TABLE>
<C> <C> <C>
1. / / FOR nominees for / / WITHHOLD AUTHORITY to / / FOR nominees for
director named below. vote. director named below,
except WITHHOLD AUTHORITY
to vote for the nomi-
nee(s) whose name(s) is
(are) lined through.
</TABLE>
Nominees: JOHN H. ABELES, M.D., LYLE ANDERSON, ELLIOT P. FRIEDMAN, TASNEEM A.
KHWAJA, PH.D., ERINCH OZADA, PHILLIP C. TRAD AND NATHAN F. TROUM, M.D., will be
considered nominees for election at the Annual Meeting.
PROPOSAL II
2. The Amendment to the Company's 1995 Stock Option Plan, As Amended, to
increase the number of shares of common stock authorized for issuance
thereunder from 2,200,000 shares to 2,900,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
PROPOSAL III
3. The ratification of Arthur Andersen LLP as the Company's independent
accountants for the fiscal year ending March 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
4. The authority of the proxies, in their discretion, to vote on such other
business as may properly come before the Annual Meeting, or any
adjournment(s) thereof.
/ / FOR / / ABSTAIN
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL MEETING
AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The undersigned also
hereby ratifies all that the said proxies do by virtue hereof and hereby
confirms that this proxy shall be valid and may be voted regardless of whether
the stockholder's name is signed as set forth below or a seal affixed or the
description, authority or capacity of the person signing is given or any other
defect of signature exists.
DATED: _________________________ 1998
______________________________ (SEAL)
(Stockholder's Signature)
______________________________ (SEAL)
(Stockholder's Signature)
Please sign this proxy exactly as the
name appears in the address above. If
shares are registered in more than
one name, all owners should sign. If
signing in a fiduciary or
representative capacity, such as
attorney-in-fact, executor,
administrator, trustee or guardian,
please give full title and attach
evidence of authority. If signer is a
corporation, please sign the full
corporate name and an authorized
officer should sign such officer's
name and title and affix the
corporate seal, if any.
